<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                                    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, 2005

                                       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: 011-16245

                            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:

                                                    Name of each exchange
           Title of Each Class                       on which registered
-----------------------------------------   ------------------------------------
Common Shares, par value $0.001 per share          New York Stock Exchange

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, 2005, 46,837,855 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 ]

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<TABLE>
<CAPTION>
                                TABLE OF CONTENTS                                                                PAGE
                                -----------------                                                                ----
<S>                                                                                                              <C>
PART I............................................................................................................1

   ITEM 1.       IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS............................................1

   ITEM 2.       OFFER STATISTICS AND EXPECTED TIMETABLE..........................................................1

   ITEM 3.       KEY INFORMATION..................................................................................2

   ITEM 4.       INFORMATION ON THE COMPANY.......................................................................9

   ITEM 4A.      UNRESOLVED STAFF COMMENTS.......................................................................30

   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...............................................46

   ITEM 8.       FINANCIAL INFORMATION...........................................................................49

   ITEM 9.       THE OFFER AND LISTING...........................................................................49

   ITEM 10.      ADDITIONAL INFORMATION..........................................................................50

   ITEM 11.      QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK......................................60

   ITEM 12.      DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES..........................................61

PART II..........................................................................................................61

   ITEM 13.      DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES..................................................61

   ITEM 14.      MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS....................61

   ITEM 15.      CONTROLS AND PROCEDURES.........................................................................62

   ITEM 16A.     AUDIT COMMITTEE FINANCIAL EXPERT................................................................62

   ITEM 16B.     CODE OF ETHICS..................................................................................62

   ITEM 16C.     PRINCIPAL ACCOUNTANT FEES AND SERVICES..........................................................62

   ITEM 16D.     EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES......................................63

   ITEM 16E.     PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS..........................63

PART III.........................................................................................................64

   ITEM 17.      FINANCIAL STATEMENTS............................................................................64

   ITEM 18.      FINANCIAL STATEMENTS............................................................................64

   ITEM 19.      EXHIBITS........................................................................................64
</TABLE>

                                        i
<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:

         o        general economic and business conditions;

         o        industry capacity and trends;

         o        competition;

         o        the loss of major clients;

         o        changes in demand for our services;

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

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

         o        changes in contingent liabilities;

         o        quality of management;

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

         o        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.

                                     PART I.

ITEM 1.           IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

         Not Applicable.

ITEM 2.           OFFER STATISTICS AND EXPECTED TIMETABLE

         Not Applicable.

<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, 2005, 2004, 2003, 2002 and 2001 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, 2005, 2004 and 2003 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,
                                                     ---------------------------------------------------------
                                                        2005       2004        2003         2002       2001
                                                     ---------   ---------   ---------   ---------   ---------
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                  <C>         <C>         <C>         <C>         <C>
INCOME STATEMENT DATA:
Revenues:
   Fees ..........................................   $ 113,198   $ 116,005   $  94,062   $ 105,419   $ 115,993
   Commissions ...................................      31,890      34,820      22,461      28,293      39,695
   Interest and Other ............................       2,767       1,496       2,279       3,570       5,028
                                                     ---------   ---------   ---------   ---------   ---------
                                                       147,855     152,321     118,802     137,282     160,716
                                                     ---------   ---------   ---------   ---------   ---------
Expenses:
   Employee Compensation and Benefits ............      34,153      29,102      22,942      26,337      28,246
   Fees Paid Out .................................       9,059       7,760       6,059       7,250       5,157
   Commissions, Clearance and Trading ............       6,993       7,371       4,811       5,919       7,376
   Research and Administration ...................      14,399      14,781      14,429      14,358      13,516
   Marketing .....................................       5,540       5,618       4,709       5,166       1,901
   Depreciation and Amortization .................       8,206       8,039       7,933       8,049       7,527
   Impairment of Intangible Asset ................      12,453           -           -           -           -
   Other Operating ...............................       9,960       8,649       8,861       8,371       9,543
                                                     ---------   ---------   ---------   ---------   ---------
                                                       100,763      81,320      69,744      75,450      73,266
                                                     ---------   ---------   ---------   ---------   ---------
Income Before Taxes ..............................      47,092      71,001      49,058      61,832      87,450
Provision for Taxes ..............................       7,039       7,852       5,983       6,381       7,153
                                                     ---------   ---------   ---------   ---------   ---------
Net Income .......................................   $  40,053   $  63,149   $  43,075   $  55,451   $  80,297
                                                     =========   =========   =========   =========   =========
Earnings Per Share:(1)
   Basic Earnings Per Share ......................   $    0.88   $    1.40   $    0.97   $    1.27   $    1.85
                                                     =========   =========   =========   =========   =========
   Diluted Earnings Per Share ....................   $    0.87   $    1.39   $    0.95   $    1.21   $    1.71
                                                     =========   =========   =========   =========   =========
WEIGHTED AVERAGE SHARES USED IN COMPUTATION:
   Basic .........................................      45,640      45,112      44,312      43,576      43,425
   Diluted .......................................      45,952      45,524      45,198      46,013      46,943
BALANCE SHEET DATA:
Total Assets .....................................   $ 152,580   $ 164,710   $ 141,008   $ 134,979   $ 143,278
Total Liabilities ................................   $  30,935   $  33,281   $  26,339   $  26,914   $  29,238
Shareholders' Equity .............................   $ 121,645   $ 131,429   $ 114,669   $ 108,065   $ 114,040

                                                               (IN MILLIONS, EXCEPT PER SHARE DATA)
OTHER DATA (unaudited):
Long-Term Debt ...................................   $    14.6   $    15.4   $    16.2   $    16.9   $    17.5
Cash Dividends Per Share .........................   $    1.20   $    1.20   $    1.20   $    1.20   $    1.20
Assets Under Management ..........................   $   9,514   $   9,348   $   8,561   $   7,655   $   9,171
</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.

                                        2
<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 COULD RESULT IN A DECREASE IN THE
         MARKET VALUE OF OUR ASSETS UNDER MANAGEMENT WHICH, IN TURN, WOULD
         RESULT IN 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 could 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 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, would fall as well.

         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 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 ten years. If one or more of these managers
were to leave the Stewart Group within a short period

                                        3
<PAGE>

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 similar departures have
not resulted in a material loss of assets under management, the departure of
these two former portfolio managers will most likely result in some client
retention issues and we cannot be certain that the impact will be immaterial.

         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:

         o        investment performance;

         o        business reputation;

         o        continuity of client relationships and of assets under
                  management;

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

         o        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.

         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:

         o        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;

         o        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

         o        W.P. Stewart & Co., Ltd. and W.P. Stewart Asset Management
                  Ltd. paid U.S. income tax on approximately 5% of their
                  earnings in 2003 and on approximately 7% of their earnings in
                  2004, and expect to pay U.S. income tax on approximately 6% of
                  their earnings in 2005, (as

                                        4
<PAGE>

                  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 2003, 2004 and 2005. 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 12.2% for 2003 and 11.1% in 2004. We believe that the overall
tax rate will not exceed 15.0% for 2005 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 recent departures of two portfolio managers, 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 be temporary. However, this change in
our business could result in an effective tax rate for 2006 in the range of
17-20% of pre-tax income, 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%.

         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. WPSH
Management N.V. and the publicly traded funds that it manages, including W.P.
Stewart Holdings N.V., are primarily regulated by the Netherlands Authority for
the Financial Markets, commonly referred to as the AFM. 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.
It is contemplated that W.P. Stewart Holdings N.V. will transfer its seat to
Luxembourg. Upon such transfer W.P. Stewart Holdings N.V. and its new management
company will be

                                        5
<PAGE>

subject to the jurisdiction of the Commission de Surveillance du Secteur
Financier, or the CSSF as it is commonly known.

         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."

         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 41% of the common shares as of February 28, 2006, 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 13.4% 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"

                                        6
<PAGE>

(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:

         o        WPS II, Inc.;

         o        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

         o        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:

         o        WPS II, Inc. or its affiliates;

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

         o        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

         o        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,

                                        7
<PAGE>

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, 2005, there were 46,837,855 common shares issued and
outstanding. Of these shares, 20,254,647 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.

         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:

         o        our operating results;

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

         o        conditions or trends in the asset management industry;

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

         o        news announcements; or

         o        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.

                                        8
<PAGE>

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 $9.5 billion in assets as of December 31,
2005. 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 35% of our assets under
management from non-U.S. clients as of December 31, 2005.

         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 20.0% and 18.7%, after fees, on funds under discretionary
management from January 1, 1975 through December 31, 2005, 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, 2005, before fees, were
4.5% and 12.6%, respectively, as compared to 0.5% and 9.1%, respectively, for
the S&P 500 during the same periods. Our compound annualized returns for the
five and ten years ended December 31, 2005, after fees, were 3.4% and 11.4%,
respectively. Our return for the year ended December 31, 2005, before fees, was
7.3% as compared to a return of 4.9% for the S&P 500 during the same period. Our
return for the year ended December 31, 2005, after fees, was 6.2%. 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.

                                        9
<PAGE>

         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.

         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

                                       10
<PAGE>

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. 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. The former
beneficial owners of TPR and their assigns will continue to hold the remaining
3,000 shares of W.P. Stewart Asset Management (Europe), Ltd. until June 30,
2006, at which time we have agreed to acquire those shares at a fair value price
to be determined on that date. In addition, W.P. Stewart Asset Management
(Europe), Ltd. currently provides client services for approximately $3.2 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.

         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 20.0% compound annual return
before fees (18.7% after fees) for client accounts from January 1, 1975 to
December 31, 2005.

         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.

                                       11
<PAGE>

         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 20 investment analyst/portfolio managers with an
average of approximately 18 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, 2005, an aggregate of approximately 1,310,000 restricted share
awards and 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. 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 31-year period from January 1, 1975 through December 31,
2005, we experienced a 20.0% compound annual return, before fees, and a 18.7%
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. As a result of retained investment gains as well as the contribution
of new funds by existing and new clients, our assets under management have grown
at a compound annual rate of approximately 8% during the period from December
31, 1995 to December 31, 2005.

                                       12
<PAGE>

         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
31-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 professionals focus on one objective - providing our
advisory clients with above-average investment returns over a long period of
time, while accepting what we believe to be below-average risk. 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 (generally four to 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.
This has allowed us to concentrate our clients' investments in a portfolio
typically of 15-20 companies that appear to offer the greatest long-term
appreciation potential. The intent is to create a portfolio which comprises an
aggregate earnings stream that grows each and every year and faster than average
in most. We believe that this pattern of consistent, fairly rapid, earnings
growth has been the primary driver behind the improving value of our clients'
portfolios and the growth of our business over the years.

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

         o        a proven track record of consistent profit growth;

                                       13
<PAGE>

         o        strong financial condition;

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

         o        accurate and reliable information that is readily available;

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

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

         o        relatively low levels of cyclicality; and

         o        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 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 31-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

                                       14
<PAGE>

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.

