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Registration No.
Filed December 8__, 1995
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No.
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 X
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AMENDMENT NO.
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THE NAVELLIER PERFORMANCE FUNDS
920 Incline Way, Building No. 1
Incline Village, Nevada 89450
(702) 831-7800
Agent for Service:
SAMUEL KORNHAUSER
155 Jackson Street, Suite 1807
San Francisco, California 94111
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to Rule 485 paragraph (b)(1)(vii)
[X] on 1/1/96 pursuant to Section 8(a), Securities Act of 1933
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of the rule 485
______________________________________________________________________________
Registrant has declared that it has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Investment Company Act
Rule 24f-2 and that the Rule 24f-2 Notice for Registrant's fiscal year 1996 will
be filed on or before the date it is due.
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THE NAVELLIER PERFORMANCE FUNDS
CONTENTS
This Registration Statement on Form N-1A consists of the following:
<TABLE>
<S> <C>
1. Facing Sheet
2. Contents
3. Cross-Reference Sheet
4. Part A - Prospectus for all shares of The Navellier Performance Funds
5. Part B - Statement of Additional Information for all shares of The
Navellier Performance Funds
6. Part C - Other Information
7. Signature Sheet
8. Exhibits
</TABLE>
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CROSS-REFERENCE SHEET
Part A
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<TABLE>
<CAPTION>
Form N-1A Item Number Prospectus Caption
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<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Fund Expenses
3. Condensed Financial Information Condensed Financial Information -
Financial Highlights
4. General Description of Registrant Investment Objectives and Policies,
General Information, Risk Considerations
5. Management of Registrant Management of the Fund
5A. Management's Discussion of Fund N/A
Performance
6. Capital Stock and Other Securities General Information
7. Purchases of Securities Management of the Fund
Being Offered
How to Buy Shares
Dividend Reinvestment
Distribution Fees
8. Redemption or Repurchase How to Redeem Shares
9. Legal Proceedings NA
</TABLE>
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Part B - Statement of Additional Information
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<TABLE>
<CAPTION>
Form N-1A Item Number
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<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History NA
13. Investment Objectives and Policies Investment Objective and Policies
Investment Restrictions
14. Management of the Fund Management
15. Control Persons and Principal Management
Holders of Securities
16. Investment Advisory Management of the Fund
and Other Services Management
Distribution Plan
Other Information
17. Brokerage Allocation and Portfolio Transactions
Other Practices Management of the Fund
18. Capital Stock and Other General Information
Securities
19. Purchase, Redemption and Pricing How to Buy Shares
of Securities Being Offered Net Asset Value
20. Tax Statutes Dividends, Distributions, and Taxes
21. Underwriters Management
Distribution Plan
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
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Part C
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Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
The Navellier Performance Funds (the "Fund") is an open-end management
investment company which offers its shares in a series of no load non-
diversified and diversified portfolios. The Fund is presently offering its
shares in the first Portfolio: the Navellier Aggressive Growth Portfolio
("Aggressive Growth") - a non-diversified open-end management portfolio.
Additional non-diversified or diversified portfolios may be added to the Fund in
the future.
Investment Objectives
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The Aggressive Growth Portfolio invests in securities traded in all United
States markets and may invest up to 10% of its assets in the shares of a single
issuer or up to 25% of its assets in any one industry. It seeks capital
appreciation through investments in securities which the Portfolio Manager
believes are undervalued in the marketplace. Investors in the Aggressive Growth
Portfolio pay no initial sales load but do pay an annual 0.25% fee ("12b-1 fee")
which over a period of years could result in higher overall expenses than
payment of an initial sales load. Navellier Management, Inc. is the investment
advisor for each of the Portfolios of the Fund. Navellier Securities Corp. is
the principal distributor of the Fund's shares.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing and should be read and
retained for future reference. Each of the Portfolios of the Fund are designed
for long term investors and not as trading vehicles and are not intended to
present a complete investment program for the investor. An investment in any of
the portfolios of the Fund involves certain speculative considerations; see
"Risk Factors". There can be no assurance that the Portfolios of the Fund will
achieve their investment objectives. The Aggressive Growth Portfolio employs an
aggressive investment strategy that has the potential for yielding high returns.
