<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                                       OR

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 - FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 - For the transition period from _____________ to
     _____________

                                       OR

[ ]  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 - Date of event requiring this shell company report
     _____________

                        Commission file number: 001-16245

                            W.P. STEWART & CO., LTD.
             (Exact name of Registrant as specified in its charter)

                                     BERMUDA
                 (Jurisdiction of incorporation or organization)

                                  Trinity Hall
                                 43 Cedar Avenue
                                P.O. Box HM 2905
                                 Hamilton, HM LX
                                     Bermuda
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12 (b) of the Act:

<TABLE>
<CAPTION>
                                             Name of each exchange
           Title of Each Class                on which registered
           -------------------               ---------------------
<S>                                         <C>
Common Shares, par value $0.001 per share   New York Stock Exchange
</TABLE>

Securities registered or to be registered pursuant to Section 12 (g) of the Act:

                                      None

Securities for which there is a reporting obligation pursuant to Section 15 (d)
of the Act:

                                      None

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the Annual
Report:

As of December 31, 2006, 47,569,278 common shares, par value $0.001 per share,
were issued and outstanding.

<PAGE>

Indicate by check mark whether the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and larger accelerated filer" in Rule 12b-2 of the Securities Exchange
Act. (check one):

 Large Accelerated Filer [ ]   Accelerated Filer [X]   Non-Accelerated Filer [ ]

Indicate by check mark which financial statement item the registrant has elected
to follow. Item 17 [X] Item 18 [ ]

If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes [ ]
No [X]


                                        2

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
PART I...................................................................      2
   ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.......      2
   ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE.....................      2
   ITEM 3.   KEY INFORMATION.............................................      3
   ITEM 4.   INFORMATION ON THE COMPANY..................................     10
   ITEM 4A.  UNRESOLVED STAFF COMMENTS...................................     29
   ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS................     30
   ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES..................     37
   ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS...........     47
   ITEM 8.   FINANCIAL INFORMATION.......................................     49
   ITEM 9.   THE OFFER AND LISTING.......................................     50
   ITEM 10.  ADDITIONAL INFORMATION......................................     52
   ITEM 11.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK..     61
   ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES......     62

PART II..................................................................     62
   ITEM 13.  DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES..............     62
   ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
             USE OF PROCEEDS.............................................     62
   ITEM 15.  CONTROLS AND PROCEDURES.....................................     63
   ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT............................     63
   ITEM 16B. CODE OF ETHICS..............................................     64
   ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES......................     64
   ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES..     65
   ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
             PURCHASERS..................................................     65

PART III.................................................................     66
   ITEM 17.  FINANCIAL STATEMENTS........................................     66
</TABLE>


                                        i

<PAGE>

<TABLE>
<S>                                                                         <C>
   ITEM 18.  FINANCIAL STATEMENTS........................................     66
   ITEM 19.  EXHIBITS....................................................     66
</TABLE>


                                       ii

<PAGE>

     FORWARD-LOOKING STATEMENTS

     Certain statements in this Annual Report are forward-looking statements,
including, without limitation, statements concerning our assumptions,
expectations, beliefs, intentions, plans or strategies regarding the future.
Such forward-looking statements are based on beliefs of our management as well
as on estimates and assumptions made by, and information currently available to,
our management. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the risk factors
set forth in this Annual Report as well as the following:

     -    general economic and business conditions;

     -    a challenge to our U.S. tax status;

     -    industry capacity and trends;

     -    competition;

     -    the loss of major clients;

     -    changes in demand for our services;

     -    changes in, or inability to implement, business strategy or
          development plans;

     -    changes in the laws and/or regulatory circumstances in Bermuda, the
          United States, the United Kingdom, Ireland, The Netherlands or other
          jurisdictions;

     -    changes in contingent liabilities;

     -    the adverse effect from a decline or volatility in the securities
          market in general or our products' performance;

     -    quality of management;

     -    ability to attract and retain qualified personnel;

     -    actions taken or omitted to be taken by third parties, including our
          shareholders, clients, competitors, legislative, regulatory, judicial
          and governmental authorities; and

     -    availability, terms and deployment of capital.

     Should one or more of these risks or uncertainties materialize, or should
the underlying assumptions prove incorrect, actual results may vary
significantly from those anticipated, believed, estimated, expected, intended or
planned. We do not intend to review or revise any particular forward-looking
statements made in this Annual Report in light of future events. You are
cautioned not to put undue reliance on any forward-looking statements.

<PAGE>

                                     PART I.

ITEM 1. Identity of Directors, Senior Management and Advisors

     Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

     Not Applicable.


                                        2
<PAGE>

ITEM 3. KEY INFORMATION

     A.   SELECTED FINANCIAL AND UNAUDITED OTHER DATA

     The following table sets forth selected financial and unaudited other data
for the Stewart Group, which includes W.P. Stewart & Co., Ltd. and its
subsidiaries, for the periods and as of the dates indicated. The data set forth
below are presented on a consolidated basis.

     The income statement and balance sheet data set forth below as of and for
the years ended December 31, 2006, 2005, 2004, 2003 and 2002 are derived from
our audited financial statements. You should read the financial data set forth
below in conjunction with "Operating and Financial Review and Prospects" and the
consolidated audited financial statements for the years ended December 31, 2006,
2005 and 2004 and related notes of the Stewart Group included elsewhere in this
Annual Report. The audited financial statements were prepared and presented in
accordance with accounting principles generally accepted in the United States of
America, or U.S. GAAP, as they are commonly known.

<TABLE>
<CAPTION>
                                                   AS OF, AND FOR THE YEAR ENDED, DECEMBER 31,
                                               ----------------------------------------------------
                                                 2006       2005       2004       2003       2002
                                               --------   --------   --------   --------   --------
                                                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                            <C>        <C>        <C>        <C>        <C>
INCOME STATEMENT DATA:
Revenues:
   Fees ....................................   $107,803   $113,198   $116,005   $ 94,062   $105,419
   Commissions .............................     29,609     31,890     34,820     22,461     28,293
   Interest and Other ......................      4,719      2,767      1,496      2,279      3,570
                                               --------   --------   --------   --------   --------
                                                142,131    147,855    152,321    118,802    137,282
                                               --------   --------   --------   --------   --------
Expenses:
   Employee Compensation and Benefits ......     43,726     34,153     29,102     22,942     26,337
   Fees Paid Out ...........................      8,126      9,059      7,760      6,059      7,250
   Performance Fee Charge ..................      2,626         --         --         --         --
   Commissions, Clearance and Trading ......      5,665      6,993      7,371      4,811      5,919
   Research and Administration .............     13,629     14,399     14,781     14,429     14,358
   Marketing ...............................      6,309      5,540      5,618      4,709      5,166
   Depreciation and Amortization ...........      6,573      8,206      8,039      7,933      8,049
   Impairment of Intangible Asset ..........        --      12,453         --         --         --
   Other Operating .........................     11,971      9,960      8,649      8,861      8,371
                                               --------   --------   --------   --------   --------
                                                 98,625    100,763     81,320     69,744     75,450
                                               --------   --------   --------   --------   --------
Income Before Taxes ........................     43,506     47,092     71,001     49,058     61,832
Provision for Taxes ........................      6,031      7,039      7,852      5,983      6,381
                                               --------   --------   --------   --------   --------
Net Income .................................   $ 37,475   $ 40,053   $ 63,149   $ 43,075   $ 55,451
                                               ========   ========   ========   ========   ========
Earnings Per Share:(1)
   Basic Earnings Per Share ................   $   0.82   $   0.88   $   1.40   $   0.97   $   1.27
                                               ========   ========   ========   ========   ========
   Diluted Earnings Per Share ..............   $   0.82   $   0.87   $   1.39   $   0.95   $   1.21
                                               ========   ========   ========   ========   ========
WEIGHTED AVERAGE SHARES USED IN COMPUTATION:
   Basic ...................................     45,817     45,640     45,112     44,312     43,576
   Diluted .................................     45,866     45,952     45,524     45,198     46,013
BALANCE SHEET DATA:
Total Assets ...............................   $146,551   $152,580   $164,710   $141,008   $134,979
Total Liabilities ..........................   $ 33,785   $ 30,935   $ 33,281   $ 26,339   $ 26,914
Shareholders' Equity .......................   $112,766   $121,645   $131,429   $114,669   $108,065

                                                       (IN MILLIONS, EXCEPT PER SHARE DATA)
OTHER DATA (unaudited):
Long-Term Debt .............................    $ 13.8     $ 14.6     $ 15.4     $ 16.2     $ 16.9
Cash Dividends Per Share ...................    $ 1.13     $ 1.20     $ 1.20     $ 1.20     $ 1.20
Assets Under Management ....................    $8,111     $9,514     $9,348     $8,561     $7,655
</TABLE>

----------
(1)  Common shares purchased by our employees, restricted shares issued to our
     employees and options granted to our employees are subject to vesting. For
     treatment of unvested common shares, unvested options, vested unexercised
     options and potentially issuable common shares, see Note 4 of the notes to
     the consolidated financial statements contained herein.


                                        3

<PAGE>

     B.   CAPITALIZATION AND INDEBTEDNESS

     Not Applicable.

     C.   REASONS FOR THE OFFER AND USE OF PROCEEDS

     Not Applicable.

     D.   RISK FACTORS

     VOLATILITY IN THE SECURITIES MARKETS CAN RESULT IN A DECREASE IN THE MARKET
     VALUE OF OUR ASSETS UNDER MANAGEMENT AND, IN TURN, A DECREASE IN OUR
     EARNINGS.

     The securities markets are highly volatile, and securities prices may
increase or decrease for many reasons, including economic, financial or
political events, which we cannot control. These events can, and sometimes do,
result in a decrease in the overall value or amount of assets that we manage and
on which we earn our fees.

     We earn most of our revenues from asset management contracts with clients.
Under a majority of these contracts, clients pay us an asset management fee
equal to a percentage of the market value of the assets we manage. As a result,
if securities prices fluctuate, the market value of the assets may fluctuate,
and our revenues and profitability may fluctuate as well. All other factors
being equal, if securities prices fall, the value of our clients' portfolios,
and our revenues, fall as well. Under certain management contracts, a portion of
our fee is dependent on the performance of the account. Under these contracts,
if the value of the relevant client's assets decline, either in absolute terms
or as compared to the return of a benchmark index, we would earn no performance
fee.

     If securities prices fall, securities may become less attractive
investments as compared to other investments. Clients have the right to remove
their assets from our management at any time, and may be more likely to do so
when securities prices decrease. In that case, the amount of assets we manage
may also decrease, and our revenues and net income may fall as well. If our
revenues were to decrease substantially, there could be an impairment of the
value of our acquired intangible assets and goodwill, which would, in turn, have
an adverse effect on our reportable earnings.

     THE ABILITY OF ALL OF OUR CLIENTS TO TERMINATE THEIR ASSET MANAGEMENT
     CONTRACTS WITH US AT WILL MAKES OUR FUTURE CLIENT AND REVENUE BASE
     UNPREDICTABLE.

     Our clients have the right to terminate their asset management contracts
with us at any time without paying any penalty. Therefore, we cannot be certain
that we will continue to receive the fees that the client agreed to pay in its
asset management contract with us, particularly if the client decides that a
competitor's services or fees are more attractive. In addition, if clients
terminate agreements covering a significant portion of the assets we manage,
this would result in a significant loss in our revenues which would adversely
affect our financial condition.

     THE MARKET FOR QUALIFIED PERSONNEL IS HIGHLY COMPETITIVE. IF WE ARE UNABLE
     TO CONTINUE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL, WE WILL BE UNABLE TO
     ADEQUATELY SERVE OUR CLIENT BASE.

     Our asset management approach depends on the expertise of our personnel and
their ability to work together as an effective team. Our business depends on our
ability to attract and retain highly skilled asset management, investment
advisory, research and administrative professionals. Competition for employees
with the necessary qualifications is intense, especially for asset management
and research professionals. If we are unable to attract and retain these
professionals, we will be unable to continue to provide a consistent level of
service to our clients. A failure to adequately serve our clients could result
in


                                        4

<PAGE>

clients' withdrawing their assets from our management and could also affect our
ability to attract new clients.

     Our core investment management team currently consists of managers who have
been with us for an average of seven years. If one or more of these managers
were to leave the Stewart Group within a short period of time, it would be
difficult to replace them without disrupting our business. A disruption in our
business could also cause us to lose clients.

     Two of our former portfolio managers left the Stewart Group in early 2006
and joined another asset management firm. Although it is difficult to assess
exactly how many clients have chosen to cease using our services as a direct
result of these departures, we have seen that the departure of these two former
portfolio managers resulted in some client retention issues during 2006. In
addition, in early February 2007, we announced that three additional portfolio
managers would be leaving the firm after a short transition period. This will
most likely result in additional client retention pressures and we cannot be
certain that the impact will be immaterial.

     In addition, we are currently managed by a small number of key management
and operating personnel whose efforts will largely determine our success. The
loss of key management personnel without an adequate replacement would have an
adverse effect on our ability to effectively manage the firm. Our success also
depends upon our ability to hire and retain qualified operating, marketing,
financial and technical personnel. Competition for qualified personnel can be
intense and, accordingly, the inability to continue to hire or retain necessary
personnel would have an adverse effect on our operations.

     COMPETITION IN OUR INDUSTRY IS INTENSE. THIS COMPETITION MAKES CLIENT
     RETENTION DIFFICULT AND OUR REVENUE BASE UNCERTAIN.

     The asset management business is highly competitive. Our ability to compete
is based on a number of factors, including:

     -    investment performance;

     -    business reputation;

     -    continuity of client relationships and of assets under management;

     -    the resources and effectiveness of our marketing and client service
          personnel; and

     -    the level of fees and commissions charged for services.

     We currently compete with a large number of other asset management firms,
as well as broker-dealers, commercial banks, investment banks, insurance
companies and other financial institutions, some of which may have greater
resources and a broader product offering. Because the cost of entering the asset
management business is relatively low, entities may easily be formed which also
may compete with us. If we are not able to compete successfully against existing
and future competitors, current clients may withdraw their assets from our
management, and we may be unable to attract a sufficient number of new clients
to maintain or improve our revenue base and net income.

     The ability to compete in our industry will to a large extent depend on our
investment performance record. If our performance does not compare favorably to
our competitors or if other investment offerings appear to provide greater
returns, we could experience a loss of assets under management. This would
result in loss of revenues and, therefore, an adverse impact on our financial
condition.


                                        5

<PAGE>

     OUR U.S. TAX STATUS COULD BE CHALLENGED. IF U.S. FEDERAL, STATE OR LOCAL
     TAXING AUTHORITIES SUCCESSFULLY CHALLENGE OUR ASSESSMENT OF HOW MUCH OF OUR
     NET INCOME WAS DERIVED FROM ACTIVITIES IN THE UNITED STATES, WE COULD BE
     FORCED TO PAY SIGNIFICANT ADDITIONAL TAXES.

     The Internal Revenue Service, or IRS as it is commonly known, and/or other
U.S. taxing authorities may assert that the Stewart Group has significantly
understated its taxable income and impose tax on the understatement. The U.S.
income tax we have paid and expect to pay is as follows:

     -    W.P. Stewart & Co., Inc. pays U.S. income tax on its taxable income,
          consisting primarily of fees received from W.P. Stewart & Co., Ltd.
          and W.P. Stewart Asset Management Ltd. for sub-advisory and research
          services less applicable expenses;

     -    W.P. Stewart Asset Management (NA), Inc. pays U.S. income tax on its
          taxable client servicing fee income on a consolidated federal basis
          with its wholly-owned subsidiary, W.P. Stewart Asset Management, Inc.;
          and

     -    W.P. Stewart & Co., Ltd. and W.P. Stewart Asset Management Ltd. paid
          U.S. income tax on approximately 7% of their earnings in 2004 and on
          approximately 6% of their earnings in 2005, and expect to pay U.S.
          income tax on less than 1% of their earnings in 2006, (as computed
          under U.S. GAAP), the percentage which is, or is expected to be,
          derived from activities directly carried on in the United States.

     We continue to take the position, which we believe is supported under
existing authority, that no U.S. income tax will be imposed on any additional
income of the Stewart Group for 2004, 2005 and 2006. In particular, no portion
of the income of W.P. Stewart Securities Limited, W.P. Stewart & Co. (Europe),
Ltd., W.P. Stewart/Hartmann, Ltd., W.P. Stewart Asset Management (Europe), Ltd.
and its subsidiaries, NS Money Management Ltd. or TPRS Services N.V. should be
subject to U.S. income tax. As a consequence, the overall effective tax rate on
our earnings was 11.1% for 2004 and 14.9% in 2005. We believe that the overall
tax rate will not exceed 14.0% for 2006 and intend to file tax returns on that
basis. The overall effective tax rate on our earnings in future years using a
similar methodology will vary in accordance with the relative nature and extent
of our activities in the United States and in countries other than the United
States. As a result of the departures of several portfolio managers over the
last year, together with other changes in the balance of our portfolio
management activities among various jurisdictions, the proportion of our
activity based in high-tax countries has increased somewhat relative to the
activity based in lower-tax jurisdictions. We believe this change will not be
permanent. However, this change in our business has resulted in an increase in
the effective tax rate for 2006, and there can be no assurance that our
effective tax rate will not continue to fluctuate significantly as a result of
various factors, including those described above.

     The IRS, New York State and/or New York City may disagree with our
positions and assert that (i) the fees paid to W.P. Stewart & Co., Inc. (50
basis points annually calculated on the assets in accounts for which W.P.
Stewart & Co., Inc. provides sub-advisory services and $1.2 million annually for
research relating to other accounts) or W.P. Stewart Asset Management (NA), Inc.
and its subsidiary understated their taxable incomes and/or (ii) the net income
of W.P. Stewart & Co., Ltd. and W.P. Stewart Asset Management Ltd. from business
that they carry on directly in the United States represents more than the amount
reported by those two companies. Any additional net income attributed to W.P.
Stewart & Co., Inc., W.P. Stewart Asset Management (NA), Inc. and its
subsidiaries or the directly-conducted U.S. business of W.P. Stewart & Co., Ltd.
and W.P. Stewart Asset Management Ltd. would be subject to U.S. taxes, at rates
that are currently up to approximately 62%.


                                        6

<PAGE>

     WE ARE SUBJECT TO THE CONTROL OF MANY REGULATORY BODIES. THESE REGULATORS
     HAVE THE POWER TO RESTRICT OR LIMIT OUR BUSINESS ACTIVITIES, TO CAUSE US TO
     CHANGE THE MANNER IN WHICH WE CONDUCT OUR BUSINESSES AND TO LEVY
     SUBSTANTIAL PENALTIES OR FINES ON US.

     The asset management industry is subject to regulation in most of the
jurisdictions in which we do business. Our Bermuda companies are subject to the
Investment Business Act 2003 of Bermuda, but by virtue of the nature of their
clients, they are currently exempt from the requirement to hold a license under
that Act. W.P. Stewart & Co., Ltd., W.P. Stewart Asset Management Ltd. and W.P.
Stewart & Co., Inc. are registered as investment advisers with the U.S.
Securities and Exchange Commission, or SEC as it is commonly known, and various
state regulatory agencies. W.P. Stewart Securities Limited, our Bermuda-based
broker-dealer, is registered with the SEC and various state regulatory agencies
as a broker-dealer. In addition, W.P. Stewart Securities Limited is regulated by
the National Association of Securities Dealers, Inc., or NASD as it is commonly
known. W.P. Stewart & Co. (Europe), Ltd. is authorized and regulated by the
Financial Services Authority, or FSA as it is commonly known. W.P. Stewart Fund
Management Limited, our Dublin-based fund management company, is regulated by
the Irish Financial Services Regulatory Authority, or IFSRA as it is commonly
known, and was previously regulated by the Central Bank of Ireland. W.P. Stewart
Fund Management S.A. and the publicly traded funds that it manages, including
W.P. Stewart Holdings Fund, are primarily regulated by the Luxembourg Commission
de Surveillance du Secteur Financier, commonly referred to as the CSSF. In
addition, W.P. Stewart & Co., Ltd. and W.P. Stewart Asset Management Ltd. have
each been issued a license by the Netherlands Authority for the Financial
Markets, commonly referred to as the AFM, to conduct certain activities in The
Netherlands, which license is conditioned upon compliance with certain
obligations of the licensee.

     These regulatory regimes are designed to protect clients and other third
parties who deal with us and our subsidiaries and to ensure the integrity of the
financial markets. They are not designed to protect our shareholders.

     These regulations often limit our activities through requirements relating
to customer protection, market conduct, money laundering and our level of net
capital. We also face the risk of significant intervention by regulatory
authorities, including extended investigation and surveillance activity,
adoption of costly or restrictive new regulations and judicial or administrative
proceedings that may result in substantial penalties to us. Among other things,
if we were found to have violated a significant regulatory requirement, we could
be fined or enjoined from engaging in certain business activities, and the
registration of certain members of the Stewart Group as investment advisers,
broker-dealers or fund managers could be terminated. If new regulations are
adopted, these consequences could be more significant.

     AS A SHAREHOLDER OF A BERMUDA COMPANY YOU MAY, IN SOME INSTANCES, HAVE
     FEWER RIGHTS AND PROTECTIONS THAN YOU WOULD HAVE AS A SHAREHOLDER OF A U.S.
     COMPANY.

     W.P. Stewart & Co., Ltd. is incorporated in Bermuda and its corporate
affairs are governed by its memorandum of association, its bye-laws and Bermuda
law. Under Bermuda law, shareholders have fewer rights than they might have as
shareholders of a corporation incorporated in a U.S. jurisdiction, and these
rights are less well-defined. It is also more difficult in some respects for
investors to protect their interests in connection with actions by the
management, board of directors or controlling shareholders of a company. For a
description of some of the rights that you will have as a shareholder of W.P.
Stewart & Co., Ltd., see Item 10 B under the caption "Additional Information -
Memorandum and Articles of Association."


                                        7

<PAGE>

     The United States and Bermuda do not have a treaty requiring Bermuda courts
to recognize and enforce U.S. court judgments in civil or criminal matters. It
is not clear that a Bermuda court would enforce a United States court judgment
based solely on the U.S. federal securities laws.

     WE ARE AND WILL CONTINUE TO BE CONTROLLED BY AFFILIATED SHAREHOLDERS.

     All shareholders of WPS II, Inc., our largest shareholder, owning
approximately 40% of the common shares as of February 28, 2007, are current or
former employees of the Stewart Group, members of their families or trusts for
members of their families. Additionally, our directors and executive officers
beneficially own approximately 13.6% of the common shares. Also, substantially
all of our other employees own common shares. Furthermore, the majority of these
shareholders (including WPS II, Inc.) will not be subject to the voting
limitations described below. WPS II, Inc. and these affiliated individuals,
therefore, will have the power (without the consent of our other shareholders)
to elect the entire board of directors and, as a result, to control the
management and policies of the Stewart Group, including making all decisions
about mergers, acquisitions, sales, borrowings, issuances and redemptions of our
securities and declaration of dividends on the common shares. They also will be
able to decide all other matters submitted to our shareholders for approval,
including amendments to our memorandum of association and bye-laws and certain
equity-based compensation arrangements.

     OUR BYE-LAWS RESTRICT SHAREHOLDERS' VOTING RIGHTS. YOU MAY NOT BE ABLE TO
     VOTE ALL OF THE COMMON SHARES THAT YOU OWN.

     Our bye-laws limit the voting power of natural persons to a maximum of 5%
of all votes attributable to our outstanding shares and the voting power of
entities and persons other than natural persons to a maximum of 9.5% of the
votes attributable to our outstanding shares. For these purposes, voting power
held by any person or entity is deemed to include voting power held or shared by
that person or entity as part of a "group" (as defined in the Securities
Exchange Act of 1934). These limitations apply regardless of how many common
shares are actually owned or controlled by a shareholder. These restrictions,
however, will not apply to:

     -    WPS II, Inc.;

     -    Other shareholders or groups of shareholders who were shareholders of
          W.P. Stewart & Co., Ltd. immediately before our initial public
          offering in December 2000; and

     -    Certain persons, entities or groups that are designated by our board
          of directors.

     The votes that could have been cast by shareholders who are subject to
these voting restrictions will be allocated to the other shareholders pro rata
based on the number of shares they hold. However, no shareholder subject to
these restrictions may be allocated additional voting rights to the extent that
the allocation would cause that shareholder to have more than 5% (for natural
persons) or 9.5% (for legal persons or entities) of the total voting power. This
voting limitation was put in place to reduce the likelihood that we will become
a controlled foreign corporation for U.S. tax purposes. See Item 10 E under the
caption "Additional Information - Taxation" for a discussion of the tax
consequences associated with our becoming a controlled foreign corporation.

     Our bye-laws also limit the overall voting power of all persons, entities
or groups to 20% of the total number of all votes attributable to our
outstanding shares. These limitations apply regardless of how many common shares
are actually owned or controlled by a shareholder and regardless of whether the
voting restrictions described in the previous paragraph apply to that
shareholder. These restrictions, however, will not apply to:


                                        8

<PAGE>

     -    WPS II, Inc. or its affiliates;

     -    Direct or indirect subsidiaries of W.P. Stewart & Co., Ltd.;

     -    Any shareholding entity that may be established for the purpose of our
          employee benefit plans and that is designated by our board of
          directors; and

     -    Other persons, entities or groups that are designated by our board of
          directors.

     This voting limitation was put in place to reduce the likelihood of
inadvertent terminations of our advisory agreements as a result of "assignments"
of such contracts.

     These voting limitations and reallocation provisions in our bye-laws make
it difficult or impossible for any person, entity or group to acquire control of
us unless our board of directors, WPS II, Inc. and the other affiliated
shareholders discussed above agree. These provisions also may make it difficult
to remove incumbent directors of the Stewart Group and may limit the price that
investors will be willing to pay in the future for common shares.

     A CHANGE OF CONTROL OF THE STEWART GROUP WOULD AUTOMATICALLY TERMINATE OUR
     CLIENTS' INVESTMENT ADVISORY AGREEMENTS WITH US UNLESS THE CLIENTS ELECT
     NOT TO TERMINATE AND COULD PREVENT US FOR A TWO-YEAR PERIOD FROM INCREASING
     THE INVESTMENT ADVISORY FEES WE ARE ABLE TO CHARGE OUR CLIENTS.

     Under the Investment Advisers Act of 1940, as amended, or the Advisers Act
as it is commonly known, a client's investment management agreement will
terminate, unless the client elects otherwise, if the agreement is "assigned" by
the investment adviser without the client's consent. An advisory agreement is
considered to be assigned to another party when a "controlling block" of the
adviser's voting securities is transferred. In our case, an assignment of the
Stewart Group's asset management contracts may occur if, among other things, we
sell or issue a certain number of additional common shares. We cannot be certain
that our clients will consent to the assignment of investment advisory
agreements or approve new agreements with the Stewart Group if a change of
control occurs.

     While the limitation in our bye-laws prohibiting any person or group from
voting more than 20% of the total number of shares of W.P. Stewart & Co., Ltd.
was put in place to reduce the likelihood of inadvertent terminations of our
advisory agreements as a result of "assignments" of such contracts, there can be
no guarantee that this voting limitation will prevent such a termination from
occurring.

     Under the Investment Company Act of 1940, as amended, or the Investment
Company Act as it is commonly known, a party that acquires control of an
investment company may not impose an "unfair burden" on that company for a
two-year period after a change of control. The term "unfair burden" has been
interpreted to include certain increases in investment advisory fees. This
restriction, along with the difficulty of obtaining a controlling voting
interest in the Stewart Group described above, may discourage potential
purchasers from acquiring a controlling interest in W.P. Stewart & Co., Ltd.

     FUTURE SALES OF CURRENTLY RESTRICTED COMMON SHARES COULD CAUSE THE MARKET
     PRICE FOR THE COMMON SHARES TO DECLINE. IF TOO MANY SHAREHOLDERS WHO ARE
     CURRENTLY RESTRICTED FROM SELLING THEIR COMMON SHARES DECIDE TO SELL THESE
     SHARES ONCE THE RESTRICTIONS ARE LIFTED, THE MARKET PRICE OF YOUR COMMON
     SHARES COULD BE ADVERSELY AFFECTED.

     As of December 31, 2006, there were 47,569,278 common shares issued and
outstanding. Of these shares, 20,549,846 common shares are freely
transferable without restriction or further registration under the Securities
Act of 1933, as amended or the Securities Act, as it is commonly known.


                                        9

<PAGE>

     Sales of substantial numbers of common shares, or the possibility of such
sales, pursuant to Rule 144 under the Securities Act or otherwise, may adversely
affect the market price of the common shares and make it more difficult for us
to raise capital by issuing equity securities.

     THE MARKET PRICE OF THE COMMON SHARES WILL FLUCTUATE.

     The market price for the common shares may be volatile and may fluctuate
based upon a number of factors including, but not limited to:

     -    our operating results;

     -    changes in financial estimates by securities analysts for the Stewart
          Group and/or its competitors;

     -    conditions or trends in the asset management industry;

     -    adoption of new accounting standards affecting the investment advisory
          business;

     -    news announcements; or

     -    changes in general economic and market conditions.

     In addition, the stock market in recent years has experienced extreme price
and volume fluctuations that often have been unrelated or disproportionate to
the operating performance of companies. These fluctuations may materially affect
the market price of our common shares.

ITEM 4. INFORMATION ON THE COMPANY

     A.   HISTORY AND DEVELOPMENT OF THE COMPANY

     THE STEWART GROUP

     The Stewart Group, which includes W.P. Stewart & Co., Ltd. and its
subsidiaries and predecessors, is an asset management company that has provided
research-intensive equity investment management services to clients throughout
the world since 1975. Headquartered in Hamilton, Bermuda with additional
operations or affiliates in the United States, Europe, Asia and the Netherlands
Antilles, we managed approximately $8.1 billion in assets as of December 31,
2006. Our client accounts are primarily for high net-worth individuals and
trusts, partnerships, private corporations and other entities in which high
net-worth individuals have a substantial interest, as well as for institutions.
Our client base is geographically diverse, with 34% of our assets under
management from non-U.S. clients as of December 31, 2006.

     Our investment management approach is to seek above-average long-term
investment returns, while accepting what we believe to be below-average risk. We
invest the capital entrusted to us in what we believe are some of the world's
finest growing businesses - large enterprises that are leaders in their
respective fields and that operate businesses with relatively predictable
growth. We focus on a five-year investment horizon and do not engage in market
timing. Our investment approach has realized a compound annualized return,
before fees, of 19.6% and 18.4%, after fees, on funds under discretionary
management from January 1, 1975 through December 31, 2006, as compared with a
return of 13.4% for the S&P 500 over the same period. Our compound annualized
returns for the five and ten years ended December 31, 2006, before fees, were
7.6% and 10.2%, respectively, as compared to 6.2% and 8.4%, respectively, for
the S&P 500 during the same periods. Our compound annualized returns for the
five and


                                       10

<PAGE>

ten years ended December 31, 2006, after fees, were 6.5% and 9.0%, respectively.
Our return for the year ended December 31, 2006, before fees, was 9.0% as
compared to a return of 15.8% for the S&P 500 during the same period. Our return
for the year ended December 31, 2006, after fees, was 7.9%. See Item 4 B under
the caption "Information on the Company - Business Overview."

     Our culture emphasizes teamwork, reinforced by profit sharing and equity
ownership by our employees. Substantially all of our employees are given the
opportunity to become shareholders during their first year of employment with
us, and as a result, virtually all of our employees own common shares.

     We believe that our focused investment approach consistently applied,
together with our compensation policy and stock ownership practice, aligns the
interests of all of our employees with the interests of our clients and
shareholders. This has contributed to close and enduring relationships with our
clients and our long-term record of significant growth in assets under
management.

     The Stewart Group began its business in 1975. Expansion of our client base
throughout the world and enhancement of our global research capability have been
principal elements of our business strategy. We believe that our global
position, described below, will continue to increase our ability to execute this
business strategy and expand our marketing relationships.

     THE GLOBAL CONSOLIDATION

     W.P. Stewart & Co., Ltd. was incorporated on June 29, 1998 under the laws
of Bermuda. On June 30, 1998, the shareholders of our U.S. predecessor company
exchanged all of their interests in that company for shares of WPS II, Inc., a
newly formed holding company. Effective as of July 1, 1998, our U.S. predecessor
company merged into W.P. Stewart & Co., Ltd. with W.P. Stewart & Co., Ltd.
continuing as the surviving company. Upon completion of this merger, WPS II,
Inc. received 29,321,436 common shares representing all of the outstanding
common shares of W.P. Stewart & Co., Ltd. at the effective time of the merger.

     As the first step in the establishment of the Stewart Group's global
business, Capital Managers Limited, a Bermuda company under common control with
our U.S. predecessor company, was organized in 1996. As of October 30, 1998,
W.P. Stewart & Co., Ltd. merged with Capital Managers Limited with W.P. Stewart
& Co., Ltd. continuing as the surviving company. As a result of the Capital
Managers Limited merger, W.P. Stewart & Co., Ltd. became the owner of Capital
Managers Limited's subsidiaries, W.P. Stewart Securities Limited, W.P. Stewart
Asset Management Ltd. and W.P. Stewart Fund Management Limited. As consideration
in the merger, we issued 13,904,305 common shares to the Capital Managers
Limited shareholders. Each of the Capital Managers Limited shareholders was
either an employee, a retired employee or director of the Stewart Group or a
trustee for the members of an employee's, or retired employee's, family or a
member of an employee's family. Each shareholder of WPS II, Inc. is also a
former shareholder of Capital Managers Limited.

