<PAGE>
- -------------------------------------------------------------------------------
W.P. STEWART & CO. GROWTH FUND, INC.
- -------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
(UNAUDITED)
JUNE 30, 1999
<PAGE>
- -------------------------------------------------------------------------------
W.P. STEWART & CO. GROWTH FUND, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS AS OF JUNE 30, 1999
- -------------------------------------------------------------------------------
MANAGEMENT COMMENTS
REVIEW OF THE SIX MONTHS ENDED JUNE 30, 1999
Total investment return for the six months ended June 30, 1999 was 3.91%.
The Fund's net asset value per share increased from $213.59 on December 31,
1998 to $221.94 on June 30, 1999.
After a strong first quarter, we witnessed an abrupt second quarter shift
in investor sentiment. There was a sharp increase in interest rates as well
as a belief that the US economy was building up a new head of steam.
Inflation concerns in the US increased, Europe looked a little stronger,
and emerging markets appeared to have bottomed. These factors caused some
investors to shift their resources from high quality, mid and large cap
stocks into bonds, or cyclically sensitive shares, overseas equities, or
smaller capitalization stocks, despite the higher risks inherent in such
choices.
In fact, inflation remained benign, but the fears persisted, and we now
have long term interest rates close to the 6% level. The P/E multiples of
your high quality growth stocks contracted simultaneously, as they always
do in a period of rising interest rates - these stocks are liquid, and
gains in them had been strong for four consecutive years. Fortunately, this
can be overcome by the underlying earnings growth in your portfolio, and
most of our companies have come through their second quarter earnings
season with fine results.
Long-term View
We feel that we may have seen the top for interest rates, and that evidence
is mounting for slowing economic growth. Inflation has stayed very subdued,
and justifies our belief that rates will start to back off. We expect that
there may only be one more tightening from the Fed, if that. Growth shares
will regain favor as the economy slows down - we typically outperform most
strongly when there is economic uncertainty and slowdown.
It is positive for the future performance of your Fund that your stocks are
now selling at a multiple of 2000 earnings that is at a discount to the S&P
Industrials.
We continue to seek out the highest quality, most attractively priced,
predictable growth companies for your Fund, and remain confident in our
approach to building your long term wealth. We look forward to reporting to
you again in January.
New York, NY
July 16, 1999
MARILYN G. BRESLOW
PRESIDENT
W.P. Stewart & Co., Inc.
Investment Adviser
1
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NAME OF ISSUER MARKET
AND TITLE OF ISSUE SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--98.1%
BANKS--5.2%
Northern Trust Corporation............................................ 35,512 $ 3,444,664
----------------
DATA PROCESSING SERVICES--9.9%
Automatic Data Processing, Inc........................................ 148,928 6,552,832
----------------
DRUGS & HEALTH CARE--24.8%
IMS Health, Inc....................................................... 80,212 2,506,625
Johnson & Johnson..................................................... 31,020 3,039,960
Lilly (Eli) & Company................................................. 41,032 2,938,917
Merck & Company, Inc.................................................. 27,774 2,055,276
Pfizer, Inc........................................................... 27,708 3,040,953
Stryker Corporation................................................... 46,300 2,783,787
----------------
16,365,518
----------------
ELECTRICAL EQUIPMENT--6.3%
General Electric Company.............................................. 36,744 4,152,072
----------------
ELECTRONICS--3.9%
Intel Corporation..................................................... 42,998 2,558,381
----------------
ENVIRONMENTAL SERVICES--2.0%
Rentokil Initial PLC, ADR *........................................... 33,280 1,300,985
----------------
FINANCE & BANKING--5.1%
State Street Corporation.............................................. 39,893 3,405,865
----------------
FOOD & BEVERAGE--4.0%
Coca Cola Company..................................................... 15,368 960,500
Wrigley WM. Jr Company................................................ 18,922 1,702,980
----------------
2,663,480
----------------
HOUSEHOLD PRODUCTS--3.6%
Gillette Company...................................................... 39,888 1,635,408
Procter & Gamble Company.............................................. 8,173 729,440
----------------
2,364,848
----------------
RESTAURANTS--5.2%