                                       15
<PAGE>

         INVESTMENT MANAGEMENT TEAM

Our highly experienced and motivated team of investment professionals has been
critical to our strong long-term investment performance. We have 20 senior
investment professionals and 14 associate portfolio managers who directly
participate in the investment process. The following table identifies the senior
investment professionals and summarizes their experience in the industry as of
March 1, 2006:

<TABLE>
<CAPTION>
                                                            YEARS IN    YEARS WITH
           NAME                   LOCATION       AGE        INDUSTRY      COMPANY
------------------------------   ----------   ----------   ----------   -----------
<S>                              <C>              <C>          <C>          <C>
David A. Altman ..............   New York         48           24           12

Ebrahim Busheri ..............   New York         40           16            4

Dev Chakrabarti ..............   London           28            6            0(1)

Sang Chung ...................   Hong Kong        36           12            2*

Christian Diebitsch ..........   London           42           15            2

Arend E. Dikkers .............   London           48           22            3

Aadil Ebrahim ................   Hong Kong        30            8            2*

Samantha Epstein .............   New York         36           14            7

Robert G. Gebhart ............   New York         34           12            3

Robert Kahn ..................   New York         73           46           31

Naomitsu Kimoto ..............   Tokyo            42           17            2*

Celina Lin ...................   Hong Kong        46           16           11*

Jack Mahler ..................   New York         47            9            0(2)

Brigitte Neigut ..............   New York         32            2            0(3)

Keith Olson ..................   Hong Kong        47           23            3*

Mark I. Phelps ...............   London           46           21            1

Harry W. Segalas .............   New York         45           23           15

Lisa M. Stewart ..............   Hong Kong        48           23           12*

William P. Stewart ...........   Bermuda          68           51           31

James T. Tierney .............   New York         39           18            6
</TABLE>

----------
*        Includes years with Bowen Asia Limited.
(1)      Joined W.P. Stewart in December 2005.
(2)      Joined W.P. Stewart in December 2005.
(3)      Joined W.P. Stewart in May 2005.

                                       16
<PAGE>

         HISTORICAL PERFORMANCE RECORD

         JANUARY 1, 1975-DECEMBER 31, 2005 PERFORMANCE

         We have achieved a 20.0% compound annual return before fees, and a
18.7% compound annual return after fees for the period from January 1, 1975
through December 31, 2005. 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, 2005, before fees, were
4.5% and 12.6%, respectively, as compared to 0.5% and 9.1%, respectively, for
the S&P 500 during the same periods. Our compound annualized returns for the
five and 10 years ended December 31, 2005, after fees, were 3.4% and 11.4%,
respectively. Our return for the year ended December 31, 2005, before fees, was
7.3% as compared to a return of 4.9% for the S&P 500 during the same period. Our
return for the year ended December 31, 2005, after fees, was 6.2%. 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.

                                       17
<PAGE>

         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,
2005. See "Method of Performance Calculation" below.

                          MANAGED ACCOUNTS VS. S&P 500

                                [CHART APPEARS HERE]

                        Value of $100 invested on December 31, 1974
                    ----------------------------------------------------
Year                S&P 500          WPS Pre-Fee            WPS Post-Fee
----                -------          -----------            ------------
'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

         EXAMINATION OF PERFORMANCE RECORD

         Our independent accountants, PricewaterhouseCoopers LLP, have performed
an examination of our performance record for the period January 1, 1989 through
December 31, 2003, including the five- and ten-year periods ended December 31,
2003, and have been engaged to perform such an examination to encompass the
period ended December 31, 2005.

         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

                                       18
<PAGE>

we believe the results would not be materially different. The accounts included
for the period from January 1, 1975 through December 31, 2005 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, 2005 performance includes the reinvestment of
dividend income, using a methodology 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, 2005 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, 2003 through December 31, 2005. Changes between beginning and
ending assets under management include capital appreciation or depreciation, net
contributions and net new accounts opened/closed.

                                       19
<PAGE>

                             ASSETS UNDER MANAGEMENT

                                                     YEAR ENDED
                                                    DECEMBER 31,
                                           ---------------------------------
                                             2005        2004        2003
                                           ---------   ---------   ---------
                                                    (in millions)
Beginning Assets Under Management ......   $   9,348   $   8,561   $   7,655
                                           =========   =========   =========
Ending Assets Under Management .........   $   9,514   $   9,348   $   8,561
                                           =========   =========   =========

         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

                                                     YEAR ENDED
                                                    DECEMBER 31,
                                           ---------------------------------
                                             2005        2004        2003
                                           ---------   ---------   ---------
                                                    (in millions)
Existing Accounts:
   Contributions .......................   $     988   $     912   $     844
   Withdrawals .........................      (1,036)       (852)       (892)
                                           ---------   ---------   ---------
Net Flows of Existing Accounts .........         (48)         60         (48)
Publicly Available Funds:
   Contributions .......................         256         203         171
   Withdrawals .........................        (149)       (172)       (167)
Direct Accounts Opened .................         312         228         326
Direct Accounts Closed .................        (733)       (940)       (618)
                                           ---------   ---------   ---------
Net New Flows ..........................        (314)       (681)       (288)
                                           ---------   ---------   ---------
Net Flows of Assets Under Management ...   $    (362)  $    (621)  $    (336)
                                           =========   =========   =========

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

                                ACCOUNT RETENTION

                                                        YEAR ENDED
                                                       DECEMBER 31,
                                              ---------------------------------
                                                2005        2004        2003
                                              ---------   ---------   ---------
Number of Accounts at Beginning of Period ..      1,910       2,081       2,204
Number of Accounts Closed During Period ....        188         262         250
Retention Rate .............................       90.2%       87.4%       88.7%

         CLIENT BASE

         Our client base is diverse. Approximately 64% of our assets under
management, and 81% of our accounts, as of December 31, 2005, were associated
with high net-worth individuals and their affiliates. As of December 31, 2005,
approximately 35% 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.

                                       20
<PAGE>

         The following tables show, as of December 31, 2005, 2004 and 2003, 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

                                                   AS OF DECEMBER 31,
                                           ---------------------------------
                                             2005        2004        2003
                                           ---------   ---------   ---------
                                                    (in millions)
Direct Relationship ....................   $   8,847   $   8,615   $   7,766
Consultant Related .....................         667         733         795
                                           ---------   ---------   ---------
     Total .............................   $   9,514   $   9,348   $   8,561
                                           =========   =========   =========

                               NUMBER OF ACCOUNTS
                              BY RELATIONSHIP TYPE

                                                   AS OF DECEMBER 31,
                                           ---------------------------------
                                             2005        2004        2003
                                           ---------   ---------   ---------
Direct Relationship ....................       1,738       1,792       1,914
Consultant Related .....................         103         118         167
                                           ---------   ---------   ---------
     Total .............................       1,841       1,910       2,081
                                           =========   =========   =========

         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, 2005, 2004 and
2003 represented 39.8%, 39.2% and 37.2%, respectively, of our direct
relationship accounts as of such dates.

                                       21
<PAGE>

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

                             ASSETS UNDER MANAGEMENT
                                 BY CLIENT TYPE

<TABLE>
<CAPTION>
                                           ASSETS UNDER MANAGEMENT AS OF            NUMBER OF ACCOUNTS AS OF
                                                DECEMBER 31, 2005                      DECEMBER 31, 2005
                                        ------------------------------------   ------------------------------------
                                           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*....    $    3,234   $    2,891   $    6,125        1,357          136        1,493
Foundations & Other
     Relationship Directed
     Institutional .................         2,543          161        2,704          232            2          234
Other Institutional ................           376          309          685           65           49          114
                                        ----------   ----------   ----------   ----------   ----------   ----------
     Total .........................    $    6,153   $    3,361   $    9,514        1,654          187        1,841
                                        ==========   ==========   ==========   ==========   ==========   ==========
</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

                                                   AS OF DECEMBER 31,
                                           ---------------------------------
                                             2005        2004        2003
                                           ---------   ---------   ---------
                                                    (in millions)
U.S. Clients ...........................   $   6,153   $   6,265   $   6,012
Non-U.S. Clients .......................       3,361       3,083       2,549
                                           ---------   ---------   ---------
     Total .............................   $   9,514   $   9,348   $   8,561
                                           =========   =========   =========

         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 current standard 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. Our standard
fee arrangement is 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 $24 million at December 31,
2005) 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, 2005,
only nine clients with an

                                       22
<PAGE>

aggregate of approximately $1.2 billion in assets under management had a
performance fee arrangement. This includes W.P. Stewart Holdings N.V., our
mutual fund listed on Euronext Amsterdam. For the year ended December 31, 2005,
we recognized a performance fee of $5.4 million from W.P. Stewart Holdings N.V.
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, 2005:

                                                AVERAGE GROSS MANAGEMENT
                                               FEE AS A PERCENT OF ASSETS
                                                    UNDER MANAGEMENT
                                               --------------------------
                                                       YEAR ENDED
CLIENT TYPE                                         DECEMBER 31, 2005
-------------------------------------------    --------------------------
Institutional..............................                 1.13%

Non-Institutional..........................                 1.19%

U.S. Clients...............................                 1.27%

Non-U.S. Clients...........................                 0.97%

Overall Weighted Average...................                 1.17%

         The average gross management fee, excluding the effect of any
performance fees, was 1.17% for the year ended December 31, 2005. The average
fee was less than our standard fee of 1.5% because a number of advisory
contracts were entered into prior to 1989, when we adopted our current fee
arrangement, account balances in excess of $25 million and $100 million are
subject to lower fees, and because accounts that have performance-based
arrangements are subject to a much lower quarterly base advisory fee.

         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.

                                       23
<PAGE>

         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, 2005,
2004 and 2003 were as follows:

                                            FEE REVENUE
                        ----------------------------------------------------
                            2005               2004              2003
                        --------------    ---------------    ---------------
           U.S.         $   76,498,570    $    76,129,771    $    70,657,079
           Non-U.S.         36,699,263         39,875,729         23,405,259
                        --------------    ---------------    ---------------
           Total        $  113,197,833    $   116,005,500    $    94,062,338
                        ==============    ===============    ===============

         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, 2005, we also served as
investment adviser to 36 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, 2005:

           JURISDICTION OF                       ASSETS UNDER
          FORMATION OF FUND                       MANAGEMENT
--------------------------------------------     -------------
                                                 (in millions)
Netherlands Antilles........................     $      1,007

Luxembourg..................................              649

Austria.....................................              109

British Virgin Islands......................              103

United States...............................              100

Austria.....................................               76

The Netherlands.............................               73

Ireland.....................................               60

British Virgin Islands......................               54

         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 Neuberger Berman, LLC as clearing agent
and as custodian on accounts where the client makes no custodial designation. We
believe that our current relationship with Neuberger Berman, LLC is satisfactory
but believe that a comparable agreement with a different clearing agent and/or
custodian could be reached if necessary.

                                       24
<PAGE>

         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. This will most likely result in
some client retention issues. Although similar departures in the past have not
resulted in a material loss of assets under management, we cannot be certain
that the impact will be immaterial in the current situation.

         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 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 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., 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.

                                       25
<PAGE>

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. It is contemplated that
W.P. Stewart Holdings N.V. will transfer its seat to Luxembourg. Upon such
transfer, W.P. Stewart Holdings N.V. (to be renamed W.P. Stewart Holdings Fund)
and its new management company, W.P. Stewart Fund Management S.A., will be
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 including the money
laundering prevention provisions thereof.