However, share prices of the Aggressive Growth Portfolio may also experience
substantial fluctuations including declines so that your shares may be worth
less than when you originally purchased them. The Aggressive Growth Portfolio
seeks long term growth, does not attempt to maintain a balanced Portfolio, and
its performance may fluctuate due to the possibility of greater concentration of
investment of the Portfolio's assets in a single issuer or industry. A
Statement of Additional Information about the Fund has been filed with the
Securities and Exchange Commission and is available upon request and without
charge by calling or writing The Navellier Performance Funds c/o Navellier
Securities Corp., Call Box 10012, Incline Village, Nevada 89450-1012; Telephone:
1-800-887-8671. The Statement of Additional Information bears the same date as
this Prospectus and is incorporated by reference into this Prospectus in its
entirety.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND, ITS INVESTMENT
ADVISER, OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH AN OFFER IN SUCH STATE.
Distributor and Sales Information
---------------------------------
Navellier Securities Corp.
Call Box 10012
Incline Village, NV 89450-1012
1-800-887-8671
The date of this Prospectus is January 1, 1996
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TABLE OF CONTENTS
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
AND ANNUAL FUND OPERATING EXPENSES.......... 1
SUMMARY..................................... 3
INVESTMENT OBJECTIVES AND POLICIES.......... 5
SPECIAL INVESTMENT METHODS AND RISKS........ 6
INVESTMENT RESTRICTIONS..................... 8
RISK FACTORS................................ 9
PERFORMANCE AND YIELD....................... 11
MANAGEMENT OF THE FUND...................... 12
EXPENSES OF THE FUND........................ 13
REPORTS AND INFORMATION..................... 15
DESCRIPTION OF SHARES....................... 15
DIVIDENDS AND DISTRIBUTIONS................. 16
TAXES....................................... 17
PURCHASE AND PRICING OF SHARES.............. 19
REDEMPTION OF SHARES........................ 22
CERTAIN SERVICES PROVIDED TO SHAREHOLDERS... 24
ADDITIONAL INFORMATION...................... 25
ASSENT TO TRUST INSTRUMENT.................. 25
</TABLE>
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SHAREHOLDER TRANSACTION EXPENSES
AND ANNUAL FUND OPERATING EXPENSES
NAVELLIER
AGGRESSIVE GROWTH
PORTFOLIO
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<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES/1/
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Maximum Sales Load Imposed on Purchases (as a
percentage of offering price).......................................... 0%
Maximum Sales Load Imposed on Reinvested
Dividends.............................................................. None
Redemption Fees........................................................ None
Annual 12b-1 Fee/2/.................................................... 0.25%
Exchange Fee/3/........................................................ 0-$5
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF
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AVERAGE NET ASSETS)
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Management Fees/4/..................................................... 1.25%
12b-1 Fees/2/.......................................................... 0.25%
Other Expenses/5/...................................................... 0.50%
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Total Fund Operating Expenses/6/....................................... 2.00%
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</TABLE>
______________________
/1/ The above table of fees and other expenses is provided to assist you
in understanding the various potential costs and expenses that an investor in
the Fund may bear directly or indirectly since the Fund has no operating
history. The Investment Advisor may, but is under no obligation to, reimburse
the Fund's expenses now or in the future.
/2/ The Aggressive Growth Portfolio does not charge an initial sales
load but does pay an annual 0.25% 12b-1 fee to the distributor or brokers who
have signed a selling agreement with the Fund. The Fund pays these brokers or
the distributor annually 0.25% of the value of the assets of the Fund which were
obtained by said brokers or distributor. The fee is paid to the broker or
distributor for continuous personal services by such broker or distributor to
investors in the Aggressive Growth Portfolio.
/3/ Shares of the Aggressive Growth Portfolio or any future portfolio
may be exchanged for shares of any other Fund Portfolio or any portfolio of The
Navellier Series Fund at net asset value without charge (up to five (5)
exchanges per account). There is a charge of $5 per exchange thereafter. There
are presently no other Fund Portfolios. There is one other Navellier Series
Fund Portfolio - The Navellier Aggressive Small Cap Equity Portfolio.