     GLOBAL EXPANSION

     In 1999, we completed three acquisitions and established our London
subsidiary. By these actions, we increased our access to a broader European
clientele, enhanced our global research capability and improved our
asset-gathering in Europe and North America.

     In 1999, we acquired from TPR & Partners N.V. and TPR Curacao N.V. 50% of
the capital stock of TPRS Services N.V., a Curacao company that is engaged in
the business of gathering assets for us. As consideration for the TPRS Services
N.V. acquisition, we issued 1,152,000 common shares. On December 29, 2000, we
consummated the acquisition of the remaining 50% of TPRS Services N.V. in
exchange for 814,000 common shares.


                                       11

<PAGE>

     In 1999, we acquired from Stewart Notz Stucki Limited, an affiliate of the
Notz Stucki group of companies, all of the outstanding capital stock of NS Money
Management Ltd. We issued 898,831 common shares as consideration for the
acquisition.

     We acquired, in 1999, from First Long Island Holdings, LLC, 100% of the
capital stock of First Long Island Investors, Inc., a significant symbiotic
marketer for us. W.P. Stewart Asset Management (NA), Inc. (as the company is now
known) is an asset-gathering firm based in New York, New York, and currently
provides client servicing for the majority of our North American clients. We
issued 1,200,000 common shares as consideration for this acquisition. To enhance
our asset-gathering in North America, we entered into ongoing arrangements with
First Long Island Investors, LLC, an entity under common ownership with First
Long Island Holdings, LLC, under which First Long Island Investors, LLC
continues to service W.P. Stewart Asset Management (NA), Inc.'s former clients
and refers new clients to us.

     Under the terms of the acquisitions of TPRS Services N.V., First Long
Island Investors, Inc. and NS Money Management Ltd., we had the right to
repurchase at nominal consideration, on an annual basis in each year during the
four years after the effective dates of each of those transactions, a portion of
the common shares issued by W.P. Stewart & Co., Ltd. as consideration in those
transactions (not to exceed in the aggregate 80% of the common shares issued in
each transaction) if certain levels of assets under management are not
maintained by the acquired businesses. In January 2003, in accordance with the
provisions of the NS Money Management Ltd. acquisition agreement, we reacquired
35,000 shares.

     In January 2000, W.P. Stewart & Co. (Europe), Ltd. commenced its investment
management business in London. W.P. Stewart & Co. (Europe), Ltd., a wholly-owned
subsidiary of W.P. Stewart & Co., Ltd., provides investment research and
sub-advisory services to our two Bermuda investment advisory companies (W.P.
Stewart & Co., Ltd. and W.P. Stewart Asset Management Ltd.). Our investment
professionals in London developed a European portfolio for our clientele using
the time-tested principles of our U.S. investment philosophy and approach. In
2002 Lisa Stewart, a founder of Bowen Asia Limited, our 40% unconsolidated
affiliate in Hong Kong, and the daughter of William P. Stewart, assumed the
responsibility for integrating our European and Asian investment teams to
develop a single team responsible for all non-North-American research. In early
2005, Mark Phelps was hired as Director of Global Investments to further develop
and be responsible for the global equity product and London team. In 2006, Mr.
Phelps was named Deputy Managing Director - Global Investments and in 2007 was
promoted to Managing Director - Global Investments. We intend to continue to
strengthen our London capabilities to advise on European and global portfolio
products.

     These London initiatives will ensure that the research and investment
management services offered by W.P. Stewart across all geographies are
consistent in style and quality.

     On November 14, 2001, we acquired a controlling interest in TPR & Partners
N.V., an asset-gathering firm based in The Netherlands via the acquisition of
shares in a Bermuda holding company that indirectly owns 100% of the shares of
TPR. TPR was subsequently renamed W.P. Stewart Asset Management (Europe) N.V.
Going forward, the Bermuda company, which is named W.P. Stewart Asset Management
(Europe), Ltd., serves as the umbrella for our European asset gathering and
client servicing activities. In the transaction, we initially acquired 9,000 of
W.P. Stewart Asset Management (Europe), Ltd.'s 12,000 outstanding shares in
exchange for 330,000 of our common shares. In 2006, pursuant to the agreement
entered into in 2001, we acquired from the former beneficial owners of TPR and
their assigns the remaining 3,000 shares of W.P. Stewart Asset Management
(Europe), Ltd. at a fair value price determined at the time of purchase. In
addition, W.P. Stewart Asset Management (Europe), Ltd. currently provides client
services for approximately $2.6 billion of our assets under management, and has
now taken the lead role in nurturing established relationships, and developing
new relationships, with Europe-based clients and asset gatherers.


                                       12
<PAGE>

     In 2004, we established Stewart Bowen Japan, Ltd., a 50%-owned joint
venture with Bowen Asia. Stewart Bowen Japan owns W.P. Stewart Japan K.K. which
provides client servicing and asset-gathering activities. This joint venture is
intended to further expand our asset-gathering in Japan and to assist in Bowen's
research activities with respect to Japanese companies.

     W.P. Stewart & Co., Ltd.'s principal executive offices are located at
Trinity Hall, 43 Cedar Avenue, P.O. Box HM 2905, Hamilton HM LX, Bermuda,
telephone number: (441) 295-8585. W.P. Stewart & Co., Ltd.'s agent in the United
States is W.P. Stewart & Co., Inc., 527 Madison Avenue, 20th Floor, New York,
New York 10022, Attention: Michael W. Stamm, Esq., telephone number (212)
750-8585.

     B.   BUSINESS OVERVIEW

     The Stewart Group offers research-intensive equity investment management
services worldwide. Central to our success are three interdependent competitive
strengths - culture, investment methodology and performance record. We foster
team effort, collaboration and a comprehensive focus on achieving superior
portfolio performance. The long-term commitment between the Stewart Group and
our employees is evidenced by our performance-based compensation policies,
employee share ownership and the tenure of our employees. The culture is a key
factor in our ability to implement, over an extended period of time, an
investment methodology that requires intense, shared, continuous research and
debate.

     These elements have contributed to a 19.6% compound annual return before
fees (18.4% after fees) for client accounts from January 1, 1975 to December 31,
2006.

     While investment performance is our primary focus, asset gathering is also
important to our business. We have developed mutually beneficial relationships
with select institutions and individuals to accumulate new assets and have
internalized relationships with our strongest partners. We will continue to
cultivate long-term relationships with our current network of marketers and to
establish relationships with additional marketers for additional asset
gathering.

     Finally, we intend to continue to pursue a global strategy, both in our
research effort and in the expansion of our client base.

     COMPETITIVE STRENGTHS

     We believe we have a franchise, culture, long-term historical performance
record and investment methodology that position us well to continue to compete
in the global wealth management business. We have built a business model we
believe is unique and have developed and successfully implemented our
disciplined investment philosophy for over 30 years. Our experienced investment
team currently consists of 19 investment analyst/portfolio managers with an
average of approximately 20 years of experience in the industry. With nine
offices around the world and a selective network of marketing relationships in
more than 10 countries, we have established an international presence and offer
services to a broad range of high net-worth individuals and institutions
throughout the world.

     CULTURE

     We place great emphasis on teamwork and client service. Cooperation is
reinforced through a profit sharing plan and equity ownership by our employees.
Substantially all employee compensation is based solely on a percentage of the
firm's annual operating profits; our general policy is not to pay fixed salaries
or to guarantee compensation. Substantially all of our employees are given the
opportunity to become shareholders during their first year of employment with
us. As a result, virtually every employee owns common shares of W.P. Stewart &
Co., Ltd. Pursuant to our 2001 Employee Equity Incentive Plan, as amended, as of
December 31, 2006, an aggregate of approximately 974,000 restricted share awards
and


                                       13

<PAGE>

option grants were outstanding or had been exercised. As of July 24, 2004, no
additional awards will be granted under this Incentive Plan. All employee
options and share purchases under such Plan are subject to seven year vesting.
During 2004, we issued an aggregate of 118,000 common shares to ten employees as
non-cash incentive compensation. An additional aggregate of 646,535 shares were
issued to 29 employees during 2005 as part of such employees' non-cash
compensation. During 2006, an aggregate of 1,105,301 shares were issued to 60
employees as part of such employees' non-cash compensation. It is our present
intention to continue to make common shares available to our employees in
proportion to their relative contributions to the Stewart Group. See Item 6 B
under the caption "Directors, Senior Management and Employees- Compensation."

     We believe that a key to our continued success is our highly motivated team
of experienced investment professionals. Most act in the dual role of analyst
and portfolio manager, with every investment portfolio handled by an individual
manager, backed up by at least one other manager to provide continuity and
stability. The group of analyst/portfolio managers is relatively small, a
structure we intend to maintain. The investment professionals meet regularly and
are able to interact quickly, informally and effectively.

     All of our investment professionals share a common commitment to both the
demanding standards required to seek to invest only in the world's best
companies and the discipline of our appraisal process. All of them have a record
of successful investing, and most of them have either known each other or worked
closely together for many years. Their investment performance and tenure show
them to be a complementary and effective team.

     LONG-TERM PERFORMANCE RECORD

     During the 32-year period from January 1, 1975 through December 31, 2006,
we experienced a 19.6% compound annual return, before fees, and an 18.4%
compound annual return, after fees, compared to a 13.4% return for the S&P 500
Index for the same period. The years ended December 31, 1993, 2000, 2001 and
2002 were the only years since our inception that we experienced negative
performance. We believe that our long-term record and strong investment returns
provide an advantage in our efforts to accumulate assets through strategic
marketing relationships, client referrals and increases to existing client
mandates.

     LOOK THROUGH EARNING POWER

     W.P. Stewart & Co., Ltd. concentrates its investments in large, generally
less cyclical, growing businesses. Throughout most of the Company's 32-year
history, the growth in earning power behind clients' portfolios has ranged from
approximately 11% to 22% annually.

     Currently, portfolio earnings growth remains solidly positive and the
Company's research analysts expect portfolio earnings growth to be within the
historical range over the next few years.

     INVESTMENT METHODOLOGY

     Our investment philosophy is simple. We invest our clients' capital in
highly liquid publicly traded securities. Like the members of a holding company
board, our interest is in ensuring the earnings of our holdings grow each year.
In making investments, the investment team focuses on a five-year investment
horizon and does not engage in market timing. We believe that our investment
research is distinguished by its intensity. Our analysts/portfolio managers do
their own research on companies they select, and on many they do not select, and
derive investment research information from a variety of sources, both external
and internal. Our analysts visit these companies regularly, contact managements
frequently, talk to competitors, customers and suppliers, and draw upon other
diverse sources of information. While one analyst has the primary responsibility
for each company (usually a maximum of


                                       14

<PAGE>

six companies per analyst), information is also gathered by other analysts and
is shared among all investment professionals.

     Because we consider ourself a long-term investor, the investment
professionals prepare detailed five-year projections for all investment
prospects and investments. These forecasts and the related appraisal of fair
current value for each company under review are used to determine what we
believe to be the intrinsic value of that company and are a critical tool in
developing a comprehensive and detailed evaluation of a company's business. This
appraisal technique systematically examines numerous factors, such as the
company's growth prospects, business and product line strength, management
capabilities, financial resources and many others. The purpose of this appraisal
technique is to evaluate the investment potential and to assess the related
risks of companies under review. Our goal is to construct portfolios of great
businesses, rather than portfolios of stocks. As a result, we consider each
client's portfolio to be a quasi-holding company.

     The purpose of our thorough investment appraisal process is to concentrate
our clients' investments only in those businesses that appear to offer the
greatest long-term appreciation potential. The five-year forecasts, and the
appraisals for companies under review, are refined frequently as our investment
professionals update their research. This consistent coverage allows our
investment professionals to act decisively when changes in price and
circumstances occur.

     At any given time, few businesses meet our standards. Accordingly, our
worldwide investment universe has historically been limited to fewer than 50
investment candidates from each of the United States, Europe, Japan and
Asia-ex-Japan, which are selected based upon a consensus of our investment team.
The universe is then ranked by the price attractiveness of each current and
prospective holding. Generally, we tend to concentrate holdings in those that
appear to offer the greatest appreciation potential and sell off those that
appear to be fully valued. Over the years, this investment methodology has added
several hundred basis points to the underlying growth in "look through" earnings
of clients' portfolios.

     Using thorough analysis and intensive research, we select investment
candidates based in part on the following criteria:

     -    a proven track record of consistent profit growth;

     -    strong financial condition;

     -    predictable earnings growth that we believe will continue for the next
          five years and beyond;

     -    accurate and reliable information that is readily available;

     -    successful, experienced management that is accessible to our
          investment team;

     -    strong product lines and competitive position, preferably with
          worldwide presence;

     -    relatively low levels of cyclicality; and

     -    large market capitalization and significant trading liquidity.

     The determination of whether a particular investment prospect is eligible
for inclusion in our investment universe is the result of a collective,
debate-driven process that actively involves all members of our investment team
and reflects their collective research and analytical judgment and experience.
While the entire investment team contributes to the research and appraisal
process, each member has the


                                       15

<PAGE>

freedom and responsibility to make investment decisions with respect to specific
client accounts within the confines of the defined universe and established
guidelines.

     BUSINESS STRATEGY

     Our business strategy is to continue to provide premier equity investment
management services on a worldwide basis. We believe that our pursuit of a more
global clientele will lead to continued growth in our assets under management
and our revenues, and that both new and existing clients will benefit from our
increased focus on international research and stock selection. We intend to
adhere to the distinctive and disciplined investment philosophy which we have
pursued over our 32-year history. In addition, we believe that a culture of
ownership and compensation for performance will be a key element for our
continued growth and future success and aligns the interests of our clients,
employees and shareholders.

     EXTEND INVESTMENT PERFORMANCE

     Central to our strategy is our objective to achieve above-average
investment returns over a long period of time for our clients while accepting
what we believe to be below-average risk. We intend to continue to adhere, in
expanding and contracting markets alike, without regard to "benchmarks", to a
philosophy that emphasizes investment over a relatively long-term horizon in
what we believe are high quality, steadily-growing businesses. We intend to
remain focused on investment performance while using our network of symbiotic
marketers as the primary means to gather assets.

     INCREASE GLOBAL RESEARCH FOCUS

     We want our clients to own equity in the finest growing businesses in the
world. We believe that having a global integrated research capability is a
critical element in providing the best investment product. We also believe that
the use of the euro in the European monetary union has led to an improvement in
the quality and availability of financial information and a more consistent
basis for comparing European companies with competitors inside and outside their
home countries. As the universe of high quality companies expands globally, we
intend to maintain a research effort parallel with the growing investment
opportunities. This global research capability will also allow us to meet
particular client needs to the extent that they express any regional or national
preferences. The establishment of W.P. Stewart & Co. (Europe), Ltd., our
ownership of approximately 40% of Bowen Asia Limited, a British Virgin Islands
company operating in Hong Kong, and the establishment of W.P. Stewart Japan
K.K., the operating subsidiary of our joint venture with Bowen, have enabled us
and our affiliate, Bowen, to expand non-U.S. research capability.

     PURSUE GLOBAL CLIENTELE

     We believe that our services and performance have been well-received by
clients throughout the world and that there exists significant opportunity to
expand our clientele internationally, especially in Europe. We believe that
non-U.S. investors are generally under-invested in equity securities and will
look to established professionals like the Stewart Group to invest their wealth.
As part of our strategy to exploit this opportunity, our acquisition of NS Money
Management Ltd., TPRS Services N.V. and TPR & Partners N.V., including its
wholly owned subsidiary, TPR Curacao N.V. and our establishment of W.P. Stewart
& Co. (Europe), Ltd. have increased our access to a broader Europe-based
clientele, provided us with a Europe-based investment management team and formed
the basis for our European client servicing and asset-gathering activities.


                                       16

<PAGE>

     INVESTMENT MANAGEMENT TEAM

     Our highly experienced and motivated team of investment professionals has
been critical to our strong long-term investment performance. Following the
resignation of three senior investment professionals, which was announced in
February 2007, we have 19 senior investment professionals and 12 associate
portfolio managers who directly participate in the investment process. The
following table identifies these senior investment professionals and summarizes
their experience in the industry as of March 1, 2007:

<TABLE>
<CAPTION>
                                           YEARS IN   YEARS WITH
         NAME             LOCATION   AGE   INDUSTRY     COMPANY
----------------------   ---------   ---   --------   ----------
<S>                      <C>         <C>   <C>        <C>
Dev Chakrabarti.......   London      29        7         1
Sang Chung............   Hong Kong   37       13         3*
Christian Diebitsch...   London      43       16         3
Arend E. Dikkers......   London      49       23         4
Aadil Ebrahim.........   Hong Kong   31        9         3*
Samantha Epstein......   New York    37       15         8
Robert G. Gebhart.....   New York    35       13         4
Jeremy Higgs..........   Hong Kong   52       21         0(1)*
John Johnson..........   Bermuda     39       16         1
Robert Kahn...........   New York    74       47        32
Naomitsu Kimoto.......   Tokyo       43       18         3*
Celina Lin............   Hong Kong   47       17        12*
Jack Mahler...........   New York    48       10         1
Brigitte Neigut.......   New York    33        5         1
Keith Olson...........   Hong Kong   48       24         4*
Mark I. Phelps........   London      47       22         2
Lisa M. Stewart.......   Hong Kong   49       24        13*
William P. Stewart....   Bermuda     69       52        32
James T. Tierney......   New York    40       19         7
</TABLE>

----------
*    Includes years with Bowen Asia Limited.

(1)  Joined Bowen in April 2006.


                                       17

<PAGE>

     HISTORICAL PERFORMANCE RECORD

     JANUARY 1, 1975-DECEMBER 31, 2006 PERFORMANCE

     We have achieved a 19.6% compound annual return before fees, and a 18.4%
compound annual return after fees for the period from January 1, 1975 through
December 31, 2006. This compares to a 13.4% return of the S&P 500 Index over the
same period computed on a comparable basis. Our compound annualized returns for
the five and 10 years ended December 31, 2006, before fees, were 7.6% and 10.2%,
respectively, as compared to 6.2% and 8.4%, respectively, for the S&P 500 during
the same periods. Our compound annualized returns for the five and 10 years
ended December 31, 2006, after fees, were 6.5% and 9.0%, respectively. Our
return for the year ended December 31, 2006, before fees, was 9.0% as compared
to a return of 15.8% for the S&P 500 during the same period. Our return for the
year ended December 31, 2006, after fees, was 7.9%. We believe our superior
investment results over long time periods are due largely to our strict
adherence to a consistent long-term investment philosophy.

     We believe that our concentration in less cyclical businesses reduces risk
relative to the S&P 500 Index. In the six down market years experienced since
our formation (1977, 1981, 1990, 2000, 2001 and 2002), the S&P 500 Index
declined by approximately 7.4%, 5.0%, 3.1%, 9.1%, 11.9% and 22.1%, respectively.
In those years, accounts managed by us appreciated by approximately 16.0%, 10.8%
and 13.2% in 1977, 1981 and 1990, respectively, and depreciated by approximately
1.3%, 5.8% and 14.4% in 2000, 2001 and 2002, respectively, in each case before
fees, as calculated in the manner described below.

     The chart below illustrates our annual return in client accounts in our
W.P. Stewart U.S. Equity Composite from January 1, 1975 through December 31,
2006. See "Method of Performance Calculation" below.

                          MANAGED ACCOUNTS VS. S&P 500

                  Value of $100 invested on December 31, 1974

                               (PERFORMANCE GRAPH)

<TABLE>
<CAPTION>
YEAR   S&P 500   WPS PRE-FEE   WPS POST-FEE
----   -------   -----------   ------------
<S>    <C>       <C>           <C>
'74        100          100           100
'75        137          165           164
'76        170          217           213
'77        157          251           245
'78        167          284           273
'79        197          377           361
'80        261          504           477
'81        248          558           523
'82        301          764           710
'83        369          980           903
'84        391        1,154         1,052
'85        515        1,720         1,554
'86        611        2,083         1,863
'87        642        2,266         2,005
'88        748        2,482         2,170
'89        986        3,377         2,925
'90        955        3,823         3,266
'91      1,247        5,892         4,988
'92      1,342        6,307         5,274
'93      1,477        6,177         5,108
'94      1,496        6,377         5,212
'95      2,059        8,592         6,950
'96      2,532       11,682         9,352
'97      3,377       15,444        12,242
'98      4,343       20,486        16,074
'99      5,256       22,901        17,762
'00      4,778       22,613        17,318
'01      4,210       21,296        16,116
'02      3,279       18,226        13,610
'03      4,220       21,838        16,141
'04      4,679       26,291        19,239
'05      4,909       28,220        20,428
'06      5,685       30,765        22,050
</TABLE>


                                       18

<PAGE>

     METHOD OF PERFORMANCE CALCULATION

     ACCOUNT INCLUSION. Our performance data, since 1989, reflects the
performance of all client U.S. equity accounts having at least $1 million in
market value as of January 1 of each year for which W.P. Stewart & Co., Ltd.
(including its U.S. predecessor company) and W.P. Stewart Asset Management Ltd.,
our Bermuda-based investment adviser subsidiary, acted with complete
discretionary authority. With respect to periods prior to 1989, the data
reflects performance of a group of accounts believed by management to be
representative of all fully discretionary client equity accounts. If the
criteria for account inclusion since 1989 had been applied for periods prior to
1989, there is no assurance that the results would be consistent, although we
believe the results would not be materially different. The accounts included for
the period from January 1, 1975 through December 31, 2006 are referred to as the
"composite" or the "managed accounts."

     In the case of one portfolio manager who joined the Stewart Group as of
1981, the performance data includes the performance of portfolios managed by him
at a different firm during the period 1975 through 1980 using an investment
philosophy similar to that practiced by us at the time. The effect of this
inclusion is to increase the compound annual return since inception by
approximately one-tenth of one percentage point.

     The managed accounts exclude one portfolio manager's 1977 performance data,
in compliance with certain Advisers Act requirements. The performance return
excluding this data is substantially the same as the performance return would
have been if such data had been included.

     PERFORMANCE CALCULATION. Beginning in 1989, performance figures for the
managed accounts have been calculated using a "time-weighted" rate of return
method, such that additions and withdrawals of capital are weighted based on the
amount of time such capital is held in the account during the period. The annual
performance of an account is derived by linking the periodic rates of return for
such account. Prior to 1989, performance figures were calculated using a linear
non-weighted method, such that beginning of year market values were adjusted to
reflect additions and withdrawals of capital during the year.

     For 1975 through 1988, the annual performance of the managed accounts is
the average of the average performance of the individual managers' portfolios.
Beginning in 1989, the annual performance is the average of all accounts in the
composite. For 1975 through 1992, accounts are given equal weighting regardless
of market value. Beginning in 1993, account performance has been asset-weighted
based on the beginning of year market value of all accounts in the composite.

     The pre-fee performance of our accounts for all years shown on the chart
reflects the deduction of brokerage commissions but not the deduction of
advisory fees which would reduce the overall return. The post-fee performance of
our accounts for all years shown reflects the deduction of brokerage commissions
as well as advisory fees.

     EFFECT OF ADVISORY FEES. After 1983, the post-fee performance of our
accounts reflects the deduction of the actual advisory fees charged each account
in the composite, adjusted for the effect of capital additions and withdrawals.
For the period 1975 through 1983, we have used the actual fee rates or the
highest fee rates then prevailing.

     From 1975 through 1988, advisory fees were deducted from performance at the
end of each year. If fees had been deducted from performance on a quarterly
basis when charged, the return since inception would have been decreased by
approximately one-tenth of one percentage point.

     S&P 500. The S&P 500 Index annual change shown in the chart relating to our
1975 through December 31, 2006 performance includes the reinvestment of dividend
income, using a methodology


                                       19

<PAGE>

similar to that used for our accounts. It does not reflect the deduction of any
transaction or custodial costs that would be involved in investing in the S&P
500. The effect of these costs would be to reduce the indicated return from 1975
through December 31, 2006 for the S&P 500 by an undetermined amount. The S&P 500
Index annual percentage change was obtained from the Standard & Poor's
Corporation, New York, New York.

     ASSETS UNDER MANAGEMENT

     The following table shows assets under management during the period from
January 1, 2004 through December 31, 2006. Changes between beginning and ending
assets under management include capital appreciation or depreciation, net
contributions and net new accounts opened/closed.

                             ASSETS UNDER MANAGEMENT

<TABLE>
<CAPTION>
                                        YEAR ENDED DECEMBER 31,
                                       ------------------------
                                        2006     2005     2004
                                       ------   ------   ------
                                             (in millions)
<S>                                    <C>      <C>      <C>
Beginning Assets Under Management...   $9,514   $9,348   $8,561
                                       ======   ======   ======
Ending Assets Under Management......   $8,111   $9,514   $9,348
                                       ======   ======   ======
</TABLE>

     The table below illustrates the total net flows of assets under management
which include changes in net flows of existing accounts and net new flows (net
contributions to our publicly available funds and flows from new accounts minus
closed accounts). The table excludes total capital appreciation or depreciation
in assets under management with the exception of the amounts attributable to
withdrawals and accounts closed.

                      NET FLOWS OF ASSETS UNDER MANAGEMENT

<TABLE>
<CAPTION>
                                        YEAR ENDED DECEMBER 31,
                                       ------------------------
                                         2006      2005     2004
                                       -------   -------   -----
                                             (in millions)
<S>                                    <C>      <C>      <C>
Existing Accounts:
   Contributions ...................   $   780   $   988   $ 912
   Withdrawals .....................    (1,356)   (1,036)   (852)
                                       -------   -------   -----
Net Flows of Existing Accounts .....      (576)      (48)     60
Publicly Available Funds:
   Contributions ...................       147       256     203
   Withdrawals .....................      (259)     (149)   (172)
Direct Accounts Opened .............       145       312     228
Direct Accounts Closed .............    (1,311)     (733)   (940)
                                       -------   -------   -----
Net New Flows ......................    (1,314)     (314)   (681)
                                       -------   -------   -----
Net Flows of Assets Under
   Management ......................   $(1,890)  $  (362)  $(621)
                                       =======   =======   =====
</TABLE>


                                       20
<PAGE>

     The following table shows client retention information for the last three
years.

                                ACCOUNT RETENTION

<TABLE>
<CAPTION>
                                                    YEAR ENDED
                                                   DECEMBER 31,
                                              ---------------------
                                               2006    2005    2004
                                              -----   -----   -----
<S>                                           <C>     <C>     <C>
Number of Accounts at Beginning of Period..   1,841   1,910   2,081
Number of Accounts Closed During Period....     399     188     262
Retention Rate.............................    78.3%   90.2%   87.4%
</TABLE>

     CLIENT BASE

     Our client base is diverse. Approximately 65% of our assets under
management, and 81% of our accounts, as of December 31, 2006, were associated
with high net-worth individuals and their affiliates. As of December 31, 2006,
approximately 34% of our assets under management were contributed by non-U.S.
clients. The following tables set forth information regarding our client base
and changes in our assets under management over time.

     The following tables show, as of December 31, 2006, 2005 and 2004, the
amount of assets under management in direct relationship client accounts and in
accounts referred to us by clients' consultants, and the number of accounts by
relationship type.

                             ASSETS UNDER MANAGEMENT
                              BY RELATIONSHIP TYPE

<TABLE>
<CAPTION>
                            AS OF DECEMBER 31,
                        -------------------------
                        2006(1)    2005     2004
                        -------   ------   ------
                              (in millions)
<S>                     <C>       <C>      <C>
Direct Relationship..    $7,489   $8,847   $8,615
Consultant Related...       622      667      733
                         ------   ------   ------
   Total.............    $8,111   $9,514   $9,348
                         ======   ======   ======
</TABLE>

(1)  This table reflects the amount of assets under management by category based
     upon whether the client had been referred to us by a consultant at the time
     of the opening of their account. Due to consultants becoming related to
     clients subsequent to the initial account opening, as of December 31, 2006,
     $1,352 million of assets under management were from accounts associated
     with a consultant. The remaining $6,759 million of assets under management
     were not associated with any consultant.

                               NUMBER OF ACCOUNTS
                              BY RELATIONSHIP TYPE

<TABLE>
<CAPTION>
                            AS OF DECEMBER 31,
                         -----------------------
                         2006(2)    2005    2004
                         -------   -----   -----
<S>                      <C>       <C>     <C>
Direct Relationship ..    1,430    1,738   1,792
Consultant Related ...       81      103     118
                          -----    -----   -----
   Total .............    1,511    1,841   1,910
                          =====    =====   =====
</TABLE>

(2)  This table reflects the number of accounts by category based upon whether
     the relevant client had been referred to us by a consultant at the time of
     the opening of their account. Due to consultants becoming related to
     clients subsequent to the initial account opening, as of December 31, 2006,
     112 accounts were associated with a consultant. The remaining 1,399
     accounts were not associated with any consultant.


                                       21

<PAGE>

     Over the years we have established relationships with a select group of
symbiotic marketers that refer portfolio management clients to us in return for
a share of the fees paid by such clients. The value of direct relationship
accounts referred by our symbiotic marketers as of December 31, 2006, 2005 and
2004 represented 39.8%, 39.8% and 39.2%, respectively, of our direct
relationship accounts as of such dates.

     The following table shows our assets under management by client type.

                             ASSETS UNDER MANAGEMENT
                                 BY CLIENT TYPE

<TABLE>
<CAPTION>
                                      ASSETS UNDER MANAGEMENT AS      NUMBER OF ACCOUNTS
                                         OF DECEMBER 31, 2006       AS OF DECEMBER 31, 2006
                                      --------------------------   ------------------------
                                       U.S.    NON-U.S.    TOTAL    U.S.   NON-U.S.   TOTAL
                                      ------   --------   ------   -----   --------   -----
                                             (in millions)
<S>                                   <C>      <C>        <C>      <C>     <C>        <C>
High Net-Worth Individual
   Relationships/Pooled Funds* ....   $2,773    $2,462    $5,235   1,126       97     1,223
Foundations & Other
   Relationship Directed
   Institutional ..................    2,289       135     2,424     199        1       200
Other Institutional ...............      334       118       452      57       31        88
                                      ------    ------    ------   -----      ---     -----
   Total ..........................   $5,396    $2,715    $8,111   1,382      129     1,511
                                      ======    ======    ======   =====      ===     =====
</TABLE>

----------
*    Pooled funds have been included in High Net-Worth Individual Relationships
     because the underlying clients of the pooled fund vehicles are high
     net-worth individuals.

     The following table shows the amount of assets under management contributed
by U.S. and non-U.S. clients.

                             ASSETS UNDER MANAGEMENT
                              U.S./NON-U.S. CLIENTS

<TABLE>
<CAPTION>
                          AS OF DECEMBER 31,
                       ------------------------
                        2006     2005     2004
                       ------   ------   ------
                             (in millions)
<S>                    <C>      <C>      <C>
U.S. Clients .......   $5,396   $6,153   $6,265
Non-U.S. Clients ...    2,715    3,361    3,083
                       ------   ------   ------
   Total ...........   $8,111   $9,514   $9,348
                       ======   ======   ======
</TABLE>


                                       22

<PAGE>


     INVESTMENT ADVISORY REVENUES

     Advisory fee revenues are generated from investment advisory contracts
between the Stewart Group and clients for whom we manage discretionary accounts.
These agreements are terminable at will by either party on short notice. Under
our traditional fee arrangement, we receive a management fee equal to 1.5% per
annum of the value of the client's account up to $25 million, plus 1.25% per
annum of any account balance in excess of $25 million up to $100 million, plus
1.0% per annum of any account balance in excess of $100 million. In 2006, we
began to offer to clients with an account value in excess of $50 million a
single fee arrangement, with no extra cost for commissions. A client choosing
this arrangement will pay a management fee equal to 1.25% per annum of the value
of the client's account if the account value is less than $100 million, 0.875%
per annum if the account value is between $100 million and $250 million, and
0.75% if the value of the account exceeds $250 million. We intend to begin to
offer a single fee arrangement, at higher rates, to clients with accounts below
$50 million during 2007. Our fee arrangements are non-negotiable. We do not
typically offer fixed income investment management service, although we make
this service available to our clients for whom we manage equity portfolios.
Clients' funds held on a long-term basis in fixed income investments
(approximately $20 million at December 31, 2006) are subject to a 0.30% annual
fee. We have also offered a limited number of clients with a high minimum
account size the opportunity to pay a lower fixed fee plus a performance fee.
The performance fee is either based upon the performance of the client's account
or the amount by which the account's performance exceeded the performance of the
S&P 500. As of December 31, 2006, only nine clients with an aggregate of
approximately $1.1 billion in assets under management had a performance fee
arrangement. This includes W.P. Stewart Holdings Fund, our mutual fund listed on
Euronext Amsterdam. For the year ended December 31, 2006, we recognized a
performance fee of $9.7 million from W.P. Stewart Holdings Fund (it should be
noted, however, that we recognized a non-recurring charge of $2.6 million
related to the resetting of the fund's "high water mark" during 2006 in
connection with the transfer of the fund from Curacao to Luxembourg). Fees under
our investment advisory contracts are typically billed and payable quarterly, in
advance. Performance fees are recorded as of the date on which the performance
period ends. The following table shows the average annualized gross management
fee, excluding the effect of any performance fees, as a percentage of assets
under management received by us from various segments of our client base during
the year ended December 31, 2006:

<TABLE>
<CAPTION>
                              AVERAGE GROSS MANAGEMENT
                             FEE AS A PERCENT OF ASSETS
                                  UNDER MANAGEMENT
                                     YEAR ENDED
CLIENT TYPE                      DECEMBER 31, 2006
-----------                  --------------------------
<S>                          <C>
Institutional.............              1.10%
Non-Institutional.........              1.12%
U.S. Clients..............              1.26%
Non-U.S. Clients..........              0.84%
Overall Weighted Average..              1.11%
</TABLE>

     The average gross management fee, excluding the effect of any performance
fees, was 1.11% for the year ended December 31, 2006. The average fee was less
than our standard fee of 1.5% because (1) a number of advisory contracts were
entered into prior to 1989, when we adopted our current fee arrangement, (2)
account balances in excess of $25 million and $100 million are subject to lower
fees, (3) accounts that have performance-based arrangements are subject to a
much lower quarterly base advisory fee and (4) we offered the single fee
arrangement discussed above to certain clients beginning July 1, 2006.