         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 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 Give Our Clients
the Right to Terminate Their 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

                                       26
<PAGE>

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, 2005, 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 $12.6 million, or approximately $12.5 million 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 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

                                       27
<PAGE>

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>
<CAPTION>
<S>              <C>           <C>          <C>           <C>            <C>           <C>           <C>          <C>
                                            -----------------------------------------
                                                    W.P. Stewart & Co., Ltd.,
                                                       our Bermuda-based
                                                       investment adviser
                                            -----------------------------------------
---------------                                                                                                   -----------
      75%                                                                                                           Approx.
                                                                                                                      40%
---------------                                                                                                   -----------
---------------  ------------  -----------  ------------  -------------  ------------  ------------  -----------  -----------
  W.P. Stewart   W.P. Stewart   NS Money    W.P. Stewart     W.P.        W.P. Stewart  W.P. Stewart      TPRS        Bowen
     Asset          & Co.      Management        &          Stewart       Securities       Asset       Services       Asia
   Management     (Europe),     Ltd., our    Co., Inc.,      Asset       Limited, our   Management    N.V., our   Limited,(1)
   (Europe),      Ltd., our     Bermuda-      our New     Management       Bermuda-     (NA), Inc.,    Curacao-       our
  Ltd.,(2) our     London-     based asset     York-       Ltd., our        based           our      based asset      Hong
 Bermuda -based     based        manager       based       Bermuda-        broker-       New York-     gatherer      Kong-
    umbrella       research                   research       based          dealer      based asset                  based
  company for     affiliate                  affiliate    investment                     gatherer                   research
 European asset                                             adviser                                                affiliate
   gathering
---------------  ------------  -----------  ------------  -------------  ------------  ------------  -----------  -----------

      (3)
---------------                                           -------------
  W.P. Stewart                                            W.P. Stewart
     Asset                                                    Fund
   Management                                              Management
 (Europe) N.V.,                                           Limited, our
      our                                                    Dublin-
  Netherlands-                                             based fund
  based asset                                              management
    gatherer                                                 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.   W.P. Stewart & Co., Ltd. has entered into an agreement pursuant to
          which it will acquire the remaining 25% on June 30, 2006.

     3.   Indirectly owned.

                                       29
<PAGE>

         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

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. As a result of this
policy, the increase in assets under management due to our strong performance
during the fourth quarter of 2004 did not affect revenue until the first quarter
of 2005. 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, investment and foreign currency 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 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

                                       30
<PAGE>

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 26%, 24% and 25% of adjusted operating
profit for the years ended December 31, 2005, 2004 and 2003, respectively. In
2005, our compensation expense was above our target of 24% of adjusted operating
profit. 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, 2006 will be approximately
24%.

         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.

         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 acquired goodwill in our acquisition of 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,

                                       31
<PAGE>

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.

         A.       OPERATING RESULTS

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)

                                                             YEARS ENDED
                                                             DECEMBER 31,
                                                          -------------------
                                                            2005       2004
                                                          --------   --------
                  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)
                                                          ========   ========

         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

                                       32
<PAGE>

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 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 based on lower adjusted operating profit and 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.

YEAR ENDED DECEMBER 31, 2004 AS COMPARED TO YEAR ENDED DECEMBER 31, 2003

         ASSETS UNDER MANAGEMENT

         Assets under management were more than $9.3 billion at December 31,
2004, an increase of approximately $0.7 billion or 8.1% from approximately $8.6
billion at December 31, 2003. This reflected the strong investment performance
of our clients' portfolios in 2004, especially in the fourth quarter of the
year, partially offset by negative net flows of assets under management.

                                       33
<PAGE>

         The following table sets forth the total net flows of assets under
management for the years ended December 31, 2004 and 2003, 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)

                                                             YEARS ENDED
                                                             DECEMBER 31,
                                                          -------------------
                                                            2004       2003
                                                          --------   --------
                  Existing Accounts:
                    Contributions                         $    912   $    844
                    Withdrawals                               (852)      (892)
                                                          --------   --------
                  Net Flows of Existing Accounts                60        (48)
                                                          --------   --------
                  Publicly Available Funds:
                    Contributions                              203        171
                    Withdrawals                               (172)      (167)
                  Direct Accounts Opened                       228        326
                  Direct Accounts Closed                      (940)      (618)
                                                          --------   --------
                  Net New Flows                               (681)      (288)
                                                          --------   --------
                  Net Flows of Assets Under Management    $   (621)  $   (336)
                                                          ========   ========

         REVENUES

         Revenues were $152.3 million for the year ended December 31, 2004, an
increase of $33.5 million or 28.2% from $118.8 million earned for the year ended
December 31, 2003. The change was due to a $21.9 million or 23.3% increase in
fee revenue, a $12.4 million or 55.0% increase in commission revenue and a $0.8
million or 34.3% decrease in interest and other revenues. The average gross fee
earned from client accounts, excluding the effect of any performance fee, was
1.19% for the year ended December 31, 2004 as compared to 1.22% for the year
ended December 31, 2003, due to a slight change in client account mix due to
larger accounts subject to our fee break. The increase in fee revenue was
attributable to higher levels of assets under management during 2004 and a
performance fee of $13.5 million from W.P. Stewart Holdings N.V., our mutual
fund listed on Euronext Amsterdam. Because we bill our fees quarterly, in
advance, the strong fourth quarter increase in assets under management had no
effect on our 2004 fee revenue. Commission revenue was significantly higher for
the year ended December 31, 2004, compared to the year ended December 31, 2003,
and reflects among other factors, that new companies were added to most clients'
portfolios during the year ended December 31, 2004, resulting in corresponding
buys and sells. Interest and other revenues decreased primarily due to a gain
realized on the sale of municipal bonds during the year ended December 31, 2003,
foreign currency losses incurred during the year ended December 31, 2004 in our
European operations due to the weaker U.S. dollar as compared to the British
pound sterling and the euro, lower subscription fees earned from our mutual
funds and lower equity income from our unconsolidated affiliates.

         EXPENSES

         Expenses, excluding income taxes, increased approximately $11.6 million
or 16.6% to $81.3 million for the year ended December 31, 2004 from $69.7
million in the prior year. The increase was due to changes in operating
expenses, including an increase in variable expenses of $1.7 million in fees
paid out, which are directly related to assets under management of referred
accounts, an increase in commissions, clearance and trading of $2.6 million,
which vary with account activity, and an increase in employee compensation and
benefits of $6.2 million due to an increase in adjusted operating profit, on

                                       34
<PAGE>

which that compensation is based. Additionally, marketing expenses increased
$0.9 million due to higher costs related to marketing travel, our new corporate
branding program and higher than anticipated marketing compensation due to very
strong performance in the fourth quarter 2004, research and administration
increased $0.3 million, depreciation and amortization increased $0.1 million and
other operating expenses decreased $0.2 million due to generally lower costs
relating to a variety of operating expenses.

         Our income tax expense increased $1.9 million to $7.9 million for the
year ended December 31, 2004 from $6.0 million in the prior year. The effective
tax rate was approximately 11.1% for 2004 and 12.2% for 2003. The higher than
expected tax rate for the year ended December 31, 2004, was due to the
performance fee earned on December 31, 2004, with a portion being taxed as U.S.
effectively connected business income.

         NET INCOME

         Net income for the year ended December 31, 2004 increased $20.1 million
or 46.6% to $63.1 million from $43.1 million for the prior year as revenues
increased at a higher rate than operating expenses.

         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.

         In 1998, WPS Aviation Holdings LLC, a limited liability company wholly
owned by us acquired, by assignment, the rights and obligations of Shamrock
Aviation, Inc., a company controlled by certain shareholders of W.P. Stewart &
Co., Ltd., under a purchase agreement to buy a Challenger aircraft for $22.5
million. The aircraft was placed in service on April 8, 1999. General Electric
Capital Corporation financed the aircraft with 10-year, amortizing loans. During
1999, we paid $22.5 million under the purchase agreement, of which GECC provided
$19.6 million under the loans. Shamrock Aviation, Inc., or an entity affiliated
with Shamrock, operates the Challenger aircraft for us. We are charged actual
cost of operations for such operating services. We believe that ownership of
this aircraft enables us to efficiently manage the heavy travel schedules of our
investment and research professionals, at rates more favorable to us than would
be charged by an unaffiliated charterer.

                                       35
<PAGE>

         On July 10, 2003, WPS Aviation entered into a 10-year amortizing loan
agreement with GECC to continue to finance its obligations under the Challenger
Purchase Agreement. 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 $17.3 million
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 $8.6 million 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).

         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 our customary quarterly dividend 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. Although there can be no guarantee that
the dividend will remain at historic levels indefinitely, there currently are no
plans for reducing it. 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 2003 and
2004 continued in 2005 but at a significantly slower pace.

         As in the prior year, for 2005, our U.S. Equity Composite outperformed
the S&P 500 on both a pre-fee and post-fee basis. In 2003, our performance
results lagged the S&P 500, which we believe is not uncommon in the early stages
of an economic recovery. However, as the economic recovery matured, our
performance exceeded the S&P 500. Historically, we have seen that in the first
year of a recovery, quality shares tend to lag, but this period is usually
limited in duration to 12-15 months. This pattern repeated itself, with quality
shares beginning to outperform in the second half of 2004. What is more
significant is that, in previous periods, our experience has been that this
out-performance can last for several years. Hence, we are optimistic about 2006
and the following several years.

         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 will most likely
result in some client retention issues in the current year.

         In 2005, the economy and corporate earnings continued their forward
progression. Nonetheless, investor sentiment was negatively impacted by energy
price volatility, further interest rate increases, fear of a real estate bubble,
the war in Iraq, and a series of horrific natural disasters. As a result,
strength in company earnings was partially offset by erosion in price/earnings
multiples. The Dow declined for the first time in three years while broader
market indexes, such as the Standard & Poor's 500 and the Russell 1000,
registered only modest gains. Although continued interest rate hikes and higher
energy costs may restrain economic expansion in 2006, gains in employment and
income, as well as the likelihood of continued strong business capital
investment, should keep the economy moving forward. In addition, we believe a
healthier global economy is emerging. While we expect corporate profit growth to
slow as we

                                       36
<PAGE>

move further into the economic cycle, we believe the earnings growth underlying
our U.S. Equity Composite will be 12% or better in 2006. Most of all, we believe
the more selective equity investment approach that we employ will prove ever
more valuable.

         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 activity based in
high-tax countries has increased somewhat relative to the activity based in
lower-tax jurisdictions. We believe this change will be temporary, and we are
currently taking steps to restore our historical geographical mix. However,
based on the current facts and assuming that we are not successful in restoring
our historical business mix, this change in our business could result in an
effective tax rate for 2006 in the range of 17-20% of pre-tax income.

         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, 2005:

<TABLE>
<CAPTION>

                                                              CONTRACTUAL OBLIGATIONS
                                 -------------------------------------------------------------------------------
                                                                   (IN MILLIONS)

                                     2006          2007-2008       2009-2010     2011-THEREAFTER      TOTAL
                                 --------------  --------------  --------------  ---------------  --------------
<S>                              <C>             <C>             <C>             <C>              <C>
Long-Term Debt (1)               $          0.8  $          1.7  $          1.8  $          11.1  $         15.4
Minimum Rental Commitments (2)   $          3.0  $          5.8  $          6.8  $          22.7  $         38.3
</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.

<TABLE>
<CAPTION>
                                                              CONTINGENT COMMITMENTS
                                 -------------------------------------------------------------------------------
                                                                    (IN MILLIONS)

                                                            AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
                                 -------------------------------------------------------------------------------
                                       2006         2007-2008       2009-2010    2011-THEREAFTER      TOTAL
                                 --------------  --------------  --------------  ---------------  --------------
<S>                                              <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.

         The following table sets forth information with respect to the current
directors and executive officers of W.P. Stewart & Co., Ltd. Effective as of
March 31, 2006, John C. Russell will assume the position of President and Chief
Executive Officer, on an interim basis, following Henry B. Smith's decision to
resign as of such date for health reasons. At such time, Mr. Russell will
relinquish the position

                                       37
<PAGE>

of Deputy Chairman but will remain a Director and member of the Executive
Committee, and Mr. Smith will remain on the board of directors as Deputy
Chairman and a member of the Executive Committee. The board of directors has
established a special committee to conduct a search for a new President and
Chief Executive Officer with plans to fill the position within the next few
months.

