Account Inclusion
Our performance data, since 1989, reflects the performance of all
client 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 predecessor, W.P. Stewart & Co., Inc.) and W.P.
Stewart Asset Management Ltd. (collectively the “Stewart Group”)
acted with complete discretionary authority.
With respect to periods prior to 1989, the data
reflects performance of a group of accounts believed by
management to be representative of all fully discretionary client
equity accounts. If the
criteria for account inclusion since 1989 had been applied for
periods prior to 1989, there is no assurance that the results would
be consistent, although we believe the results would not be
materially different. The
accounts included for the period from January 1, 1975 through
present 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 a similar investment philosophy as 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 or year-to-date 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 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 to each account in the
Composite, adjusted for the effect of capital additions and
withdrawals. For the period
from 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 and year-to-date percentage change shown
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 for the S&P 500 by an undetermined amount.
The S&P 500 Index annual and year-to-date percentage change was
obtained from the Standard & Poor’s Corporation, New York, New York.
W.P.
Stewart & Co., Ltd., Trinity Hall, 43 Cedar Avenue, Hamilton HM 12.
Bermuda
Revised 05/99