                                       23

<PAGE>

     Currently, each of our investment advisory contracts names either W.P.
Stewart & Co., Ltd. or W.P. Stewart Asset Management Ltd., our Bermuda-based
investment adviser subsidiary, as the investment adviser. These entities have
engaged and may engage in the future W.P. Stewart & Co., Inc., W.P. Stewart &
Co. (Europe), Ltd. or Bowen Asia Limited to act as sub-adviser for certain
accounts or mandates. Under written sub-advisory agreements, the sub-adviser is
entitled to receive from the named investment advisory entity a fee which is
comparable to fees charged by other unrelated advisers for similar mandates.
W.P. Stewart & Co., Inc. is the investment adviser with respect to W.P. Stewart
& Co. Growth Fund, Inc., a U.S. registered mutual fund sponsored by the Stewart
Group. W.P. Stewart & Co. (Europe), Ltd. is the investment manager with respect
to W.P. Stewart Funds plc and W.P. Stewart (Distributor) Funds plc, open-ended
umbrella funds organized under the laws of Ireland.

     GEOGRAPHIC AREA DATA

     Our primary business is the provision of investment advisory services to
clients located throughout the world. The amounts of fee revenue received from
clients in the U.S. and elsewhere for the years ended December 31, 2006, 2005
and 2004 were as follows:

<TABLE>
<CAPTION>
                           FEE REVENUE
           ------------------------------------------
               2006           2005           2004
           ------------   ------------   ------------
<S>        <C>            <C>            <C>
U.S.       $ 71,397,432   $ 76,498,570   $ 76,129,771
Non-U.S.     36,405,030     36,699,263     39,875,729
           ------------   ------------   ------------
Total      $107,802,462   $113,197,833   $116,005,500
           ============   ============   ============
</TABLE>

     COLLECTIVE INVESTMENT FUNDS

     Mutual fund and pooled accounts are not a primary focus of the Stewart
Group or its future business strategy. Our U.S. mutual fund is used primarily to
efficiently invest smaller accounts. As of December 31, 2006, we also served as
investment adviser to 31 collective investment funds and other pooled vehicles
organized to meet the fiscal and regulatory requirements of certain U.S. and
non-U.S. clients. The following table sets forth information regarding
collective investment funds and other pooled vehicles with assets under
management in excess of $50 million as of December 31, 2006:

<TABLE>
<CAPTION>
     JURISDICTION OF         ASSETS UNDER
    FORMATION OF FUND         MANAGEMENT
    -----------------       -------------
                            (in millions)
<S>                         <C>
Luxembourg...............        $975
Luxembourg...............         484
United States............          95
British Virgin Islands...          92
The Netherlands..........          88
Austria..................          81
British Virgin Islands...          74
United Kingdom...........          51
</TABLE>


                                       24

<PAGE>

     CLEARING CUSTODIAN AND BROKERAGE ARRANGEMENTS

     We do not hold any funds or securities of our clients. Clients' funds and
securities are held by custodians appointed either by the client or, if no
custodian is named by the client, by the Stewart Group. We currently utilize, on
a fully disclosed basis, the services of Pershing LLC as clearing agent and as
custodian on accounts where the client makes no custodial designation. We
believe that our current relationship with Pershing LLC is satisfactory but
believe that a comparable agreement with a different clearing agent and/or
custodian could be reached if necessary.

     Our investment advisory contracts authorize us to select the broker through
which any transaction may be executed and specifically authorize the use of our
affiliated broker-dealer, W.P. Stewart Securities Limited.

     COMPETITION

     We believe that currently only a limited number of companies with a similar
investment philosophy and practice compete directly with us in our core business
of providing wealth management services to the upper tier of the wealth
management market. However, the investment management business in general is
intensely competitive. In providing investment management services, we compete
with a large number of asset management firms as well as broker-dealers, trust
companies, commercial banks and other specialized wealth management providers.
Our future growth and profitability will be affected by our ability to retain
and increase our market share, which could be adversely affected over the longer
term as competitors seek to develop high net-worth relationships. Many of our
current and potential competitors are significantly larger in terms of capital,
assets, geographic presence, distribution network and other important business
criteria, provide a wider range of services and may have access to greater
financial resources than the Stewart Group.

     Two of our former portfolio managers left the Stewart Group in early 2006
and joined another asset management firm, and in February 2007 we announced that
three additional portfolio managers would be leaving the firm after a short
transition period. This will most likely result in additional client retention
issues, and we cannot be certain that the impact will be immaterial.

     REGULATION

     Our business and the investment management industry in general are subject
to extensive regulation in Bermuda, the United States at both the federal and
state levels, the United Kingdom, the Republic of Ireland, the Grand Duchy of
Luxembourg and The Netherlands, as well as by various self-regulatory
organizations, or SROs as they are commonly known, in these and other
jurisdictions. A number of regulatory agencies of various jurisdictions are
charged with safeguarding the integrity of the securities and other financial
markets and with protecting the interests of customers participating in markets
in those jurisdictions.

     In Bermuda, our investment business is subject to the jurisdiction of the
Bermuda Monetary Authority. The Investment Business Act 2003 requires licensing
of all persons carrying on investment business in or from Bermuda, unless there
is an exemption available to that person under the Act. Our investment
businesses are currently exempt from the licensing requirements of the Act due
to the nature of our clientele.

     In the United States, the SEC is the federal agency that is primarily
responsible for the regulation of investment advisers and broker-dealers, and
the Board of Governors of the Federal Reserve System promulgates regulations
applicable to securities credit transactions involving broker-dealers and
certain other U.S. persons. Investment advisers and broker-dealers are subject
to registration and regulation by


                                       25

<PAGE>

state securities regulators in those states in which they conduct business.
Industry SROs, including the NASD and national securities exchanges, have
authority over the firms that are their members.

     In the United Kingdom, the main regulatory body is the Financial Services
Authority. W.P. Stewart & Co. (Europe), Ltd. is authorized and regulated by the
Financial Services Authority. In the Republic of Ireland, the Irish Financial
Services Regulatory Authority is responsible for the regulation of fund
management activities and is the regulatory body that supervises W.P. Stewart
Fund Management Limited and the Dublin domiciled investment funds which it
manages. These responsibilities were previously under the authority of the
Central Bank of Ireland. In The Netherlands, De Nederlandsche Bank N.V., known
as the Dutch Central Bank, has historically been responsible for the regulation
of fund management activities, such as the supervision of WPSH Management N.V.
and the publicly traded funds that it manages, including W.P. Stewart Holdings
N.V. (prior to the transfer to Luxembourg), the shares of which fund are traded
on Euronext Amsterdam. Most of those responsibilities of the Dutch Central Bank
have been transferred to the Netherlands Authority for the Financial Markets,
commonly referred to as the AFM, as of September 1, 2002. In addition, W.P.
Stewart & Co., Ltd. and W.P. Stewart Asset Management Ltd. have each been issued
a license by the AFM to conduct certain activities in The Netherlands, which
license is conditioned upon compliance with certain obligations of the licensee,
including the AFM's capital adequacy requirements. W.P. Stewart & Co., Ltd. and
W.P. Stewart Asset Management Ltd. currently satisfy these requirements. In
Luxembourg, W.P. Stewart Holdings Fund and its management company, W.P. Stewart
Fund Management S.A., are subject to the jurisdiction of the Commission de
Surveillance du Secteur Financier, or the CSSF as it is commonly known.

     W.P. Stewart & Co., Ltd., W.P. Stewart Asset Management Ltd. and W.P.
Stewart & Co., Inc. are registered as investment advisers with the SEC. As
investment advisers, each is subject to the requirements of the Advisers Act and
the SEC's regulations thereunder. They, and their employees engaged in advisory
services, are also subject to certain state securities laws and regulations, and
to laws regarding fiduciaries. Federal and state regulations impose, among other
things, limitations on the ability of investment advisers to charge
performance-based or non-refundable fees to clients, record-keeping and
reporting requirements, disclosure requirements, limitations on principal
transactions between an adviser or its affiliates and advisory clients,
requirements as to fees paid to solicitors (paid client referral sources),
restrictions on commission and fee arrangements with broker-dealers, and
advertising restrictions, as well as general anti-fraud prohibitions. The state
securities law requirements applicable to employees of investment advisers
include certain qualification requirements as to advisory employees. In
addition, W.P. Stewart & Co., Inc., as investment adviser to a mutual fund
registered under the Investment Company Act, is subject to requirements under
the Investment Company Act and the SEC's regulations thereunder. Such
requirements include, among other things, record-keeping and reporting
requirements and procedures for handling funds. Each of W.P. Stewart & Co.,
Ltd., W.P. Stewart Asset Management Ltd. and W.P. Stewart & Co., Inc. also are
subject to the requirements of the USA Patriot Act of 2001.

     Under the Advisers Act, every investment advisory agreement with a client
must expressly provide that it may not be assigned by the investment adviser
without the consent of the client. Under the Investment Company Act, every
investment adviser's agreement with a registered investment company must provide
for the agreement's automatic termination in the event of its assignment. Under
both Acts, an investment advisory agreement is deemed to have been assigned when
there is a direct or indirect transfer of the agreement, including a direct
assignment or a transfer of a "controlling block" of the firm's voting
securities or, under certain circumstances, upon the transfer of a "controlling
block" of the voting securities of its parent corporation. A transaction is not
an assignment under the Advisers Act or the Investment Company Act, however, if
it does not result in a change of actual control or management of the investment
adviser. Any assignment of our investment advisory agreements would require, as
to any registered investment company client, the prior approval by a majority of
its shareholders, and as to our other clients, the prior consent of such clients
to such assignments. Sales by WPS II, Inc. or other shareholders or our
issuances of common shares, among other things, could result in a deemed


                                       26

<PAGE>

assignment of our investment advisory agreements under such statutes. See Item 3
D under the captions "Key Information - Risk Factors - We Are Subject to the
Control of Many Regulatory Bodies..." and "Key Information - Risk Factors - A
Change of Control of the Stewart Group Would Automatically Terminate Our
Clients' Investment Advisory Agreements with Us...."

     The officers, directors and employees of our investment management business
may from time to time own securities which are also owned by one or more of
their clients. We have internal policies with respect to, among other things,
individual investments, required reporting of securities transactions and
restrictions on certain transactions so as to reduce the possibility of
conflicts of interest.

     W.P. Stewart Securities Limited, our Bermuda-based broker-dealer, is
registered as a broker-dealer with the SEC and in all 50 states of the United
States and is a member of, and subject to regulation by, the NASD. As a result
of federal and state broker-dealer registration and SRO memberships, W.P.
Stewart Securities Limited is subject to overlapping schemes of regulation which
cover many aspects of its securities business. Such regulations cover matters
including the use and safekeeping of clients' funds and securities,
record-keeping and reporting requirements, and supervisory and organizational
procedures intended to assure compliance with securities laws and prevent
improper trading on material nonpublic information. As a broker-dealer
registered with the SEC and certain states and a member firm of the NASD, W.P.
Stewart Securities Limited is also subject to the capital requirements of the
SEC, the states and the NASD. These capital requirements specify minimum levels
of capital, computed in accordance with regulatory requirements ("net capital"),
that W.P. Stewart Securities Limited is required to maintain and also limit the
amount of leverage that W.P. Stewart Securities Limited is able to obtain in its
business. A failure of W.P. Stewart Securities Limited to maintain its minimum
required capital could require it to cease executing client transactions until
it returned to capital compliance, and could cause it to lose its membership on
an exchange or in an SRO, lose its registration with the SEC or a state, or
require its liquidation. At December 31, 2006, W.P. Stewart Securities Limited
was required to maintain minimum net capital, in accordance with SEC rules, of
approximately $100,000 and had total net capital of approximately $500,000, or
approximately $400,000 in excess of the amount required. W.P. Stewart Securities
Limited also is subject to the requirements of the USA Patriot Act of 2001,
including the money laundering prevention provisions thereof.

     W.P. Stewart & Co. (Europe), Ltd. is a member of, and subject to regulation
by, FSA in the United Kingdom. Its permitted activities are limited to providing
investment management and investment advice, together with the marketing of
unregulated collective investment schemes. FSA regulations cover matters such as
the use and safekeeping of clients' funds and securities, record-keeping and
reporting requirements, employee-related matters, including qualification and
approval of supervisory, investment management and sales personnel, disclosure
requirements, advertising restrictions and minimum levels of capital. W.P.
Stewart & Co. (Europe), Ltd. currently satisfies its minimum capital
requirements.

     W.P. Stewart Fund Management Limited is subject to the supervisory control
of the Irish Financial Services Regulatory Authority. The permitted activities
of W.P. Stewart Fund Management Limited include the provision of services
consisting of the establishment and management of specified collective
investment undertakings, the provision of management and administration services
and of investment and financial advice. W.P. Stewart Fund Management Limited
also is subject to minimum capital requirements, ongoing reporting and
disclosure requirements and such other prudential and supervisory requirements
as IFSRA may issue from time to time. W.P. Stewart Fund Management Limited
currently satisfies its minimum capital requirements.

     Compliance with many of the regulations applicable to us involves a number
of risks, particularly because applicable regulations in a number of areas may
be subject to varying interpretation. Regulators make periodic examinations and
review annual, monthly and other reports on our operations, track record and
financial condition. In the event of a violation of or non-compliance with any
applicable law or


                                       27

<PAGE>

regulation, governmental regulators and SROs may institute administrative or
judicial proceedings that may result in censure, fine, compensation orders,
civil penalties (including treble damages in the case of insider trading
violations), criminal penalties, the issuance of cease-and-desist orders, the
deregistration or suspension of the non-compliant firm, the suspension or
disqualification of the firm's officers or employees and other adverse
consequences. We have not experienced any such penalties to date. Such
violations or non-compliance also could subject us and/or our employees to civil
actions by private persons. Any governmental, SRO or private proceeding alleging
violation of or non-compliance with laws or regulations could have a material
adverse effect upon our business, financial condition, results of operations and
business prospects.

     The regulatory environment in which we operate is subject to change. We may
be adversely affected as a result of new or revised legislation or regulations
imposed by the SEC, other U.S., state or non-U.S. governmental regulatory
authorities or SROs. We also may be adversely affected by changes in the
interpretation or enforcement of existing laws and rules by these governmental
authorities and SROs. Our businesses may be materially affected not only by
securities regulations but also by regulations of general application. For
example, the volume of our principal investment advisory business in a given
time period could be affected by, among other things, existing and proposed tax
legislation and other governmental regulations and policies (including the
interest rate policies of the Federal Reserve Board) and changes in the
interpretation or enforcement of existing laws and rules that affect the
business and financial communities.


                                       28
<PAGE>

     C. ORGANIZATION STRUCTURE

     The organizational chart set forth below shows our operating structure, our
principal operating subsidiaries, the jurisdiction of incorporation of our
subsidiaries and, in the case of subsidiaries that are not wholly-owned, the
percentage of shares that we hold in those subsidiaries. We believe this
operating structure positions us effectively to service our global clientele and
pursue our global strategy.

<TABLE>
<S>          <C>
                                                   W.P. Stewart & Co. Ltd.,
                                                       our Bermuda-based
                                                      Investment adviser
                                                               |
                                                               |
    -------------------------------------------------------------------------------------------------------------------------
    |              |            |           |            |            |           |             |            |      Approx. |
    |              |            |           |            |            |           |             |            |          40% |
    |              |            |           |            |            |           |             |            |              |
------------   ---------   ----------   ---------   ----------   ----------   ----------   -----------   --------   ------------
   W.P.          W.P.       NS Money      W.P.         W.P.         W.P.         W.P.         W.P.         TPRS         Bowen
  Stewart       Stewart    Management    Stewart      Stewart      Stewart      Stewart      Stewart     Services       Asia
   Asset         & Co.      Ltd., our    & Co.,        Asset     Securities      Asset        Fund         N.V.,    Limited (1),
Management     (Europe)     Bermuda-    Inc., our   Management    Limited,    Management   Management,      our       our Hong
 (Europe),     Ltd., our      based     New York-    Ltd., our       our         (NA),      S.A., our    Curacao-    Kong-based
 Ltd., our      London-       asset       based      Bermuda-     Bermuda-     Inc., our   Luxembourg      based      research
 Bermuda-        based       manager    research       Based        based      New York-     -based        asset      affiliate
   based       research                 affiliate   investment     broker-       based        fund       gatherer
 umbrella      affiliate                              adviser      dealer        asset     management
  company                                                                      gatherer      company
    for
 European
   asset
 gathering
------------   ---------   ----------   ---------   ----------   ----------   ----------   -----------   --------   ------------
    |                                                    |
    |                                                    |
    | (2)                                                |
------------                                        ----------
    W.P.                                               W.P.
   Stewart                                            Stewart
    Asset                                              Fund
 Management                                         Management
  (Europe)                                           Limited,
  N.V., our                                         our Dublin
Netherlands-                                          -based
 based asset                                           fund
  gatherer                                          management
                                                      company
------------                                        ----------
</TABLE>

(1.) W.P. Stewart & Co., Ltd. has entered into an agreement pursuant to which it
     has an option (exercisable from June 2004 to June 2009) to increase
     ownership to 50% or more.

(2.) Indirectly owned.

     D. PROPERTY, PLANT AND EQUIPMENT

     Our headquarters and certain of our executive offices are located at
Trinity Hall, 43 Cedar Avenue, Hamilton, Bermuda in a building owned by a joint
venture between the Stewart Group and The Bank of Bermuda Limited and leased to
us by the joint venture on arms-length commercial terms. We also lease offices
in New York, New York; Portland, Maine; London, England; Curacao, Netherlands
Antilles; Oegstgeest, The Netherlands; Luxembourg, Grand-Duchy of Luxembourg;
and, through a joint venture with Bowen Asia Limited, Tokyo, Japan. We believe
our facilities have been well maintained, are in good operating condition, are
adequate for our current operational requirements and could be replaced, if
necessary, on acceptable terms.

ITEM 4A. UNRESOLVED STAFF COMMENTS

     Not Applicable.


                                       29

<PAGE>

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     OVERVIEW

     W.P. Stewart & Co., Ltd., together with its subsidiaries, is a
research-focused investment adviser that manages assets for high net-worth
individuals and institutions located throughout the world. Our principal source
of revenues is investment advisory fees and, accordingly, fluctuations in
financial markets and client contributions and withdrawals have a direct effect
on revenues and net income. Additionally, significant components of our expenses
are variable in nature and tend to partially offset fluctuations in revenue.

     Our advisory fees are computed quarterly based on account market values and
fee rates pursuant to investment advisory contracts with clients. Our general
policy is to bill clients quarterly, in advance. Under certain client contracts,
we are entitled to receive performance fees when the return on assets under
management exceeds specified benchmark returns or other performance targets.
Performance fees are recorded as of the date on which the performance period
ends.

     Another component of our revenues is brokerage commissions. Commission
revenues earned on our brokerage activities, substantially all of which relate
to client accounts, vary directly with account trading activity and new account
generation. Therefore, commission revenue is also affected by market conditions.

     Interest and other revenue primarily consists of interest earned on our
cash management activities, interest earned on notes receivable for employee
purchases of common shares, foreign currency, investment and trading realized
and unrealized gains and losses, subscription fees earned from our mutual funds
and equity income relating to our investments in unconsolidated affiliates.

     We provide competitive rewards to our employees through our compensation
and benefits policies, together with our employee equity ownership practices.
Employee compensation and benefits are our largest operating expense, the most
significant component of which is compensation paid to our research
analysts/portfolio managers. Compensation for substantially all employees varies
with operating profit. At the beginning of each year, any such employee is
allocated a participation in our compensation pool. Certain employees may also
be eligible for other cash or non-cash incentive compensation. Compensation paid
depends upon our actual operating profit, as adjusted for depreciation,
amortization of intangibles, non-cash compensation and retirement benefits
("adjusted operating profit"). We review from time to time the percentage of
operating profit made available for the compensation pool. Under our variable
compensation program, which heavily weights compensation against profit
performance, compensation expense may vary within a targeted range of adjusted
operating profit. Compensation expense for employees participating in the
compensation pool was approximately 29%, 26% and 24% of adjusted operating
profit for the years ended December 31, 2006, 2005 and 2004, respectively. In
2006, our compensation expense exceeded the upper end of our targeted range.
This was the result of a decision by senior management to reward our employees
for their strong efforts during a difficult year, despite the actual lower level
of adjusted operating profit. It is currently anticipated that compensation
expense for the year ending December 31, 2007 will be within the range of
approximately $26 - $28 million.

     Fees paid out are paid to select banks, investment firms and individuals in
at least 10 countries, with whom we have formal marketing arrangements and that
make up our network of symbiotic marketers. We consider the banks, investment
firms and individuals who gather assets for us to be symbiotic marketers of our
services because of the mutual benefits that flow from the relationship - they
are able to offer premier equity investment management services to their clients
and we are able to extend the reach of our asset-gathering efforts. These fees
are based on the market value of referred accounts and vary based on new account
generation and fluctuations in the market value of referred accounts.


                                       30

<PAGE>

     Commissions, clearance and trading expenses include fees incurred related
to brokerage activities. These transaction-related costs vary directly with
trading activity. Transaction costs are reviewed quarterly and are competitive.

     Research and administration expenses include research, travel and
entertainment, communications, information technology systems support and
occupancy.

     Marketing expenses represent costs associated with our internal marketing
initiatives and client servicing activities, and include client seminars,
marketing related travel, marketing related compensation and other operational
expenses.

     Other operating expenses include professional fees consisting of auditing,
tax, legal and consulting fees, charitable contributions and other
administration expenses.

     Our effective tax rate is driven by tax jurisdictions in which we conduct
business activity, and to the extent that these activities change, our tax rate
may vary accordingly.

     Substantially all of our employees are given the opportunity to become
shareholders during their first year of employment with us. As a result,
virtually all of our employees are shareholders of W.P. Stewart & Co., Ltd. and
participate in the results of our operations.

     CRITICAL ACCOUNTING POLICIES

     GOODWILL AND INTANGIBLE ASSETS. Our consolidated statement of financial
condition includes substantial assets in the form of goodwill and intangible
assets. We account for those assets in accordance with Statement of Financial
Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." The
intangible assets were among the assets that we acquired in the business
acquisitions described in Note 2 of our consolidated financial statements
included with this report. We amortize the intangible assets on a straight-line
basis over their estimated useful lives, which range from five to 20 years. We
test the carrying values of these assets for impairment annually and whenever
events or changes in circumstances indicate that such values may not be
recoverable. There would be an impairment loss if and to the extent that the sum
of the assets' expected future undiscounted cash flows were to be less than
their carrying values. We recorded goodwill in our acquisition of W.P. Stewart
Asset Management (Europe), Ltd. (formerly TPR & Partners N.V.). Goodwill is the
excess of the total acquisition cost over the fair value of the net assets on
the date of the acquisition. We do not amortize goodwill, but we test it
annually for impairment. If we were to experience a significant reduction in
revenues from the acquired businesses or from our reporting units, the carrying
values of our goodwill or intangible assets could be materially impaired and the
resulting impairment losses could have a material adverse effect on our
earnings.

     Late in the fourth quarter of 2005, we were instructed to liquidate certain
NS Money Management accounts as a result of a third party business transaction
impacting the related clients. This resulted in an outflow of approximately $200
million in assets under management. The future undiscounted cash flows generated
by the advisory fees on the $200 million of assets under management supported
the NS Money Management customer related intangible assets. As a result of this
event, for the year ended December 31, 2005, we recognized an impairment loss
equal to the carrying value of the asset in the amount of $12,452,978.


                                       31

<PAGE>

     A.  OPERATING RESULTS

YEAR ENDED DECEMBER 31, 2006 AS COMPARED TO YEAR ENDED DECEMBER 31, 2005

     ASSETS UNDER MANAGEMENT

     Assets under management were approximately $8.1 billion at December 31,
2006, a decrease of approximately $1.4 billion or 14.7% from approximately $9.5
billion at December 31, 2005.

     The following table sets forth the total net flows of assets under
management for the years ended December 31, 2006 and 2005, which include changes
in net flows of existing accounts and net new flows (net contributions to our
publicly available funds and flows from new accounts minus closed accounts). The
table excludes total capital appreciation or depreciation in assets under
management with the exception of the amounts attributable to withdrawals and
closed accounts.

                      NET FLOWS OF ASSETS UNDER MANAGEMENT
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                          YEARS ENDED
                                          DECEMBER 31,
                                       -----------------
                                         2006      2005
                                       -------   -------
<S>                                    <C>       <C>
Existing Accounts:
   Contributions                       $   780   $   988
   Withdrawals                          (1,356)   (1,036)
                                       -------   -------
Net Flows of Existing Accounts            (576)      (48)
                                       -------   -------
Publicly Available Funds:
   Contributions                           147       256
   Withdrawals                            (295)     (149)
Direct Accounts Opened                     145       312
Direct Accounts Closed                  (1,311)     (733)
                                       -------   -------
Net New Flows                           (1,314)     (314)
                                       -------   -------
Net Flows of Assets Under Management   $(1,890)  $  (362)
                                       =======   =======
</TABLE>

     REVENUES

     Revenues were $142.1 million for the year ended December 31, 2006 a
decrease of $5.8 million or 3.9% from $147.9 million earned for the year ended
December 31, 2005. The change was due to a $5.4 million or 4.8% decrease in fee
revenue, a $2.3 million or 7.2% decrease in commission revenue and a $1.9
million or 70.5% increase in interest and other revenues. The average gross fee
earned from client accounts, excluding the effect of any performance fees, was
1.11% for the year ended December 31, 2006 as compared to 1.17% for the year
ended December 31, 2005. The change in the average gross fee rate was due to a
slight change in the client account mix in favor of larger accounts subject to
our fee break, a greater percentage of our accounts having been with us for a
longer period of time and having lower fee rates which have been grandfathered
under our current fee structure and the fact that several of our large accounts
are performance fee based accounts. These accounts have a reduced quarterly base
advisory fee and pay a performance fee, if applicable, generally at calendar
year-end. Adjusted to exclude the effect of performance fee based accounts, the
average gross management fee was 1.24% for the year ended December 31, 2006 as
compared to 1.27% for the year ended December 31, 2005. The change in fee
revenue was the result of a decrease in fees based on lower assets under
management for 2006 partially offset by a $3.4 million increase in performance
fees earned. Commission revenue was lower for the year ended December 31, 2006,
compared to the year ended December 31, 2005 due to lower trading volume based
upon the investment decisions made by our portfolio managers. Interest and other
revenues


                                       32

<PAGE>

increased primarily due to an increase in interest income earned on our cash
management activities and an increase in realized and unrealized gains from
investments in municipal bonds and equity securities.

     EXPENSES

     Expenses, excluding income taxes, decreased approximately $2.2 million or
2.1% to $98.6 million for the year ended December 31, 2006 from $100.8 million
in the prior year. The most significant item which caused this decrease was the
non-recurring, non-cash impairment loss of $12.5 million recognized in respect
of a write-off of our customer related intangibles during 2005. Other factors
contributing to the decrease included a decrease in variable expenses of $0.9
million in fees paid out, which are directly related to assets under management
of referred accounts, a decrease in commissions, clearance and trading of $1.3
million, which vary with account activity, a decrease in research and
administration of $0.8 million and a decrease in depreciation and amortization
of $1.6 million. These decreases were partially offset by an increase in
employee compensation and benefits caused by an increase in the compensation
percentage for 2006 of $9.6 million due in part to additional non-cash
compensation expense related to restricted shares issuances. These grants were
to several key employees and resulted in higher non-cash compensation expense of
approximately $7.9 million for the year ended December 31, 2006 as compared to
approximately $3.3 million for the prior year. Additionally, in 2006 we
recognized a non-recurring $2.6 million performance fee charge related to the
resetting of the performance fee "high water mark" in connection with the
transfer of W.P. Stewart Holdings Fund (formerly known as W.P. Stewart Holdings
N.V.) from Curacao to Luxembourg. Further offsetting the decrease in expenses
were increases in marketing expenses of $0.8 million and other operating
expenses of $2.0 million. The increase in marketing expenses reflects a higher
level of marketing initiatives including our first ever internal global
marketing seminar, and the increase in other operating expenses primarily
relates to higher professional and administrative fees related to the transfer
of W.P. Stewart Holdings Fund to Luxembourg, executive search fees, costs
related to regulatory compliance and higher administrative costs related to our
mutual funds.

     Our income tax expense decreased $1.0 million to $6.0 million for the year
ended December 31, 2006 from $7.0 million in the prior year. The effective U.S.
GAAP tax rates were approximately 14% for 2006 and 15% for 2005. The effective
rate for the year ended December 31, 2005, adjusted for the non-recurring
non-cash impairment charge of $12.5 million was 11.8%. These effective tax rates
are higher than our historical rates. For the year ended December 31, 2006, the
higher effective tax rate relates to changes in the allocation of our portfolio
management activities among various jurisdictions reflecting recent portfolio
manager departures and other management changes. The proportion of our various
activities based in high-tax jurisdictions has increased somewhat relative to
the activity based in lower-tax jurisdictions, but we are currently taking steps
to restore our historical geographic mix. The higher effective tax rate for the
year ended December 31, 2005, was primarily due to the non-deductible, non-cash
impairment charge of $12.5 million and the fact that a higher portion of our
performance fees earned were subject to U.S. corporate tax.

     NET INCOME

     Net income for the year ended December 31, 2006 decreased $2.6 million or
6.4% to $37.5 million from $40.1 million for the prior year as revenues
decreased at a higher rate than operating expenses.


                                       33

<PAGE>

YEAR ENDED DECEMBER 31, 2005 AS COMPARED TO YEAR ENDED DECEMBER 31, 2004

     ASSETS UNDER MANAGEMENT

     Assets under management were approximately $9.5 billion at December 31,
2005, an increase of approximately $0.2 billion or 2.2% from approximately $9.3
billion at December 31, 2004.

     The following table sets forth the total net flows of assets under
management for the years ended December 31, 2005 and 2004, which include changes
in net flows of existing accounts and net new flows (net contributions to our
publicly available funds and flows from new accounts minus closed accounts). The
table excludes total capital appreciation or depreciation in assets under
management with the exception of the amounts attributable to withdrawals and
closed accounts.

                      NET FLOWS OF ASSETS UNDER MANAGEMENT
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                          YEARS ENDED
                                          DECEMBER 31,
                                       -----------------
                                         2005      2004
                                       -------   -------
<S>                                    <C>       <C>
Existing Accounts:
   Contributions                       $   988    $ 912
   Withdrawals                          (1,036)    (852)
                                       -------    -----
Net Flows of Existing Accounts             (48)      60
                                       -------    -----
Publicly Available Funds:
   Contributions                           256      203
   Withdrawals                            (149)    (172)
Direct Accounts Opened                     312      228
Direct Accounts Closed                    (733)    (940)
                                       -------    -----
Net New Flows                             (314)    (681)
                                       -------    -----
Net Flows of Assets Under Management   $  (362)   $(621)
                                       =======    =====
</TABLE>

     REVENUES

     Revenues were $147.9 million for the year ended December 31, 2005 a
decrease of $4.4 million or 2.9% from $152.3 million earned for the year ended
December 31, 2004. The change was due to a $2.8 million or 2.4% decrease in fee
revenue, a $2.9 million or 8.4% decrease in commission revenue and a $1.3
million or 85.0% increase in interest and other revenues. The average gross fee
earned from client accounts, excluding the effect of any performance fees, was
1.17% for the year ended December 31, 2005 as compared to 1.19% for the year
ended December 31, 2004. The change in the average gross fee rate was due to a
slight change in the client account mix in favor of larger accounts subject to
our fee break, a greater percentage of our accounts having been with us for a
longer period of time and having lower fee rates which have been grandfathered
under our current fee structure and the fact that three of our large accounts
are performance fee based accounts. The change in fee revenue was the result of
a $7.8 million decrease in performance fees earned partially offset by an
increase in fees based on higher assets under management for 2005. Commission
revenue was lower for the year ended December 31, 2005, compared to the year
ended December 31, 2004 due to lower trading volume based upon the investment
decisions made by our portfolio managers. Interest and other revenues increased
primarily due to an increase in interest income earned on our cash management
activities, an increase in investment and foreign currency gains and higher
income earned from our unconsolidated affiliates.