/4/ Represents the advisory fee paid to Navellier Management, Inc. (See
"Expenses of the Fund - Compensation of the Investment Adviser".)
/5/ Since the Fund has no operating history, this 0.50% represents an
estimate of all other expenses of the Portfolio (except the 12b-1 fee).
/6/ This includes the annual 0.25% 12b-1 fee which has the effect of
increasing annual operating expenses.
1
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EXAMPLES:
The following example indicates the direct and indirect expenses an investor
(maintaining an average annual investment of $1,000) could expect to incur in a
single year, and three-year period respectively:
<TABLE>
<CAPTION>
Navellier
Aggressive
Growth
Portfolio
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<S> <C>
One-Year ..... $21
Three-Year ..... $64
</TABLE>
The foregoing example assumes (a) that an investor maintains an average of
$1,000 invested in the Portfolio; (b) no sales load, (c) a 5% annual return; (d)
percentage amounts listed above for Annual Fund Operating Expenses remain
constant (for all periods shown above); (e) reinvestment of all dividends and
distributions; and (f) no exchanges between Portfolios.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR LESS THAN
THOSE SHOWN ABOVE.
2
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SUMMARY
THE FUND
The Navellier Performance Funds (the "Fund") is an open-end management
investment company organized as a business trust under the laws of the State of
Delaware on October 17, 1995. The Fund is currently offering its shares in the
first Portfolio of the Series - the Navellier Aggressive Growth Portfolio
("Aggressive Growth Portfolio"). The Aggressive Growth Portfolio is a no-load
non-diversified portfolio. Investors in the Aggressive Growth Portfolio are
charged a 0.25% annual 12b-1 fee.
INVESTMENT OBJECTIVES
The Aggressive Growth Portfolio seeks capital appreciation through
investment in securities which the Portfolio Manager believes are undervalued in
the marketplace. The Investment Advisor can invest up to 10% of the Aggressive
Growth Portfolio's assets in the stock of any single issuer or up to 25% of this
Portfolio's assets in any one industry. There can be no assurance that the
Portfolio will achieve its investment objectives. The Portfolio's investment
objectives may not be changed without shareholder approval. This Portfolio
should not be considered suitable for investors seeking current income.
INVESTMENT ADVISER
Navellier Management, Inc. (the "Investment Adviser") administers the
Fund's assets and determines which securities will be selected as investments
for the Fund. Louis Navellier, the President and CEO of the Investment Advisor,
refined the Modern Portfolio Theory investing strategy which is applied in
managing the assets of each Portfolio. He sets the strategies and guidelines
for each Portfolio and oversees the Portfolio Manager's activities. Alan Alpers
is the Portfolio Manager involved in the day to day investment activities of the
Aggressive Growth Portfolio. The Investment Adviser receives an annual fee,
equal to 1.25% of the value of assets under management for each of the Fund
portfolios, payable monthly, based upon a percentage of that Portfolio's average
daily net assets. The advisory fees paid to the Investment Adviser are higher
than those generally paid by most other investment companies. The Fund is
paying this higher management fee based on its desire to retain Navellier
Management, Inc.'s specific application of Modern Portfolio Theory, its
particular method of analyzing stocks and its investment advisory services.
DISTRIBUTION OF SHARES
Navellier Securities Corp. (the "Distributor") acts as the sole underwriter
of the Fund's shares. It is a corporation wholly owned by Louis Navellier, who
also owns Navellier Management, Inc., the Fund's Investment Adviser. The
Distributor may sell shares of the Fund directly to investors or shares may be
purchased through a network of broker-dealers selected by Distributor. The
Distributor will compensate these selected dealers by paying them directly, or
by allowing them to receive annually all or a portion of the 12b-1 fee.
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HOW TO INVEST
Shares of each portfolio of the Fund are continuously offered for sale by
the Distributor and through selected broker-dealers. The daily public offering
price for the Aggressive Growth Portfolio is the net asset value next computed
after receipt of your order. Initial purchases must be at least $2,000 ($500 in
the case of IRA and other retirement plans or qualifying group plans) and
subsequent investments must be $100 or more.