McDonald's Corporation................................................ 83,046 3,430,838
----------------
</TABLE>
* ADR- American Depository Receipts
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NAME OF ISSUER MARKET
AND TITLE OF ISSUE SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--(CONTINUED)
RETAIL--23.4%
Albertsons, Inc. .................................................. 32,730 $ 1,687,641
Autozone, Inc. (a)................................................. 104,424 3,145,773
CVS Corporation.................................................... 58,369 2,962,227
Dollar General Corporation......................................... 191,313 5,548,077
Gap, Inc........................................................... 15,000 755,625
Home Depot, Inc. .................................................. 21,500 1,385,406
----------------
15,484,749
----------------
SOFTWARE--4.7%
Microsoft Corporation (a).......................................... 34,558 3,116,700
----------------
TOTAL COMMON STOCKS--(Cost $50,769,747) ................................. 64,840,932
----------------
SHORT TERM INVESTMENTS--2.0% PRINCIPAL
REPURCHASE AGREEMENT--2.0% AMOUNT
----------
Agreement with State Street Bank and Trust Company, 3.250% dated
06/30/1999, to be repurchased at $1,321,119 07/01/1999, collateralized
by $1,110,000 U.S. Treasury Note,8.125% maturing 5/15/2021
(value $1,347,610).................................................... 1,321,000 1,321,000
----------------
TOTAL SHORT TERM INVESTMENTS--(Cost $1,321,000) ............................ 1,321,000
----------------
TOTAL INVESTMENTS--(Cost $52,090,747)--100.1% 66,161,932
OTHER ASSETS LESS LIABILITIES--(0.1)% (88,184)
----------------
NET ASSETS--100.0% $ 66,073,748
----------------
----------------
</TABLE>
(a) No dividends paid on security.
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at market value (cost $ 50,769,747)........................ $ 64,840,932
Repurchase agreements, at market value (cost $ 1,321,000)............................. 1,321,000
Cash ................................................................................. 78
Receivable for Fund shares sold....................................................... 102,690
Dividends and interest receivable..................................................... 35,939
Other assets.......................................................................... 54,358
----------------
Total Assets..................................................................... 66,354,997
----------------
LIABILITIES:
Payable for Fund shares repurchased................................................... 22,194
Advisory fee payable.................................................................. 235,343
Other accrued expenses................................................................ 23,712
----------------
Total Liabilities................................................................ 281,249
----------------
NET ASSETS............................................................................ $ 66,073,748
----------------
----------------
NET ASSETS CONSIST OF:
Capital stock ($0.001 par value; 100,000,000 shares
authorized, 297,712 shares issued and outstanding)............................... $ 298
Capital paid in excess of par......................................................... 47,371,881
Undistributed net investment loss..................................................... (338,955)
Accumulated realized gain on investments - net........................................ 4,969,339
Unrealized appreciation on investments - net.......................................... 14,071,185
----------------
NET ASSETS............................................................................ $ 66,073,748
----------------
----------------
Net asset value per share............................................................. $ 221.94
----------------
----------------
Redemption price per share............................................................ $ 220.83
----------------
----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $1,496).................................. $ 189,067
Interest.............................................................................. 41,475
----------------
Total investment income.......................................................... 230,542
----------------
EXPENSES:
Investment advisory fees.............................................................. 445,023
Administrative fees................................................................... 35,143
Custodian fees........................................................................ 24,198
Transfer agent fees................................................................... 19,990
Registration fees..................................................................... 19,314