     EXPENSES

     Expenses, excluding income taxes, increased approximately $19.4 million or
23.9% to $100.8 million for the year ended December 31, 2005 from $81.3 million
in the prior year. The most significant


                                       34

<PAGE>

item which caused this increase was the non-cash impairment loss of $12.5
million recognized in respect of a write-off of our customer related
intangibles. The remaining increase was due to changes in operating expenses,
including an increase in variable expenses of $1.3 million in fees paid out,
which are directly related to assets under management of referred accounts and
an increase in employee compensation and benefits of $5.1 million offset in part
by a decrease in commissions, clearance and trading of $0.4 million, which vary
with account activity. The increase in employee compensation and benefits was
caused by an increase in the compensation percentage for 2005 due in part to
additional non-cash compensation expense related to restricted shares issuances
in 2004 and 2005. These grants were to several key employees and resulted in
higher non-cash compensation expense of approximately $3.3 million for the year
ended December 31, 2005. Additionally, research and administration expenses
decreased $0.4 million, marketing expenses decreased $0.1 million, depreciation
and amortization increased $0.1 million and other operating expenses increased
$1.3 million. Included in other operating expenses is minority interest expense
related to WPSAM Europe of $0.5 million due to higher profitability in 2005 and
costs of approximately $0.5 million or approximately one cent per share, related
to due diligence work performed in connection with our entering into
negotiations for a strategic acquisition. We did not proceed with the
acquisition and these costs were expensed in the first quarter of 2005.

     Our income tax expense decreased $0.9 million to $7.0 million for the year
ended December 31, 2005 from $7.9 million in the prior year. The effective U.S.
GAAP tax rates were approximately 15% for 2005 and 11.1% for 2004. The effective
rate for the year ended December 31, 2005, adjusted for the non-recurring
non-cash impairment charge of $12.5 million was 11.8%. The higher than expected
tax rate for the year ended December 31, 2005, was primarily due to the
non-deductible non-cash impairment charge of $12.5 million and the fact that a
larger portion of our performance fees earned on December 31, 2005, was subject
to U.S. corporate tax.

     NET INCOME

     Net income for the year ended December 31, 2005 decreased $23.0 million or
36.6% to $40.1 million from $63.1 million for the prior year as operating
expenses increased at a higher rate than revenues.

     INFLATION

     Our assets are largely liquid in nature and, therefore, not significantly
affected by inflation. However, the rate of inflation may affect our expenses,
such as information technology and occupancy costs, which may not be readily
recoverable in the pricing of the services that we provide. To the extent
inflation results in rising interest rates and has other negative effects upon
the securities markets, it may adversely affect our financial position and
results of operations.

     B.  LIQUIDITY AND CAPITAL RESOURCES

     Our financial condition is highly liquid with principal assets including
cash and cash equivalents, investments available for sale and receivables from
clients. Cash equivalents are primarily short-term, highly liquid investments
with an original maturity of three months or less at the date of purchase.
Liabilities include operating payables and accrued compensation. Our investment
advisory activities do not in general require us to maintain significant capital
balances. However, our advisory activities for clients in The Netherlands, the
activities of W.P. Stewart Securities Limited, our Bermuda-based broker-dealer,
and the sub-advisory activities of W.P. Stewart & Co. (Europe), Ltd., our
London-based research affiliate, require us to maintain certain minimum levels
of capital.

     We continually monitor and evaluate the adequacy of the capital maintained
for those activities and have consistently maintained net capital in excess of
the prescribed amounts. Historically, we have met our liquidity requirements
with cash generated from our operations.


                                       35

<PAGE>

     We anticipate that our cash flow from operations will be sufficient to meet
our debt and other obligations as they come due as well as our anticipated
capital requirements. Our liquidity, facilities and overall financial condition
remain strong. We have maintained a quarterly dividend, though beginning in the
fourth quarter of 2006 we decreased the quarterly dividend from $0.30 per
quarter to $0.23, and have funded that dividend out of operating cash flow. Our
board of directors carefully scrutinizes our earnings and cash position
quarter-by-quarter to ascertain the prudence of our dividend. In March 2007, our
board of directors decided to change the way we pay dividends, moving from the
historic pattern of four equal quarterly amounts to a new policy of paying lower
amounts in the first three quarters and a final, fourth payment in January,
based on cash earnings for the year, including any performance fees recorded in
the fourth quarter. In accordance with this policy and our long-standing policy
to pay dividends approximating substantially all cash earnings, we declared a
quarterly dividend payable in April 2007 of $0.15 per common share. Consistent
with this focus, our board of directors will continue to monitor our liquidity
and our ability to pay dividends and will also consider opportunities for share
repurchases with a view toward increasing long-term shareholder value.

     C.  RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

     Not Applicable.

     D.  TREND INFORMATION

     The positive performance of our clients' portfolios seen in the last few
years continued in 2006, although at a slower pace than anticipated for most of
the year.

     As opposed to the prior two years, for 2006, our U.S. Equity Composite did
not outperform the S&P 500. However, we are optimistic about 2007 and the
following several years. Portfolio earnings growth of our clients' portfolios
has continued to be strong, and our earnings growth forecast for the next few
years is in the 12-15% range. It is expected that the market will return to more
historical levels of 6-8%. Therefore, we believe our absolute earnings growth
potential looks good and our relative earnings growth potential looks better.

     The economic picture for 2006 was a "tale of two years" - a weak start and
a strong finish. In the first part of the year, results came under significant
pressure, with post-fee returns being down more than 8% through early August.
During the second part of the year, however, results bounced back. From the low
point in early August through year end, the percent appreciation of our clients'
portfolios was in the mid-teens, outperforming the S&P. In our view, 2006 may
prove to be the overdue inflection point marking a shift of investor interest
back toward high quality large capitalization growth companies. However, in the
short-term, our year to date performance through March 28, 2007 was lagging
slightly behind the S&P 500 Index.

     Our positive performance has been somewhat offset over the past couple of
years by negative net flows of assets under management. We are working to expand
and develop existing and new distribution alliances in order to reverse this
trend. We believe we have made some progress in the last couple of years in this
regard; however, this is not an exercise that leads to quick results. In
addition, the departure of two portfolio managers in early 2006 and three
additional portfolio managers in early 2007 will most likely continue to result
in client retention issues in the current year. Through March 23, 2007, we
experienced net outflows of approximately $1.1 billion, and foresee additional
outflows of at least approximately $325 million in the first quarter, as one
large sub-advised fund notified us of its decision to close their account by
March 31, 2007.

     As a result of the recent portfolio manager departures noted above,
together with other changes in the balance of our portfolio management
activities among various jurisdictions, the proportion of our


                                       36
<PAGE>

activity based in high-tax countries has increased in the last couple of years
somewhat relative to the activity based in lower-tax jurisdictions. We are
currently taking steps to restore our historical geographical mix; however,
there can be no assurance that these steps will be effective.

     During the month of February 2007, we entered into agreements with certain
employees whose employment with us was terminated in the first quarter. In
accordance with these agreements, we will incur one-time, non-recurring cash
expenses of approximately $1.6 million and non-cash charges related to
restricted shares of approximately $4.2 million in the first quarter of 2007.

     E.   OFF-BALANCE SHEET ARRANGEMENTS

     We have no off-balance sheet arrangements.

     F.   TABULAR DISCLOSURE OF CONTRACTUAL ARRANGEMENTS

     W.P. Stewart & Co., Ltd. has contractual obligations to make future
payments under long-term debt and non-cancelable operating lease agreements and
has contingent commitments as disclosed in the notes to the consolidated
financial statements. The following tables set forth these contractual
obligations and contingent commitments as of December 31, 2006:

                             CONTRACTUAL OBLIGATIONS
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                 2007   2008-2009   2010-2011   2012-THEREAFTER   TOTAL
                                 ----   ---------   ---------   ---------------   -----
<S>                              <C>    <C>         <C>         <C>               <C>
Long-Term Debt (1)               $0.8      $1.8        $1.9          $10.1        $14.6
Minimum Rental Commitments (2)   $3.0      $6.4        $6.9          $19.3        $35.6
</TABLE>

(1)  See Note 8 to the consolidated financial statements for additional
     information.

(2)  See Note 17 to the consolidated financial statements for additional
     information.

                             CONTINGENT COMMITMENTS
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                                AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
                                          ------------------------------------------------------
                                          2007   2008-2009   2010-2011   2012-THEREAFTER   TOTAL
                                          ----   ---------   ---------   ---------------   -----
<S>                                       <C>    <C>         <C>         <C>               <C>
Commitments under letters of credit (3)    --       $1.2         --            $0.7         $1.9
</TABLE>

(3)  See Note 9 to the consolidated financial statements for additional
     information.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

     A.   DIRECTORS AND SENIOR MANAGEMENT

     Members of the board of directors of W.P. Stewart & Co., Ltd. are elected
by the shareholders of W.P. Stewart & Co., Ltd. All directors serve until
re-elected at the next annual general meeting or their successors are elected or
appointed.


                                       37

<PAGE>

     The following table sets forth information with respect to the current
directors and executive officers of W.P. Stewart & Co., Ltd.

<TABLE>
<CAPTION>
NAME                                                POSITION                             POSITION HELD SINCE
----                                                --------                             -------------------
<S>                       <C>                                                            <C>
William P. Stewart.....   Chairman, Chief Executive Officer and Director(1)              June 1998 (Director);
                                                                                         1975-May 2005 & January
                                                                                         2007-present (officer)

Henry B. Smith.........   Deputy Chairman and Director(1)                                June 1998

John C. Russell........   Director(1)                                                    June 1998

Dominik M.F. Brunner...   Director(3)                                                    May 2004

Angus S. King, Jr......   Director(2)(4)                                                 February 2004

Jeremy W. Sillem.......   Director(2)(3)                                                 May 2005

Heinrich Spangler......   Director(4)                                                    June 1998

Jan J. Spiering........   Director(1)(3)                                                 September 2004

Richard D. Spurling....   Director (2)(4)                                                June 2002

Rocco Macri............   Managing Director - Chief Operating Officer                    May 2005

Susan G. Leber.........   Managing Director - Chief Financial Officer                    May 2005

William O. Hall, III...   Managing Director - Marketing & Client Services                February 2007

Mark I. Phelps.........   Managing Director - Global Investments                         February 2007

Peter Jan P. Rubingh...   Managing Director - Marketing & Client Services                February 2007

Charles G.R. Target....   Managing Director - Communications and Corporate Development   February 2007

Sylvia A. Cart.........   Deputy Managing Director - Broker/Dealer                       April 2005

Mark A. Henderson......   Deputy Managing Director                                       November 1998

Frederick M. Ryan......   Deputy Managing Director - Investor Relations                  September 2001

Michael W. Stamm.......   Deputy Managing Director - General Counsel                     July 2006

Debra Randall..........   Corporate Secretary                                            January 2001
</TABLE>

----------
(1)  Denotes member of the Executive Committee of the board of directors.

(2)  Denotes member of the Compensation Committee of the board of directors.

(3)  Denotes member of the Audit Committee of the board of directors.

(4)  Denotes member of the Nominating and Corporate Governance Committee of the
     board of directors.

     WILLIAM P. STEWART is Chairman, Chief Executive Officer and a Director of
W.P. Stewart & Co., Ltd. He started on Wall Street in 1955 on the trading floor
of the New York Stock Exchange. He joined Spingarn, Heine & Co. in 1957 as an
analyst/registered representative and, in 1961, moved to Pyne, Kendall &
Hollister in the same capacity. He was successively Director of Research,
General Partner responsible for the firm's investment advisory and institutional
operations, President of its international investment banking subsidiary,
Managing Partner and Chairman and Chief Executive Officer of Riter, Pyne,
Kendall & Hollister, Inc. After the sale of Riter, Pyne's principal business in
early 1973, Mr. Stewart joined Ruane, Cunniff & Co., an investment management
firm, as Vice Chairman, while simultaneously founding our U.S. predecessor
company as a corporate consultant. He established our U.S. predecessor company
as an investment advisory firm in 1975.

     HENRY B. SMITH has served as a Director of W.P. Stewart & Co., Ltd. since
June 1998. Mr. Smith became President and Chief Executive Officer in May 2005
and resigned from these positions effective as of March 31, 2006, due to health
reasons. Mr. Smith remains on the Board of Directors in the position of


                                       38

<PAGE>


Deputy Chairman and member of the Executive Committee. Until its acquisition by
HSBC Holdings PLC in February 2004, Mr. Smith was Chief Executive Officer and a
Director of The Bank of Bermuda, with whom he had been employed in various
capacities since 1973. From February 2004 through December 31, 2004, he held the
position of Executive Director of The Bank of Bermuda, with oversight
responsibility for the integration of the Bank's businesses into the HSBC group.
Mr. Smith remains a non-executive director of The Bank of Bermuda and is also a
director of Axis Capital Holdings Limited in Bermuda.

     JOHN C. RUSSELL has served as a Director of W.P. Stewart & Co., Ltd. since
1998. Mr. Russell stepped down from his interim position as President and Chief
Executive Officer in February of 2007 but remains a valued consultant to the
firm as well as a Director and a member of the Executive Committee. Mr. Russell
relinquished the position of Deputy Chairman as of March 31, 2006 when he became
interim President and Chief Executive Officer. He joined the Stewart Group in
1996 as General Counsel, relinquishing that position after becoming the firm's
Chief Operating Officer in April 1997. From 1992 to 1996, Mr. Russell was a
partner in the law firm of Kroll & Tract. From 1987 through 1992, Mr. Russell
served as President and Chief Executive Officer of the Ohio Brass Company, a
manufacturing company, and OB Systems and Mining, Inc., another manufacturing
company. From 1980 to 1987, he served as President and Chief Executive Officer
of Naarden International, Inc., an international fragrance and flavor company.
In 1970, Mr. Russell was a founding partner of the law firm Anderson Russell
Kill & Olick. Mr. Russell has more than 40 years of experience in domestic and
international corporate and securities law.

     DOMINIK M. F. BRUNNER has served as a Director of W. P. Stewart & Co., Ltd.
since May 2004. Mr. Brunner is currently the Principal of First Capital
Investments Ltd., a private company he founded in 1997, providing investment
banking services to European mid-sized enterprises. Also, in 1997, Mr. Brunner
founded and operated Dominik Brunner - Servicos Financeiros, LDA ("DBSF"). DBSF
provided financial consulting in Portugal and acted as a representative of
Clariden Bank, a Credit Suisse Group company. The operations of DBSF were sold
to Clariden Bank AG at the end of 2003. From 1993 to 1997 Mr. Brunner was the
Co-Managing Partner of Espirito Santo Development Capital Investors. Ltd., a
$100 million private equity fund, sponsored by the Espirito Santo Group of
Portugal and whose investors included financial institutions from Europe, the
Middle East and the United States. Previously, Mr. Brunner was involved in the
European chemicals industry and the international trading industry as an
executive and management board member of several companies.

     ANGUS S. KING, JR. has served as a Director of W.P. Stewart & Co., Ltd.
since February 2004. Mr. King is currently Of Counsel to the law firm of
Bernstein, Shur, Sawyer and Nelson and is affiliated with Leaders, LLC, a
mergers and acquisitions firm, both groups being headquartered in Portland,
Maine. Mr. King is also a Distinguished Lecturer at Bowdoin College in
Brunswick, Maine. Mr. King served as the Governor of the State of Maine from
1995 to 2003. He was first elected as an independent in 1994 and was re-elected
in 1998. Prior to this, Mr. King was in the private practice of law from 1975
until 1983 with the firm Smith, Loyd and King in Brunswick, Maine. From 1976
until 1993 Mr. King hosted and co-produced a variety of public affairs
programming on Maine PBS stations. He was employed for six years as the Vice
President and Chief Counsel in Portland, Maine for the Swift River-Hafslund
Company. From 1989 to 1994 he served as the President of Northeast Energy
Management, Inc., a company that he founded.

     JEREMY W. SILLEM has served as a Director of W.P. Stewart & Co., Ltd. since
May 2005. Mr. Sillem is the Managing Partner of Spencer House Partners LLP. From
2000 to 2004, he was Chairman of Bear, Stearns International Limited, the
European arm of the New York based investment bank. Prior to joining Bear
Stearns, Mr. Sillem spent a 28 year career with Lazard LLC and its predecessor
entities, ultimately serving as Chief Executive of Lazard Capital Markets in
London and as a Managing Director of Lazard Freres & Co. New York and Lazard
Brothers & Co. Limited London. From 1994 to 2004 he


                                       39

<PAGE>


was a member of the International Capital Markets Committee of the New York
Stock Exchange. He is Chairman of the World Trust Fund, a London Stock
Exchange-listed investment company, and is a director of Mezzacappa Partners LLC
and Mezzacappa Long/Short Fund LLC, two SEC registered funds of hedge funds
managed by Mezzacappa Partners of New York; RHJ International SA, a diversified
holding company of businesses primarily located in Japan listed on the First
Market of Euronext Brussels; and Harbourmaster Capital (Holdings) Limited, a
European CLO/CDO Manager. He is a member of the HCPA Hedge Fund Advisory
Committee and Partners Capital Investment Group LLC Advisory Board. He is also a
member of the Business Advisory Forum of the Said Business School of Oxford
University and the Investment Committee of Brasenose College Oxford, and serves
as an Advisory Director of Reform, the London based public policy think tank.

     HEINRICH SPANGLER has served as a Director of W.P. Stewart & Co., Ltd.
since June 1998. For the last 26 years, Mr. Spangler has served in various
capacities, including managing partner, and presently serves as Spokesman of the
Board of Management and Chief Executive Officer of Bankhaus Carl Spangler & Co.
AG, the oldest private bank in Austria. Mr. Spangler also serves as Chairman of
the Supervisory Board of Carl Spangler Kapitalanlageges. m.b.H., a private
investment company located in Salzburg, Austria.

     JAN J. SPIERING, F.C.A. has served as a Director of W.P. Stewart & Co.,
Ltd. since September 2004. Mr. Spiering is a Fellow of the Institute of
Chartered Accountants in England and Wales and a Fellow of the Institute of
Chartered Accountants of Bermuda, and is the retired Managing Partner and
Chairman of Ernst & Young Bermuda, a firm which he joined in 1979. Previous to
Ernst & Young, he was employed by Robson Rhodes, a United Kingdom firm of
Chartered Accountants with whom he qualified. Additionally, Mr. Spiering has
served as a director of numerous companies and in particular within the
investment industry. Currently he is President and a director of several
privately held investment companies as well as a director of a Bermuda
reinsurance company. He has served on various public boards and committees
including Deputy Chairman of Bermuda International Business Association,
Chairman of Bermuda's International Business Association Mutual Funds, Chairman
of the Board of Governors of the Bermuda College and Chairman of Bermuda's
International Business Forum.

     RICHARD D. SPURLING has been a Director of W.P. Stewart & Co., Ltd. since
June 2002. Mr. Spurling retired in March 2005 as Senior Partner at Appleby
Spurling Hunter (formerly Appleby, Spurling & Kempe), an international law firm
with offices in Bermuda, the Cayman Islands, British Virgin Islands, London (UK)
and Hong Kong, where he had practiced since 1977. He obtained his English Bar
qualification in 1975 and was called to the English Bar in November 1976
following pupilage at Law Chambers in London. He was called to the Bermuda Bar
in 1977. Mr. Spurling also serves as a director of Belco Holdings Limited,
Bermuda Electric Light Company Limited, BF&M Life Insurance Company Limited,
BF&M Limited, Bermuda International Insurance Services Limited and Bermuda Press
(Holdings) Ltd. in Bermuda; as a Life Trustee of the Bermuda Biological Station
for Research, Inc; and as a Trustee of the St. George Foundation. Mr. Spurling
was an elected Member of the Bermuda Parliament for five years and served as the
Government Whip.

     ROCCO MACRI is Managing Director - Chief Operating Officer of W.P. Stewart
& Co., Ltd. He served as Deputy Managing Director - Chief Financial Officer from
September 2001 until May 2005 and as Finance Director from March 1999 until
September 2001. From 1993 through 1999, he was a Partner with the accounting
firm of Lopez, Edwards Frank & Co., LLP, where he was a Manager from 1984
through 1998. From 1984 through 1998 Mr. Macri had principal responsibility for
the Stewart Group audit. Mr. Macri received a B.A. in Business Administration in
1981 from Adelphi University and is a Certified Public Accountant.

     SUSAN G. LEBER is Managing Director - Chief Financial Officer of W.P.
Stewart & Co., Ltd. She served as Deputy Managing Director - Financial
Operations from March 2003 until May 2005, as


                                       40

<PAGE>

Director of Financial Operations from December 2001 until March 2003 and as
Deputy Finance Director - Group Controller from March 1999 until December 2001.
Prior to joining W.P. Stewart, she was a Senior Manager with the accounting firm
of Lopez Edwards Frank & Co., LLP from 1993 to 1999, where she was manager of
the Stewart Group audit. Ms. Leber received a Bachelors of Science degree in
accounting from The University of Staten Island and is a Certified Public
Accountant.

     WILLIAM O. HALL, III is Managing Director - Marketing & Client Services
(United States) of W.P. Stewart & Co., Ltd. Prior to February 2007 he was Senior
Vice President of W.P. Stewart Asset Management (N.A.) Inc. He has more than 20
years of experience in the investment and wealth management business. Prior to
joining W.P. Stewart in December 2002, Mr. Hall was Managing Director of H.M.
Payson & Co., a private trust company in Portland, Maine. Mr. Hall was also a
founder and managing principal of Hazzard & Hall, CPA's, PA. He holds a
bachelors degree from the University of Richmond and a Masters in Finance from
Bentley College. Mr. Hall is a Chartered Financial Analyst, a Certified Public
Accountant and a Certified Financial Planner. He serves on the boards of a
number of charitable organizations and is Vice Chairman of Maine Education
Services.

     MARK I. PHELPS is an Analyst/Portfolio Manager and became Managing Director
- Global Investments in February 2007. Previously, he had been appointed Deputy
Managing Director - Global Investments in July 2006. He joined W.P. Stewart in
February 2005 at its London research and portfolio management subsidiary, W.P.
Stewart & Co. (Europe), Ltd. Mr. Phelps is a British national with more than 20
years experience in European, U.S. and Global investment research and portfolio
management. For over ten years he held senior positions with the Dresdner Bank
organization in both London and San Francisco. Most recently he served as a
Chief Investment Officer for Global Equities at Dresdner RCM in San Francisco.
Mr. Phelps has a BA (Hons.) in Economics from the University of York in England
and completed graduate studies at the Royal Military Academy Sandhurst, England.
From 1981 to 1984 Mr. Phelps was in the British Army and finished his service
with the rank of Captain.

     PETER JAN P. RUBINGH became Managing Director - Marketing & Client Services
(Europe & Asia) in February 2007. Previously, he was a Deputy Managing Director
of W.P. Stewart and Co., Ltd. since 2000 and Co-Chairman of W.P. Stewart Asset
Management (Europe), Ltd. since January 2001. In 1993, Mr. Rubingh co-founded
TPR & Partners N.V. (now a part of W.P. Stewart Asset Management (Europe),
Ltd.), an Amsterdam-based business which concentrated on gathering assets and
servicing clients for W.P. Stewart. Between 1979 and 1993 he worked for Noro
Nederland B.V. (The Noro Group of Companies), where he served in various
capacities, including Group Controller, Assistant Managing Director, Management
Team Member and Portfolio Manager (Venture Capital) in The Netherlands, the
United States and the Netherlands Antilles.

     CHARLES G.R. TARGET became Managing Director - Communications and Corporate
Development of W.P. Stewart & Co., Ltd. in February 2007. Previously, he served
as Deputy Managing Director - International Development of W.P. Stewart & Co.,
Ltd. Mr. Target is an Executive Director of our Asian affiliate, Bowen Asia
Limited. Prior to the founding of Bowen, Mr. Target was a general partner and
director of Alan Patricof Associates, the London-based international venture
capital company. Before joining Patricof in 1988, Mr. Target served as Managing
Director of Business International Asia/Pacific Ltd., an economic research and
consulting company owned by the Economist Group, where he was responsible for
the Asian regional operations of the company.

     SYLVIA A. CART is Deputy Managing Director - Broker/Dealer of W.P. Stewart
& Co., Ltd. Ms. Cart also serves as Vice-President and Compliance Officer of our
broker-dealer subsidiary W.P. Stewart Securities Limited. She served as
Supervisor of our broker-dealer operations from February 1998 until March 2000
and as Senior Trading Administrator since February 1998. Prior to joining W.P.
Stewart, she was a Costing Analyst in the Global Custody department of The Bank
of Bermuda. Ms. Cart received a Business Diploma from The Bermuda College.


                                       41

<PAGE>

     MARK A. HENDERSON is Deputy Managing Director of W.P. Stewart & Co., Ltd.
and Co-Chairman of W.P. Stewart Asset Management (Europe), Ltd. He joined W.P.
Stewart in 1998. Mr. Henderson began his career in New York with Rheem
International, Inc., a subsidiary of City Investing Corp. He was seconded by
Rheem to South Africa between 1969 and 1973 to establish their South African
subsidiary. In 1974 he joined Panmure Gordon & Co., members of the London Stock
Exchange. He became an individual member of the London Stock Exchange in 1979
and a partner of Panmure Gordon & Co. in 1981. Panmure Gordon & Co. was acquired
by NationsBank Corp. in 1986. In that year he became a director of NationsBank
(Europe) Ltd. and a member of the Executive Committee of Panmure Gordon & Co.,
Ltd. He is currently a member of The Securities Institute in London.

     FREDERICK M. RYAN has served as Deputy Managing Director - Investor
Relations of W.P. Stewart & Co., Ltd. since September 2001. Mr. Ryan served as
Deputy Managing Director from February 1999 through August 2001 and as Deputy
Managing Director - Europe from October 1998 through January 1999. Prior to
that, Mr. Ryan was a consultant with FMR Capital Advisory, financial and
business consultants. From 1991 through 1997, he was president of Canada Life
Investment Management. Mr. Ryan worked with the investment and business
consulting group of FMR & Associates from 1982 through 1991. From 1969 through
1982, Mr. Ryan was a shareholder, officer and Director of R.A. Daly & Co., Ltd.,
a brokerage firm and a former member firm of the Toronto Stock Exchange. Mr.
Ryan has been a member of the CFA Institute (formerly the Association for
Investment Management & Research) since 1967 and served as president of the
Toronto Society of Financial Analysts (a constituent member society of the CFA
Institute) in 1976-1977.

     MICHAEL W. STAMM is Deputy Managing Director - General Counsel of W.P.
Stewart & Co. Ltd. He joined W.P. Stewart in 2002. Previously, Mr. Stamm was
Executive Vice President and General Counsel of HealthMarket Inc, a health care
company. Prior to joining HealthMarket, he had been a partner at the New
York-based law firms Kelley Drye & Warren LLP and Anderson Kill & Olick, where
he was chairman of the corporate practice group. He served as outside counsel
for the W.P. Stewart Group during many of his years at those firms. He holds a
B.A in Political Science from Villanova University and a J.D. from Rutgers Law
School.

     DEBRA RANDALL has served as Corporate Secretary of W.P. Stewart & Co., Ltd.
since January 2001. Ms. Randall, a graduate of the Institute of Chartered
Secretaries and Administrators, has more than 14 years' experience in the legal
and corporate services sector.

     Charles Target is the son-in-law of William P. Stewart. There are no other
family relationships between any directors and executive officers.

     B.   COMPENSATION

     The aggregate compensation paid or accrued in 2006 by W.P. Stewart & Co.,
Ltd. to individuals serving as directors and executive officers during that
year, including bonuses and compensation payable pursuant to employee benefit
plans, was $8.4 million. In addition, during 2006 certain directors were issued
an aggregate of 22,500 common shares as compensation for their services, and
executive officers were issued an aggregate of 528,947 common shares as part of
their non-cash incentive compensation granted during the year. All of such share
issuances were in the form of restricted share grants pursuant to which the
shares vest over three to five years. In addition, there are certain
restrictions on transfer until the time at which the shares are fully vested.

     We sponsor both a defined contribution profit-sharing plan (including a
401(k) feature) and a defined contribution money-purchase plan in the United
States. We also sponsor similar defined contribution retirement plans in both
Bermuda and the United Kingdom. These plans cover substantially all employees
who meet the minimum age, service and eligibility requirements. The aggregate
amount


                                       42

<PAGE>

paid, set aside or accrued by W.P. Stewart & Co., Ltd. in 2006 to provide
pension, retirement or other employee benefits to individuals serving as
directors and executive officers during that year was $270,476.

     W.P. Stewart & Co., Ltd. has agreed to pay each of its "non-executive
directors" (currently Messrs. Brunner, King, Sillem, Smith, Spangler, Spiering
and Spurling) $20,000 per annum for his services on the board of directors. In
addition, we have agreed to pay each non-executive director $10,000 per annum
for each committee on which such director serves in addition to the $20,000
annual fee for services on the board of directors. In addition to such fees, the
Deputy Chairman of the Board of Directors (currently Mr. Smith) will receive
$80,000 per annum, and the Chairman of the Audit Committee and named financial
expert (currently Mr. Spiering) will receive $40,000 per annum.

     C.   BOARD PRACTICES

     The terms of office of our directors and officers will run until the
election of successor directors (or until the shareholders resolve in a general
meeting not to re-appoint a director) or the appointment of successor officers.

     Executive Committee. The Executive Committee of the board of directors is
composed of Messrs. Russell, Smith, Spiering and Stewart. The Executive
Committee has the power and authority to manage the affairs of the company on
behalf of the board of directors when it is not in session, consistent with the
expressed desires of the board of directors. The Executive Committee maintains a
record of any and all actions it takes and notifies the board of directors after
it takes any such action. The agenda for each regular quarterly meeting of the
board of directors includes discussion and ratification of actions that have
been taken by the Executive Committee since the previous regular quarterly board
meeting.

     Compensation Committee. The Compensation Committee of the board of
directors is composed of Messrs. King, Sillem and Spurling. The Compensation
Committee is responsible for, among other things, making recommendations to the
board of directors as to our compensation philosophy; overseeing the development
of compensation programs; evaluating the performance of senior management and
determining compensation levels for senior management; making recommendations to
the board of directors concerning non-senior management compensation, incentive
compensation plans and equity-based plans; and overseeing implementation of, and
compliance with, incentive compensation plans and equity based plans.

     Audit Committee. The Audit Committee of the board of directors is composed
of Messrs. Brunner, Sillem and Spiering. The Audit Committee is responsible for,
among other things, reviewing the structure of our internal controls, including
internal audit; the annual appointment of the external auditors, including the
approval of audit engagement fees and terms; considering the independence of the
external auditor; approving audit and non-audit engagements with the external
auditor; reviewing the annual audit plan; reviewing our audited and unaudited
financial statements and the related management discussion in our periodic
reports filed with the SEC and earnings press releases; reviewing disclosures
made in connection with certifications provided by management for our annual
report on Form 20-F; assisting the board of directors in its review of
compliance with regulatory requirements; reviewing compliance with policies and
practices involving ethics, conflicts and other such matters, as delegated by
the board of directors; and establishing procedures for submission and treatment
of complaints regarding accounting, internal controls and auditing matters. The
Audit Committee meets and reports to the board of directors no less than once
per quarter.

     Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee of the board of directors is composed of Messrs. King,
Spangler and Spurling. This committee is responsible for, among other things,
recommending to the board of directors the desirable size of the


                                       43

<PAGE>

board or any committee thereof; developing criteria for board members and
evaluating potential candidates against such criteria; reviewing and responding
to nominations for board membership; identifying and recommending to the board
candidates for board membership; developing and recommending to the board a set
of corporate governance principles; monitoring compliance with our corporate
governance principles and code of ethics; developing and recommending to the
board standards in determining whether a board member is independent; and
establishing procedures to oversee the annual evaluation of the board and
management.

     We have not entered into any contracts with directors for benefits upon
termination of service.

     Our Board of Directors has adopted Corporate Governance Guidelines as well
as charters for the Audit Committee, Compensation Committee and Nominating and
Corporate Governance Committee which comply with the corporate governance rules
of the New York Stock Exchange. A copy of the Corporate Governance Guidelines
and each of these charters is available on our website at www.wpstewart.com. A
copy of such documents will also be made available to our shareholders upon
request by contacting our Deputy Managing Director--Investor Relations by phone
at (441) 295-8585, by fax at (441) 296-8357 or by e-mail at
IRINFO@wpstewart.com.