RISK FACTORS
Investment in any Portfolio of the Fund involves special risks and there
can be no guarantee of profitability. (See "Risk Factors".)
4
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INVESTMENT OBJECTIVES AND POLICIES
NAVELLIER AGGRESSIVE GROWTH PORTFOLIO
THE INVESTMENT OBJECTIVE OF THE NAVELLIER AGGRESSIVE GROWTH PORTFOLIO IS TO
ACHIEVE LONG TERM GROWTH OF CAPITAL PRIMARILY THROUGH INVESTMENTS IN STOCKS OF
COMPANIES WITH APPRECIATION POTENTIAL.
The Navellier Aggressive Growth Portfolio is a non-diversified Portfolio which
means it may invest a larger than normal percentage of its total assets in the
securities of any company or companies which the Investment Advisor believes
represents an opportunity for significant capital appreciation. The Investment
Advisor will not invest more than 10% of the Portfolio's assets in the stock of
any single company or more than 25% of the Portfolio's assets in securities
issued by companies in any one industry. Since the Investment Advisor can
concentrate more of the Portfolio's assets in the stock of a single company or
in the stocks of companies in a single industry, this Portfolio should be
considered to offer greater potential for capital appreciation as well as
greater risk of loss due to the potential concentration of assets in a single
security or industry. This Portfolio because of its concentration also poses a
greater potential for volatility. This Portfolio should not be considered
suitable for investors seeking current income. This Portfolio may invest its
assets in a broad range of companies without restriction on their
capitalization. Under normal circumstances, the Aggressive Growth Portfolio
will invest at least 65% of its total assets in stocks of issuers. However,
that projected minimum percentage could be lowered during adverse market
conditions or for defensive purposes and is not a fundamental policy of the
Portfolio. Stocks of issuers include, but are not limited to, common and
preferred stock, and convertible preferred stocks that are convertible into
common stock. While this Portfolio intends to operate as a non-diversified open
end management investment company for the purposes of the 1940 Act, it also
intends to qualify as a regulated investment company under the Internal Revenue
Code ("Code"). As a non-diversified investment company under the 1940 Act, the
Fund may invest more than 5% and up to 25% of its assets in the securities of
any one issuer at the time of purchase. However, for purposes of the Internal
Revenue Code, as of the last day of any fiscal quarter, this Portfolio may not
have more than 25% of its total assets invested in any one issuer, and, with
respect to 50% of its total assets, the Portfolio may not have more than 5% of
its total assets invested in any one issuer, nor may it own more than 10% of the
outstanding voting securities of any one issuer. These limitations do not apply
to investments in securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities or the securities of investment companies that
qualify as regulated investment companies under the Code.
The Aggressive Growth Portfolio may also invest in debt securities and
money market funds if, in the opinion of the Investment Adviser, such investment
will further the investment objective of the Portfolio. In addition, when the
Investment Adviser feels that market or other conditions warrant it or for
temporary defensive purposes, the Aggressive Growth Portfolio may retain cash or
invest all or any portion of its assets in cash equivalents, including money
market mutual funds. Under normal conditions, the Portfolio's holdings in such
non-equity securities should not exceed 35% of the total assets of the
Portfolio. If the Fund's assets or a portion thereof are retained in cash or
money market funds or money
5
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market mutual funds, such cash will, in all probability, be deposited in
interest-bearing or money market accounts or money market mutual funds with
Rushmore Trust and Savings, FSB, which is also the Fund's Transfer Agent and
Custodian. Such cash deposits in interest bearing instruments issued by
Rushmore Trust and Savings ("Transfer Agent") will only be deposited with the
Transfer Agent if its interest rates, terms, and security are equal to or better
than could be received by depositing such cash with another savings institution.
It is anticipated that all of the Aggressive Growth Portfolio's investments
in corporate debt securities (other than commercial paper) and preferred stocks
will be represented by debt securities and preferred stocks which have, at the
time of purchase, a rating within the four highest grades as determined by
Moody's Investors Service, Inc. (Aaa, Aa, A, Baa) or the three highest grades
determined by Standard & Poor's Corporation (AAA, AA, A). Although investment-
quality securities are subject to market fluctuations, the risk of loss of
income and principal is generally expected to be less than with lower quality
securities. In the event the rating of a debt security or preferred stock in
which the Portfolio has invested drops below investment grade, the Portfolio
will promptly dispose of such investment.