Director fees......................................................................... 10,716
Miscellaneous fees.................................................................... 15,113
----------------
Total expenses................................................................... 569,497
----------------
Net investment loss................................................................... (338,955)
----------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments...................................................... 4,828,996
Net change in unrealized appreciation on investments.................................. (2,486,709)
----------------
Net gain on investments............................................................... 2,342,287
----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................. $ 2,003,332
----------------
----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED JUNE 30, 1999 ENDED
(UNAUDITED) DECEMBER 31, 1998
----------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss............................................. $ (338,955) $ (524,172)
Net realized gain on investments................................ 4,828,996 2,427,262
Net change in unrealized appreciation
on investments................................................ (2,486,709) 10,121,250
----------------- ----------------
Net increase in net assets
from operations.......................................... 2,003,332 12,024,340
----------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments................................ - (2,348,801)
----------------- ----------------
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold....................................... 16,166,131 7,663,593
Shares issued to shareholders
in reinvestment of distributions........................... - 2,268,863
Cost of redemptions............................................. (2,745,444) (5,159,672)
------------------ -----------------
Net increase in net assets from Fund
share transactions....................................... 13,420,687 4,772,784
----------------- ----------------
Net increase in net assets...................................... 15,424,019 14,448,323
----------------- ----------------
----------------- ----------------
NET ASSETS:
Beginning of period............................................. 50,649,729 36,201,406
----------------- ----------------
End of period................................................... $ 66,073,748 $ 50,649,729
----------------- ----------------
----------------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
(UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE FOR THE
ENDED YEAR YEAR
JUNE 30, 1999 ENDED ENDED
(UNAUDITED) DECEMBER 31, 1998 DECEMBER 31, 1997
----------- ----------------- -----------------
<S> <C> <C> <C>
INCOME FROM INVESTMENT OPERATIONS:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............... $ 213.59 $ 168.71 $ 152.65
----------- ----------- -----------
Net investment loss............................ (1.14) (2.21) (1.87)
Net realized and unrealized gain on
investments................................ 9.49 57.80 38.53
----------- ----------- -----------
Net increase from investment operations............ 8.35 55.59 36.66
Distributions to shareholders from net
realized gains on investments.................. - (10.71) (20.60)
----------- ----------- -----------
Net asset value, end of period..................... $ 221.94 $ 213.59 $ 168.71
----------- ----------- -----------
----------- ----------- -----------
TOTAL INVESTMENT RETURN (a)........................ 3.91% 33.30% 24.69%
RATIOS AND SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ 1.92%(b) 1.94% 2.13%
Ratio of fees and expenses waived and
reimbursed by the Adviser and
Administrator to average net assets............ - - 0.02%
Ratio of net investment loss to
average net assets............................. (1.14)%(b) (1.26)% (1.35)%
Portfolio turnover ................................ 18% 34% 79%
Net assets, end of period (in thousands) .......... $ 66,074 $ 50,650 $ 36,201
</TABLE>
- -------------------------------------------------------------------------------
(a) Total investment return is calculated assuming a purchase of common stock
at net asset value at the beginning of the period, a sale at net asset
value at the end of the period, reinvestment of all dividends and
distributions at net asset value during the period and no redemption fee.
Total investment return would be reduced if the redemption fee of 0.50%
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.
(b) Annualized.
The chart above reflects the unaudited operating performance, based on a share
of Fund common stock outstanding, as well as total investment return, ratios to
average net assets and other supplemental data for the periods indicated. This
information has been determined based upon information provided in the financial
statements.