     Our Board of Directors, upon the recommendation of the Nominating and
Corporate Governance Committee, adopted standards for determining the
independence of directors. These standards, which comply with the corporate
governance rules of the New York Stock Exchange, require, among other things,
the absence of the following characteristics for a director to be deemed
independent: employment by us of the director or his/her immediate family
member; compensation (other than as a director) from us to the director or
his/her immediate family member; affiliation with our auditor; interlocking
compensation committee with another entity with which the director or his/her
immediate family member is an executive officer; a material financial
relationship between us and an entity of which the director or his/her immediate
family member is a director or employee. In 2006, the Board of Directors
determined that each of Messrs. Brunner, King, Sillem, Spangler, Spiering and
Spurling qualified as independent under the standards adopted.

     In accordance with our Corporate Governance Guidelines adopted by the Board
of Directors, the non-management directors of our Board of Directors meet in
executive sessions at regularly scheduled intervals, with no members of
management present. The Chairman of the Nominating and Corporate Governance
Committee, currently Mr. Spurling, normally presides over such meetings. In his
absence another member of that committee would be chosen. In the event an
interested party should wish to make any concerns known to the non-management
directors, they may contact Mr. Spurling care of our offices in Bermuda. The
mailing address for our offices is P.O. Box HM 2905, Hamilton HMLX, Bermuda.

     D.   EMPLOYEES

     At December 31, 2004, 2005 and 2006, we employed 106, 117 and 113 persons,
respectively. We consider our relations with our employees to be good.


                                       44

<PAGE>


     E.   SHARE OWNERSHIP

     The following table presents information regarding the beneficial ownership
of our common shares by our directors and executive officers as of March 1,
2007:

<TABLE>
<CAPTION>
                                      NUMBER
                                        OF
                                      COMMON
                                      SHARES
               NAME                    OWNED    PERCENTAGE
               ----                 ---------   ----------
<S>                                 <C>         <C>
William P. Stewart (1)              4,182,711      8.70%
Peter Jan P. Rubingh (2)              762,366      1.59%
All other Directors and Executive
Officers as a group (3)             1,574,224         *
</TABLE>

*    Each individual's ownership is less than 1%.

(1)  Includes 4,144,140 shares owned by trusts for which Mr. Stewart serves as
     trustee (with respect to which Mr. Stewart disclaims beneficial ownership)
     and 8,571 shares that may be purchased upon exercise of currently
     exercisable options.

(2)  Includes 730,419 shares which are owned by a holding company of which Mr.
     Rubingh owns 100%.

(3)  Includes 125,000 shares held by a trust (with respect to which beneficial
     ownership is disclaimed) and 37,238 shares that may be purchased upon
     exercise of currently exercisable options.

     As of March 1, 2007, our directors and executive officers currently own
options to purchase an aggregate of 157,381 of our common shares. Each option
vests in equal portions on the first seven anniversaries of the grant date.
77,572 of these options were granted on October 24, 2001 at an exercise price of
$20.80 per share and will expire on October 24, 2008. An additional 29,716,
41,524 and 8,569 of these options were granted on May 1, 2002, August 20, 2002
and October 3, 2002 at exercise prices of $28.42, $22.10 and $16.58,
respectively, for an aggregate of 79,809 options. These options will expire on
May 1, 2009, August 20, 2009 and October 3, 2009, respectively.

     W.P. Stewart & Co., Ltd. historically had periodically sold common shares
to its employees and those of its affiliates at fair value for cash and/or
installment notes. These installment notes are full recourse, bear interest at
8.5% or 10% per annum and are collateralized by the shares purchased. The
principal amount of each note is payable in 28 quarterly installments, subject
to mandatory payment in full upon termination of employment. Shares vest in 28
equal quarterly installments. Unvested shares are, and vested shares may be,
repurchased from the employee upon termination. Different, but substantially
equivalent, terms applied in respect of individuals employed in certain
countries outside Bermuda and the United States.

     W.P. Stewart & Co., Ltd. 2001 Employee Equity Incentive Plan, as amended

     In 2001, we adopted the W.P. Stewart & Co., Ltd. 2001 Employee Equity
Incentive Plan, a share option and restricted share plan, to promote the
interests of W.P. Stewart & Co., Ltd. and its shareholders by aiding us and our
affiliates in attracting and retaining employees and directors capable of
assuring our future success, by offering such persons incentives to put forth
maximum efforts for the success of our business, and by affording such persons
an opportunity to acquire a proprietary interest in our company. The plan
continued in effect until July 23, 2004, as of which dated the plan expired and
no further awards will be granted. Awards granted prior to the termination date
extend beyond the termination of the plan, and the authority of management and
our Compensation and Executive Committees to administer the plan and our board
of directors to amend it, extend beyond the termination of the plan.


                                       45

<PAGE>

     The plan is administered by our management, subject to oversight by the
Compensation and Executive Committees of our board of directors. Subject to
review and approval by the committee, as appropriate, management continues after
termination of the plan to have the authority to:

     -    subject to certain conditions, amend the terms and conditions of any
          award or award agreement and accelerate the exercisability of any
          award or the lapse of restrictions relating to any award;

     -    determine whether, to what extent and under what circumstances awards
          may be exercised with the payment of cash, shares, other securities,
          other awards or other property, or canceled, forfeited or suspended;

     -    determine whether, to what extent and under what circumstances cash,
          shares, other securities, other awards, other property and other
          amounts payable by W.P. Stewart & Co., Ltd. with respect to an award
          under the plan shall be deferred either automatically or at the
          election of the holder thereof or the committee;

     -    interpret and administer the plan and any instrument or agreement,
          including any award agreement, relating to the plan;

     -    establish, amend, suspend or waive such rules and regulations and
          appoint such agents as it shall deem appropriate for the proper
          administration of the plan; and

     -    make any other determination and take any other action that the
          committee deems necessary or desirable for the administration of the
          plan.

     Subject to limited exceptions permitted by the committee, awards may not be
transferred other than by will or by the laws of descent and distribution.
Except as otherwise provided in the plan, no award or right under an award may
be pledged, alienated, attached or otherwise encumbered, and any attempt to
pledge, alienate, attach or encumber an award will be void and unenforceable
against us or any of our affiliates.

     The committee may waive any conditions of or our rights under any
outstanding award, prospectively or retroactively. Except as otherwise provided
in the plan or an award agreement, unless we or the committee obtains consent
from the participant, holder or beneficiary of the award, the committee may not
amend, alter, suspend, discontinue or terminate any outstanding award
prospectively or retroactively.

     If the committee determines that any event affecting the shares would
result in the dilution or enlargement of any of the benefits or potential
benefits intended to be made available under the plan, the committee will, in a
manner it deems equitable, adjust any or all of:

     -    the number and type of shares (or other securities or other property)
          subject to outstanding awards; and

     -    the purchase or exercise price with respect to any award.

     All awards under the plan are evidenced by appropriate agreements executed
on our behalf and by the participants. Awards generally vest over a seven-year
period. The exercise price of a share option is not less than the New York Stock
Exchange closing price of our common shares on the date of grant. Restricted
shares were purchased at a discount of up to 20% from the New York Stock
Exchange closing price value.


                                       46
<PAGE>

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

     A.   MAJOR SHAREHOLDERS

     The following table presents information regarding the beneficial ownership
of our common shares as of March 1, 2007 by persons or groups of affiliated
persons known to us to own more than 5% of our common shares. See also Item 6 E
above under the caption "Directors, Senior Management and Employees - Share
Ownership."

<TABLE>
<CAPTION>
NAME                        NUMBER     PERCENTAGE
----                      ----------   ----------
<S>                       <C>          <C>
WPS II, Inc.              19,264,557      40.1%
Van Den Berg Management    8,391,790      17.5%
</TABLE>

     WPS II, Inc. has the same voting rights per share as all other holders of
common shares; however, our bye-laws specifically exempt such holder from the
limitations on voting power that may apply to other holders if they become
owners of more than a specified percentage of common shares. Van Den Berg
Management is not exempt and, therefore, is subject to the limitations described
in Item 3 D under the caption "Key Information - Risk Factors - Our bye-laws
restrict shareholders' voting rights...."

     As of March 1, 2007, we had 181 shareholders of record, of which 124,
owning approximately 97% of our common shares, were U.S. persons.

     B.   RELATED PARTY TRANSACTIONS

     In connection with purchases of shares of W.P. Stewart & Co., Ltd. and its
predecessors, since at least 1991, our employees, including our executive
officers, and our directors have entered into loan agreements with, and signed
promissory notes to, us in respect of some or all of the purchase price of such
shares. Most of our employees are or have been parties to such loans. In
connection with such share purchases, Messrs. Russell and Target and Ms. Cart
have outstanding loans pursuant to loan agreements with, and signed promissory
notes to, the Stewart Group. Each of these loans accrues interest at a rate of
either 8.5% or 10% per annum. Pursuant to Section 402 of the Sarbanes-Oxley Act
of 2002, there have been no material changes to these loans nor have there been
any new loans made subsequent to July 30, 2002 to any directors or executive
officers.

     The table set forth below provides the details with respect to the
aggregate amount outstanding under these loan agreements and promissory notes as
of December 31, 2006 and the largest aggregate amount of indebtedness
outstanding under each of these loan agreements and promissory notes during the
year ended December 31, 2006 for each of the above-named directors and executive
officers.

<TABLE>
<CAPTION>
                                                  LARGEST AMOUNT
                                                OUTSTANDING DURING
                         AMOUNT OUTSTANDING       THE YEAR ENDED
NAME                  AS OF DECEMBER 31, 2006    DECEMBER 31, 2006
----                  -----------------------   ------------------
<S>                   <C>                       <C>
John C. Russell               $92,925                $193,555
Charles G.R. Target                 0                  28,669
Sylvia A. Cart                 17,089                  22,393
</TABLE>


                                       47

<PAGE>

     The lease agreement relating to W.P. Stewart & Co., Inc.'s office space in
New York covers space utilized by Stewart family interests that reimburse W.P.
Stewart & Co., Inc., on a monthly basis, for that portion of the rental and
other costs associated with the space so utilized. Such lease-related amount was
$181,545 for the year ended December 31, 2006. We believe that the reimbursement
amounts that we receive from the Stewart family interests for the utilization of
this space are as favorable as the amounts we could receive from an unaffiliated
party for utilization of the same space.

     W.P. Stewart & Co., Ltd. owns approximately 40% of Bowen Asia Limited. Ms.
Lisa M. Stewart, the daughter of Mr. William P. Stewart, and Mr. Charles G.R.
Target, Ms. Stewart's husband and a Managing Director of W.P. Stewart & Co.,
Ltd., together own a majority of the stock of Bowen Asia Limited. We have been
granted an option exercisable from June 2004 until June 2009 to expand our
ownership of Bowen Asia Limited to a majority interest. In addition to our
investment in Bowen Asia Limited, we pay solicitation, sub-advisory and research
fees to Bowen Asia Limited. Such fees were, in the aggregate, $1,457,152 for the
year ended December 31, 2006. We believe that the solicitation, sub-advisory and
research fees that we pay to Bowen Asia Limited are as favorable as the fees we
would pay to an unaffiliated party for similar services. We have entered into an
agreement with Bowen Capital Management, a subsidiary of Bowen Asia Limited,
which entitles us to receive solicitation fees for client referrals to Bowen
Capital Management. Total solicitation fees received under the terms of this
agreement were $7,114 for the year ended December 31, 2006. In addition, we
entered into a joint venture arrangement with Bowen Asia Limited pursuant to
which each of us and Bowen owns 50% of Stewart Bowen Japan Ltd., the parent of
W.P. Stewart Japan K.K. W.P. Stewart Japan K.K. provides client servicing and
asset gathering activities. As of December 31, 2006, our investment in Stewart
Bowen Japan Ltd. totaled $107,035.

     Since April 30, 1999, we have used an aircraft owned by Shamrock Aviation,
Inc. and have compensated Shamrock Aviation, Inc. for its use by paying charter
fees that we believe are more favorable to the Stewart Group than the fees that
would be paid to an unaffiliated charterer. Shamrock Aviation, Inc. is owned by
Mr. William P. Stewart and trusts for the benefit of his four adult children.
Mr. Stewart serves as President, and Mr. Gregory S. Stewart, his son, serves as
Vice President, of Shamrock Aviation, Inc. Fees to Shamrock Aviation, Inc.,
reflected in research and administration expenses, amounted to $738,731 for the
year ended December 31, 2006. We entered into agreements pursuant to which
Shamrock Aviation, Inc. or an entity affiliated with Shamrock has agreed to
provide operational and maintenance services at cost for a Challenger aircraft
owned by one of our subsidiaries. These costs, reflected in research and
administration expenses, include $3,087,474 for the year ended December 31,
2006. We believe that the terms of this transaction are more favorable to us
than the terms that we could obtain from an unaffiliated party in a comparable
transaction.

     We pay solicitation fees in respect of certain accounts and an amount
calculated on the basis of a portion of the brokerage commissions paid by
certain accounts, as directed by those clients, to a beneficial owner of a
minority interest in W.P. Stewart & Co., Ltd. Such payments amounted to $7,867
for the year ended December 31, 2006. We believe that the payments made are as
favorable as those we would pay to an unaffiliated party in a similar
transaction.

     We pay Carl Spangler Kapitalanlageges. m.b.H., which is controlled by
Bankhaus Carl Spangler & Co. AG, the Chief Executive Officer of which is
Heinrich Spangler, one of our directors, fees for solicitation services. These
fees amounted to $513,106 for the year ended December 31, 2006.

     Certain directors of W.P. Stewart & Co., Ltd. serve as directors of funds
from which we have received investment advisory fees, fund management fees,
subscription fees and commissions. Such fees and commissions were $15,555,068
for the year ended December 31, 2006. Included in such amount is a performance
fee we recognized in 2006 from W.P. Stewart Holdings Fund, our mutual fund
listed on Euronext Amsterdam. This performance fee totaled $9,740,086 and is
included in receivables from


                                       48

<PAGE>

affiliates, net, at December 31, 2006. Additionally, for the year ended December
31, 2006, we recognized a non-recurring $2,625,642 performance fee charge
related to the resetting of the performance fee "high water mark" in connection
with the transfer of the fund from Curacao to Luxembourg.

     We lease our office space in The Netherlands from Duinzigt I, a company
owned by the former principals of TPR & Partners N.V., including one of our
Managing Directors. Total rent expense for the year ended December 31, 2006 was
$190,260.

     We own a 40% interest in Kirk Management Ltd., a real estate joint venture
incorporated in Bermuda. The remaining 60% interest is owned by The Bank of
Bermuda, of which one of our directors and former executive officers is a
non-executive director. Included in receivables from affiliates, net, at
December 31, 2006 is a subordinated loan of $212,526 and accrued interest on
such loan in the amount of $34,132 due from Kirk Management Ltd. The loan has no
fixed repayment date. Kirk Management Ltd. also owns and leases to W.P. Stewart
& Co., Ltd its Hamilton, Bermuda headquarters. The lease expires in 2020 and
calls for annual rent of approximately $180,000.

     Included in operating expenses for the year ended December 31, 2006 were
contributions in the amount of $325,000 paid to the W.P. Stewart & Co.
Foundation, Inc., a private charitable foundation.

     Included in receivables from affiliates, net, at December 31, 2006 is the
amount of $352,701, which represents an outstanding receivable from WPS II,
Inc., a significant shareholder. This balance is non-interest bearing and has no
fixed repayment date.

     Pursuant to a deferred share exchange agreement entered into as of November
14, 2001 with TPR Holdings B.V., we agreed to acquire the 25% minority interest
holding in W.P. Stewart Asset Management (Europe), Ltd. as of June 30, 2006 at a
fair value price to be determined on that date and payable in shares of W.P.
Stewart & Co., Ltd. TPR Holdings assigned its ownership interest of, and its
right to sell, the 25% interest to various individuals, some of whom are
officers of W.P. Stewart & Co., Ltd. and its subsidiaries. We entered into an
amendment to the deferred share exchange agreement with each of such assignees,
pursuant to which it was agreed that, as of July 1, 2006, the minority interest
holdings would be purchased for an aggregate of $6,000,000 in cash instead of
stock.

     C.   INTERESTS OF EXPERTS AND COUNSEL

     Not Applicable.

ITEM 8. FINANCIAL INFORMATION

     A.   CONSOLIDATED STATEMENT AND OTHER FINANCIAL INFORMATION

     See pages F-1 to F-25.

     We currently have no pending litigation of a material nature. We note,
however, that, in January 2004 Logicom Inclusive, Inc. filed a complaint against
us and certain of our employees relating to an alleged copyright infringement of
software programs. The total damages claimed were in excess of $3 million. Two
of the four claims were dismissed on a motion to dismiss in August 2004. We do
not believe that the remaining claims are merited, and we therefore do not
believe this claim will have a material adverse effect on our financial
condition or results of operations.

     The holders of our common shares are entitled to receive, on a pro rata
basis, dividends when, as and if declared by our board of directors. Dividends
may be paid only in accordance with the Companies Act 1981 of Bermuda, which
provides that dividends and other distributions to shareholders may not be paid
if there are reasonable grounds for believing that:


                                       49

<PAGE>

     -    W.P. Stewart & Co., Ltd. is, or would after the dividend payment be,
          unable to pay its liabilities as they become due; or

     -    the realizable value of W.P. Stewart & Co., Ltd.'s assets after such
          payment would be less than the aggregate of its liabilities and its
          issued share capital and share premium accounts.

     W.P. Stewart & Co., Ltd.'s ability to declare dividends on the common
shares may also be limited by regulatory restrictions derived from the net
capital rules of various regulatory bodies applicable to W.P. Stewart & Co.,
Ltd. and its subsidiaries. Rights to dividends and distributions that have not
been claimed within six years after the date on which they were declared revert
to W.P. Stewart & Co., Ltd.

     We have a policy of declaring quarterly dividends on the common shares. We
reduced the amount of our quarterly dividend from the historical rate of $0.30
to $0.23 beginning in the third quarter of 2006, and paid a dividend of $0.23
per share in January 2007. In March 2007, our board of directors decided to
change the way we pay dividends, moving from the historic pattern of four equal
quarterly amounts to a new policy of paying lower amounts in the first three
quarters and a final, fourth payment in January, based on cash earnings for the
year, including any performance fees recorded in the fourth quarter. In
accordance with this policy and our long-standing policy to pay dividends
approximating substantially all cash earnings, we declared a quarterly dividend
payable in April 2007 of $0.15 per common share. The declaration and payment of
dividends to holders of common shares is in the discretion of the board of
directors and depends on our capital requirements, operating and financial
condition and business plan at the time, legal restrictions, regulatory
restrictions and such other factors as the board of directors may deem relevant.

     B.   SIGNIFICANT CHANGES

     Not Applicable.

ITEM 9. THE OFFER AND LISTING

     Not Applicable, except for Items 9.A.4 and 9.C.


                                       50

<PAGE>

     TRADING MARKETS

     Our common shares, par value US $0.001 per share, have traded on the New
York Stock Exchange under the symbol "WPL" since December 8, 2000 and have been
listed on the Bermuda Stock Exchange under the symbol "WPS" since December 11,
2000. On March 28, 2007, the last reported sale price for our common shares on
the New York Stock Exchange was $10.89 per share. As of that date there had been
no trading of our common shares on the Bermuda Stock Exchange. Certain
historical market price data is set forth below.

<TABLE>
<CAPTION>
                             NEW YORK
                          STOCK EXCHANGE
                         ---------------
PERIOD                    HIGH      LOW
------                   ------   ------
<S>                      <C>      <C>
Annual
   2002                  $31.73   $14.35
   2003                  $25.57   $14.94
   2004                  $23.74   $18.70
   2005                  $25.75   $20.90
   2006                  $24.19   $ 9.50

Quarter
   First Quarter 2005    $25.75   $22.13
   Second Quarter 2005   $24.32   $20.90
   Third Quarter 2005    $25.00   $22.25
   Fourth Quarter 2005   $25.60   $21.30
   First Quarter 2006    $24.19   $17.43
   Second Quarter 2006   $21.23   $14.88
   Third Quarter 2006    $15.67   $ 9.50
   Fourth Quarter 2006   $15.88   $10.76

Month
   September 2006        $12.60   $11.36
   October 2006          $14.13   $10.76
   November 2006         $15.77   $13.35
   December 2006         $15.88   $15.01
   January 2007          $16.28   $15.28
   February 2007         $15.62   $11.07
   March 1 - 28, 2007    $12.00   $ 9.75
</TABLE>


                                       51

<PAGE>

ITEM 10. ADDITIONAL INFORMATION

     A.   SHARE CAPITAL

     Not Applicable.

     B.   MEMORANDUM AND ARTICLES OF ASSOCIATION

     ORGANIZATION AND REGISTER

     W.P. Stewart & Co., Ltd. is a company incorporated under the Companies Act
1981 of Bermuda. It is registered in the Register maintained by the Bermuda
Registrar of Companies under the entry number "EC25146."

     OBJECTS AND PURPOSES

     Clause 6 of our Memorandum of Association states that W.P. Stewart & Co.,
Ltd. was formed for the following objects:

     -    To carry on business as a holding company and to acquire and hold
          shares, stocks, debenture stock, bonds, mortgages, obligations and
          securities of any kind issued or guaranteed by any company,
          corporation or undertaking of whatever nature and wherever constituted
          or carrying on business, and shares, stock, debentures, debenture
          stock, bonds, obligations and other securities issued or guaranteed by
          any government, sovereign ruler, commissioners, trust, local authority
          or other public body, whether in Bermuda or elsewhere, and to vary,
          transpose, dispose of or otherwise deal with from time to time as may
          be considered expedient any of our investments for the time being;

     -    To acquire any such shares and other securities as are mentioned in
          the preceding paragraph by subscription, syndicate participation,
          tender, purchase, exchange or otherwise and to subscribe for the same,
          either conditionally or otherwise, and to guarantee the subscription
          thereof and to exercise and enforce all rights and powers conferred by
          or incident to the ownership thereof;

     -    To co-ordinate the administration, policies, management, supervision,
          control, research, planning, trading and any and all other activities
          of any company or companies now or hereafter incorporated or acquired
          which may be or may become a company, wherever incorporated, which is
          or becomes a holding company or a subsidiary of, or affiliated with,
          us within the meanings respectively assigned to those terms in the
          Companies Act 1981 or, with the prior written approval of the Minister
          of Finance, any company or companies now or hereafter incorporated or
          acquired with which we may be or may become associated;

     -    To act as sponsors or representatives for any company, unit trust,
          partnership or other entity seeking a listing of its shares, units or
          other instruments on any stock exchange, and to act as agent or
          representative of any company listed on any stock exchange and to
          arrange and sponsor public and private issues of shares and loan
          capital and to negotiate and underwrite such issues;

     -    To act as agents for the sale and purchase of any stocks, shares or
          securities, or for any other monetary or mercantile transaction and as
          managers and investment advisers for any company, partnership, public
          or private body, association, individual or entity


                                       52

<PAGE>

          wherever incorporated, formed or based outside Bermuda and, with the
          prior permission in writing of the Minister of Finance for any person
          or any class or group of persons incorporated, formed or based in
          Bermuda;

     -    To act as underwriters, sponsors and agents for any government and
          other authority and, for any person and, with the prior permission in
          writing of the Minister of Finance, any person incorporated, formed or
          based in Bermuda;

     -    To provide financial services, advice and facilities of every
          description, including (but without limiting the generality of the
          foregoing words) all these capable of being provided by stockholders,
          stockjobbers, promoters and managers of investment vehicles,
          investment media, financial advisers, underwriters and issuing houses
          to any person and, with the prior permission in writing of the
          Minister of Finance, any persons incorporated, formed or based in
          Bermuda;

     -    To invest the funds of or available to us in the share or loan capital
          of any other company, partnership or other enterprise wherever
          incorporated, formed or carrying on business, and in the bonds or
          other obligations of any authority, undertaking or corporation,
          whether public or private; and

     -    As set forth in paragraphs (b) to (n) and (p) to (u) inclusive in the
          Second Schedule to the Companies Act 1981.

     DIRECTORS' INTERESTS

     Pursuant to the terms of clause 96 of our bye-laws, a director shall not
generally vote at a meeting of the board of directors or of a committee of the
board of directors on any resolution concerning a matter in which he has a
material interest unless such interest arises only because the situation falls
within one or more of the following:

     -    the resolution relates to our giving the director a guarantee,
          security or indemnity in respect of a liability incurred by him for
          our benefit;

     -    the resolution relates to our giving a third party a guarantee,
          security or indemnity in respect of an obligation of ours for which
          the director has assumed responsibility under a guarantee or indemnity
          or by the giving a security;

     -    the director's interest arises in relation to the subscription or
          purchase by him of our securities pursuant to a general offer to our
          shareholders or to the public;

     -    the director's interest arises from being a participant in the
          underwriting of any of our securities;

     -    the resolution relates to a proposal concerning another corporation in
          which he holds less than 1% of the shares;

     -    the resolution relates to a retirement benefits scheme which has been
          approved by the authorities of any country for tax purposes;

     -    the resolution relates to any contract or arrangement for the benefit
          of our employees and does not provide the director any advantage or
          privilege not accorded to the employees; or


                                       53

<PAGE>

     -    any proposal concerning any insurance which we are empowered to
          purchase for the benefit of any of our directors.

     The board of directors may exercise all the powers of the company to borrow
money and to mortgage or charge all or any part of our undertaking, property and
assets and to issue debentures and other securities, whether outright or as
collateral security for any debt, liability or obligation of ours or of any
other person.

     SHAREHOLDERS' RIGHTS

     The holders of our common shares are entitled to receive, on a pro rata
basis, dividends when, as and if declared by our board of directors. Dividends
may be paid only in accordance with the Companies Act 1981 of Bermuda which
provides that dividends and other distributions to shareholders may not be paid
if there are reasonable grounds for believing that:

     -    W.P. Stewart & Co., Ltd. is, or would after the dividend payment be,
          unable to pay its liabilities as they become due; or

     -    the realizable value of W.P. Stewart & Co., Ltd.'s assets after such
          payment would be less than the aggregate of its liabilities and its
          issued share capital and share premium accounts.

     W.P. Stewart & Co., Ltd.'s ability to declare dividends on the common
shares may also be limited by regulatory restrictions derived from the net
capital rules of various regulatory bodies applicable to W.P. Stewart & Co.,
Ltd. and its subsidiaries. Rights to dividends and distributions that have not
been claimed within six years after the date on which they were declared revert
to W.P. Stewart & Co., Ltd.

     Subject to the provisions set forth below and any other special rights or
restrictions as to voting for the time being attached to any class of shares by
or in accordance with our bye-laws, at any general meeting on a poll vote, every
shareholder who is present in person or by proxy shall have one vote for every
common share of which such person is the holder. Most matters to be approved by
holders of common shares require approval by a simple majority vote of the
common shares represented at the shareholders' meeting. A resolution passed by
the holders of a majority of the issued common shares either in person or by
proxy at a general meeting is required to approve an amalgamation with another
company. Shareholders do not have cumulative voting rights. Shareholders have
the power to elect directors, appoint auditors and make changes in the amount of
authorized share capital of W.P. Stewart & Co., Ltd. The current maximum number
of directors is 12; however nine directors were elected at the most recent
annual general meeting of shareholders. All directors are elected at each annual
general meeting, except that the board of directors may fill interim vacancies
(including the vacancies caused by the difference between the maximum and actual
numbers of directors) between general meetings.

     Our bye-laws limit the voting power of natural persons to a maximum of 5%
of all votes attributable to our outstanding shares and the voting power of
entities and persons other than natural persons to a maximum of 9.5% of the
votes attributable to our outstanding shares. For these purposes, voting power
held by any person or entity is deemed to include power held or shared by that
person or entity as part of a "group" (as defined in the Securities Exchange Act
of 1934). These limitations apply regardless of how many common shares are
actually owned or controlled by a shareholder. These restrictions, however, will
not apply to:


                                       54

<PAGE>

     -    WPS II, Inc.;

     -    Other shareholders or groups of shareholders who were shareholders of
          W.P. Stewart & Co., Ltd. immediately before our initial public
          offering; and

     -    Additional persons, entities or groups that are designated by our
          board of directors.

     The votes that could have been cast by shareholders who are subject to
these voting restrictions will be allocated to the other shareholders pro rata
based on the number of shares they hold. However, no shareholder subject to
these restrictions may be allocated additional voting rights to the extent that
the allocation would cause that shareholder to have more than 5% (for natural
persons) or 9.5% (for legal persons or entities) of the total voting power. This
voting limitation was put in place to reduce the likelihood of our becoming a
controlled foreign corporation for U.S. tax purposes. See Item 3 D under the
caption "Risk Factors - Our U.S. tax status could be challenged..." and Item 10
E under the caption "Taxation - United States - Controlled Foreign Corporation
Rules" for a discussion of the tax consequences associated with our becoming a
controlled foreign corporation.

     Our bye-laws also limit the overall voting power of all persons, entities
or groups to 20% of the total number of all votes attributable to our
outstanding shares (including the common shares). These limitations apply
regardless of how many common shares are actually owned or controlled by a
shareholder and regardless of whether the voting restrictions described in the
previous paragraph apply to that shareholder. These restrictions, however, will
not apply to:

     -    WPS II, Inc. or its affiliates;

     -    Direct or indirect subsidiaries of W.P. Stewart & Co., Ltd.;

     -    Any shareholding entity that may be established for the purpose of our
          employee benefit plans and that is designated by our board of
          directors; and

     -    Other persons, entities or groups that are designated by our board of
          directors.

     If W.P. Stewart & Co., Ltd. is wound up, the liquidator may, with the
sanction of a resolution of shareholders, divide among the shareholders in kind
all or part of our assets and may, with that sanction, vest all or part of the
assets in trustees of trusts for the benefit of the shareholders in the
liquidator's discretion, provided that a shareholder may not be compelled to
accept any securities or other assets which would subject that shareholder to
liability.

     CHANGES IN SHAREHOLDERS' RIGHTS

     Any change in the rights relating to the common shares requires either the
adoption of a resolution by the holders of a majority of the common shares at a
duly held meeting of the common shareholders of W.P. Stewart & Co., Ltd. or the
written consent of the holders of not less than 75% of the common shares.

     GENERAL MEETINGS OF SHAREHOLDERS

     The annual general meeting of shareholders shall be held at such time and
place as the board of directors shall appoint. The board may convene special
general meetings of shareholders on its own initiative or when requisitioned by
shareholders in accordance with applicable Bermuda law. Under the Companies Act
1981 of Bermuda, our directors are required, on the request of shareholders
holding not


                                       55
<PAGE>

less than 10% of our paid-up voting share capital, to convene a special general
meeting of shareholders for the purpose stated in the request.

     The quorum required for a meeting of shareholders is generally at least two
shareholders present in person or by proxy representing not less than one-third
in nominal value of the total issued common shares. Shareholders' meetings are
convened upon advance notice of at least 14 days.

     NO LIMITATION ON FOREIGN OWNERSHIP

     There are no limitations under Bermuda law or our memorandum of association
on the rights of persons who are not citizens or residents of Bermuda, as such,
to hold or vote our shares.

     CHANGE IN CONTROL

     There are no provisions in our memorandum of association or bye-laws that
would have the effect of delaying, deferring or preventing a change in control
of W.P. Stewart & Co., Ltd. and that would only operate with respect to an
amalgamation, acquisition or corporate restructuring involving it or any of its
subsidiaries.

     DISCLOSURE OF SHARE HOLDINGS

     Our bye-laws do not require shareholders to disclose their shareholdings
except to our board of directors.

     As an exempted company, W.P. Stewart & Co., Ltd. is exempted from Bermuda
laws which restrict the percentage of share capital that may be held by
non-Bermudians, but, as an exempted company, we may not, except with the express
authorization of the Bermuda legislature or under a license granted by the
Minister of Finance of Bermuda, participate in certain business transactions
including:

     -    the acquisition or holding of land in Bermuda (except as required for
          our business and held by way of lease or tenancy for terms of not more
          than 50 years or with the consent of the Minister of Finance of
          Bermuda, as required to provide accommodation or recreational
          facilities for our employees and held by way of lease or tenancy for
          terms of not more than 21 years);

     -    the taking of mortgages on land in Bermuda to secure an amount in
          excess of BD$50,000 without the consent of the Minister of Finance of
          Bermuda;

     -    the acquisition of any bonds or debentures secured on any land in
          Bermuda except bonds or debentures issued by the Bermuda government or
          a public authority; or

     -    the carrying on of business of any kind in Bermuda other than with
          persons outside Bermuda, except in certain limited circumstances such
          as doing business with another exempted company in furtherance of the
          business of W.P. Stewart & Co., Ltd. carried on outside Bermuda.

     C. MATERIAL CONTRACTS

     Pursuant to an agreement to which we became party on October 30, 1998,
certain shareholders of W.P. Stewart & Co., Ltd. who are current or former
employees, or their assigns, have certain demand and piggyback registration
rights with respect to their common shares. The demand registration rights will
only be available if a sufficient number of shareholders with similar rights
join in the request so that at


                                       56

<PAGE>

least 15% of the outstanding common shares are to be registered; and the
offerings will be firm commitment underwritten offerings.