In determining the types of companies which will be suitable for investment
by the Aggressive Growth Portfolio, the Investment Adviser will screen over
6,000 stocks and will take into account various factors and base its stock
selection on its own model portfolio theory concepts. The Fund invests
primarily in what the Investment Adviser believes are undervalued common stocks
believed to have long-term growth potential. Stocks are selected on the basis
of an evaluation of factors such as earnings growth, expanding profit margins,
market dominance and/or factors that create the potential for market dominance,
sales growth, and other factors that indicate a company's potential for growth.
There are no limitations on the type, operating history, or dividend paying
record of companies or industries in which the Portfolios may invest; the
principal criteria for investment being that the securities provide
opportunities for capital growth. The Fund will invest up to 100% of its
capital in equity securities selected for their capital growth potential.
The Investment Adviser will typically (but not always) purchase common
stocks of issuers which have records of profitability and strong earnings
momentum. When selecting such stocks, the issuers may be lesser known companies
moving from a lower to a higher market share position within their industry
groups rather than the largest and best known companies in such groups. The
Investment Adviser may also purchase common stocks of well known, highly
researched, large companies if the Investment Advisor believes such common
stocks offer opportunity for long-term capital growth.
SPECIAL INVESTMENT METHODS AND RISKS
"SHORT SALES AGAINST THE BOX"
Any Portfolio of the Fund is permitted to make short sales if at the time
of the short sale the Portfolio owns or has the right to acquire a security
equal in kind and amount to the security being sold short, at no additional
cost. This investment technique is known as a "short sale against the box."
6
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In a short sale, the seller does not immediately deliver the securities
sold and is said to have a short position in those securities until delivery
occurs. To make delivery to the purchaser, the executing broker borrows the
securities being sold short on behalf of the seller. While the short position
is maintained, the seller collateralizes its obligation to deliver the
securities sold short in an amount equal to the proceeds of the short sale plus
an additional margin amount established by the Board of Governors of the Federal
Reserve. If the Fund engages in a short sale, the collateral account will be
maintained by the Fund's custodian. While the short sale is open, the Fund will
maintain, in a segregated custodial account, an amount of securities equal in
kind and amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities at no additional cost. These
securities would constitute the Fund's long position.
The Portfolio may make a short sale against the box, when it believes that
the price of a security may decline, causing a decline in the value of a
security owned by the Portfolio (or a security convertible into or exchangeable
for such security), or when the Portfolio desires to sell the security it owns
at a current attractive price, but also wishes to defer recognition of gain or
loss for federal income tax purposes and for purposes of satisfying certain
tests applicable to regulated investment companies under the Internal Revenue
Code. In such a case, any future losses in the Portfolio's long position should
be reduced by a gain in the short position. The extent to which such gains or
losses are reduced would depend upon the amount of the security sold short
relative to the amount the Portfolio owns. There will be certain additional
transaction costs associated with short sales against the box, but the Portfolio
will endeavor to offset theses costs with income from the investment of the cash
proceeds of short sales.
"SHORT-SELLING"
Any Portfolio of the Fund may make short sales, which are transactions in
which the Portfolio sells a security it does not own in anticipation of a
decline in the market value of that security. To complete such a transaction,
the Portfolio must borrow the security to make delivery to the buyer. The
Portfolio then is obligated to replace the security borrowed by purchasing it at
the market price at the time of replacement. The price at such time may be more
or less than the price at which the security was sold by the Portfolio. Until
the security is replaced, the Portfolio is required to pay to the lender any
dividends or interest which accrue during the period of the loan. To borrow the
security, the Portfolio also may be required to pay a premium, which would
increase the costs of the security sold. The proceeds of the short sale will be
retained by the broker, to the extent necessary to met margin requirements,
until the short position is closed out.