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
YEAR YEAR FEBRUARY 28, 1994*
ENDED ENDED THROUGH
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ----------------- ------------------
<S> <C> <C> <C>
INCOME FROM INVESTMENT OPERATIONS:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............... $ 125.94 $ 101.06 $ 100.00
----------- ----------- -----------
Net investment loss............................ (1.81) (1.15) (0.48)
Net realized and unrealized gain on
investments................................ 40.17 29.19 1.54
----------- ----------- -----------
Net increase from investment operations............ 38.36 28.04 1.06
Distributions to shareholders from net
realized gains on investments.................. (11.65) (3.16) -
----------- ------------ -----------
Net asset value, end of period..................... $ 152.65 $ 125.94 $ 101.06
----------- ----------- -----------
----------- ----------- -----------
TOTAL INVESTMENT RETURN (a)........................ 30.64% 27.73% 1.06%
RATIOS AND SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ 2.50% 2.50% 2.50%(b)
Ratio of fees and expenses waived and
reimbursed by the Adviser and
Administrator to average net assets............ 0.28% 1.32% 10.20%(b)(c)
Ratio of net investment loss to
average net assets............................. (1.51)% (1.36)% (1.25)%(b)
Portfolio turnover ................................ 76% 76% 9%
Net assets, end of period (in thousands) .......... $ 19,829 $ 10,789 $ 3,109
</TABLE>
- -------------------------------------------------------------------------------
*Commencement of investment operations.
(a) Total investment return is calculated assuming a purchase of common stock
at net asset value at the beginning of the period, a sale at net asset
value at the end of the period, reinvestment of all dividends and
distributions at net asset value during the period and no redemption fee.
Total investment return would be reduced if the redemption fee of 0.50%
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.
(b) Annualized.
(c) Includes organization expenses paid by Adviser.
The chart above reflects the unaudited operating performance, based on a share
of Fund common stock outstanding, as well as total investment return, ratios to
average net assets and other supplemental data for the periods indicated. This
information has been determined based upon information provided in the financial
statements.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
1. ORGANIZATION AND FUND DESCRIPTION
W.P. Stewart & Co. Growth Fund, Inc. (the "Fund") is an open-end,
non-diversified management investment company registered under the Investment
Company Act of 1940 (the "Act"). It was incorporated under the laws of the
State of Maryland in September 1993. The Fund had no operations prior to
October 25, 1993, other than those relating to organizational matters. The
initial capital contribution of $100,000 was provided on October 25, 1993 by
W.P. Stewart & Co., N.V. in exchange for 1,000 shares of the Fund. The Fund
invests primarily in common stocks listed on the New York Stock Exchange.
W.P. Stewart & Co., Inc., a registered investment adviser, is the Fund's
investment adviser. W.P. Stewart & Co., Inc. assumed this responsibility from
its affiliate in July, 1998. The change did not involve any change in actual
control or management of the investment adviser to the Fund. W.P. Stewart &
Co., Inc. and its predecessor are together referred to as the "Adviser."
Shares of the Fund are available for subscription by eligible investors.
There is no sales charge. The redemption fee is 0.50%.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund.
USE OF ESTIMATES: The process of preparing financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions which affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date
of the financial statements, as well as the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
INVESTMENT VALUATION: The Fund values its portfolio as directed by the Board
of Directors at the closing price of the New York Stock Exchange (generally
4:00 p.m. New York City time) of each business day.
In general, the Fund values its portfolio holdings as of their last available
public sale price on the valuation date, in the case of securities listed on
any established securities exchange or included in the NASDAQ National Market
System or any comparable foreign over-the-counter quotation system providing
last sale data or, if no sales of such securities are reported on such date
and in the case of over-the-counter securities not described above in this
paragraph, at the last reported bid price. In cases where securities are
traded on more than one exchange, the securities are valued on the exchange
on which the securities are principally traded. All other securities and
assets are valued at fair value as determined in good faith by or under the
direction of the Board of Directors.
INVESTMENT TRANSACTIONS: All securities transactions are recorded on a trade
date basis. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses on sales
of securities are determined on the basis of identified cost.