<TABLE>
<CAPTION>
                                                                                             POSITION HELD
NAME                                                     POSITION                            SINCE
-----------------------------------  ------------------------------------------------------  ----------------
<S>                                  <C>                                                     <C>
William P. Stewart.................  Chairman and Director(1)                                June 1998
John C. Russell....................  Deputy Chairman and Director(1)                         June 1998
Henry B. Smith.....................  President, Chief Executive Officer and Director(1)      June 1998
                                                                                             (Director); May
                                                                                             2005 (officer)
Dominik M.F. Brunner...............  Director(3)                                             May 2004
Angus S. King, Jr..................  Director(2)(4)                                          February 2004
Jeremy W. Sillem...................  Director(3)(4)                                          May 2005
Heinrich Spangler..................  Director(2)(4)                                          June 1998
Jan J. Spiering....................  Director(3)                                             September 2004
Richard D. Spurling................  Director (2)(4)                                         June 2002
Rocco Macri........................  Chief Operating Officer                                 May 2005
Susan G. Leber.....................  Chief Financial Officer                                 May 2005
Fred T. Busk III...................  Global Marketing Director                               November 2005
Sylvia A. Cart.....................  Deputy Managing Director - Broker/Dealer                April 2005
Mark A. Henderson..................  Deputy Managing Director                                November 1998
Peter Jan P. Rubingh...............  Deputy Managing Director                                January 2001
Frederick M. Ryan..................  Deputy Managing Director - Investor Relations           September 2001
Charles G.R. Target................  Deputy Managing Director - International Development    June 1999
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 and a Director of W.P. Stewart & Co.,
Ltd. Prior to May 2005, Mr. Stewart also served as Chief Executive Officer. 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.

         JOHN C. RUSSELL serves as Deputy Chairman and a Director of W.P.
Stewart & Co., Ltd. Prior to May 2005, Mr. Russell also served as Managing
Director. Effective March 31, 2006, Mr. Russell will assume the position of
President and Chief Executive Officer, on an interim basis, following Henry B.
Smith's decision to resign as of such date. Mr. Russell will relinquish the
position of Deputy Chairman as of March 31, 2006 but will remain a Director and
a member of the Executive Committee. He joined the

                                       38
<PAGE>

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.

         HENRY B. SMITH has been President and Chief Executive Officer of W.P.
Stewart & Co., Ltd. since May 2005 and has served as a Director of W.P. Stewart
& Co., Ltd. since June 1998. Mr. Smith has announced his resignation as
President and Chief Executive Officer effective as of March 31, 2006, due to
health reasons. Mr. Smith will remain on the Board of Directors in the position
of 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.

         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 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

                                       39
<PAGE>

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

                                       40
<PAGE>

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.

         FRED T. BUSK III is Global Marketing Director of W.P. Stewart & Co.,
Ltd. Prior to joining W.P. Stewart in November 2005, Mr. Busk was an executive
with The Bank of Bermuda Limited (the "Bank") in Bermuda, New York and London,
including serving as President & Chief Executive Officer of Bank of Bermuda New
York Limited with responsibility for developing the Bank's investment fund
administration business in the U.S. From 2003 to 2005 he served as Global Head
of Strategy at the Bank and, following the acquisition of the Bank of Bermuda by
HSBC in February 2004, was the executive head of the team responsible for the
integration of the Bank's business lines into HSBC. Mr. Busk is a graduate of
Colgate University in Hamilton, New York and has completed a professional
certificate in financial planning in addition to other financial and management
professional development courses throughout his working career. He has been a
frequent speaker at academic and industry forums on asset management, fund
administration and securities processing.

         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.

         MARK A. HENDERSON has served as Deputy Managing Director of W.P.
Stewart & Co., Ltd. since November 1998. Mr. Henderson began his career in New
York with Rheem International, Inc., a steel manufacturer and 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., a financial adviser, brokerage concern and member 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 was responsible for the international expansion of the firm's business
which included the establishment of an office in New York. He is currently a
member of The Securities Institute in London.

         PETER JAN P. RUBINGH has served as Deputy Managing Director of W.P.
Stewart and Co., Ltd. since January 2001. He is a co-founder and Managing
Director of TPR & Partners N.V. (now W.P. Stewart Asset Management (Europe),
N.V.), an Amsterdam-based business which has concentrated on gathering assets
and servicing clients for W.P. Stewart since TPR's inception in 1993. Mr.
Rubingh began his career at Moret & Limperg (now Ernst & Young), Amsterdam, in
1978 as an Assistant Accountant within the audit team. He joined Noro Nederland
B.V. (The Noro Group of Companies), a fund management group, in 1979 and served
in various capacities within the group, including Group Controller, Assistant
Managing Director, Management Team Member and Portfolio Manager (Venture
Capital) in The Netherlands, the United States and the Netherlands Antilles.
While at Noro, Mr. Rubingh also served as a non-executive member of the
Supervisory Boards of HomeBanc in Atlanta, Georgia and ICON International in New
York City.

         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

                                       41
<PAGE>

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.

         CHARLES G.R. TARGET has served as Deputy Managing Director -
International Development of W.P. Stewart & Co., Ltd. since June 1999. 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.

         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 2005 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 $6.3 million. In addition, during 2005 certain directors were issued
an aggregate of 19,500 common shares as compensation for their services, and
executive officers were issued an aggregate of 399,491 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 paid, set aside or accrued by W.P. Stewart & Co., Ltd. in 2005 to provide
pension, retirement or other employee benefits to individuals serving as
directors and executive officers during that year was $273,657.

         W.P. Stewart & Co., Ltd. has agreed to pay each of its "non-executive
directors" (currently Messrs. Brunner, King, Sillem, 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. As of March 2005, in addition
to such fees, the Chairman of the Audit Committee and named financial expert
(currently Mr. Spiering) will receive $30,000 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.

                                       42
<PAGE>

         Executive Committee. The Executive Committee of the board of directors
is composed of Messrs. Russell, Smith 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, Spangler 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. Mr. Spangler served as a
member of the Audit Committee until May 2005. 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, Sillem, Spangler and Spurling. This committee is responsible for, among
other things, recommending to the board of directors the desirable size of the
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.

                                       43
<PAGE>

         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 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 with an
entity of which the director or his/her immediate family member is a director or
employee. The Board of Directors has determined that in 2005 each of its current
non-management directors (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, 2003, 2004 and 2005, we employed 110, 106 and 117
persons, respectively. We consider our relations with our employees to be good.

         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, 2006:

                                                  NUMBER OF
                                                COMMON SHARES
                   NAME                             OWNED         PERCENTAGE
          -----------------------------------   --------------   ------------
          William P. Stewart (1)                     4,182,711           8.93%

          John C. Russell (2)                          466,682           1.00%

          Peter Jan P. Rubingh (3)                     730,419           1.56%

          All other Directors and Executive
          Officers as a group (4)                      894,151              *


    * 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 125,000 shares held by a trust (with respect to which Mr.
         Russell disclaims beneficial ownership) and 4,286 shares that may be
         purchased upon exercise of currently exercisable options.

(3)      Includes 80,000 shares which are owned by two trusts established for
         Mr. Rubingh's children, for which Mr. Rubingh is the trustee.

(4)      Includes 21,858 shares that may be purchased upon exercise of currently
         exercisable options.

                                       44
<PAGE>

         As of March 1, 2006, our directors and executive officers currently own
options to purchase an aggregate of 153,987 of our common shares. Each option
vests in equal portions on the first seven anniversaries of the grant date.
102,563 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 37,141,
4,285 and 9,998 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 51,424 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.

         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:

         o        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;

         o        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;

         o        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;

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

         o        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

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

                                       45
<PAGE>

         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:

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

         o        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.

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, 2006 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."

         NAME                   NUMBER         PERCENTAGE
         ------------------   ----------       ----------
         WPS II, Inc.         19,364,557             41.3%

         The above-listed beneficial owner 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. See
Item 3 D under the caption "Key Information - Risk Factors - Our bye-laws
restrict shareholders' voting rights."

         As of March 1, 2006, we had 168 shareholders of record, of which 126,
owning approximately 98% of our common shares, were U.S. persons.

                                       46
<PAGE>

         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, 2005 and the largest aggregate amount of indebtedness
outstanding under each of these loan agreements and promissory notes during the
year ended December 31, 2005 for each of the above-named directors and executive
officers.

                                                              LARGEST AMOUNT
                                                            OUTSTANDING DURING
                                   AMOUNT OUTSTANDING         THE YEAR ENDED
           NAME                 AS OF DECEMBER 31, 2005     DECEMBER 31, 2005
    --------------------        -----------------------    ---------------------
    John C. Russell                 $     193,555              $     294,185

    Charles G.R. Target                    28,669                     57,337

    Susan G. Leber                              0                    122,788

    Sylvia A. Cart                         22,393                     30,320

         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
$172,357 for the year ended December 31, 2005. 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 Deputy 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,
$1,722,632 for the year ended December 31, 2005. 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 $6,267 for the year ended
December 31, 2005. 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,
2005, our investment in Stewart Bowen Japan Ltd. totaled $99,871.

                                       47
<PAGE>

         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
$1,758,497 for the year ended December 31, 2005. 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 $3,100,843 for the year ended
December 31, 2005. 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 $7,382
for the year ended December 31, 2005. 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 $682,590 for the year ended December 31, 2005.

         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
$15,245,066 for the year ended December 31, 2005. Included in such amount is a
performance fee we recognized in 2005 from W.P. Stewart Holdings N.V., our
mutual fund listed on Euronext Amsterdam. This performance fee totaled
$5,349,750 and is included in receivables from affiliates, net, at December 31,
2005.

         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
Deputy Managing Directors. Total rent expense for the year ended December 31,
2005 was $188,795.

         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 executive officers is a
non-executive director. Included in receivables from affiliates, net, at
December 31, 2005 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.

         Appleby Spurling Hunter, a law firm of which Richard D. Spurling, one
of our directors, was a partner until April 2005, and its affiliate Appleby
Corporate Services provide legal and corporate administrative and secretarial
services to our company. Fees for such services amounted to $23,803 for the year
ended December 31, 2005.

         Included in operating expenses for the year ended December 31, 2005
were contributions in the amount of $507,500 paid to the W.P. Stewart & Co.
Foundation, Inc., a private charitable foundation.

         C.       INTERESTS OF EXPERTS AND COUNSEL

         Not Applicable

                                       48
<PAGE>

ITEM 8.           FINANCIAL INFORMATION

         A.       CONSOLIDATED STATEMENT AND OTHER FINANCIAL INFORMATION

         See pages F-1 to F-24.

         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:

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

         o        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 expect that the amount of those dividends will be determined as approximately
$1.20 per annum. We paid a dividend of $0.30 per share in January 2006 and
currently anticipate similar dividends in April, July and October of this year.
However, 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.

         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 15, 2006, the last reported sale price for our common shares
on the New York Stock Exchange was $20.69 per share. As of that date there had
been no trading of our common shares on the Bermuda Stock Exchange. Certain
historical

                                       49
<PAGE>

market price data is set forth below, with certain prices for 2001 rounded to
the nearest hundredth of a dollar.