     Pursuant to an agreement with Bowen Asia Limited and its shareholders,
dated as of June 30, 1999, W.P. Stewart & Co., Ltd., increased its total
investment in Bowen Asia Limited from 21.9% to 40%. The price of this increase
was $500,000 and 27,769 of our shares. We have the option (exercisable from June
30, 2004 to June 30, 2009) to purchase such number of shares of Bowen as would
increase our ownership to 50.1% of Bowen's issued and outstanding shares. If we
exercise this option, the Bowen shareholders will have the option to put their
remaining shares in Bowen to us. In either case the option price per share would
equal 15 times Bowen's trailing four quarters' after-tax earnings (or, if
greater, $10 million in the case of our purchase option), divided by the number
of outstanding Bowen shares. The agreement imposes limitations on any transfers
or issuances of Bowen shares. If there is a change of control of W.P. Stewart &
Co., Ltd., Bowen has the right to repurchase all Bowen shares then owned by W.P.
Stewart & Co., Ltd. Bowen and its shareholders have a right of first refusal in
the event we propose to sell any of our Bowen shares. The agreement also calls
for us to have representation on Bowen's board of directors.

     Pursuant to a share exchange agreement with TPR Holding B.V. dated as of
November 14, 2001, W.P. Stewart and Co., Ltd. exchanged 330,000 of its shares
for 75% of the outstanding shares of W.P. Stewart Asset Management (Europe),
Ltd., which in turn indirectly owns all of the shares of W.P. Stewart Asset
Management (Europe) N.V. (formerly TPR & Partners N.V.). The parties also
entered into a deferred share exchange agreement as of November 14, 2001
pursuant to which W.P. Stewart & Co., Ltd. agreed to acquire the remaining
shares of W.P. Stewart Asset Management (Europe), Ltd. as of June 30, 2006 at a
fair value price determined on that date and payable in shares of W.P. Stewart &
Co., Ltd. TPR Holdings assigned its ownership of, and its right to sell, the 25%
interest to various individuals, some of whom are officers of W.P. Stewart &
Co., Ltd. and its subsidiaries. We entered into an amendment to the deferred
share exchange agreement with each of such assignees, pursuant to which it was
agreed that, as of July 1, 2006, the minority interest holdings would be
purchased for an aggregate of $6,000,000 in cash instead of stock.

     D. EXCHANGE CONTROLS

     Because we have been designated as non-resident in Bermuda for exchange
control purposes, there are no restrictions on our ability to transfer funds in
and out of Bermuda or to pay dividends to non-Bermuda residents who are holders
of our shares, other than in local Bermuda currency.

     E. TAXATION

     The following summary describes the principal tax consequences under U.S.
federal income tax law and the laws of Bermuda of the ownership and disposition
of the common shares. Except where otherwise noted, this summary does not
describe any tax consequences arising under the law of any State, locality or
taxing jurisdiction other than Bermuda or the U.S. federal government. There is
no income tax treaty between Bermuda and the United States.

     The discussion below is based upon the nature and conduct of our business,
which may change, and upon our understanding of our position under the tax laws
of the various countries in which we have assets or conduct activities, which
position is subject to review and possible challenge by taxing authorities and
to possible changes in law, which may have retroactive effect.

     BERMUDA

     We have obtained from the Minister of Finance of Bermuda under the Exempted
Undertakings Tax Protection Act 1966 (as amended), an undertaking that, in the
event that Bermuda enacts any


                                       57

<PAGE>

legislation imposing tax computed on profits, income, any capital asset, gain or
appreciation, or any tax in the nature of estate duty or inheritance tax, then
the imposition of such tax will not be applicable to the shares, debentures or
other obligations of W.P. Stewart & Co., Ltd., until at least March 28, 2016.
Under current Bermuda law, no income, withholding or other taxes or stamp or
other duties are imposed upon the issue, transfer or sale of the common shares
or on any payments thereunder.

     UNITED STATES

     This summary is based on the Internal Revenue Code, Treasury regulations
and rulings promulgated thereunder and judicial decisions in effect or available
on the date of this Annual Report. All of the foregoing are subject to change
with or without retroactive effect, which could affect the continued accuracy of
this summary. No advance rulings have been or will be sought from the IRS
regarding the matters discussed in this Annual Report. Accordingly, you are
urged to consult your tax adviser to determine the U.S. federal, state, local
and foreign income and other tax consequences to you of acquiring, holding and
disposing of common shares.

     U.S. HOLDERS. As used in this section, the term "U.S. person" means for
U.S. federal income tax purposes:

     -    a citizen or resident of the United States or any political
          subdivision thereof;

     -    a corporation or partnership created or organized in the United States
          or under the laws of the United States or of any State; or

     -    an estate or trust the income of which is subject to U.S. federal
          income taxation regardless of its source.

     The term "U.S. holder" means a person, a holder or a beneficial owner of
common shares who is a U.S. person. A "non-U.S. holder" is any holder who is not
a U.S. holder.

     In general, U.S. holders will include dividends in income, in accordance
with their method of accounting, as ordinary income. Assuming the common shares
are held as a capital asset, gain or loss on a subsequent sale or other taxable
disposition of the stock will be a capital gain or loss, which will be long-term
if such stock is held for more than one year. At least a portion of any dividend
will constitute foreign source dividend income, which may be relevant for a U.S.
holder's foreign tax credit limit computation.

     PASSIVE FOREIGN INVESTMENT COMPANY RULES. W.P. Stewart & Co., Ltd., based
on the nature of its assets and income, does not believe it should currently be
classified as a "passive foreign investment company" (as defined below).
However, it is possible, though W.P. Stewart & Co., Ltd. believes it unlikely,
that W.P. Stewart & Co., Ltd. could be classified as a passive foreign
investment company in the future.

     A foreign corporation will be treated as a passive foreign investment
company if either 75% or more of its gross income is "passive income" or at
least 50% of the average percentage of its assets are assets which produce or
are held for the production of "passive income" (hereinafter "passive assets").
"Passive income" is generally defined as any income included in the definition
of "foreign personal holding company income" under Section 954(c) of the
Internal Revenue Code. Among these items are income consisting of:


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<PAGE>

     -    dividends, interest, rent, royalties; and

     -    gains and losses from the sale of property giving rise to the income
          described in the preceding item, as well as other types of income not
          here relevant.

     For these purposes, cash held by a foreign corporation generally
constitutes a passive asset, but trade or service receivables resulting from a
business which produces non-passive income does not. Intangibles that produce
identifiable types of income (including goodwill) are similarly characterized in
terms of the type of income they produce. A foreign corporation owning at least
25% by value of the stock of another corporation is treated, for purposes of
passive foreign investment company classification, as if it held its
proportionate share of such corporate assets and received directly its
proportional share of such corporation's income.

     If a foreign corporation constitutes a passive foreign investment company,
any U.S. person holding any amount of stock in such corporation will generally
be subject to an interest charge on "excess distributions" of the passive
foreign investment company. Alternatively, such U.S. person may elect to be
taxed currently on its share of passive foreign investment company income by
being treated as receiving a distribution of its pro rata share of the passive
foreign investment company earnings and profits. A U.S. person may also make a
"mark-to-market" election with respect to "marketable" passive foreign
investment company stock to recognize (at the close of each taxable year) any
excess of the fair market value of such stock over its adjusted basis as
ordinary income and any excess of the adjusted basis of such stock over its fair
market value as ordinary loss.

     CONTROLLED FOREIGN CORPORATION RULES. Our bye-laws contain provisions which
attempt to prevent us from becoming a "controlled foreign corporation."
Specifically, the provisions restrict the voting rights associated with voting
shares in the case of any shareholder who acquires sufficient shares to become a
U.S. Shareholder (as defined below) if the effect of such acquisition would be
to cause us to become a controlled foreign corporation. In any event, the
controlled foreign corporation rules will not apply to a U.S. holder that never
owns 10% or more of the common shares.

     In general, a foreign corporation will constitute a controlled foreign
corporation if more than 50% of the shares of the corporation, measured by
reference to combined voting power or value, is held, directly or indirectly, by
"U.S. Shareholders." A "U.S. Shareholder", for this purpose, is any person that
is a U.S. person for U.S. federal income tax purposes that possesses 10% or more
of the combined voting power of all classes of shares of a corporation. Neither
W.P. Stewart & Co., Ltd. nor any of its foreign affiliates is a controlled
foreign corporation.

     If W.P. Stewart & Co., Ltd. (or any foreign affiliate) were in the future
to constitute a controlled foreign corporation, a U.S. Shareholder of W.P.
Stewart & Co., Ltd. would be treated, subject to certain exceptions, as
receiving a dividend at the end of our taxable year in an amount equal to that
person's pro rata share of the "subpart F income" and certain U.S. source income
of W.P. Stewart & Co., Ltd. (or any controlled foreign corporation foreign
affiliate), whether or not distributed. Among other items, and subject to
certain exceptions, "subpart F income" includes dividends, interest, annuities,
gains from the sale of shares and securities, certain gains from commodities
transactions, certain types of insurance income and income from certain
transactions with related parties. If W.P. Stewart & Co., Ltd. (or any foreign
affiliate) were in the future to constitute a controlled foreign corporation, we
believe only a relatively small portion of our income would be subpart F income.

     In addition, however, if a U.S. person owning 10% or more of the combined
voting power of all classes of stock entitled to vote of a controlled foreign
corporation sells or exchanges such stock, the gain recognized is treated as
ordinary dividend income (and not capital gain) to the extent of the earnings
and


                                       59

<PAGE>

profits of such corporation accumulated after December 31, 1962 and during
the period(s) the stock was held by such U.S. person while such foreign
corporation was a controlled foreign corporation.

     If W.P. Stewart & Co., Ltd. were treated as a controlled foreign
corporation, a U.S. Shareholder of W.P. Stewart & Co., Ltd. would be taxable on
the subpart F income of W.P. Stewart & Co., Ltd. under rules described in the
preceding paragraph and not under the passive foreign investment company rules
previously described.

     BACKUP WITHHOLDING. A U.S. holder of common shares may, under certain
circumstances, be subject to "backup withholding" at the rate of 28% with
respect to dividends paid on the common shares or the proceeds of sale, exchange
or redemption of common shares unless such U.S. holder:

     -    is a corporation or comes within certain other exempt categories, and,
          when required, demonstrates this fact; or

     -    provides a correct taxpayer identification number, certifies that such
          holder is not subject to backup withholding and otherwise complies
          with applicable requirements of the backup withholding rules.

     Any amount withheld under these rules will be creditable against the U.S.
holder's U.S. federal income tax liability. A U.S. holder who does not provide a
correct taxpayer identification number may be subject to penalties imposed by
the IRS. Assuming proper shareholder information is provided, we believe that
back-up withholding will not be required.

     NON-U.S. HOLDERS. Dividends paid by foreign corporations are treated as
income from U.S. sources and subject to withholding at a rate of 30% if 25% or
more of the foreign corporation's gross income for the three-year period (or
such part of the period such corporation was in existence) ending with the close
of its taxable year preceding the declaration of such dividend was effectively
connected (or treated as effectively connected) with the conduct of a U.S. trade
or business, but only in an amount that bears the same ratio to the dividend as
the gross income which is effectively connected with a U.S. trade or business
bears to the foreign corporation's gross income from all sources. The Internal
Revenue Code provides, however, that if a foreign corporation is "subject to"
the branch profits tax, then the above-described withholding tax does not apply.

     Accordingly, because W.P. Stewart & Co., Ltd. and W.P. Stewart Asset
Management Ltd., if more than 25% of their gross income were deemed connected
with the United States, will be subject to the branch profits tax, we do not
believe that non-U.S. holders will be subject to the 30% withholding tax.

     Moreover, gains and losses on the sale or exchange of common shares
generally will not be subject to U.S. income or withholding tax unless:

     -    in the case of a non-U.S. holder who is an individual, such non-U.S.
          holder is present in the United States for a period or periods
          aggregating 183 days or more during the taxable year of disposition
          (in which case such individual may be taxed as a U.S. holder in any
          event); or

     -    any gain is effectively connected with the non-U.S. holder's trade or
          business in the United States.

     The value of common shares should not be includible in the gross estate of
any individual non-U.S. holder for purposes of determining such non-U.S.
holder's liability, if any, for U.S. estate tax on non-resident alien
individuals.


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<PAGE>

     F.   DIVIDENDS AND PAYING AGENTS

     Not Applicable.

     G. STATEMENTS BY EXPERTS

     Not Applicable.

     H. DOCUMENTS ON DISPLAY

     You may read and copy any documents filed by W.P. Stewart & Co., Ltd. at
the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information about the public
reference room. You may also access our filings electronically at www.sec.gov.
Our filings with the SEC are also available to the public through the New York
Stock Exchange, 20 Broad Street, New York, New York 10005, on which the common
shares are listed.

     I. SUBSIDIARY INFORMATION

     Not Applicable.

ITEM 11. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

     The following discusses our exposure to market risk related to foreign
currency exchange rates, interest rates and equity prices. We do not utilize or
hold derivative financial instruments to hedge against such risks.

FOREIGN CURRENCY EXCHANGE RATE RISK

     Although we have significant foreign-based operations, the majority of our
transactions are denominated in U.S. dollars. We do, however, have various
operations where transactions are denominated in foreign currencies and are
subject to market risk with respect to fluctuations in the relative values of
currencies. We have international operations in Europe, Asia and the Netherlands
Antilles and conduct transactions in the local currency of each location.
Therefore, our operating results may be affected by changes in the values of
those currencies. Historically, our exposure to fluctuations in the relative
values of currencies has been limited because substantially all of our assets
are denominated in U.S. dollars, and those assets which are not denominated in
U.S. dollars have generally been denominated in historically stable currencies.
The impact to our cash and cash equivalents balances has therefore not been
material. Currency transaction gains or losses, derived on monetary assets and
liabilities stated in a currency other than our functional currency, are
recognized in current operations and have not been significant to our operating
results in any period. To date, we have not entered into any foreign exchange
hedges or other derivative financial instruments. We will continue to evaluate
our exposure to foreign currency exchange rate risk on a regular basis.

INTEREST RATE RISK

     Our exposure to market risk for changes in interest rates relates primarily
to our long-term debt.

     As of December 31, 2006, we had one long-term debt instrument with a
principal amount of $14.6 million. This loan bears interest at a rate equal to
the sum of (i) two and 25/100 percent (2.25%) per annum plus (ii) a variable per
annum interest rate equal to the rate listed for one month commercial paper
(non-financial). Due to the variable interest rate of this loan, should interest
rates rise, the results of our operations may be impacted by the additional
costs of carrying this long-term debt. The table below presents the details of
this loan as of December 31, 2006.


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<PAGE>

                           BY SCHEDULED MATURITY DATE
                                 (IN MILLIONS)

<TABLE>
<CAPTION>
                            2007    2008    2009    2010    2011   THEREAFTER   TOTAL   FAIR VALUE
                           -----   -----   -----   -----   -----   ----------   -----   ----------
<S>                        <C>     <C>     <C>     <C>     <C>     <C>          <C>     <C>
Long term debt:
   Variable rate           $ 0.8   $ 0.9   $ 0.9   $ 0.9   $ 0.9     $10.1      $14.6     $14.6
   Average interest rate    7.50%   7.50%   7.50%   7.51%   7.51%     7.87%
</TABLE>

EQUITY PRICE RISK

     The securities markets are highly volatile, and securities prices may
increase or decrease for many reasons, including economic, financial or
political events, which we cannot control. These events could result in a
decrease in the overall value or amount of assets that we manage and on which we
earn our fees. In addition, these events could have a negative impact on the
value of our investments in equity securities.

     We have exposure to equity price risks since we earn most of our revenues
from asset management contracts with clients pursuant to which clients pay us an
asset management fee equal to a percentage of the market value of the assets we
manage. As a result, if securities prices fluctuate, the market value of the
assets may fluctuate, and our revenues and profitability may fluctuate as well.
All other factors being equal, if securities prices fall, the value of our
clients' portfolios, and our revenues, would fall as well. In addition, if
securities prices fall, securities may become less attractive investments as
compared to other investments. Clients have the right to remove their assets
from our management at any time, and may be more likely to do so when securities
prices decrease. In that case, the amount of assets we manage may decrease, and
our revenues and net income may fall as well.

     We also have exposure to equity price risks as a result of our investment
of an aggregate of $30 million in three pooled investment vehicles. In the
fourth quarter of 2006, as the initial limited partner, we contributed seed
capital of $10 million to each of three limited partnerships. Two of these
partnerships invest capital contributions in U.S. equity securities, and one
invests in companies in Europe, Australia and Asia, including India. The value
of our partnership interests will vary with the value of the partnerships'
underlying equity portfolios. We have the ability to withdraw from our
partnership capital account as of the beginning of each calendar month.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not Applicable.

                                    PART II.

ITEM 13. DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES

     Not Applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

     Not Applicable.


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<PAGE>

ITEM 15. CONTROLS AND PROCEDURES

     A.   DISCLOSURE CONTROLS AND PROCEDURES

     Under the supervision and with the participation of our management,
including our Chief Executive Officer and our Chief Financial Officer, we have
evaluated the effectiveness of our disclosure controls and procedures pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 as of December 31,
2006. Based upon that evaluation, the Chief Executive Officer and the Chief
Financial Officer have concluded that, as of December 31, 2006, our disclosure
controls and procedures were effective.

     B.   MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
          REPORTING

     Our management is responsible for establishing and maintaining adequate
internal control over financial reporting for the company. Internal control over
financial reporting is a process to provide reasonable assurance regarding the
reliability of our financial reporting for external purposes in accordance with
accounting principles generally accepted in the United States of America.
Internal control over financial reporting includes maintaining records that in
reasonable detail accurately and fairly reflect our transactions; providing
reasonable assurance that transactions are recorded as necessary for preparation
of our financial statements; providing reasonable assurance that receipts and
expenditures of company assets are made in accordance with management
authorization; and providing reasonable assurance that unauthorized acquisition,
use or disposition of company assets that could have a material effect on our
financial statements would be prevented or detected on a timely basis. Because
of its inherent limitations, internal control over financial reporting is not
intended to provide absolute assurance that a misstatement of our financial
statements would be prevented or detected.

     Management conducted an evaluation of the effectiveness of our internal
control over financial reporting based on the framework in Internal Control --
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management concluded that the
company's internal control over financial reporting was effective as of December
31, 2006.

     This annual report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the company to provide only management's
report in this annual report.

     C.   CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

     Weiser LLP, which was engaged in September 2005 when the determination was
made to outsource certain internal audit functions, was terminated from such
engagement in June 2006, at which time Enterprise Financial Consulting Group,
LLC was engaged to perform such services. We believe this will provide added
value to our internal audit function and could provide information to enhance
our internal controls. Otherwise, there were no significant changes made during
2006 in our internal controls or in other factors that has materially affected,
or is likely to materially affect, those controls.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

     Our Board of Directors has determined (by action of its Executive
Committee) that at least one member of the Audit Committee, Jan J. Spiering,
qualifies as a financial expert as that term is defined by the Securities and
Exchange Commission. Mr. Spiering's business experience is described under Item
6 A "Directors, Senior Management and Employees--Directors and Senior
Management." The Board of


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<PAGE>

Directors has determined that Mr. Spiering is an independent director as such
term is defined by the New York Stock Exchange listing standards.

ITEM 16B. CODE OF ETHICS

     We have adopted a Code of Business Conduct and Ethics which applies to all
of our directors, executive officers and other employees. A copy of this Code of
Business Conduct and Ethics has been posted and is available on our website at
www.wpstewart.com. A copy of this Code will also be made available to our
shareholders upon request by contacting our Deputy Managing Director--Investor
Relations by phone at (441) 295-8585, by fax at (441) 296-8357 or by e-mail at
IRINFO@wpstewart.com.

     We intend to disclose any amendment (other than technical, administrative
or other non-substantive amendments) or waiver to our Code of Business Conduct
and Ethics on our website, www.wpstewart.com, within five business days of such
amendment or waiver if the amendment or waiver applies to our Chief Executive
Officer or Chief Financial Officer.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     AUDIT FEES

     The aggregate fees billed by PricewaterhouseCoopers LLP, our independent
registered public accountants, for the audit of our financial statements and
other services provided in connection with statutory and regulatory filings were
$789,282 and $728,618 for fiscal years ended December 31, 2006 and 2005,
respectively.

     AUDIT-RELATED FEES

     The aggregate fees billed by PricewaterhouseCoopers LLP for assurance and
related services related to the performance of an audit or review of our
financial statements were $19,000 and $15,972 for fiscal years ended December
31, 2006 and 2005, respectively. Audit-related fees for the year ended December
31, 2006 were for work performed in connection with Sarbanes-Oxley Section 404
compliance, and for the year ended December 31, 2005 were for the work performed
in reviewing certain regulatory capital adequacy calculations.

     TAX FEES

     The aggregate fees billed by PricewaterhouseCoopers LLP for services
related to tax compliance, tax advice and tax planning were $326,949 and
$502,292 for fiscal years ended December 31, 2006 and 2005, respectively. Tax
fees are fees in respect of tax return preparation, consultation on tax matters
and other tax planning and advice.

     ALL OTHER FEES

     The aggregate fees billed by PricewaterhouseCoopers LLP for all services
other than those described above were $0 and $186,597 for fiscal years ended
December 31, 2006 and 2005, respectively. For the year ended December 31, 2005,
$182,700 was for due diligence work performed in connection with a potential
acquisition and $3,897 was for pension plan and retirement plan consulting
services.

     All of the audit-related, tax and other fees described above were
pre-approved by the Audit Committee. The Audit Committee, or a designated member
thereof, pre-approves each audit and non-audit service rendered by our external
auditor. The following are "prohibited non-audit services": (i) bookkeeping or
other services related to the accounting records or financial statements of W.P.
Stewart &


                                       64

<PAGE>

Co., Ltd.; (ii) financial information systems design and implementation; (iii)
appraisal or valuation services, providing fairness opinions or preparing
contribution-in-kind reports; (iv) actuarial services; (v) internal audit
outsourcing services; (vi) management functions or human resources; (vii) broker
or dealer, investment adviser or investment banking services; (viii) legal
services and expert services unrelated to the audit; and (ix) any other service
that the Public Company Accounting Oversight Board prohibits through regulation.
The services discussed in clauses (i) through (v) are permitted provided the
Audit Committee reasonably concludes that the results of such services will not
be subject to audit procedures during an audit.

     Notwithstanding the foregoing, pre-approval is not necessary for minor
permitted non-audit services if: (i) the aggregate amount of all such non-audit
services provided constitutes not more than five percent of the total amount of
revenues paid by W.P. Stewart & Co., Ltd. to its auditor during the fiscal year
in which the non-audit services are provided; (ii) such services were not
recognized at the time of the engagement to be non-audit services; and (iii)
such services are promptly brought to the attention of the Audit Committee and
approved prior to the completion of the audit by the Audit Committee or by one
or more members of the Audit Committee to whom authority to grant such approvals
has been delegated by the Audit Committee.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

     Not Applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

     The following table shows, for each month in 2006, certain information with
respect to our purchase of our common shares. All unvested shares were
repurchased from employees at the lower of the original price paid by such
employee or the then current market price. Unvested shares were repurchased at
the time of the employee's termination of employment. No vested shares were
purchased from employees. In August, we purchased shares on the open pursuant to
a publicly announced $30 million repurchase program. The aggregate price paid
pursuant to the market repurchases was $2.1 million.

<TABLE>
<CAPTION>
                                Number of
                                 Shares
                                Purchased
            Number of Shares   as Part of
             Purchased from     Publicly
                Employees       Announced    Average
           -----------------   Repurchase     Price
Month      Vested   Unvested     Program    Per Share
-----      ------   --------   ----------   ---------
<S>        <C>      <C>        <C>          <C>
Jan 2006     --      36,653           --     $  15.91
Feb 2006     --          --           --           --
Mar 2006     --       3,143           --     $  16.50
Apr 2006     --          --           --           --
May 2006     --      17,313           --     $  17.68
Jun 2006     --       1,143           --     $  16.50
Jul 2006     --          --           --           --
Aug 2006     --          --      199,226     $  10.55
Sep 2006     --          --           --           --
Oct 2006     --          --           --           --
Nov 2006     --          --           --           --
Dec 2006     --      11,748           --     $  13.06
            ---      ------      -------
             --      70,000      199,226
            ===      ======      =======
</TABLE>


                                       65
<PAGE>



                                    PART III.

ITEM 17. FINANCIAL STATEMENTS

     See pages F-1 through F-25, incorporated herein by reference.

ITEM 18. FINANCIAL STATEMENTS

     Not Applicable.

ITEM 19. EXHIBITS

<TABLE>
<S>      <C>
1.1*     Memorandum of Association

1.2*     Bye-Laws

2.1**    Form of Stock Certificate

4.1*     1996 Shareholders Agreement among Global Reach, Limited and
         Shareholders of Global Reach Limited

4.2*     Purchase Agreement, dated as of June 30, 1999, between W.P.
         Stewart & Co., Ltd. and Bowen Asia Limited.

4.3***   Share Exchange Agreement, dated as of December 29, 2000, between
         W.P. Stewart & Co., Ltd. and TPR & Partners N.V.

4.4***   Amendment to 1996 Shareholder Agreement

4.5#     Share Exchange Agreement, dated as of November 14, 2001, between
         W.P. Stewart & Co., Ltd. and TPR Holding B.V.

4.6#     Deferred Share Exchange Agreement, dated as of November 14, 2001,
         among W.P. Stewart & Co., Ltd., W.P. Stewart Asset Management
         (Europe), Ltd. and TPR Holding B.V.

8.1      Subsidiaries of the Registrant

12.1     Certification pursuant to Rule 13a-14(a) of the Securities
         Exchange Act of 1934

12.2     Certification pursuant to Rule 13a-14(a) of the Securities
         Exchange Act of 1934

13.1     Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to
         Section 906 of the Sarbanes-Oxley Act of 2002

13.2     Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to
         Section 906 of the Sarbanes-Oxley Act of 2002

15.1     Consent of PricewaterhouseCoopers LLP
</TABLE>

----------

*    Previously filed on November 21, 2000 as an exhibit to the Registrant's
     Registration Statement on Form F-1 (333-49420).

**   Previously filed on December 6, 2000 as an exhibit to the Registrant's
     Registration Statement on Form 8-A/A (011-16245).

***  Previously filed on March 30, 2001 as an exhibit to the Registrant's Report
     on Form 20-F (011-16245).

#    Previously filed on March 29, 2002 as an exhibit to the Registrant's Report
     on Form 20-F (011-16245).


                                       66

<PAGE>

INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                         PAGE
                                                                     -----------
<S>                                                                  <C>
CONSOLIDATED FINANCIAL STATEMENTS AS OF, AND FOR THE THREE YEARS
   ENDED DECEMBER 31, 2006, 2005 AND 2004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                  F-2
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                           F-3
CONSOLIDATED STATEMENTS OF OPERATIONS                                    F-4
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY               F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS                                    F-6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       F-7 TO F-25
</TABLE>


                                       F-1

<PAGE>

             Report of Independent Registered Public Accounting Firm

To the Board of Directors and
Shareholders of W.P. Stewart & Co., Ltd.

     In our opinion, the accompanying consolidated statements of financial
condition and the related consolidated statements of operations, changes in
shareholders' equity and of cash flows appearing on pages F-3 through F-25
present fairly, in all material respects, the financial position of W.P. Stewart
& Co., Ltd. and its subsidiaries (the "Company") at December 31, 2006, 2005 and
2004, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2006 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

New York, New York

March 29, 2007


                                       F-2

<PAGE>

                            W.P. STEWART & CO., LTD.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                        DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                                   2006           2005           2004
                                                                               ------------   ------------   ------------
<S>                                                                            <C>            <C>            <C>

                                   ASSETS:

CASH AND CASH EQUIVALENTS                                                      $ 30,323,957   $ 64,566,799   $ 51,859,146
FEES RECEIVABLE                                                                   3,709,922      4,530,566      2,626,200
RECEIVABLE FROM CLEARING BROKER                                                     315,867        975,603        274,936
INVESTMENTS IN UNCONSOLIDATED AFFILIATES (NET OF ACCUMULATED AMORTIZATION
   OF $494,232, $411,860 AND $329,488 FOR 2006, 2005 AND 2004, RESPECTIVELY)      3,904,218      3,829,391      3,783,010
RECEIVABLES FROM AFFILIATES, NET                                                 11,430,102      6,006,088     14,708,269
INVESTMENTS, TRADING (COST $30,195,156 FOR 2006)                                 31,803,543             --             --
INVESTMENTS, AVAILABLE FOR SALE (COST $96,518, $8,861,345 AND $9,246,245
   FOR 2006, 2005 AND 2004, RESPECTIVELY)                                           129,312      8,756,877      9,019,674
INVESTMENT IN AIRCRAFT (NET OF ACCUMULATED DEPRECIATION OF $22,451,475,
   $21,450,140 AND $19,445,223 FOR 2006, 2005 AND 2004, RESPECTIVELY)                    --      1,001,335      3,006,252
GOODWILL                                                                          8,681,797      5,631,797      5,631,797
INTANGIBLE ASSETS (NET OF ACCUMULATED AMORTIZATION OF $40,953,034,
   $36,513,924 AND $18,766,788 FOR 2006, 2005 AND 2004, RESPECTIVELY)            47,828,426     49,317,537     67,064,672
FURNITURE, EQUIPMENT, SOFTWARE AND LEASEHOLD IMPROVEMENTS (NET OF
   ACCUMULATED DEPRECIATION AND AMORTIZATION OF $6,662,378, $5,621,096
   AND $4,890,622 FOR 2006, 2005 AND 2004, RESPECTIVELY)                          3,380,812      3,432,340      3,315,698
INTEREST RECEIVABLE ON SHAREHOLDERS' NOTES                                           15,044         40,700         62,894
INCOME TAXES RECEIVABLE                                                           2,598,921      1,464,058         86,582
OTHER ASSETS                                                                      2,429,594      3,027,281      3,270,789
                                                                               ------------   ------------   ------------
                                                                               $146,551,515   $152,580,372   $164,709,919
                                                                               ============   ============   ============

                   LIABILITIES AND SHAREHOLDERS' EQUITY:

LIABILITIES:
   LOANS PAYABLE                                                               $ 14,595,612   $ 15,412,341   $ 16,202,992
   EMPLOYEE COMPENSATION AND BENEFITS PAYABLE                                     6,181,267      4,213,626      5,924,364
   FEES PAYABLE                                                                   2,704,532      3,097,377      2,466,561
   VENDOR PAYABLES                                                                4,766,374      3,057,694      3,286,721
   ACCRUED EXPENSES AND OTHER LIABILITIES                                         4,900,000      4,900,000      5,400,000
   DEFERRED INCOME TAXES PAYABLE                                                    637,500             --             --
                                                                               ------------   ------------   ------------
                                                                                 33,785,285     30,681,038     33,280,638
                                                                               ------------   ------------   ------------
MINORITY INTEREST                                                                        --        254,348             --
                                                                               ------------   ------------   ------------
SHAREHOLDERS' EQUITY:
   COMMON SHARES, $0.001 PAR VALUE (125,000,000 SHARES AUTHORIZED
      47,569,278, 46,837,855 AND 46,113,462 SHARES ISSUED AND
      OUTSTANDING FOR 2006, 2005 AND 2004, RESPECTIVELY)                             47,569         46,838         46,113
   ADDITIONAL PAID-IN-CAPITAL                                                    90,545,974     85,445,648     80,260,553
   ACCUMULATED OTHER COMPREHENSIVE INCOME                                         1,114,075        429,924        984,626
   RETAINED EARNINGS                                                             21,719,738     37,519,609     53,204,705
                                                                               ------------   ------------   ------------
                                                                                113,427,356    123,442,019    134,495,997
LESS: NOTES RECEIVABLE FOR COMMON SHARES                                           (661,126)    (1,797,033)    (3,066,716)
                                                                               ------------   ------------   ------------
                                                                                112,766,230    121,644,986    131,429,281
                                                                               ------------   ------------   ------------
                                                                               $146,551,515   $152,580,372   $164,709,919
                                                                               ============   ============   ============
</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                   STATEMENTS.