9
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
SECURITIES LENDING: The Fund may lend its portfolio securities to brokers,
dealers and financial institutions when secured by collateral maintained on a
daily marked-to-market basis in an amount equal to at least 100% of the
market value, determined daily, of the loaned securities. The Fund at any
time may demand the return of the securities loaned. The Fund will continue
to receive the income on loaned securities and, at the same time, will earn
interest on the loan collateral, a portion of which generally will be rebated
to the borrower. Any cash collateral received under these loans will be
invested in short-term money market instruments. Where voting or consent
rights with respect to the loaned securities pass to the borrower, the Fund
will follow the policy of calling the loan, in whole or in part as may be
appropriate, to permit the exercise of such voting or consent rights if the
matters involved will have a material effect on the Fund's investment in the
securities loaned. The Fund did not engage in securities lending during the
six months ended June 30, 1999.
REPURCHASE AGREEMENTS: A repurchase agreement customarily requires the seller
to repurchase the securities at a mutually agreed upon time and price. The
total amount received by the Fund on repurchase would be calculated to exceed
the price paid by the Fund, reflecting an agreed upon yield for the period of
time to the settlement (repurchase) date. The underlying securities are
ordinarily United States government securities, but may consist of other
securities in which the Fund is permitted to invest. Repurchase agreements
will be fully collateralized at all times. If the seller defaults in its
obligation to repurchase, the Fund may suffer a loss as a result of the cost
in liquidating the collateral and if the collateral declines in value.
ORGANIZATION EXPENSES: The Adviser has borne all costs and expenses
associated with the organization and initial registration of the Fund and its
shares.
FEDERAL INCOME TAXES: The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to registered investment
companies and to distribute all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund intends to pay an
annual dividend to shareholders of record representing its entire net
investment income and to distribute all of its realized net capital gains at
least annually. Distributions are recorded on the ex-dividend date. Income
distributions and capital gain distributions are determined in accordance
with income tax regulations, which may differ from generally accepted
accounting principles. During the six months ended June 30, 1999, the Fund
did not make any distributions to shareholders.
3. RELATED PARTY AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Investment Services Advisory Agreement, the Fund pays the Adviser a
fee of 1.5% of the Fund's average daily net assets, which is payable
quarterly in arrears.
10
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
In addition to the quarterly advisory fee, the Fund bears all costs and
expenses directly related to investment transactions effected and positions
held for the Fund's account, including brokerage commissions, custodial fees,
interest on borrowings and administrative fees. The Adviser has voluntarily
agreed to waive 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. Such voluntary waiver and/or expense reimbursement
is not required by the Investment Advisory Services Agreement and may be
discontinued at any time. In addition, the Adviser voluntarily bears the cost
of certain professional services incurred by the Fund, including audit,
legal, and other miscellaneous expenses, although this arrangement may change
in the future. The amount of the expenses for professional services borne by
the Adviser was $51,940 for the six months ended June 30, 1999.
Under the terms of the Investment Advisory Services Agreement, an affiliated
company of the Adviser may conduct brokerage services for the Fund. For the
six months ended June 30, 1999, the Adviser's affiliate earned $47,718 in
commissions as broker on trades of portfolio securities.
One director of the Adviser is also a director of the Fund. Each of the
directors who is not an officer or employee of the Adviser (the "Independent
Directors") is entitled to be paid by the Fund a fee of $1,250 for each
meeting that he or she attends of the Fund's Board of Directors and each
meeting of any committee of the Board of Directors on which he or she serves.
For the six months ended June 30, 1999, the Fund has paid a total of $10,000
to the directors for their services.
4. ADMINISTRATION AGREEMENT
The Fund is a party to an Administration Agreement with State Street Bank and
Trust Company (the "Administrator") dated January 11, 1994. Under that
agreement, the Administrator receives an annual fee equal to 0.08% of the
Fund's net asset value up to $125 million, 0.06% of the next $125 million,
and 0.04% of assets in excess of $250 million, subject to a minimum annual
fee of $65,000.