                                                 NEW YORK STOCK EXCHANGE
                                            ----------------------------------
     PERIOD                                      HIGH               LOW
     ------------------------------------   ---------------    ---------------
     Annual

              2001                               $ 29.62           $ 18.01

              2002                               $ 31.73           $ 14.35

              2003                               $ 22.58           $ 14.94

              2004                               $ 23.74           $ 18.70

              2005                               $ 25.75           $ 20.90

     Quarter

              First Quarter 2004                 $ 23.55           $ 18.70

              Second Quarter 2004                $ 20.67           $ 18.95

              Third Quarter 2004                 $ 20.75           $ 19.16

              Fourth Quarter 2004                $ 23.74           $ 19.61

              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

     Month

              September 2005                     $ 23.94           $ 22.25

              October 2005                       $ 24.62           $ 21.30

              November 2005                      $ 25.51           $ 23.70

              December 2005                      $ 25.60           $ 23.31

              January 2006                       $ 24.19           $ 21.00

              February 2006                      $ 21.81           $ 17.43

              March 1 - 15, 2006                 $ 20.87           $ 19.92

ITEM 10.          ADDITIONAL INFORMATION

         A.       SHARE CAPITAL

         Not Applicable

                                       50
<PAGE>

         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:

         o        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;

         o        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;

         o        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;

         o        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;

         o        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 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;

                                       51
<PAGE>

         o        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;

         o        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;

         o        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

         o        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:

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

         o        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;

         o        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;

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

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

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

         o        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

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

                                       52
<PAGE>

         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:

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

         o        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 10; 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:

         o        WPS II, Inc.;

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

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

                                       53
<PAGE>

         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:

         o        WPS II, Inc. or its affiliates;

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

         o        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

         o        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 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.

                                       54
<PAGE>

         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:

         o        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);

         o        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;

         o        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

         o        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 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

                                       55
<PAGE>

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.

         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 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

                                       56
<PAGE>

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:

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

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

         o        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:

         o        dividends, interest, rent, royalties; and

         o        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

                                       57
<PAGE>

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 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:

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

                                       58
<PAGE>

         o        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:

         o        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

         o        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.

         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.

                                       59
<PAGE>

         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 investment in municipal bonds and our long-term debt. We have
invested excess cash in municipal securities, with varying fixed interest rates
and maturity dates. Fixed rate securities may have their fair market values
adversely impacted due to a rise in interest rates.

         The table below provides information about our available for sale
securities that are sensitive to changes in interest rates as of December 31,
2005. The table presents the principal amounts and related weighted average
interest rates by year of maturity. It should be noted that the securities
listed below consist of municipal bonds, some of which may be called prior to
the scheduled maturity dates.

<TABLE>
<CAPTION>
                                                       BY SCHEDULED MATURITY DATE
                                                             (IN MILLIONS)
                         --------------------------------------------------------------------------------------
                          2006      2007      2008     2009     2010     THEREAFTER      TOTAL       FAIR VALUE
                         ------    ------    ------   ------   ------    ----------    ----------    ----------
<S>                      <C>       <C>            <C>      <C> <C>       <C>           <C>           <C>
Available for sale
 securities:
   Fixed Rate            $  2.2    $  2.4         -        -   $  0.2    $      3.4    $      8.2    $      8.6
   Weighted average
    interest rate          4.62%     4.21%        -        -     8.76%         6.63%
</TABLE>

         As of December 31, 2005, we had one long-term debt instrument with a
principal amount of $15.4 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

                                       60
<PAGE>

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, 2005.

<TABLE>
<CAPTION>
                                                          BY SCHEDULED MATURITY DATE
                                                                (IN MILLIONS)
                           ---------------------------------------------------------------------------------------
                            2006      2007      2008      2009      2010     THEREAFTER      TOTAL      FAIR VALUE
                           ------    ------    ------    ------    ------    ----------    ----------   ----------
<S>                        <C>       <C>       <C>       <C>       <C>       <C>           <C>          <C>
Long term debt:
  Variable rate            $  0.8    $  0.8    $  0.9    $  0.9    $  0.9    $     11.1    $     15.4   $     15.4
  Average interest rate      6.51%     6.53%     6.53%     6.53%     6.53%         6.72%
</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.

         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.

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

                                       61
<PAGE>

ITEM 15.          CONTROLS AND PROCEDURES

         Under the supervision and with the participation of our management,
including our President and Chief Executive Officer and our Chief Financial
Officer, we evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934) as of December 31, 2005. Based upon that
evaluation, the President and Chief Executive Officer and the Chief Financial
Officer concluded that, as of December 31, 2005, our disclosure controls and
procedures were effective in timely alerting them to the material information
relating to us (or our consolidated subsidiaries) required to be included in our
periodic SEC filings.

         Weiser LLP was engaged in September 2005 when the determination was
made to outsource certain internal audit functions. 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 2005 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 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 $728,618 and $549,266 for fiscal years ended December
31, 2005 and 2004, 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 $15,972 and $15,000 for fiscal years ended December
31, 2005 and 2004, respectively. Audit-related fees for the year ended

                                       62
<PAGE>

December 31, 2005 were for the work performed in reviewing certain regulatory
capital adequacy calculations and for the year ended December 31, 2004 were for
the examination of the performance of the W.P. Stewart U.S. Equity Composite.

         TAX FEES

         The aggregate fees billed by PricewaterhouseCoopers LLP for services
related to tax compliance, tax advice and tax planning were $502,292 and
$197,777 for fiscal years ended December 31, 2005 and 2004, 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 $186,597 and $6,527 for fiscal
years ended December 31, 2005 and 2004, 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. For the year ended December 31, 2004, these fees were
primarily 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 & 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 2005, certain information
with respect to our purchase of our common shares. All unvested shares were
repurchased from employees at the original price paid by such employee. Unvested
shares were repurchased at the time of the employee's termination

                                       63
<PAGE>

of employment. All vested shares were purchased from employees at the then
current market price. No shares were purchased pursuant to a publicly announced
repurchase plan or program.

                           Number of Shares
                          -----------------   Average Price
         Month            Vested   Unvested     Per Share
         --------------   ------   --------   -------------
         Jan 2005              -          -               -
         Feb 2005              -          -               -
         Mar 2005              -        161   $       16.50
         Apr 2005              -          -               -
         May 2005              -          -               -
         Jun 2005              -          -               -
         Jul 2005              -          -               -
         Aug 2005              -          -               -
         Sep 2005              -        371   $       16.50
         Oct 2005              -          -               -
         Nov 2005              -          -               -
         Dec 2005          1,000          -   $       25.16
                          ------   --------
                           1,000        532
                          ======   ========

                                    PART III.

ITEM 17.          FINANCIAL STATEMENTS

         See pages F-1 through F-24, incorporated herein by reference.

ITEM 18.          FINANCIAL STATEMENTS

         Not Applicable

ITEM 19.          EXHIBITS

            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

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

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

            4.5***    Amendment to 1996 Shareholder Agreement

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

            4.7#      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.

                                       64
<PAGE>

            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

----------
*        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).

                                       65
<PAGE>

INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                             -----------
<S>                                                                          <C>
CONSOLIDATED FINANCIAL STATEMENTS AS OF, AND FOR THE THREE YEARS ENDED
 DECEMBER 31, 2005, 2004 AND 2003
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-24
</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-24
present fairly, in all material respects, the financial position of W.P. Stewart
& Co., Ltd. and its subsidiaries (the "Company") at December 31, 2005, 2004 and
2003, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2005 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 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 14, 2006

                                       F-2
<PAGE>

                            W.P. STEWART & CO., LTD.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                        DECEMBER 31, 2005, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                            2005              2004              2003
                                                                       --------------    --------------    --------------
<S>                                                                    <C>               <C>               <C>
                           ASSETS:

CASH AND CASH EQUIVALENTS                                              $   64,566,799    $   51,859,146    $   36,824,614
FEES RECEIVABLE                                                             4,530,566         2,626,200         1,895,426
RECEIVABLE FROM CLEARING BROKER                                               975,603           274,936           395,617
INVESTMENTS IN UNCONSOLIDATED AFFILIATES (NET OF ACCUMULATED
 AMORTIZATION OF $411,860, $329,488 AND $247,116 FOR 2005,
 2004 AND 2003, RESPECTIVELY)                                               3,829,391         3,783,010         3,855,406
RECEIVABLES FROM AFFILIATES, NET                                            6,006,088        14,708,269           903,029
INVESTMENTS, AVAILABLE FOR SALE (COST $8,861,345, $9,246,245
 AND $9,469,688 [PRIMARILY MUNICIPAL SECURITIES] FOR 2005, 2004
 AND 2003, RESPECTIVELY)                                                    8,756,877         9,019,674         9,291,201
INVESTMENT IN AIRCRAFT (NET OF ACCUMULATED DEPRECIATION OF
 $21,450,140, $19,445,223 AND $17,442,551 FOR 2005, 2004 AND
 2003, RESPECTIVELY)                                                        1,001,335         3,006,252         5,008,924
GOODWILL                                                                    5,631,797         5,631,797         5,631,797
INTANGIBLE ASSETS (NET OF ACCUMULATED AMORTIZATION OF $36,513,924,
 $18,766,788 AND $13,572,643 FOR 2005, 2004 AND 2003, RESPECTIVELY)        49,317,537        67,064,672        69,160,735
FURNITURE, EQUIPMENT, SOFTWARE AND LEASEHOLD IMPROVEMENTS
 (NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION OF $3,432,344,
 $4,890,622 AND $4,264,880 FOR 2005, 2004 AND 2003, RESPECTIVELY)           3,432,340         3,315,698         3,320,096
INTEREST RECEIVABLE ON SHAREHOLDERS' NOTES                                     40,700            62,894           146,158
INCOME TAXES RECEIVABLE                                                     1,464,058            86,582         1,510,692
OTHER ASSETS                                                                3,027,281         3,270,789         3,064,215
                                                                       --------------    --------------    --------------
                                                                       $  152,580,372    $  164,709,919    $  141,007,910
                                                                       ==============    ==============    ==============

            LIABILITIES AND SHAREHOLDERS' EQUITY:

LIABILITIES:
 LOANS PAYABLE                                                         $   15,412,341    $   16,202,992    $   16,968,114
 EMPLOYEE COMPENSATION AND BENEFITS PAYABLE                                 4,213,626         5,924,364         1,075,306
 FEES PAYABLE                                                               3,097,377         2,466,561           678,937
 VENDOR PAYABLES                                                            3,057,694         3,286,721         1,800,232
 ACCRUED EXPENSES AND OTHER LIABILITIES                                     4,900,000         5,400,000         5,400,000
                                                                       --------------    --------------    --------------
                                                                           30,681,038        33,280,638        25,922,589
                                                                       --------------    --------------    --------------
MINORITY INTEREST                                                             254,348                 -           416,731
                                                                       --------------    --------------    --------------
SHAREHOLDERS' EQUITY:
 COMMON SHARES, $0.001 PAR VALUE (125,000,000 SHARES AUTHORIZED
  46,837,855, 46,113,462 AND 46,035,726 SHARES ISSUED AND
  OUTSTANDING FOR 2005, 2004 AND 2003, RESPECTIVELY)                           46,838            46,113            46,036
 ADDITIONAL PAID-IN-CAPITAL                                                99,302,120        82,344,878        80,419,304
 CONTINGENTLY RETURNABLE SHARES (162,800 SHARES FOR 2003)                           -                 -        (3,623,928)
 UNEARNED COMPENSATION                                                    (13,856,472)       (2,084,325)                -
 ACCUMULATED OTHER COMPREHENSIVE INCOME                                       429,924           984,626           573,284
 RETAINED EARNINGS                                                         37,519,609        53,204,705        45,217,876
                                                                       --------------    --------------    --------------
                                                                          123,442,019       134,495,997       122,632,572
LESS: NOTES RECEIVABLE FOR COMMON SHARES                                   (1,797,033)       (3,066,716)       (7,963,982)
                                                                       --------------    --------------    --------------
                                                                          121,644,986       131,429,281       114,668,590
                                                                       --------------    --------------    --------------
                                                                       $  152,580,372    $  164,709,919    $  141,007,910
                                                                       ==============    ==============    ==============
</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, 2005, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                            2005              2004              2003
                                                                       --------------    --------------    --------------
<S>                                                                    <C>               <C>               <C>
REVENUE:
 FEES (INCLUDES FEES FROM AFFILIATES OF $10,524,528, $17,755,121
  AND $3,652,480 FOR 2005, 2004 AND 2003, RESPECTIVELY)                $  113,197,833    $  116,005,500    $   94,062,338
 COMMISSIONS                                                               31,889,805        34,819,726        22,461,350
 INTEREST AND OTHER                                                         2,767,217         1,496,179         2,278,783
                                                                       --------------    --------------    --------------
                                                                          147,854,855       152,321,405       118,802,471
                                                                       --------------    --------------    --------------
EXPENSES:
 EMPLOYEE COMPENSATION AND BENEFITS                                        34,152,799        29,102,102        22,941,582
 FEES PAID OUT                                                              9,058,834         7,760,372         6,058,705
 COMMISSIONS, CLEARANCE AND TRADING                                         6,993,204         7,371,412         4,810,992
 RESEARCH AND ADMINISTRATION                                               14,399,422        14,781,318        14,429,008
 MARKETING                                                                  5,540,294         5,617,923         4,709,203
 DEPRECIATION AND AMORTIZATION                                              8,206,220         8,038,837         7,933,277
 IMPAIRMENT OF INTANGIBLE ASSET                                            12,452,978                 -                 -
 OTHER OPERATING                                                            9,959,838         8,648,979         8,861,154
                                                                       --------------    --------------    --------------
                                                                          100,763,589        81,320,943        69,743,921
                                                                       --------------    --------------    --------------
 INCOME BEFORE TAXES                                                       47,091,266        71,000,462        49,058,550
 PROVISION FOR TAXES                                                        7,038,582         7,851,775         5,983,267
                                                                       --------------    --------------    --------------
 NET INCOME                                                            $   40,052,684    $   63,148,687    $   43,075,283
                                                                       ==============    ==============    ==============
 EARNINGS PER SHARE:
 BASIC EARNINGS PER SHARE                                              $         0.88    $         1.40    $         0.97
                                                                       ==============    ==============    ==============
 DILUTED EARNINGS PER SHARE                                            $         0.87    $         1.39    $         0.95
                                                                       ==============    ==============    ==============
</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, 2005, 2004 AND 2003

<TABLE>
<CAPTION>

                                                           COMMON SHARES             ADDITIONAL      CONTINGENTLY
                                                   -----------------------------      PAID-IN         RETURNABLE        UNEARNED
                                                       SHARES          AMOUNT         CAPITAL           SHARES        COMPENSATION
                                                   -------------   -------------   --------------   --------------   --------------
<S>                                                   <C>          <C>             <C>              <C>              <C>
BALANCE @ DECEMBER 31, 2002                           46,179,822   $      46,180   $   78,673,127   $  (14,263,158)  $            -
  ISSUANCE OF COMMON SHARES, @ $0.001 PAR VALUE
   CASH                                                   47,273              47          971,654
   NOTES RECEIVABLE                                       20,750              21          335,299
  CONTINGENTLY RETURNABLE SHARES, NO LONGER
   SUBJECT TO REPURCHASE                                                                2,919,052       10,261,580
  REPURCHASE AND CANCELLATION OF COMMON
   SHARES, @ $0.001 PAR VALUE                            (85,312)            (85)      (1,189,609)
  CANCELLATION OF COMMON SHARES, @ $0.001
   PAR VALUE                                            (126,807)           (127)      (1,671,852)         377,650
  NON-CASH COMPENSATION                                                                   381,633
  NET INCOME
  DIVIDENDS ($1.20 PER SHARE)
  OTHER COMPREHENSIVE INCOME
  PROCEEDS FROM NOTES RECEIVABLE
   FOR COMMON SHARES
                                                   -------------   -------------   --------------   --------------   --------------
BALANCE @ DECEMBER 31, 2003                           46,035,726          46,036       80,419,304       (3,623,928)               -
  ISSUANCE OF COMMON SHARES, @ $0.001 PAR VALUE
   CASH                                                   29,714              29          532,369
   NOTES RECEIVABLE                                        7,858               7          148,366
   RESTRICTED SHARES                                     138,000             138        2,706,162                        (2,706,300)
  CONTINGENTLY RETURNABLE SHARES, NO LONGER
   SUBJECT TO REPURCHASE                                                                 (623,524)       3,623,928
  REPURCHASE AND CANCELLATION OF COMMON
   SHARES, @ $0.001 PAR VALUE                            (46,122)            (46)        (352,584)
  CANCELLATION OF COMMON SHARES, @ $0.001
   PAR VALUE                                             (51,714)            (51)        (845,496)
  NON-CASH COMPENSATION                                                                   360,281                           621,975
  NET INCOME
  DIVIDENDS ($1.20 PER SHARE)
  OTHER COMPREHENSIVE INCOME
  PROCEEDS FROM NOTES RECEIVABLE
   FOR COMMON SHARES
                                                   -------------   -------------   --------------   --------------   --------------
BALANCE @ DECEMBER 31, 2004                           46,113,462          46,113       82,344,878                -       (2,084,325)
  ISSUANCE OF COMMON SHARES, @ $0.001 PAR VALUE
   CASH                                                   59,176              59        1,109,166
   NOTES RECEIVABLE                                          714               1           11,837
   RESTRICTED SHARES                                     666,035             666       15,112,686                       (15,113,352)
  CONTINGENTLY RETURNABLE SHARES, NO LONGER
   SUBJECT TO REPURCHASE
  REPURCHASE AND CANCELLATION OF COMMON
   SHARES, @ $0.001 PAR VALUE                             (1,000)             (1)         (25,159)
  CANCELLATION OF COMMON SHARES, @ $0.001
   PAR VALUE                                                (532)              -           (8,772)
  NON-CASH COMPENSATION                                                                   757,484                         3,341,205
  NET INCOME
  DIVIDENDS ($1.20 PER SHARE)
  OTHER COMPREHENSIVE INCOME
  PROCEEDS FROM NOTES RECEIVABLE
   FOR COMMON SHARES
                                                   -------------   -------------   --------------   --------------   --------------
BALANCE @ DECEMBER 31, 2005                           46,837,855   $      46,838   $   99,302,120   $            -   $  (13,856,472)
                                                   =============   =============   ==============   ==============   ==============

<CAPTION>
                                                     ACCUMULATED
                                                       OTHER
                                                    COMPREHENSIVE      RETAINED         NOTES
                                                       INCOME          EARNINGS       RECEIVABLE         TOTAL
                                                   --------------   --------------   ------------   --------------
<S>                                                <C>              <C>              <C>            <C>
BALANCE @ DECEMBER 31, 2002                        $       34,576   $   57,129,989   $(13,555,499)  $  108,065,215
  ISSUANCE OF COMMON SHARES, @ $0.001 PAR VALUE
   CASH                                                                                                    971,701
   NOTES RECEIVABLE                                                                      (335,320)               -
  CONTINGENTLY RETURNABLE SHARES, NO LONGER
   SUBJECT TO REPURCHASE                                                                                13,180,632
  REPURCHASE AND CANCELLATION OF COMMON
   SHARES, @ $0.001 PAR VALUE                                                                           (1,189,694)
  CANCELLATION OF COMMON SHARES, @ $0.001
   PAR VALUE                                                                            1,294,329                -
  NON-CASH COMPENSATION                                                                                    381,633
  NET INCOME                                                            43,075,283                      43,075,283
  DIVIDENDS ($1.20 PER SHARE)                                          (54,987,396)                    (54,987,396)
  OTHER COMPREHENSIVE INCOME                              538,708                                          538,708
  PROCEEDS FROM NOTES RECEIVABLE
   FOR COMMON SHARES                                                                    4,632,508        4,632,508
                                                   --------------   --------------   ------------   --------------
BALANCE @ DECEMBER 31, 2003                               573,284       45,217,876     (7,963,982)     114,668,590
  ISSUANCE OF COMMON SHARES, @ $0.001 PAR VALUE
   CASH                                                                                                    532,398
   NOTES RECEIVABLE                                                                      (148,373)               -
   RESTRICTED SHARES                                                                                             -
  CONTINGENTLY RETURNABLE SHARES, NO LONGER
   SUBJECT TO REPURCHASE                                                                                 3,000,404
  REPURCHASE AND CANCELLATION OF COMMON
   SHARES, @ $0.001 PAR VALUE                                                                             (352,630)
  CANCELLATION OF COMMON SHARES, @ $0.001
   PAR VALUE                                                                              845,547                -
  NON-CASH COMPENSATION                                                                                    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                               984,626       53,204,705     (3,066,716)     131,429,281
  ISSUANCE OF COMMON SHARES, @ $0.001 PAR VALUE
   CASH                                                                                                  1,109,225
   NOTES RECEIVABLE                                                                       (11,838)               -
   RESTRICTED SHARES                                                                                             -
  CONTINGENTLY RETURNABLE SHARES, NO LONGER
   SUBJECT TO REPURCHASE                                                                                         -
  REPURCHASE AND CANCELLATION OF COMMON
   SHARES, @ $0.001 PAR VALUE                                                                              (25,160)
  CANCELLATION OF COMMON SHARES, @ $0.001
   PAR VALUE                                                                                8,772                -
  NON-CASH COMPENSATION                                                                     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                        $      429,924   $   37,519,609   $ (1,797,033)  $  121,644,986
                                                   ==============   ==============   ============   ==============
</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, 2005, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                      2005              2004              2003
                                                                 --------------    --------------    --------------
<S>                                                              <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  NET INCOME                                                     $   40,052,684    $   63,148,687    $   43,075,283
  ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
   PROVIDED BY OPERATING ACTIVITIES:
      (GAIN)/LOSS ON SALE OF AVAILABLE FOR SALE SECURITIES              156,746                 -          (219,790)
      UNREALIZED (GAIN)/LOSS ON AVAILABLE FOR SALE SECURITIES           (22,780)                -                 -
      AMORTIZATION OF BOND PREMIUM                                      384,942           104,380           262,527
      DEPRECIATION AND AMORTIZATION                                  20,659,198         8,038,837         7,933,277
      EQUITY IN INCOME OF UNCONSOLIDATED AFFILIATES                     (53,752)          315,602            45,481
      NON-CASH COMPENSATION                                           4,107,332           982,256           381,633
      MINORITY INTEREST                                                 254,348          (416,731)          251,599
  CHANGES IN OPERATING ASSETS AND LIABILITIES:
      FEES RECEIVABLE                                                (1,904,366)         (730,774)          739,205
      RECEIVABLE FROM CLEARING BROKER                                  (700,667)          120,681           470,845
      RECEIVABLES FROM AFFILIATES, NET                                8,702,181       (13,805,240)         (218,219)
      INCOME TAXES RECEIVABLE                                        (1,377,476)        1,424,110         1,703,588
      INTEREST RECEIVABLE ON SHAREHOLDERS' NOTES                         22,194            83,264           150,848
      OTHER ASSETS                                                      243,508          (206,574)         (366,893)
      EMPLOYEE COMPENSATION AND BENEFITS PAYABLE                     (1,710,738)        4,849,058            58,336
      FEES PAYABLE                                                      630,816         1,787,624          (424,093)
      VENDOR PAYABLES                                                  (229,027)        1,486,489           628,248
      ACCRUED EXPENSES AND OTHER LIABILITIES                           (500,000)                -          (545,100)
                                                                 --------------    --------------    --------------
          NET CASH PROVIDED BY OPERATING ACTIVITIES                  68,715,143        67,181,669        53,926,775
                                                                 --------------    --------------    --------------
CASH FLOWS (USED FOR) INVESTING ACTIVITIES:
  PROCEEDS FROM SALE OF AVAILABLE FOR SALE SECURITIES                 7,325,566         4,460,267         4,004,790
  PURCHASE OF AVAILABLE FOR SALE SECURITIES                          (7,551,788)       (4,278,611)       (4,567,763)
  INVESTMENT IN UNCONSOLIDATED AFFILIATE                                (75,001)         (325,577)                -
  CASH DIVIDENDS PAID ON SHARES SUBJECT TO REPURCHASE                         -           (97,680)         (293,040)
  PURCHASE OF FURNITURE, EQUIPMENT, SOFTWARE AND
   LEASEHOLD IMPROVEMENTS                                              (941,415)         (755,249)          (93,729)
                                                                 --------------    --------------    --------------
          NET CASH (USED FOR) INVESTING ACTIVITIES                   (1,242,638)         (996,850)         (949,742)
                                                                 --------------    --------------    --------------
CASH FLOWS (USED FOR) FINANCING ACTIVITIES:
  PAYMENTS ON LOANS PAYABLE                                            (790,651)         (765,122)         (543,262)
  PROCEEDS FROM ISSUANCE OF COMMON SHARES                             1,109,225           532,398           971,701
  REPURCHASE OF COMMON SHARES                                           (25,160)         (352,630)       (1,189,694)
  PROCEEDS FROM NOTES RECEIVABLE FOR COMMON SHARES                    1,264,106         4,200,092         4,632,508
  DIVIDENDS TO SHAREHOLDERS                                         (55,737,780)      (55,161,858)      (54,987,396)
                                                                 --------------    --------------    --------------
          NET CASH (USED FOR) FINANCING ACTIVITIES                  (54,180,260)      (51,547,120)      (51,116,143)