                                       F-3

<PAGE>

                            W.P. STEWART & CO., LTD.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                             2006           2005           2004
                                                                         ------------   ------------   ------------
<S>                                                                      <C>            <C>            <C>
REVENUE:
   FEES (INCLUDES FEES FROM AFFILIATES OF $15,313,602, $10,524,528 AND
      $17,755,121 FOR 2006, 2005 AND 2004, RESPECTIVELY)                 $107,802,462   $113,197,833   $116,005,500
   COMMISSIONS                                                             29,608,834     31,889,805     34,819,726
   INTEREST AND OTHER                                                       4,719,382      2,767,217      1,496,179
                                                                         ------------   ------------   ------------
                                                                          142,130,678    147,854,855    152,321,405
                                                                         ------------   ------------   ------------
EXPENSES:
   EMPLOYEE COMPENSATION AND BENEFITS                                      43,725,858     34,152,799     29,102,102
   FEES PAID OUT                                                            8,126,112      9,058,834      7,760,372
   PERFORMANCE FEE CHARGE                                                   2,625,642             --             --
   COMMISSIONS, CLEARANCE AND TRADING                                       5,665,123      6,993,204      7,371,412
   RESEARCH AND ADMINISTRATION                                             13,628,542     14,399,422     14,781,318
   MARKETING                                                                6,309,491      5,540,294      5,617,923
   DEPRECIATION AND AMORTIZATION                                            6,572,545      8,206,220      8,038,837
   IMPAIRMENT OF INTANGIBLE ASSET                                                  --     12,452,978             --
   OTHER OPERATING                                                         11,971,467      9,959,838      8,648,979
                                                                         ------------   ------------   ------------
                                                                           98,624,780    100,763,589     81,320,943
                                                                         ------------   ------------   ------------
INCOME BEFORE TAXES                                                        43,505,898     47,091,266     71,000,462
PROVISION FOR TAXES                                                         6,030,455      7,038,582      7,851,775
                                                                         ------------   ------------   ------------
NET INCOME                                                               $ 37,475,443   $ 40,052,684   $ 63,148,687
                                                                         ============   ============   ============
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE                                                 $       0.82   $       0.88   $       1.40
                                                                         ============   ============   ============
DILUTED EARNINGS PER SHARE                                               $       0.82   $       0.87   $       1.39
                                                                         ============   ============   ============
</TABLE>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                   STATEMENTS.


                                       F-4
<PAGE>

                            W.P. STEWART & CO., LTD.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                            ACCUMULATED
                              COMMON SHARES      ADDITIONAL  CONTINGENTLY      OTHER
                           -------------------    PAID-IN     RETURNABLE   COMPREHENSIVE    RETAINED       NOTES
                             SHARES     AMOUNT    CAPITAL       SHARES         INCOME       EARNINGS     RECEIVABLE      TOTAL
                           ----------  -------  -----------  ------------  -------------  ------------  -----------  ------------
<S>                        <C>         <C>      <C>          <C>           <C>            <C>           <C>          <C>
BALANCE @ DECEMBER 31,
   2003                    46,035,726  $46,036  $80,419,304  $(3,623,928)   $  573,284    $ 45,217,876  $(7,963,982) $114,668,590
   ISSUANCE OF COMMON
      SHARES, @ $0.001
      PAR VALUE
      CASH                     29,714       29      532,369                                                               532,398
      NOTES RECEIVABLE          7,858        7      148,366                                                (148,373)           --
      RESTRICTED SHARES       138,000      138         (138)                                                                   --
   CONTINGENTLY
      RETURNABLE SHARES,
      NO LONGER SUBJECT
      TO REPURCHASE                                (623,524)   3,623,928                                                3,000,404
   REPURCHASE AND
      CANCELLATION OF
      COMMON SHARES, @
      $0.001 PAR VALUE        (46,122)     (46)    (352,584)                                                             (352,630)
   CANCELLATION OF COMMON
      SHARES, @ $0.001
      PAR VALUE               (51,714)     (51)    (845,496)                                                845,547            --
   NON-CASH COMPENSATION                            982,256                                                               982,256
   NET INCOME                                                                               63,148,687                 63,148,687
   DIVIDENDS ($1.20 PER
      SHARE)                                                                               (55,161,858)               (55,161,858)
   OTHER COMPREHENSIVE
      INCOME                                                                   411,342                                    411,342
   PROCEEDS FROM NOTES
      RECEIVABLE FOR
      COMMON SHARES                                                                                       4,200,092     4,200,092
                           ----------  -------  -----------  -----------    ----------    ------------  -----------  ------------
BALANCE @ DECEMBER 31,
   2004                    46,113,462   46,113   80,260,553           --       984,626      53,204,705   (3,066,716)  131,429,281
   ISSUANCE OF COMMON
      SHARES, @ $0.001
      PAR VALUE
      CASH                     59,176       59    1,109,166                                                             1,109,225
      NOTES RECEIVABLE            714        1       11,837                                                 (11,838)           --
      RESTRICTED SHARES       666,035      666         (666)                                                                   --
   REPURCHASE AND
      CANCELLATION OF
      COMMON SHARES, @
      $0.001 PAR VALUE         (1,000)      (1)     (25,159)                                                              (25,160)
   CANCELLATION OF COMMON
      SHARES, @ $0.001
      PAR VALUE                  (532)      --       (8,772)                                                  8,772            --
   NON-CASH COMPENSATION                          4,098,689                                                   8,643     4,107,332
   NET INCOME                                                                               40,052,684                 40,052,684
   DIVIDENDS ($1.20 PER
      SHARE)                                                                               (55,737,780)               (55,737,780)
   OTHER COMPREHENSIVE
      INCOME                                                                  (554,702)                                  (554,702)
   PROCEEDS FROM NOTES
      RECEIVABLE FOR
      COMMON SHARES                                                                                       1,264,106     1,264,106
                           ----------  -------  -----------  -----------    ----------    ------------  -----------  ------------
BALANCE @ DECEMBER 31,
   2005                    46,837,855   46,838   85,445,648           --       429,924      37,519,609   (1,797,033)  121,644,986
   ISSUANCE OF COMMON
      SHARES, @ $0.001
      PAR VALUE
      RESTRICTED SHARES     1,127,801    1,127       (1,127)                                                                   --
   REPURCHASE AND
      CANCELLATION OF
      COMMON SHARES, @
      $0.001 PAR VALUE       (233,012)    (233)  (2,660,036)                                                           (2,660,269)
   CANCELLATION OF COMMON
      SHARES, @ $0.001
      PAR VALUE               (36,214)     (36)    (555,969)                                                556,005            --
   FORFEITURE OF COMMON
      SHARES, @ $0.001
      PAR VALUE              (127,152)    (127)         127                                                                    --
   NON-CASH COMPENSATION                          8,317,331                                     77,582       36,418     8,431,331
   NET INCOME                                                                               37,475,443                 37,475,443
   DIVIDENDS ($1.13 PER
      SHARE)                                                                               (53,352,896)               (53,352,896)
   OTHER COMPREHENSIVE
      INCOME                                                                   684,151                                    684,151
   PROCEEDS FROM NOTES
      RECEIVABLE FOR
      COMMON SHARES                                                                                         543,484       543,484
                           ----------  -------  -----------  -----------    ----------    ------------  -----------  ------------
BALANCE @ DECEMBER 31,
   2006                    47,569,278  $47,569  $90,545,974  $        --    $1,114,075    $ 21,719,738  $  (661,126) $112,766,230
                           ==========  =======  ===========  ===========    ==========    ============  ===========  ============
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.


                                       F-5

<PAGE>



                            W.P. STEWART & CO., LTD.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                    2006           2005           2004
                                                                ------------   ------------   ------------
<S>                                                             <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   NET INCOME                                                   $ 37,475,443   $ 40,052,684   $ 63,148,687
   ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
      PROVIDED BY OPERATING ACTIVITIES:
      (GAIN)/LOSS ON SALE OF TRADING SECURITIES                     (204,628)            --             --
      (GAIN)/LOSS ON SALE OF AVAILABLE FOR SALE SECURITIES          (407,030)       156,746             --
      (GAIN)/LOSS ON DISPOSITION OF FURNITURE, EQUIPMENT,
         SOFTWARE AND LEASEHOLD IMPROVEMENTS                          14,952             --             --
      UNREALIZED (GAIN)/LOSS ON TRADING SECURITIES                (1,608,387)            --             --
      UNREALIZED (GAIN)/LOSS ON AVAILABLE FOR SALE SECURITIES          4,390        (22,780)            --
      AMORTIZATION OF BOND PREMIUM                                   710,356        384,942        104,380
      DEPRECIATION AND AMORTIZATION                                6,572,545     20,659,198      8,038,837
      EQUITY IN INCOME OF UNCONSOLIDATED AFFILIATES                  (32,199)       (53,752)       315,602
      NON-CASH COMPENSATION                                        8,431,331      4,107,332        982,256
      MINORITY INTEREST                                             (254,348)       254,348       (416,731)
   CHANGES IN OPERATING ASSETS AND LIABILITIES:
      FEES RECEIVABLE                                                820,644     (1,904,366)      (730,774)
      RECEIVABLE FROM CLEARING BROKER                                659,736       (700,667)       120,681
      PROCEEDS FROM SALE OF TRADING SECURITIES                     2,664,682             --             --
      PURCHASE OF TRADING SECURITIES                             (32,655,209)            --             --
      RECEIVABLES FROM AFFILIATES, NET                            (5,424,014)     8,702,181    (13,805,240)
      INCOME TAXES RECEIVABLE                                     (1,134,863)    (1,377,476)     1,424,110
      INTEREST RECEIVABLE ON SHAREHOLDERS' NOTES                      25,656         22,194         83,264
      OTHER ASSETS                                                   597,687        243,508       (206,574)
      EMPLOYEE COMPENSATION AND BENEFITS PAYABLE                   1,967,641     (1,710,738)     4,849,058
      FEES PAYABLE                                                  (392,845)       630,816      1,787,624
      VENDOR PAYABLES                                              1,708,680       (229,027)     1,486,489
      ACCRUED EXPENSES AND OTHER LIABILITIES                              --       (500,000)            --
      DEFERRED INCOME TAXES PAYABLE                                  637,500             --             --
                                                                ------------   ------------   ------------
         NET CASH PROVIDED BY OPERATING ACTIVITIES                20,177,720     68,715,143     67,181,669
                                                                ------------   ------------   ------------
CASH FLOWS (USED FOR) INVESTING ACTIVITIES:
   PROCEEDS FROM SALE OF AVAILABLE FOR SALE SECURITIES            14,922,031      7,325,566      4,460,267
   PURCHASE OF AVAILABLE FOR SALE SECURITIES                      (6,554,421)    (7,551,788)    (4,278,611)
   PURCHASE OF GOODWILL                                           (3,050,000)            --             --
   PURCHASE OF INTANGIBLE ASSETS                                  (2,950,000)            --             --
   INVESTMENT IN UNCONSOLIDATED AFFILIATE                           (125,000)       (75,001)      (325,577)
   CASH DIVIDENDS PAID ON SHARES SUBJECT TO REPURCHASE                    --             --        (97,680)
   PURCHASE OF FURNITURE, EQUIPMENT, SOFTWARE AND LEASEHOLD
      IMPROVEMENTS                                                (1,062,151)      (941,415)      (755,249)
   PROCEEDS FROM DISPOSITION OF FURNITURE, EQUIPMENT,
      SOFTWARE AND LEASEHOLD IMPROVEMENTS                             49,000             --             --
                                                                ------------   ------------   ------------
         NET CASH (USED FOR) INVESTING ACTIVITIES                  1,229,459     (1,242,638)      (996,850)
                                                                ------------   ------------   ------------
CASH FLOWS (USED FOR) FINANCING ACTIVITIES:
   PAYMENTS ON LOANS PAYABLE                                        (816,729)      (790,651)      (765,122)
   PROCEEDS FROM ISSUANCE OF COMMON SHARES                                --      1,109,225        532,398
   REPURCHASE OF COMMON SHARES                                    (2,660,269)       (25,160)      (352,630)
   PROCEEDS FROM NOTES RECEIVABLE FOR COMMON SHARES                  543,484      1,264,106      4,200,092
   DIVIDENDS TO SHAREHOLDERS                                     (53,352,896)   (55,737,780)   (55,161,858)
                                                                ------------   ------------   ------------
         NET CASH (USED FOR) FINANCING ACTIVITIES                (56,286,410)   (54,180,260)   (51,547,120)
EFFECT OF EXCHANGE RATE CHANGES IN CASH                              636,389       (584,592)       396,833
                                                                ------------   ------------   ------------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS             (34,242,842)    12,707,653     15,034,532
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                      64,566,799     51,859,146     36,824,614
                                                                ------------   ------------   ------------
CASH AND CASH EQUIVALENTS, END OF YEAR                          $ 30,323,957   $ 64,566,799   $ 51,859,146
                                                                ============   ============   ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
   CASH PAID DURING THE PERIOD FOR:
         INCOME TAXES                                           $  6,732,017   $  8,817,574   $  7,130,218
                                                                ============   ============   ============
         INTEREST                                               $  1,065,620   $    854,200   $    585,997
                                                                ============   ============   ============
</TABLE>

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

IN 2004, THE FINAL 20% OF THE SHARES ORIGINALLY ISSUED IN CONNECTION WITH OUR
ACQUISITION OF TPRS SERVICES N.V. IN 2000, CEASED TO BE SUBJECT TO REPURCHASE,
AND WERE RECORDED WITH A FAIR VALUE OF $3,000,404 (SEE NOTE 2).

THE COMPANY CANCELLED OUTSTANDING NOTES OF $556,005, $8,772 AND $845,547 FOR THE
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004, RESPECTIVELY (SEE NOTE 10).

THE COMPANY ISSUED COMMON SHARES FOR NOTES RECEIVABLE FOR THE YEARS ENDED
DECEMBER 31, 2005 AND 2004 IN THE AMOUNTS OF $11,838 AND $148,373, RESPECTIVELY
(SEE NOTE 11).

THE COMPANY ISSUED 1,127,801, 666,035 AND 138,000 COMMON SHARES FOR THE YEARS
ENDED DECEMBER 31, 2006, 2005 AND 2004, RECORDED WITH A FAIR VALUE OF
$20,480,649, $15,113,352 AND $2,706,300, RESPECTIVELY AND CANCELLED 127,152
FORFEITED RESTRICTED COMMON SHARES FOR THE YEAR ENDED DECEMBER 31, 2006 RECORDED
WITH A FAIR VALUE OF $2,800,737 (SEE NOTE 13).

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.


                                       F-6
<PAGE>

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PRESENTATION

The accompanying consolidated financial statements of W.P. Stewart & Co., Ltd.,
a Bermuda exempt company incorporated on August 16, 1996 and a registered
investment adviser under the United States of America ("U.S.") Investment
Advisers Act of 1940, as amended, ("WPS & Co., Ltd." and, together with its
subsidiaries, the "Company") are presented on a consolidated basis.

NOTE 2: BACKGROUND AND ORGANIZATION

For the years ended December 31, 2006, 2005 and 2004, the consolidated Company
consisted of several affiliated entities under common control, which provide
investment advisory and related services including securities brokerage. The
background and organization of the entities presented in the Company's
consolidated financial statements are set out below.

The Company's subsidiaries and affiliates include:

W.P. Stewart Asset Management Ltd. ("WPSAM"), a wholly-owned subsidiary, is a
registered investment adviser under the U.S. Investment Advisers Act of 1940
with clients throughout the world.

W.P. Stewart Securities Limited ("WPSSL"), a wholly-owned subsidiary, acts as an
introducing broker, clearing all transactions with, and for, customers of its
affiliates on a fully-disclosed basis through an independent clearing broker.
WPSSL is a registered broker-dealer under the U.S. Securities Exchange Act of
1934, as amended, and is a member of the National Association of Securities
Dealers.

W.P. Stewart Fund Management Limited ("WPS Dublin"), is a wholly-owned
subsidiary of WPSAM. The primary business of WPS Dublin is providing management
and administrative services to investment funds. WPS Dublin is currently the
manager of W.P. Stewart Funds plc and W.P. Stewart (Distributor) Funds plc, two
umbrella-type open-ended investment companies regulated by the Irish Financial
Services Regulatory Authority ("IFSRA"), formerly regulated by the Central Bank
of Ireland.

W.P. Stewart & Co., Inc. ("WPSI"), a wholly-owned subsidiary, is a registered
investment adviser under the U.S. Investment Advisers Act of 1940. Its principal
business is to provide investment research and sub-advisory services to the
Company.

WPS Aviation Holdings LLC ("WPS Aviation") is a wholly-owned subsidiary of WPSI.

W.P. Stewart & Co. (Europe), Ltd. ("WPS Europe"), a wholly-owned subsidiary, is
authorized and regulated by the Financial Services Authority ("FSA") and
previously was regulated by the Investment Management Regulatory Organisation
Limited ("IMRO"). Its principal business is to provide investment research and
sub-advisory services to the Company.

W.P. Stewart Fund Management S.A. ("WPSFM SA"), is a wholly-owned subsidiary,
subject to the jurisdiction of the Commission de Surveillance du Secteur
Financier ("CSSF"). The primary business of WPSFM SA is providing management and
administrative services to investment funds. WPSFM SA is currently the manager
of W.P. Stewart Holdings Fund (formerly W.P. Stewart Holdings N.V.), an
open-ended investment company under the jurisdiction of the CSSF and listed on
the Euronext Amsterdam.


                                       F-7

<PAGE>

In October and November 2006, the Company commenced investment activities in the
WPS US Absolute Investment Partnership, L.P., WPS US Relative Investment
Partnership, L.P. and WPS International Partners, L.P., three new investment
partnerships, which are wholly-owned subsidiaries of the Company. These
investment partnerships hold a portfolio of listed equity securities which are
classified as investments, trading on the consolidated statements of financial
condition.

Business Acquisitions

In 1999 the Company acquired 50% of TPRS Services N.V. ("TPRS") and 100% of NS
Money Management (Bermuda) Limited ("NSMM") and First Long Island Investors,
Inc. ("FLII"). On December 29, 2000, the Company acquired the remaining 50% of
TPRS. The repurchase provisions of the acquisition agreements specified that 80%
of the Company's common shares issued in connection therewith could be
repurchased ("contingently returnable shares") at par value by the Company up to
a maximum of 20% per year as of January 1, 2000, 2001, 2002 and 2003, except in
the case of the December 29, 2000 TPRS acquisition where the reference dates
were July 1, 2001, 2002, 2003 and 2004, if assets under management which were
part of the acquisitions decreased below defined reference amounts at the
specified dates and were not replaced.

The recorded purchase price for each acquisition was determined by the sum of:

     1.   the number of shares issued on acquisition not subject to repurchase,
          multiplied by the fair value of each of those shares at the
          acquisition date;

     2.   the number of shares that ceased to be subject to repurchase at each
          anniversary date, multiplied by the fair value of each of those shares
          at that date; and

     3.   the cumulative cash dividends paid on shares subject to repurchase.

The shares issued in connection with the TPRS, NSMM and FLII acquisitions were
initially reported in shareholders' equity (within share capital and as a
contra-equity account captioned "contingently returnable shares") at their
issuance prices as of the dates the acquisitions were consummated. On the dates
on which the contingently returnable shares ceased to be subject to repurchase,
the contra-equity account was relieved and any difference between the initial
issue price and the then current fair value of those shares was charged or
credited to additional paid-in capital, and the purchase price was adjusted for
the fair value of the shares. Cash dividends on shares no longer subject to
repurchase were recorded as a reduction of shareholders' equity.

Intangible assets arising from the Company's business acquisitions are comprised
primarily of customer relationships.

The following table shows information for each acquisition as of and for the
year ended December 31, 2006.

<TABLE>
<CAPTION>
              AGGREGATE   SHARES NOT     PURCHASE     INTANGIBLE
              NUMBER OF   SUBJECT TO      PRICE      AMORTIZATION
ACQUISITION     SHARES    REPURCHASE    ALLOCATION   FOR THE YEAR
-----------   ---------   ----------   -----------   ------------
<S>           <C>         <C>          <C>           <C>
TPRS          1,966,000    1,966,000   $42,367,772    $2,596,633
FLII          1,200,000    1,200,000    23,703,088     1,536,279
              ---------    ---------   -----------    ----------
              3,166,000    3,166,000   $66,070,860    $4,132,912
              =========    =========   ===========    ==========
</TABLE>


                                      F-8

<PAGE>

The following table shows information for each acquisition as of and for the
year ended December 31, 2005.

<TABLE>
<CAPTION>
              AGGREGATE   SHARES NOT     PURCHASE     INTANGIBLE
              NUMBER OF   SUBJECT TO      PRICE      AMORTIZATION
ACQUISITION     SHARES    REPURCHASE    ALLOCATION   FOR THE YEAR
-----------   ---------   ----------   -----------   ------------
<S>           <C>         <C>          <C>           <C>
TPRS          1,966,000    1,966,000   $42,367,772    $2,596,633
NSMM            863,831      863,831    17,042,406       953,839
FLII          1,200,000    1,200,000    23,703,088     1,536,279
              ---------    ---------   -----------    ----------
              4,029,831    4,029,831   $83,113,266    $5,086,751
              =========    =========   ===========    ==========
</TABLE>

The following table shows information for each acquisition as of and for the
year ended December 31, 2004.

<TABLE>
<CAPTION>
                                           CASH
                                         DIVIDENDS
                                          PAID ON
              AGGREGATE   SHARES NOT   CONTINGENTLY     PURCHASE     INTANGIBLE
              NUMBER OF   SUBJECT TO    RETURNABLE       PRICE      AMORTIZATION
ACQUISITION     SHARES    REPURCHASE      SHARES       ALLOCATION   FOR THE YEAR
-----------   ---------   ----------   ------------   -----------   ------------
<S>           <C>         <C>          <C>            <C>           <C>
TPRS          1,966,000    1,966,000      $97,680     $42,367,772    $2,496,619
NSMM            863,831      863,831           --      17,042,406       953,839
FLII          1,200,000    1,200,000           --      23,703,088     1,536,279
              ---------    ---------      -------     -----------    ----------
              4,029,831    4,029,831      $97,680     $83,113,266    $4,986,737
              =========    =========      =======     ===========    ==========
</TABLE>

On November 14, 2001, the Company acquired a controlling interest in TPR &
Partners N.V. ("TPR"), an asset-gathering firm based in The Netherlands via the
acquisition of shares in a Bermuda holding company that indirectly owns 100% of
the shares of TPR. Going forward, the Bermuda company, which is named W.P.
Stewart Asset Management (Europe), Ltd. ("WPSAM Europe"), serves as the umbrella
for the Company's European asset gathering and client servicing activities. In
the transaction, the Company initially acquired 9,000 of WPSAM Europe's 12,000
outstanding shares in exchange for 330,000 common shares of the Company. The
acquisition price of $8,052,000 less the fair value of net assets acquired of
$170,203 has been allocated to intangible assets and goodwill. The former
beneficial owners of TPR, one of whom is an executive officer of the Company,
and their assigns continued to hold the remaining 3,000 shares of WPSAM Europe
until July 1, 2006, at which time the Company acquired those shares at a fair
value price of $6,000,000, which has been allocated to intangible assets and
goodwill in the amounts of $2,950,000 and $3,050,000, respectively. For the year
ended December 31, 2006 there was no impairment in the carrying value of
goodwill.

Late in the fourth quarter of 2005, the Company was instructed to liquidate
certain NSMM accounts as a result of a third party business transaction
impacting the related clients. This resulted in an outflow of approximately $200
million in assets under management ("AUM"). The future undiscounted cash flows
generated by the advisory fees on the $200 million of AUM supported the NSMM
customer related intangible assets. As a result of this event, for the year
ended December 31, 2005, the Company recognized an impairment loss equal to the
carrying value of the asset in the amount of $12,452,978.


                                      F-9

<PAGE>

For intangible assets subject to amortization, the estimated aggregate
amortization expense for each of the five succeeding years ending December 31 is
as follows:

<TABLE>
<S>    <C>
2007   $4,476,626
2008   $4,476,626
2009   $4,476,626
2010   $4,476,626
2011   $4,476,626
</TABLE>

NOTE 3: ACCOUNTING POLICIES

These consolidated financial statements are presented in conformity with
accounting principles generally accepted in the U.S. The functional currency for
the Company and its affiliates is the U.S. dollar with the exceptions of WPS
Europe and W.P. Stewart Asset Management (Europe), N.V. ("WPSAM Europe N.V."), a
wholly-owned subsidiary of WPSAM Europe, for which the pound sterling and the
euro, respectively, are the functional currencies.

The process of preparing consolidated financial statements in conformity with
generally accepted accounting principles in the U.S. requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the dates of
the consolidated financial statements, as well as the reported amounts of
revenues and expenses during the reporting periods. Actual results may differ
from those estimates.

Principles of Consolidation

The Company consolidates all affiliated entities in which it has a majority
ownership interest or maintains effective control. All material inter-company
transactions have been eliminated.

Cash and Cash Equivalents

The Company considers cash in banks, money market funds and short-term highly
liquid investments with an original maturity of three months or less at the date
of purchase to be cash equivalents. The Company maintains a large majority of
its cash in two banks.

Investments in Unconsolidated Affiliates

The Company includes its investments in the common stock of investees in which
it owns between 20-50% in the caption "Investments in Unconsolidated Affiliates"
and accounts for such investments under the equity method of accounting.

Investments, Trading and Available for Sale

Investments in equity and municipal securities have been classified as either
"trading" or "available for sale" in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" and, as such, are recorded at quoted market values.
Transactions are recorded on a trade date basis. For the year ended December 31,
2006, unrealized gains and losses on investments classified as trading in the
amount of $1,608,387 are recorded as profit or loss and are included in interest
and other whereas unrealized gains and losses on investments classified as
available for sale are recorded in accumulated other comprehensive income within
shareholders' equity.

Furniture, Equipment, Software, Leasehold Improvements and Investment in
Aircraft

Furniture, equipment, software, leasehold improvements and investment in
aircraft are stated at cost less accumulated depreciation and amortization.
Depreciation is computed using straight-line and accelerated methods over the
estimated useful lives of the assets. Leasehold improvements are amortized over
the


                                      F-10

<PAGE>

shorter of the lease term or the estimated life of the improvements. The
aircraft is depreciated using an accelerated method over seven years.

Fees and Fees Paid Out

Fees for the management of clients' accounts are based on terms stated in client
contracts and are based upon a percentage of assets under management determined
as of the last day of the prior quarter as specified in the contracts. Fees are
recognized in the period in which they are earned. Under certain client
contracts, the Company is entitled to receive performance fees when the return
on assets under management exceeds specified benchmark returns or other
performance targets. Performance fees are recorded as of the date on which the
performance period ends.

Fees for the referral of certain accounts are paid to solicitors and are based
on terms stated in contracts with such parties. Such amounts, included in fees
paid out, are based upon a percentage of the fee revenue generated from the
referred accounts and are recognized in the same period as the corresponding
revenue.

Commissions

Commissions on brokerage activities and related trading costs are recorded on a
trade date basis.

Income Taxes

The Company uses the asset and liability method required by Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), to record income taxes. SFAS 109 states that "deferred tax assets and
liabilities are recognized principally for the expected tax consequences of
temporary differences between the tax bases of assets and liabilities and their
reported amounts". A valuation allowance is established to reduce deferred tax
assets to amounts that are expected to be realized.

The Company may be subject to challenges from tax authorities regarding the
amount of taxes due. These challenges may include questions regarding the amount
of deductions and the allocation of income in the jurisdictions where the
Company conducts business. In evaluating the potential exposure associated with
various tax positions, the Company records reserves for such potential
exposures. Based on management's evaluation of the Company's tax position, it is
believed that the amounts related to these potential tax exposures are
appropriately accrued as accrued expenses and other liabilities. To the extent
the Company were to prevail in matters for which such accruals have been
established or be required to pay amounts in excess of the aforementioned
reserves, the Company's effective tax rate in a given financial statement period
may be impacted.

Foreign Currency Translation

The Company accounts for foreign currency translation in accordance with
Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation". Assets and liabilities are translated at the exchange rate in
effect at year-end, and revenue and expenses are translated at the average rates
of exchange prevailing during the year. Gains or losses resulting from foreign
currency transactions are included in net income. The U.S. dollar effect that
arises from translating the net assets of WPS Europe and WPSAM Europe N.V. is
recorded in "accumulated other comprehensive income", a separate component of
shareholders' equity.

Intangible Assets and Goodwill

Intangible assets arising from the Company's business acquisitions (see Note 2)
are amortized on a straight-line basis over periods of five to 20 years. The
carrying value of the intangibles acquired is reviewed for impairment annually
or whenever events or changes in circumstances indicate that they may not be
recoverable based upon expectations of future undiscounted cash flows over their
remaining lives. Where the undiscounted cash flow is less than the carrying
amount of the asset, an impairment loss will


                                      F-11

<PAGE>

be recognized. The loss will be the difference between the fair value of the
asset and the carrying value of the asset.

Goodwill from the Company's acquisition of TPR (see Note 2) is accounted for
pursuant to Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" ("SFAS No. 142"). In accordance with SFAS No. 142,
goodwill is not amortized but is tested annually for impairment.

Earnings Per Share

Basic earnings per share is computed by dividing the net income applicable to
common shares outstanding by the weighted average number of shares outstanding,
excluding unvested shares issued to employees of the Company or its affiliates,
contingently returnable shares, unvested options, vested unexercised options and
potentially issuable common shares. Diluted earnings per share is computed using
the same method as basic earnings per share, but also reflects the impact of
unvested shares issued to employees of the Company or its affiliates,
contingently returnable shares and the dilutive effect of unvested options,
vested unexercised options issued to employees of the Company or its affiliates
and potentially issuable common shares, using the treasury stock method.

Share-Based Compensation

On January 1, 2005, the Company began to account for share-based employee
compensation in accordance with the method prescribed by Statement of Financial
Accounting Standards No. 123 (Revised 2004), "Share-Based Payment" ("SFAS No.
123R"). SFAS No. 123R requires that compensation cost related to share-based
payment transactions be recognized in the financial statements. Share-based
payment transactions within the scope of SFAS No. 123R include share options,
restricted share awards, certain performance-based awards, share appreciation
rights, and employee share purchase plans (see Note 12).

Business Segments

The Company operates predominantly in one business segment, the investment
advisory and asset management industry.

Reclassification of Comparative Financial Statements

Certain prior year amounts have been reclassified to conform with current year
presentation.

New Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN No. 48"), "Accounting for Uncertainty in Income
Taxes -- an Interpretation of SFAS No. 109". FIN No. 48 requires that the
Company determine whether a tax position is more likely than not to be sustained
upon examination, including resolution of any related appeals or litigation
processes, based upon the technical merits of the position. Once it is
determined that a position meets this recognition threshold, the position is
measured to determine the amount of benefit to be recognized in the financial
statements. The Company expects to adopt the provisions of FIN No. 48 beginning
in the first quarter of 2007. The Company does not expect the adoption to have a
material effect on its financial condition, results of operations and cash
flows.


                                      F-12
<PAGE>

NOTE 4: EARNINGS PER SHARE

<TABLE>
<CAPTION>
                                                    2006          2005          2004
                                                -----------   -----------   -----------
<S>                                             <C>           <C>           <C>
Basic Earnings Per Share:
Net income                                      $37,475,443   $40,052,684   $63,148,687
                                                ===========   ===========   ===========
Weighted average basic shares outstanding        45,816,561    45,639,687    45,111,869
                                                -----------   -----------   -----------
Net income per share                            $      0.82         $0.88         $1.40
                                                ===========   ===========   ===========
Diluted Earnings Per Share:
Net income                                      $37,475,443   $40,052,684   $63,148,687
                                                ===========   ===========   ===========
Weighted average basic shares outstanding        45,816,561    45,639,687    45,111,869
Add: Unvested shares, contingently returnable
   shares, unvested options, vested
   unexercised options  and dilutive
   potentially issuable common shares                49,903       311,859       412,174
                                                -----------   -----------   -----------
Weighted average diluted shares outstanding      45,866,464    45,951,546    45,524,043
                                                -----------   -----------   -----------
Net income per share                            $      0.82   $      0.87   $      1.39
                                                ===========   ===========   ===========
</TABLE>

Basic earnings per share is computed by dividing the net income applicable to
common shares outstanding by the weighted average number of shares outstanding,
excluding unvested shares issued to employees of the Company or its affiliates,
contingently returnable shares, unvested options, vested unexercised options and
potentially issuable common shares. Diluted earnings per share is computed using
the same method as basic earnings per share, but also reflects the impact of
unvested shares issued to employees of the Company or its affiliates,
contingently returnable shares and the dilutive effect of unvested options,
vested unexercised options issued to employees of the Company or its affiliates
and potentially issuable common shares, using the treasury stock method.

On December 31, 2006, 2005 and 2004, respectively, 47,569,278, 46,837,855 and
46,113,462 shares were issued and outstanding. The shareholders of record are
entitled to full voting rights (see Note 14) and dividends on these shares;
1,812,874, 1,052,330 and 700,863 of these shares were unvested and held by the
Company's or affiliates' employees on December 31, 2006, 2005 and 2004,
respectively.


                                      F-13

<PAGE>

NOTE 5: COMPREHENSIVE INCOME

The following table details the components of comprehensive income as described
in Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income".