5. INVESTMENT TRANSACTIONS
Purchases of investments and proceeds from sales of investments, excluding
short-term securities, for the period ended June 30, 1999 were $23,528,638
and $10,520,944, respectively. As of June 30, 1999, unrealized appreciation
and depreciation for Federal income tax purposes was $14,595,296 and
$524,111, respectively. The aggregate cost of investments at June 30, 1999
for Federal income tax purposes was $52,090,747.
11
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
6. FUND SHARE TRANSACTIONS
The Fund is authorized to issue 100,000,000 shares of $0.001 par value capital
stock. For the six months ended June 30,1999 and the year ended December 31,
1998, transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999 YEAR ENDED DECEMBER 31, 1998
SHARES AMOUNT SHARES AMOUNT
------- ------ ------ ------
<S> <C> <C> <C> <C>
Sold......................... 73,133 $ 16,166,131 38,725 $ 7,663,593
Reinvested................... - - 11,095 2,268,863
Redeemed..................... (12,553) (2,745,444) (27,270) (5,159,672)
------------- ------------- ------------- -----------
Net increase................. 60,580 $ 13,420,687 22,550 $ 4,772,784
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
</TABLE>
7. BENEFICIAL INTEREST
At June 30, 1999, no shareholder owned more than 5% of the Fund's outstanding
shares.
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments," requires disclosure of fair value
information about financial instruments for which it is practicable to
estimate the value, whether or not recognized on the statement of financial
condition. As a registered investment company, the Fund's investments in
securities are already recorded at market value. The fair value of all other
financial assets and liabilities is considered to approximate the recorded
value, due to the short-term nature of the financial instruments.
9. YEAR 2000 READINESS
The services provided to the Fund by the Adviser, Administrator, Transfer
Agent and Custodian depend on the continued functioning of their computer
systems. Many computer software systems in use today cannot distinguish the
year 2000 from the year 1900 because of the way dates are encoded and
calculated. The Fund could be adversely affected if its service providers'
computer systems cannot make this distinction. The Adviser has made
inquiries, on behalf of the Fund, of the Administrator, Transfer Agent and
Custodian regarding whether they expect to have their computer systems
adjusted for the year 2000 transition. The Adviser has been informed that all
of these service providers expect that their systems will be Year 2000
compliant prior to that time. Furthermore, the Adviser expects that its
systems will be Year 2000 compliant prior to that time. The value of the
securities of the companies and other entities in which the Fund invests
could also be adversely affected by the "Year 2000 Problem," which could hurt
the Fund's investment return.
10. SUBSEQUENT EVENTS
During July 1999, the Fund's auditors, Lopez Edwards Frank & Co., LLP, merged
with and into M.R.Weiser & Co., LLP which will remain as the surviving
company.
12
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
527 MADISON AVENUE
NEW YORK, NY 10022
- -------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
- ----------------------
Marilyn G. Breslow President and Director
John C. Russell Vice President and Director
June Eichbaum Director
William Talcott May Director
Thomas R. LeViness Director
David J. Winkler Director
Susan G. Leber Treasurer
Lisa D. Levey Secretary
Alison A. Proshan Assistant Secretary
INVESTMENT ADVISER
- ------------------
W.P. Stewart & Co., Inc.
527 Madison Avenue
New York, NY 10022
(212) 750-8585
ADMINISTRATOR, CUSTODIAN, TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT
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State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
INDEPENDENT AUDITORS
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M.R.Weiser & Co., LLP
135 West 50th Street
New York, NY 10020
LEGAL COUNSEL
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Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, NY 10022-9998
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THIS REPORT IS NOT AUTHORIZED FOR USE AS AN OFFER OF SALE OR A SOLICITATION
OF AN OFFER TO BUY SHARES OF THE FUND UNLESS ACCOMPANIED OR PRECEDED BY THE
FUND'S CURRENT PROSPECTUS. PAST PERFORMANCE RESULTS SHOWN IN THIS REPORT
SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE PERFORMANCE. INVESTMENT
RETURN WILL VARY, AND NET ASSET VALUE OF SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