EFFECT OF EXCHANGE RATE CHANGES IN CASH                                (584,592)          396,833           537,532
                                                                 --------------    --------------    --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                            12,707,653        15,034,532         2,398,422

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                         51,859,146        36,824,614        34,426,192
                                                                 --------------    --------------    --------------
CASH AND CASH EQUIVALENTS, END OF YEAR                           $   64,566,799    $   51,859,146    $   36,824,614
                                                                 ==============    ==============    ==============

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
 CASH PAID DURING THE PERIOD FOR:

          INCOME TAXES                                           $    8,817,574    $    7,130,218    $    4,516,783
                                                                 ==============    ==============    ==============
          INTEREST                                               $      854,200    $      585,997    $      998,364
                                                                 ==============    ==============    ==============
</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). IN ADDITION, AS
DISCUSSED IN NOTE 2, IN 2003, 20% OF THE SHARES ORIGINALLY ISSUED IN CONNECTION
WITH OUR ACQUISITIONS OF NS MONEY MANAGEMENT (BERMUDA) LIMITED, FIRST LONG
ISLAND INVESTORS, INC. AND TPRS SERVICES N.V. CEASED TO BE SUBJECT TO
REPURCHASE, AND WERE RECORDED WITH A FAIR VALUE OF $2,333,644, $3,868,800 AND
$6,978,188, RESPECTIVELY. ADDITIONALLY, IN 2003, IN ACCORDANCE WITH THE
PROVISIONS OF THE ACQUISITION AGREEMENTS, THE COMPANY REACQUIRED 35,000 SHARES
WHICH WERE RECORDED WITH A VALUE OF $377,650 REPRESENTING THE INITIAL ISSUE
PRICE OF THE SHARES.

THE COMPANY CANCELLED OUTSTANDING NOTES OF $8,772, $845,547 AND $1,294,329 FOR
THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003, RESPECTIVELY (SEE NOTE 10).

THE COMPANY ISSUED COMMON SHARES FOR NOTES RECEIVABLE FOR THE YEARS ENDED
DECEMBER 31, 2005, 2004 AND 2003 IN THE AMOUNTS OF $11,838, $148,373 AND
$335,320, RESPECTIVELY (SEE NOTE 11).

THE COMPANY ISSUED 666,035 AND 138,000 COMMON SHARES FOR THE YEARS ENDED
DECEMBER 31, 2005 AND 2004, RECORDED WITH A FAIR VALUE OF $15,113,352 AND
$2,706,300, RESPECTIVELY. (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, 2005, 2004 and 2003, 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. Prior to April 2004, WPS Dublin was the manager of WP Stewart Global
Funds plc, an umbrella-type open-ended investment company regulated by the
Central Bank of Ireland. Effective April 28, 2004 WP Stewart Global Funds plc
entered into voluntary liquidation.

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.

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.

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

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

                                      F-7
<PAGE>

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, 2005.

                         AGGREGATE     SHARES NOT      PURCHASE      INTANGIBLE
                         NUMBER OF     SUBJECT TO        PRICE      AMORTIZATION
ACQUISITION               SHARES       REPURCHASE     ALLOCATION    FOR THE YEAR
--------------------   ------------   ------------   ------------   ------------
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
                       ============   ============   ============   ============

                                       F-8
<PAGE>

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>

The following table shows information for each acquisition as of and for the
year ended December 31, 2003.

<TABLE>
<CAPTION>
                                                                       CASH
                                                                      DIVIDENDS
                                                                      PAID ON
                         AGGREGATE     SHARES NOT    CONTINGENTLY   CONTINGENTLY     PURCHASE      INTANGIBLE
                         NUMBER OF     SUBJECT TO     RETURNABLE     RETURNABLE       PRICE       AMORTIZATION
ACQUISITION               SHARES       REPURCHASE       SHARES         SHARES       ALLOCATION    FOR THE YEAR
--------------------   ------------   ------------   ------------   ------------   ------------   ------------
<S>                       <C>            <C>              <C>       <C>            <C>            <C>
TPRS                      1,966,000      1,803,200        162,800   $    293,040   $ 39,269,688   $  2,285,037
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      3,867,031        162,800   $    293,040   $ 80,015,182   $  4,775,155
                       ============   ============   ============   ============   ============   ============
</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
former beneficial owners of TPR, one of whom is an executive officer of the
Company, and their assigns will continue to hold the remaining 3,000 shares of
WPSAM Europe until June 30, 2006, at which time the Company will acquire those
shares at a fair value price determined on that date. 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. For the year ended December 31,
2005 there were no changes 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 expense, the estimated aggregate
amortization expense for each of the five succeeding years ending December 31 is
as follows:

                2006               $  4,310,345
                2007               $  4,265,912
                2008               $  4,265,912
                2009               $  4,265,912
                2010               $  4,265,912

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 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, Available for Sale

Investments in equity and municipal securities have been classified as
"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. Unrealized gains and losses 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 shorter of the lease term or the estimated life of the improvements. The
aircraft is depreciated using an accelerated method over seven years.

                                      F-10
<PAGE>

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

                                      F-11
<PAGE>

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

Effective January 1, 2003, the Company began to account for share-based employee
compensation in accordance with the fair value method prescribed by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"), as amended by Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure" ("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 adoption of SFAS No. 123 did not have a material effect on the
Company's results of operations or financial position.

Prior to January 1, 2003, the Company had elected to account for its share-based
employee compensation plan in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"). In
accordance with APB No. 25, compensation expense is not recognized for employee
options that have no intrinsic value on the date of grant.

Share options granted for the years ended December 31, 2002 and 2001 were
accounted for, and will continue to be accounted for, under the intrinsic
value-based method as prescribed by APB No. 25. Therefore, no compensation
expense was recognized for those share options that had no intrinsic value on
the date of grant (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 December 2004, the Financial Accounting Standards Board ("FASB") published
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 stock options, restricted share awards, certain performance-based
awards, share appreciation rights, and employee share purchase plans. The
Company has adopted the revised standards as of January 1, 2005 (See Note 12).
The effect of adopting SFAS No. 123R resulted in an increase in compensation
expense for the year ended December 31, 2005 of $287,138.

                                      F-12
<PAGE>

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

             Expected Life                          1 to 7 years
             Risk free interest rate               4.84% - 4.89%
             Dividend yield                        4.22% - 7.24%
             Volatility                                   12.87%

NOTE 4: EARNINGS PER SHARE

<TABLE>
<CAPTION>
                                                        2005             2004             2003
                                                   --------------   --------------   --------------
<S>                                                <C>              <C>              <C>
Basic Earnings Per Share:
Net income                                         $   40,052,684   $   63,148,687   $   43,075,283
                                                   ==============   ==============   ==============
Weighted average basic shares outstanding              45,639,687       45,111,869       44,311,905
                                                   --------------   --------------   --------------
Net income per share                               $         0.88   $         1.40   $         0.97
                                                   ==============   ==============   ==============
Diluted Earnings Per Share:
Net income                                         $   40,052,684   $   63,148,687   $   43,075,283
                                                   ==============   ==============   ==============
Weighted average basic shares outstanding              45,639,687       45,111,869       44,311,905
Add:  Unvested shares, contingently returnable
       shares, unvested options, vested
       unexercised options  and dilutive
       potentially issuable common shares                 311,859          412,174          886,060
                                                   --------------   --------------   --------------
Weighted average diluted shares outstanding            45,951,546       45,524,043       45,197,965
                                                   --------------   --------------   --------------
Net income per share                               $         0.87   $         1.39   $         0.95
                                                   ==============   ==============   ==============
</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, 2005, 2004 and 2003, respectively, 46,837,855, 46,113,462 and
46,035,726 shares were issued and outstanding. The shareholders of record are
entitled to full voting rights (see Note 14) and dividends on these shares;
1,052,330, 700,863 and 1,212,254 of these shares were unvested and held by the
Company's or affiliates' employees on December 31, 2005, 2004 and 2003,
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>
                                                        2005             2004             2003
                                                   --------------   --------------   --------------
<S>                                                <C>              <C>              <C>
Net income                                         $   40,052,684   $   63,148,687   $   43,075,283
Other comprehensive income, net of tax:
     Reclassification adjustment for
       unrealized gains/(losses) on
        available for sale securities
        included in interest and other                     83,580           (7,361)         (72,251)
     Unrealized gains/(losses) on available
        for sale securities                               (53,690)          21,870           73,427
     Foreign currency translation
         adjustment                                      (584,592)         396,833          537,532
                                                   --------------   --------------   --------------
Comprehensive income                               $   39,497,982   $   63,560,029   $   43,613,991
                                                   ==============   ==============   ==============
</TABLE>

NOTE 6: INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Investments in unconsolidated affiliates include the following:

<TABLE>
<CAPTION>
                                                        2005             2004             2003
                                                   --------------   --------------   --------------
<S>                                                <C>              <C>              <C>
Investment in Bowen Asia Limited                   $    2,336,107   $    2,317,130   $    2,624,008
Investment in Stewart Bowen Japan Ltd.                     99,871          158,557                -
Investment in Kirk Management Ltd.                      1,393,413        1,307,323        1,231,398
                                                   --------------   --------------   --------------
Total                                              $    3,829,391   $    3,783,010   $    3,855,406
                                                   ==============   ==============   ==============
</TABLE>

At December 31, 2005, 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 $1,758,497,
$2,531,126 and $2,311,783 for the years ended December 31, 2005, 2004 and 2003,
respectively, which were paid to Shamrock Aviation, Inc. ("Shamrock"), a company
owned by principal shareholders of the Company.