<TABLE>
<CAPTION>
                                                      2006          2005          2004
                                                  -----------   -----------   -----------
<S>                                               <C>           <C>           <C>
Net income                                        $37,475,443   $40,052,684   $63,148,687
Other comprehensive income, net of tax:
   Reclassification adjustment for unrealized
      gains/(losses) on available for sale
      securities included in interest and other        76,390        83,580        (7,361)
   Unrealized gains/(losses) on available
      for sale securities                             (28,628)      (53,690)       21,870
   Foreign currency translation adjustment            636,389      (584,592)      396,833
                                                  -----------   -----------   -----------
Comprehensive income                              $38,159,594   $39,497,982   $63,560,029
                                                  ===========   ===========   ===========
</TABLE>

NOTE 6: INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Investments in unconsolidated affiliates include the following:

<TABLE>
<CAPTION>
                                            2006         2005         2004
                                         ----------   ----------   ----------
<S>                                      <C>          <C>          <C>
Investment in Bowen Asia Limited         $2,305,501   $2,336,107   $2,317,130
Investment in Stewart Bowen Japan Ltd.      107,035       99,871      158,557
Investment in Kirk Management Ltd.        1,491,682    1,393,413    1,307,323
                                         ----------   ----------   ----------
Total                                    $3,904,218   $3,829,391   $3,783,010
                                         ==========   ==========   ==========
</TABLE>

At December 31, 2006, the Company owned approximately 40% of Bowen Asia Limited
("Bowen").

The Company owns a 40% interest in Kirk Management Ltd., a real estate joint
venture incorporated in Bermuda. Kirk Management Ltd. owns Trinity Hall, a
building located in Hamilton, Bermuda, which is leased by the Company from the
joint venture and serves as the Company's headquarters.

The Company owns a 50% interest in Stewart Bowen Japan Ltd. ("SBJL"), a joint
venture incorporated in the British Virgin Islands. W. P. Stewart Japan K.K., a
wholly-owned subsidiary of SBJL, is located in Tokyo, Japan and provides client
servicing and asset gathering activities. Bowen owns the remaining 50% interest
in SBJL.

NOTE 7: RELATED PARTY TRANSACTIONS

Research and administrative expenses include travel expenses of $738,731,
$1,758,497 and $2,531,126 for the years ended December 31, 2006, 2005 and 2004,
respectively, which were paid to Shamrock Aviation, Inc. ("Shamrock"), a company
owned by principal shareholders of the Company.


                                      F-14

<PAGE>

The Company has entered into agreements pursuant to which, either Shamrock or an
entity affiliated with Shamrock, has agreed to provide operational and
maintenance services at cost for the Challenger aircraft owned by the Company.
These costs, reflected in research and administration expenses, include
$3,087,474, $3,100,843 and $2,569,082 for the years ended December 31, 2006,
2005 and 2004, respectively.

A portion of the office space located in New York includes space occupied by
Stewart family interests. WPSI is reimbursed on a monthly basis for rent and
other costs associated with the space, which amounted to $181,545, $172,357 and
$175,187 for the years ended December 31, 2006, 2005 and 2004, respectively.
These amounts are based upon the actual space utilized in each of those years.

The Company pays solicitation fees in respect of certain accounts and an amount
calculated on the basis of a portion of the brokerage commissions paid by
certain accounts, as directed by those clients to a beneficial owner of a
minority interest in the Company. Such payments amounted to $7,867 and $7,382
for the years ended December 31, 2006 and 2005. Prior to 2005, these payments
were made to WPS Investissements S.A., a Swiss investment management firm,
principally owned by a beneficial owner of a minority interest in the Company.
Such payments amounted to $6,358 for the year ended December 31, 2004.

The Company pays Bowen, an unconsolidated affiliate of the Company (see Note 6),
the other principal owners of which are an executive officer and a beneficial
owner of a minority interest in the Company, fees for solicitation, sub-advisory
and research services. Such costs amounted to $1,457,152, $1,722,632 and
$1,227,329 for the years ended December 31, 2006, 2005 and 2004, respectively.
The Company receives solicitation fees from Bowen Capital Management ("BCM"), a
subsidiary of Bowen, for client referrals to BCM. Total solicitation fees
received from BCM for the years ended December 31, 2006, 2005 and 2004 were
$7,114, $6,267 and $6,098, respectively.

The Company pays Carl Spangler Kapitalanlageges. m.b.H., which is controlled by
Bankhaus Carl Spangler & Co. AG, the Chief Executive Officer of which is one of
the Company's directors, fees for solicitation services. These fees amounted to
$513,106, $682,590 and $625,617 for the years ended December 31, 2006, 2005 and
2004, respectively.

The Company paid Appleby Spurling Hunter and Appleby Corporate Services
(formerly Appleby, Spurling & Kempe and A.S. & K. Services Ltd.), of which prior
to March 31, 2005 one of the Company's directors was a senior partner, fees for
various legal, corporate administrative and secretarial services. Such fees for
services amounted to $23,803 and $43,679 for the years ended December 31, 2005
and 2004, respectively.

Certain directors of the Company serve as directors of funds from which the
Company receives investment advisory fees, fund management fees, subscription
fees and commissions. Such fees and commissions were $15,555,068, $15,245,066
and $20,752,325 for the years ended December 31, 2006, 2005 and 2004,
respectively.

The Company owns a 40% interest in Kirk Management Ltd. (see Note 6), a real
estate joint venture incorporated in Bermuda. The remaining 60% interest is
owned by The Bank of Bermuda of which, prior to 2004, one of the Company's
directors was the Chief Executive Officer. Such director remains a non-executive
director of The Bank of Bermuda and during the period from May 2005 through
March 31, 2006 was an executive officer of the Company. Kirk Management Ltd.
also owns and leases to the Company its Hamilton, Bermuda headquarters. Included
in research and administration expenses is rent expense of $180,000 for each of
the years ended December 31, 2006, 2005 and 2004.


                                      F-15

<PAGE>

Included in receivables from affiliates, net, at December 31, 2006, 2005 and
2004 is a subordinated loan of $212,526 and accrued interest on such loan in the
amount of $34,132 due from Kirk Management Ltd. The loan has no fixed repayment
date.

Included in receivables from affiliates, net, at December 31, 2006, 2005 and
2004 are the amounts of $352,701, $349,465 and $340,318, respectively, which
represent an outstanding receivable from WPS II, Inc. a significant shareholder
of the Company. This balance is non-interest bearing and has no fixed repayment
date.

WPSAM serves as investment adviser to W.P. Stewart Holdings Fund ("WPSH")
formerly W.P. Stewart Holdings N.V. ("WPSH NV"), our mutual fund listed on
Euronext Amsterdam. This fund has a fixed fee of 25 basis points per annum and a
10% performance fee. Included in receivables from affiliates, net, at December
31, 2006, 2005 and 2004, are performance fees receivable in the amounts of
$9,740,086, $5,349,750 and $13,537,506, respectively. In connection with the
seat transfer of WPSH NV to Luxembourg on July 1, 2006 and the related resetting
of the performance fee to a straight high water mark, although WPSAM did not
terminate the investment advisory agreement, the performance fee credit balance
at June 30, 2006 in the amount of $2,625,642 was recognized and paid by WPSAM to
WPSH. This amount was recorded as a performance fee charge and is included in
the consolidated statement of operations for the year ended December 31, 2006.

Included in investments available for sale at December 31, 2004 is an amount of
$895,423 which was an investment in a fund managed by WPS Dublin, a wholly-owned
subsidiary of the Company.

Included in research and administration expenses for the years ended December
31, 2006, 2005 and 2004 is rent expense in the amount of $190,260, $188,795 and
$194,552 which is paid to a company owned by the former principals of WPSAM
Europe N. V., one of whom is an executive officer of the Company.

Included in other operating expenses for the years ended December 31, 2006, 2005
and 2004 are contributions in the amounts of $325,000, $507,500 and $411,000
paid to the W.P. Stewart & Co. Foundation, Inc. (the "Foundation"), a private
charitable foundation.

NOTE 8: LONG-TERM DEBT

On July 10, 2003, WPS Aviation entered into a 10-year amortizing loan agreement
with General Electric Capital Corporation ("GECC") to continue to finance its
obligations under the purchase agreement relating to the purchase of a
Challenger aircraft. The purpose of this new agreement was solely to consolidate
all prior obligations to GECC and to reduce the fixed interest rates under the
previous obligations. This new loan was for the principal sum of $17,278,264 at
a floating per annum simple interest rate, as defined in the loan agreement as
the contract rate, to be paid in 120 monthly installments and a final
installment of $8,608,913 plus any outstanding interest. The contract rate of
interest is equal to the sum of (i) two and 25/100 percent (2.25%) per annum
plus (ii) a variable per annum interest rate equal to the rate listed for
one-month commercial paper (non-financial). The first monthly periodic
installment was due and paid on August 10, 2003 with installments due and
payable on the same day of each succeeding month. The loan is collateralized by
the Challenger aircraft.


                                      F-16

<PAGE>

Future principal payments on the loan as of December 31, 2006 are as follows:

<TABLE>
<S>                         <C>
2007                        $    843,756
2008                             871,570
2009                             900,587
2010                             930,320
2011                             961,106
Thereafter (through 2013)     10,088,273
                            ------------
                            $ 14,595,612
                            ============
</TABLE>

Interest expense on long-term debt totaled $1,064,517, $829,777 and $579,318 for
the years ended December 31, 2006, 2005 and 2004, respectively.

The carrying value of this loan approximates its fair value as of December 31,
2006.

The loan documents require the Company to maintain certain financial ratios and
a minimum level of $15 million of tangible net worth (as defined in the loan
documents). The Company was in compliance with such ratios as of December 31,
2006.

NOTE 9: COMMITMENTS AND CONTINGENCIES

At December 31, 2006, the Company was contingently liable on three irrevocable
standby letters of credit. One letter of credit is in the amount of $1,000,000
in favor of Wachovia Corporate Services Inc. ("Wachovia") and collateralizes
amounts received from the Company's clients that Wachovia wires daily to the
Company's account at The Bank of Bermuda. The second letter of credit is in the
amount of $200,000, in favor of WPSI's landlord. The third letter of credit is
in the amount of $699,033 in favor of WPS Europe's landlord. The latter amount
is guaranteed by the Company, and is collateralized by a fixed deposit cash
account in the same amount, which will remain intact over the term of the lease
and, is reflected in other assets at December 31, 2006, 2005 and 2004.

At December 31, 2006, WPSSL had net capital, as defined, of $536,765 that
exceeded the required minimum net capital of $100,000 by $436,765.

WPSSL conducts business with a clearing broker on behalf of its customers
subject to a clearing agreement. WPSSL earns commissions as an introducing
broker for the transactions of its customers, which are normally settled on a
delivery-against-payment basis. Under the clearing agreement, WPSSL has agreed
to indemnify the clearing broker for non-performance by any customers introduced
by WPSSL. As the right to charge WPSSL has no maximum amount, and applies to all
trades executed through the clearing broker, WPSSL believes there is no maximum
amount assignable to this right. At December 31, 2006, WPSSL has recorded no
liability with respect to this right. WPSSL is subject to credit risk to the
extent that the clearing broker may be unable to repay amounts owed.

WPSAM serves as investment adviser to W.P. Stewart Holdings Fund ("WPSH")
formerly W.P. Stewart Holdings N.V. ("WPSH NV"), our mutual fund listed on
Euronext Amsterdam. This fund pays WPSAM a fixed fee of 25 basis points per
annum and a 10% performance fee.

Through June 30, 2006, the performance fee was calculated as 10% of the change
in WPSH NV's net asset value per share from valuation date to valuation date,
multiplied by the number of shares outstanding as of the earlier of the two
dates. However, if the calculation were to produce a negative figure, that
amount would be treated as a credit against future performance fees. If the
advisory agreement


                                      F-17

<PAGE>

were to be terminated by the investment adviser, the remaining negative balance,
if any, would have to be paid back to WPSH NV by the investment adviser.

In connection with the seat transfer of WPSH NV to Luxembourg on July 1, 2006
and the related resetting of the performance fee to a straight high water mark,
although WPSAM did not terminate the investment advisory agreement, the
performance fee credit balance at June 30, 2006 in the amount of $2,625,642 was
recognized and paid by WPSAM to WPSH. This amount was recorded as a performance
fee charge and is included in the consolidated statement of operations for the
year ended December 31, 2006.

Effective July 1, 2006, as per the terms of the investment advisory agreement,
the performance fee is payable annually in arrears and is equal to 10% of the
increase, if any, in the net asset value per share as compared to December 31 of
the previous year. The performance fee is calculated on each valuation day by
first calculating the net asset value per share prior to the performance fee
accrual for that day (the "base net asset value per share"), and then allocating
10% of the increase (or decrease) in the base net asset value per share compared
to the higher of (i) the net asset value per share (after accrual of performance
fee) on the preceding valuation day or (ii) the highest net asset value per
share previously attained as at any prior December 31st, multiplied by the
number of shares in issue on the current valuation day. If on any valuation day
the net asset value per share shall fall below the high water mark, then no
performance fee shall be accrued until such time as the net asset value per
share exceeds the high water mark. Included in receivables from affiliates, net,
at December 31, 2006 is a performance fee receivable in the amount of
$9,740,086.

The Company has committed to make future issuances of 820,000 common shares as
non-cash incentive employee compensation. The commitments made by the Company to
issue such shares are conditioned upon the satisfaction of certain individual
employee performance conditions relating to Company profitability, investment
performance or both. Any shares that may be issued by the Company in the future
in satisfaction of those commitments will be restricted shares. When issued,
these restricted shares will remain subject to vesting requirements over time,
with limited exceptions permitting accelerated or immediate vesting. The
dilutive effect of these potentially issuable common shares is included in the
weighted average diluted shares outstanding in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128").

The Company is involved in a legal action with a vendor arising in the ordinary
course of business. Management believes, based on currently available
information, that the results of such proceedings will not have a material
adverse effect on the financial condition or results of operations of the
Company.

NOTE 10: NOTES RECEIVABLE FOR COMMON SHARES

Pursuant to employee or director purchase agreements for common shares, in the
event a purchaser is no longer in the employment of, or no longer serves as a
director of, the Company or any of its affiliates, the purchaser, shall transfer
to the Company all rights to the shares that have not vested at the time of such
termination. The remaining balance of the outstanding notes receivable related
to the unvested shares shall be abated.

Pursuant to the terms of the purchase agreements, during the year ended December
31, 2006, 36,214 unvested common shares of former employees were repurchased and
their installment notes totaling $556,005 were abated.

Pursuant to the terms of the purchase agreements, during the year ended December
31, 2005, 532 unvested common shares of former employees were repurchased and
their installment notes totaling $8,772 were abated.


                                      F-18

<PAGE>

Pursuant to the terms of the purchase agreements, during the year ended December
31, 2004, 51,714 unvested common shares of former employees were repurchased and
their installment notes totaling $845,547 were abated.

All the common shares described above are subject to vesting provisions.

Future minimum payments expected to be received on notes receivable for common
shares as of December 31, 2006 are as follows:

<TABLE>
<S>    <C>
2007   $322,643
2008    247,931
2009     74,806
2010      8,952
2011      6,794
       --------
       $661,126
       ========
</TABLE>

Interest income on all such notes was $79,656, $192,678 and $464,146 for the
years ended December 31, 2006, 2005 and 2004, respectively.

NOTE 11: 2001 EMPLOYEE EQUITY INCENTIVE PLAN

The W.P. Stewart & Co., Ltd. 2001 Employee Equity Incentive Plan, as amended
(the "Plan") provided for awards of common shares of the Company, to be granted
to eligible employees of the Company and its affiliates in the form of
restricted common shares and/or options. The exercise price of the options is
equal to the market value of the Company's shares on the date of the grant. All
awards that vest are exercisable in equal annual amounts on each of the first
seven anniversaries of the grant dates. The dilutive effect of unvested options
and vested unexercised options is included in the weighted average diluted
shares outstanding in accordance with Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" ("SFAS No. 128").

On May 12, 2003, the Board of Directors approved an amendment to the Plan that
(i) increased the total number of common shares available for awards under the
Plan from 2,500,000 to a total of 3,000,000, inclusive of awards previously
granted, and (ii) increased the duration of the period during which vested
options may be exercised from one year to two years with respect to any option
grants made in the future.

As provided in the Plan, as of July 24, 2004 no further grants may be awarded
under the Plan. However, previously issued grants will extend beyond that date
as expressly provided in the Plan documents.

In 2006, pursuant to the terms of the Plan, 128,568 and 9,285 unexercised
options granted in 2001 and 2002, respectively, were forfeited by former
employees of the Company. Additionally, in 2006, 74,465 and 64,030 vested
options granted in 2001 and 2002, respectively, expired.

During 2005, pursuant to the terms of the Plan, 28,273 and 30,903 vested
employee share options granted in 2001 and 2002, respectively, were exercised
for an aggregate amount of $1,109,225. Additionally in 2005, 714 vested employee
share options granted in 2002 were exercised for an installment note in the
amount of $11,838. The installment note bears interest at 8.5% per annum, is for
a period of two years and is collateralized by the shares issued.

In 2005, pursuant to the terms of the Plan, 106,957 unexercised options granted
in 2001 were forfeited by former employees of the Company. Additionally, in
2005, 98,614 and 43,714 vested options granted in 2001 and 2002, respectively,
expired.


                                      F-19
<PAGE>

During 2004, pursuant to the terms of the Plan, 8,622 and 21,092 vested employee
share options granted in 2001 and 2002, respectively, were exercised for an
aggregate amount of $532,399. Additionally in 2004, 4,286 and 3,572 vested
employee share options granted in 2001 and 2002, respectively, were exercised
for installment notes in the amount of $148,373. The installment notes bear
interest at 8.5% per annum, are for a period of two years and are collateralized
by the shares issued.

In 2004, pursuant to the terms of the Plan, 19,756 and 7,714 unexercised options
granted in 2001 and 2002, respectively, were forfeited by former employees and
non-employee directors of the Company. Additionally, in 2004, 131,447 and 48,627
vested options granted in 2001 and 2002, respectively, expired.

NOTE 12: SHARE OPTIONS

On January 1, 2003, the Company began to account for share-based employee
compensation in accordance with the fair value method prescribed by SFAS No.
123, as amended by SFAS No. 148, using the prospective adoption method. Under
this method of adoption, compensation expense is recognized based on the fair
value of the share options granted in 2003 and future years over the related
vesting periods. The amount of share-based compensation recognized under SFAS
No. 123 for the years ended December 31, 2006, 2005 and 2004 for share options
granted in 2003, was $530, $4,470 and $5,639, respectively. During 2006, 40,178
unexercised options granted in 2003 were forfeited by former employees of the
Company and 9,322 vested options granted in 2003 expired. There were no share
options granted for the years ended December 31, 2006, 2005 and 2004.

The options outstanding as of December 31, 2006, 2005 and 2004 for grants
awarded during the year ended December 31, 2003, are set forth below:

<TABLE>
<CAPTION>
                                                 WEIGHTED AVERAGE
                                  OPTIONS     REMAINING CONTRACTUAL   WEIGHTED AVERAGE
DECEMBER 31,   EXERCISE PRICE   OUTSTANDING        LIFE (YEARS)        EXERCISE PRICE
------------   --------------   -----------   ---------------------   ----------------
<S>            <C>              <C>           <C>                     <C>
    2006           $20.20          15,750               5                  $20.20
                                   ======
    2005           $20.20          65,250               5                  $20.20
                                   ======
    2004           $20.20          65,250               6                  $20.20
                                   ======
</TABLE>

On January 1, 2005, the Company began to account for share-based employee
compensation in accordance with the method prescribed by Statement of Financial
Accounting Standards No. 123 (Revised 2004), "Share-Based Payment" ("SFAS No.
123R"). SFAS No. 123R requires that compensation cost related to share-based
payment transactions be recognized in the financial statements. Share-based
payment transactions within the scope of SFAS No. 123R include share options,
restricted share awards, certain performance-based awards, share appreciation
rights, and employee share purchase plans. The effect of adopting SFAS No. 123R
resulted in an increase in compensation expense for the years ended December 31,
2006 and 2005 of $155,392 and $287,138, respectively.


                                      F-20

<PAGE>

The following range assumptions were applied in determining the effect on
compensation expense upon adoption of SFAS No. 123R for the years ended December
31, 2006 and 2005:

<TABLE>
<CAPTION>
                              2006           2005
                          ------------   ------------
<S>                       <C>            <C>
Expected Life             1 to 7 years   1 to 7 years
Risk free interest rate   5.09% - 5.33%  4.84% - 4.89%
Dividend yield            4.22% - 7.24%  4.22% - 7.24%
Volatility                       11.16%         12.87%
</TABLE>

The options outstanding as of December 31, 2006, 2005 and 2004 for grants made
prior to January 1, 2003 are set forth below:

<TABLE>
<CAPTION>
                                                  WEIGHTED AVERAGE
                                   OPTIONS     REMAINING CONTRACTUAL   WEIGHTED AVERAGE
DECEMBER 31,   EXERCISE PRICES   OUTSTANDING        LIFE (YEARS)        EXERCISE PRICE
------------   ---------------   -----------   ---------------------   ----------------
<S>            <C>               <C>           <C>                     <C>
                    $20.80          235,663              2                  $20.80
               $16.58 - $28.42      274,278              3                  $22.01
                                  ---------
    2006                            509,941
                                  =========

               $20.80 - $25.65      438,696              3                  $20.92
               $16.58 - $28.42      347,593              4                  $21.93
                                  ---------
    2005                            786,289
                                  =========

               $20.80 - $25.65      672,540              4                  $20.90
               $16.58 - $28.42      422,924              5                  $21.86
                                  ---------
    2004                          1,095,464
                                  =========
</TABLE>

Options exercisable at December 31, 2006, 2005 and 2004 were 157,738, 189,997
and 208,319 respectively.

Had compensation cost for the options granted under the Plan prior to January 1,
2003 been determined based on fair value at the grant dates consistent with the
fair value method prescribed by SFAS No. 123, the Company's net income and
earnings per share for the year ended December 31, 2004 would have been the
following pro forma amounts:

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)       2004
-------------------------------------   -----------
<S>                                     <C>
Net income, as reported                 $63,148,687
Adjustment for compensation cost            477,685
                                        -----------
Pro forma net income                    $62,671,002
                                        ===========
Earnings per share, as reported:
   Basic                                $      1.40
   Diluted                              $      1.39
Pro forma earnings per share:
   Basic                                $      1.39
   Diluted                              $      1.38
</TABLE>


                                      F-21

<PAGE>

In the preceding table, pro forma compensation expense associated with option
grants is recognized over the relevant vesting periods.

The following range assumptions were applied in determining pro forma
compensation cost:

<TABLE>
<CAPTION>
                              2004
                          ------------
<S>                       <C>
Expected Life             1 to 7 years
Risk free interest rate   3.10% - 4.31%
Dividend yield            4.22% - 7.24%
Volatility                       16.22%
</TABLE>

The effects of applying SFAS No. 123 on pro forma disclosures of net income and
earnings per share for the year ended December 31, 2004 are not likely to be
representative of the pro forma effects on net income and earnings per share in
future years, because the assumptions used to determine the fair value can vary
significantly.

Disclosed fair values of options for the year ended December 31, 2004 for those
options granted prior to January 1, 2003, have been estimated at the date of
grant using a Black-Scholes option-pricing model. The Black-Scholes option model
was developed for use in estimating the fair value of traded options that have
no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions, including
the expected share price volatility. The Company's options have characteristics
significantly different from those of traded options, and changes in the
subjective input assumptions can materially affect the fair value estimates. The
weighted average fair value of those options granted prior to January 1, 2003
was $2.12 for the year ended December 31, 2004.

NOTE 13: RESTRICTED SHARES

During 2006, 22,500 restricted shares were granted to certain non-employee
directors of the Company and 1,105,301 restricted shares were granted as
employee non-cash compensation. In addition, during 2006, 127,152 restricted
shares were forfeited by former employees of the Company. Non-cash compensation
of $616,845 relating to the forfeited shares that had been charged to
compensation expense prior to January 1, 2006 was reversed, and dividends of
$77,582 paid on those forfeited shares prior to January 1, 2006, was charged to
compensation expense.

During 2005, 19,500 restricted shares were granted to certain non-employee
directors of the Company and 646,535 restricted shares were granted as employee
non-cash compensation.

During 2004, 20,000 restricted shares were granted to certain non-employee
directors of the Company and 118,000 restricted shares were granted as employee
non-cash compensation.

These shares are subject to vesting schedules and resale restrictions set forth
in the associated Restricted Share Agreements. Unearned compensation equivalent
to the market value of the shares at the date of grant was charged to
shareholder's equity as of that date and is being amortized over the one through
five year vesting periods as specified in the terms of the individual Restricted
Share Agreements. Unearned compensation charged to additional paid-in capital, a
component of shareholder's equity at December 31, 2006, 2005 and 2004 was
$20,480,649, $15,113,352 and $2,706,300, respectively. Compensation expense
resulting from the amortization of the unearned compensation for the years ended
December 31, 2006, 2005 and 2004 was $7,939,734, $3,341,205 and $621,975,
respectively.


                                      F-22

<PAGE>

NOTE 14: SHAREHOLDERS' VOTING RIGHTS

The Company's Bye-Laws limit the voting power of natural persons to 5%, and the
voting power of other entities, "groups" (as defined in the U.S. Securities
Exchange Act of 1934) and persons other than natural persons (legal persons) to
9.5%, of the votes attributable to the outstanding shares of the Company,
regardless of how many of our shares (including common shares) they own or
control. This restriction does not apply to parties who were shareholders
immediately before our initial public offering, including WPS II, Inc. and
certain individuals designated by the Company's Board of Directors who are
currently affiliated with the Company. Votes that could have been cast by
shareholders but for these voting restrictions are allocated to the other
holders of the common shares pro-rata based on the number of shares they hold,
except that no shareholder subject to the restrictions may receive an allocation
to the extent that it would result in the shareholder holding more than 5% (for
natural persons) or 9.5% (for legal persons, entities or groups) of the total
voting power. The Company's Board of Directors may approve the exemption of
other persons or groups from this restriction.

In addition, the Bye-Laws provide that no person or group (other than WPS II,
Inc. or its affiliates, direct or indirect subsidiaries of the Company, certain
employee benefit plans designated by the Board of Directors which may be
established by the Company or as otherwise exempted by the Board of Directors)
deemed to be a beneficial owner of common shares may vote more than 20% of the
total number of votes attributable to the common shares outstanding.

NOTE 15: INCOME TAXES

Under current Bermuda law, the Company and its Bermuda subsidiaries are not
required to pay any Bermuda taxes on their income or capital gains. The Company
and its Bermuda subsidiaries will be exempt from such forms of taxation in
Bermuda until at least March 2016.

Income from the Company's operations in the United States and from U.S.
subsidiaries of the Company is subject to income taxes imposed by U.S.
authorities. In addition, the Company's non-U.S. subsidiaries are subject to
income taxes imposed by the jurisdictions in which those subsidiaries conduct
business.

Deferred taxes arise as a result of unrealized gains and losses which are not
taxable until realized.

At December 31, 2006, WPS Europe had approximately $24 million of unused tax
loss carryforwards in the United Kingdom, which may be used to offset future
taxable income in the United Kingdom. A valuation allowance for 100% of the
deferred income tax assets relating to these tax loss carryforwards has been
established. Realization of the net deferred tax assets is dependent on
generating sufficient taxable income prior to their expiration. The Company
believes it is more likely than not that these income tax benefits will not be
realized.

The Company's effective tax rate is driven by the tax jurisdictions in which it
conducts business and to the extent the jurisdictions in which it conducts
activities changes, the effective tax rate will change accordingly.

The provision for income taxes detailed below represents the Company's estimate
of taxes on income applicable to all jurisdictions and is calculated at rates
equal to the statutory income tax rate in each jurisdiction.


                                      F-23

<PAGE>

The income tax provision/(benefit), for the years ended December 31, 2006, 2005
and 2004 is as follows:

<TABLE>
<CAPTION>
                           2006         2005         2004
                        ----------   ----------   ----------
<S>                     <C>          <C>          <C>
Current taxes:
   U.S.:
      Federal           $3,460,837   $5,240,844   $6,279,761
      State and local    2,125,293    1,784,499    1,562,487
                        ----------   ----------   ----------
                         5,586,130    7,025,343    7,842,248
   Other:                 (193,175)      13,239        9,527
                        ----------   ----------   ----------
                         5,392,955    7,038,582    7,851,775
                        ----------   ----------   ----------
Deferred taxes:
   U.S.:
      Federal              360,000           --           --
      State and local      277,500           --           --
                        ----------   ----------   ----------
                           637,500           --           --
                        ----------   ----------   ----------
Net tax expense         $6,030,455   $7,038,582   $7,851,775
                        ==========   ==========   ==========
</TABLE>

NOTE 16: PENSION BENEFITS

The Company sponsors both a defined contribution profit-sharing plan (including
a 401(k) feature) and a defined contribution money-purchase plan in the U.S. The
Company also sponsors similar defined contribution retirement plans in both
Bermuda and the United Kingdom. These plans cover substantially all employees
who meet the minimum age, service and eligibility requirements.

Total employer contributions amounted to $1,838,138, $1,785,038 and $1,535,787
for the years ended December 31, 2006, 2005 and 2004, respectively. Participants
are immediately vested in their account balances.

NOTE 17: LEASE COMMITMENTS

The Company has several lease agreements in various locations including Bermuda,
New York, Maine, London, Curacao and The Netherlands. The lease agreements are
for various periods through December 31, 2021. The leases are subject to
escalation charges based on increases in real estate taxes and maintenance
costs.

Future minimum rental commitments under non-cancellable operating leases in
effect as of December 31, 2006 were as follows:

<TABLE>
<S>                         <C>
2007                        $ 3,041,970
2008                          2,891,400
2009                          3,487,087
2010                          3,427,472
2011                          3,457,372
Thereafter (through 2021)    19,294,661
                            -----------
                            $35,599,962
                            ===========
</TABLE>

Total rent expense for all operating leases was $3,155,645, $3,077,906 and
$2,909,452, for the years ended December 31, 2006, 2005 and 2004, respectively.


                                      F-24

<PAGE>

Included in the table above is an annual amount of $180,000 and an aggregate
15-year total commitment amount of $2,610,000 payable to Kirk Management Ltd., a
40% unconsolidated affiliate of the Company, which owns Trinity Hall, the
Company's headquarters in Hamilton, Bermuda. In addition, included in the table
above is a four-year commitment amount of approximately $786,000 payable to a
company owned by the former principals of TPR.

NOTE 18: GEOGRAPHIC AREA DATA

The Company's primary business is the provision of investment advisory services
to clients located throughout the world, in primarily two geographic areas, as
follows:

<TABLE>
<CAPTION>
                           FEE REVENUE
           ------------------------------------------
               2006           2005           2004
           ------------   ------------   ------------
<S>        <C>            <C>            <C>
U.S.       $ 71,397,432   $ 76,498,570   $ 76,129,771
Non-U.S.     36,405,030     36,699,263     39,875,729
           ------------   ------------   ------------
Total      $107,802,462   $113,197,833   $116,005,500
           ============   ============   ============
</TABLE>

NOTE 19: SUBSEQUENT EVENTS

On January 8, 2007, the Company declared a dividend of $0.23 per share to
shareholders of record as of January 17, 2007, payable on January 31, 2007 in
the aggregate amount of $10,940,934.

On February 1, 2007, the Board of Directors of the Company announced that
William P. Stewart, Chairman of the Board would resume his former role of Chief
Executive Officer of the Company.

During the first quarter of 2007, 715,000 restricted shares were granted to our
employees at a value of $13.26 per share, 6,429 unvested shares were repurchased
from former employees for an aggregate amount of $96,756, 4,900 unvested shares
were cancelled and 240,000 restricted shares were forfeited.

During the month of February 2007, the Company committed to make future
issuances of 425,000 common shares as non-cash incentive compensation. The
commitments made by the Company to issue such shares are conditioned upon the
satisfaction of certain individual employee performance conditions relating to
Company profitability, investment performance or both. Any shares that may be
issued by the Company in the future in satisfaction of those commitments will be
restricted shares. When issued, those restricted shares will remain subject to
vesting requirements over time, with limited exceptions permitting accelerated
or immediate vesting.

During the month of February 2007, the Company entered into separation
agreements with several employees whose employment with the Company terminated
in the first quarter. Per the terms of those agreements, in the first quarter of
2007 the Company will incur one-time, non-recurring cash expenses of
approximately $1,600,000 and non-cash charges related to restricted shares of
approximately $4,200,000.

Subsequent to December 31, 2006, the Company has experienced net outflows of
assets under management of approximately $1.4 billion.

Subsequent to December 31, 2006, the Board of Directors of the Company adopted a
new dividend policy moving from the historic pattern of four equal quarterly
amounts to a new policy of paying lower amounts in the first three quarters and
a final, fourth payment in January, based on cash earnings for the year,
including any performance fees received in the fourth quarter.


                                      F-25
<PAGE>

SIGNATURES

     The Registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

                                        W.P. STEWART & CO., LTD.


                                        By: /s/ Rocco Macri
                                            ------------------------------------
                                        Name: Rocco Macri
                                        Title: Managing Director -
                                               Chief Operating Officer

Date: April 2, 2007

<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
NUMBER   EXHIBIT
------   -------
<S>      <C>
8.1      Subsidiaries of the Registrant

12.1     Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act
         of 1934

12.2     Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act
         of 1934

13.1     Certification pursuant to Rule 13a-14(b) and 18 U.S.C. 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

13.2     Certification pursuant to Rule 13a-14(b) and 18 U.S.C. 1350, as adopted
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

15.1     Consent of PricewaterhouseCoopers LLP
</TABLE>