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

                                      F-14
<PAGE>

owned by the Company. These costs, reflected in research and administration
expenses, include $3,100,843, $2,569,082 and $2,584,769 for the years ended
December 31, 2005, 2004 and 2003, 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 $172,357, $175,187 and
$162,477 for the years ended December 31, 2005, 2004 and 2003, respectively.
These amounts are based upon the actual space utilized in each of those years.

WPS Dublin served as the investment manager to an Irish fund solely advised by
WPS Investissements S.A., a Swiss investment management firm, principally owned
by a beneficial owner of a minority interest in the Company. The Company had no
ownership interest in either the Irish fund or WPS Investissements S.A. WPS
Dublin collected and remitted to WPS Investissements S.A. all of the advisory
fees in respect of such fund. Such fees amounted to $25,405 for the year ended
December 31, 2003. In addition, 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 such fund and certain accounts, as directed by
those clients to a beneficial owner of a minority interest in the Company. Such
payments amounted to $7,382 for the year ended December 31, 2005. Prior to 2005,
these payments were made to WPS Investissements S.A. Such payments amounted to
$6,358 and $12,995 for the years ended December 31, 2004 and 2003, respectively.

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 $1,722,632, $1,227,329 and
$859,333 for the years ended December 31, 2005, 2004 and 2003, 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, 2005, 2004 and 2003 were
$6,267, $6,098 and $7,600, 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
$682,590, $625,617 and $988,184 for the years ended December 31, 2005, 2004 and
2003, 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, $43,679 and $50,339 for the years ended December
31, 2005, 2004 and 2003, 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 $15,245,066, $20,752,325
and $5,765,255 for the years ended December 31, 2005, 2004 and 2003,
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 since May 2005 has been 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, 2005, 2004
and 2003.

                                      F-15
<PAGE>

Included in receivables from affiliates, net, at December 31, 2005, 2004 and
2003 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.

WPSAM serves as investment adviser to W.P. Stewart Holdings N.V., 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, 2005 and 2004, are performance fees receivable in the
amounts of $5,349,750 and $13,537,506, respectively. There was no performance
fee earned for the year ended December 31, 2003.

Included in investments available for sale at December 31, 2004 and 2003 are
amounts of $895,423 and $833,958, respectively, which were investments in
various funds managed by WPS Dublin, a wholly-owned subsidiary of the Company.

Included in research and administration expenses for the years ended December
31, 2005, 2004 and 2003 is rent expense in the amount of $188,795, $194,552 and
$155,581 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, 2005, 2004
and 2003 are contributions in the amounts of $507,500, $411,000 and $222,450
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.

Future principal payments on the loan as of December 31, 2005 are as follows:

            2006                               $    816,729
            2007                                    843,756
            2008                                    871,570
            2009                                    900,587
            2010                                    930,320
            Thereafter (through 2013)            11,049,379
                                               ------------
                                               $ 15,412,341
                                               ============

Interest expense on long-term debt totaled $829,777, $579,318 and $913,992 for
the years ended December 31, 2005, 2004 and 2003, respectively.

The carrying value of this loan approximates its fair value as of December 31,
2005.

                                      F-16
<PAGE>

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,
2005.

NOTE 9: COMMITMENTS AND CONTINGENCIES

At December 31, 2005, 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, 2005, 2004 and 2003.

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-settlement 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, 2005, 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 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. As per the terms of the
investment advisory agreement, the performance fee is payable annually in
arrears and is 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 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. At December 31, 2005, there is
no intention by WPSAM, the investment adviser, to terminate the investment
advisory agreement nor is there any negative balance.

The Company has committed to make future issuances of 1,000,000 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.

                                      F-17
<PAGE>

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, 2005, 532 unvested common shares of former employees were repurchased and
their installment notes totaling $8,772 were abated.

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.

In 2003, the Company issued 20,750 common shares to certain employees and
employees of affiliates, all of which were issued in connection with the
Company's 2001 Employee Equity Incentive Plan, for installment notes totaling
$335,320. The installment notes are full recourse, bear interest at 8.5% per
annum, are for a term of seven years and are collateralized by the shares
issued. Each principal payment, as defined in each of the promissory notes, is
equal to one twenty-eighth of the total face value of the note. During 2003, the
Company also issued 1,000 common shares to certain employees and employees of
affiliates, all of which were issued in connection with the Company's 2001
Employee Equity Incentive Plan, for cash payments totaling $16,160.

Pursuant to the terms of the purchase agreements, during the year ended December
31, 2003, 91,807 unvested common shares of former employees were repurchased and
their installment notes totaling $1,294,329 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, 2005 are as follows:

            2006                               $   675,859
            2007                                   475,407
            2008                                   384,616
            2009                                   195,989
            2010                                    52,488
            Thereafter (through 2011)               12,674
                                               -----------
                                               $ 1,797,033
                                               ===========

Interest income on all such notes was $192,678, $464,146 and $825,778 for the
years ended December 31, 2005, 2004 and 2003, 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

                                      F-18
<PAGE>

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.

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.

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.

In 2003, the Company granted awards under the Plan that consisted of rights to
purchase 21,750 restricted common shares, which vest in equal amounts in each of
the 28 calendar quarters following the grant, and options to purchase 65,250
shares, which vest in equal amounts on each of the first seven anniversaries of
the grant date. The exercise price of the options is equal to the market value
of the Company's shares on the date of grant.

During 2003, pursuant to the terms of the Plan, 44,629 and 1,644 vested employee
share options granted in 2001 and 2002, respectively, were exercised for an
aggregate amount of $955,541.

In 2003, 195,561 and 53,929 unexercised options granted in 2001 and 2002,
respectively, were forfeited by former employees of the Company. Additionally,
in 2003, 109,678 vested options granted in 2001 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

                                      F-19
<PAGE>

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, 2005 and 2004 for
share options granted in 2003, was $4,470 and $5,639, respectively. There were
no share options granted for the years ended December 31, 2005 and 2004.

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

                                   WEIGHTED AVERAGE REMAINING
                     OPTIONS          REMAINING CONTRACTUAL     WEIGHTED AVERAGE
EXERCISE PRICE     OUTSTANDING            LIFE (YEARS)           EXERCISE PRICE
---------------  ---------------   --------------------------   ----------------
$         20.20           65,250               5                  $       20.20

Prior to January 1, 2003, the Company had elected to account for its share-based
employee compensation plan in accordance with APB No. 25. In accordance with APB
No. 25, compensation expense is not recognized for employee options that have no
intrinsic value on the date of grant.

Share options granted for all periods prior to January 1, 2003, were accounted
for under the intrinsic value-based method as prescribed by APB No. 25.
Therefore, no compensation expense was recognized for those share options that
had no intrinsic value on the date of grant. The dilutive effect of these
options is included in the weighted average diluted shares outstanding in
accordance with SFAS No. 128.

The options outstanding as of December 31, 2005, 2004 and 2003 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 - $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
                                      ============

                 $20.80 - $25.65           836,651             5                $          20.89
                 $16.58 - $28.42           503,928             6                $          21.88
                                      ------------
    2003                                 1,340,579
                                      ============
</TABLE>

Options exercisable at December 31, 2005, 2004 and 2003 were 189,997, 208,319
and 227,378 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 years ended December 31, 2004 and 2003, would have
been the following pro forma amounts:

                                      F-20
<PAGE>

          (IN THOUSANDS, EXCEPT PER SHARE DATA)        2004           2003
          --------------------------------------   ------------   ------------
          Net income, as reported                  $ 63,148,687   $ 43,075,283
          Adjustment for compensation cost              477,685        913,393
                                                   ------------   ------------
          Pro forma net income                     $ 62,671,002   $ 42,161,890
                                                   ============   ============
          Earnings per share, as reported:
            Basic                                  $       1.40   $       0.97
            Diluted                                $       1.39   $       0.95
          Pro forma earnings per share:
            Basic                                  $       1.39   $       0.95
            Diluted                                $       1.38   $       0.93

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:

                                                 2004                2003
                                            ---------------   -----------------
          Expected Life                        1 to 7 years        1 to 7 years
          Risk free interest rate             3.10% - 4.31%       1.60% - 4.32%
          Dividend yield                      4.22% - 7.24%       4.22% - 7.24%
          Volatility                                 16.22%              22.07%

The effects of applying SFAS No. 123 on pro forma disclosures of net income and
earnings per share for the years ended December 31, 2004 and 2003, 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 years ended December 31, 2004 and 2003,
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 values of those options
granted prior to January 1, 2003 were $2.12 and $2.79 for the years ended
December 31, 2004 and 2003, respectively.

NOTE 13: RESTRICTED SHARES

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

                                      F-21
<PAGE>

that date and is being amortized over the two through five year vesting periods
as specified in the terms of the individual Restricted Share Agreements.
Compensation expense resulting from the amortization of the unearned
compensation for the years ended December 31, 2005 and 2004 was $3,341,205 and
$621,975, respectively.

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.

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-22
<PAGE>

The income tax provision/(benefit), all current, for the years ended December
31, 2005, 2004 and 2003 is as follows:

                                     2005           2004           2003
                                 ------------   ------------   ------------
            U.S.:
            Federal              $  5,240,844   $  6,279,761   $  5,046,492
            State and local         1,784,499      1,562,487      1,600,296
                                 ------------   ------------   ------------
                                    7,025,343      7,842,248      6,646,788
            Other:                     13,239          9,527       (663,521)
                                 ------------   ------------   ------------
                                 $  7,038,582   $  7,851,775   $  5,983,267
                                 ============   ============   ============

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 $1,785,038, $1,535,787 and $1,486,044
for the years ended December 31, 2005, 2004 and 2003, 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, 2005 were as follows:

               2006                                  $   2,967,198
               2007                                      2,967,198
               2008                                      2,841,451
               2009                                      3,437,138
               2010                                      3,406,570
               Thereafter (through 2021)                22,680,745
                                                     -------------
                                                     $  38,300,300
                                                     =============

Total rent expense for all operating leases was $3,077,906, $2,909,452 and
$2,834,537, for the years ended December 31, 2005, 2004 and 2003, respectively.

Included in the table above is an annual amount of $180,000 and an aggregate
16-year total commitment amount of $2,790,000 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 five-year commitment amount of approximately $914,000 payable to a
company owned by the former principals of TPR.

                                      F-23
<PAGE>

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:

                                                 Fee Revenue
                                 ------------------------------------------
                                     2005           2004           2003
                                 ------------   ------------   ------------
                  U.S.           $ 76,498,570   $ 76,129,771   $ 70,657,079
                  Non-U.S          36,699,263     39,875,729     23,405,259
                                 ------------   ------------   ------------
                  Total          $113,197,833   $116,005,500   $ 94,062,338
                                 ============   ============   ============

NOTE 19: SUBSEQUENT EVENTS

On January 3, 2006, the Company declared a dividend of $0.30 per share to
shareholders of record as of January 13, 2006, payable on January 27, 2006 in
the aggregate amount of $14,039,715.

On January 5, 2006, 6,010 unvested common shares of former employees were
repurchased and their installment notes totaling $77,618 were abated, 30,643
unvested common shares of former employees were repurchased for an aggregate
amount of $505,610 and 2,152 restricted unvested shares were cancelled.

                                      F-24
<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: Chief Operating Officer

Date:  March 17, 2006

<PAGE>

                                INDEX TO EXHIBITS

NUMBER    EXHIBIT
-------   ----------------------------------------------------------------------
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