The Portfolio will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and the date on
which the Portfolio replaces the borrowed security. The Portfolio will realize
a gain if the security declines in price between those dates. The amount of any
gain will be decreased, and the amount of any loss increased, by the amount of
any premium, dividends or interest the Portfolio may be required to pay in
connection with a short sale.
7
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No securities will be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed 25%
of the value of the Portfolio's net assets. In addition, short sales of the
securities of any single issuer, which must be listed on a national exchange,
may not exceed 5% of the Portfolio's net assets or 5% of any class of such
issuer's securities.
The Portfolio will place in a segregated account with its custodian bank an
amount of cash or U.S. government securities equal to the difference between (a)
the market value of the securities sold short at the time they were sold short
and (b) any cash or U.S. government securities required to be deposited as
collateral with the broker in connection with the short sale (not including the
proceeds from the short sale). This segregated account will be marked to market
daily, provided that at no time will the amount deposited in it plus the amount
deposited with the broker as collateral be less than the market value of the
securities at the time they were sold short.
INVESTMENT RESTRICTIONS
The Aggressive Growth Portfolio can invest up to 10% of its assets in stock
of a single company and up to 25% of its assets in stock of companies in a
single industry. The Portfolios of the Fund may not make investments in real
estate or commodities or commodity contracts, including futures contracts, but
may purchase securities of issuers which deal in real estate or commodities.
The Portfolios of the Fund are also prohibited from investing in or selling
puts, calls, straddles (or any combination thereof). The Portfolios of the Fund
are also prohibited from investing in derivatives. Each Portfolio may borrow
money only from banks for temporary or emergency (not leveraging) purposes
provided that, after each borrowing, there is an asset coverage in the borrowing
Portfolio of at least 300%. In order to secure any such borrowing, the
borrowing Portfolio may pledge, mortgage, or hypothecate up to 10% of the market
value of the assets of the Portfolio. The investment by the Portfolio in
securities, including American Depository Receipts, of issuers or any
governmental entity or political subdivision thereof, located, incorporated or
organized outside of the United States is limited to 25% of the net asset value
of the Portfolio, provided that no such foreign securities may be purchased
unless they are traded in United States securities markets.
The Fund may not purchase for any Portfolio "restricted securities" (as
defined in Rule 144(a)(3) of the Securities Act of 1933) if, as a result of such
purchase, more than 10% of the net assets (taken at market value) of such
Portfolio would be invested in such securities nor will the Fund invest in
illiquid or unseasoned securities if as a result of such purchase more than 5%
of the net assets of such portfolio would be invested in either illiquid or
unseasoned securities.
In addition to the investment restrictions described above, the investment
program of each Portfolio is subject to further restrictions which are described
in the Statement of Additional Information. The restrictions for each Portfolio
are fundamental and may not be changed without shareholder approval.
8
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RISK FACTORS
LACK OF OPERATING HISTORY AND EXPERIENCE
The Fund (and its first portfolio, the Navellier Aggressive Growth
Portfolio), is a newly organized investment company with no history of
operations. The Investment Adviser was organized on May 28, 1993 and has been
managing the assets of The Navellier Series Fund since January 3, 1994 and the
publicly invested assets of The Navellier Series Fund since April 1, 1994.
Although the Investment Adviser sub-contracts a substantial portion of its
responsibilities for administrative services of the Fund's operations to various
agents, including the Transfer Agent, the Custodian, and accountant, the
Investment Adviser still has overall responsibility for the selection of
securities for investment and, along with each Portfolio's Trustees, is
responsible for the selection of such agents and their oversight. None of the
principals, officers, legal counsel, or directors of the Investment Adviser
(including such of those persons who are also controlling persons or legal
counsel of the Fund) had before June, 1993 ever registered, operated, or
supervised the operations of investment companies in the past, and there is no
assurance that their past business experiences will enable them to successfully
manage the assets of the Fund in the future. The owner of the Investment
Adviser has been in the business of rendering advisory services to significant
pools of capital such as retirement plans and large investors since 1987.
The owner of the Investment Adviser is also the owner of another
investment advisory firm, Navellier & Associates Inc., which presently manages
over $1.2 Billion in investor funds. The owner of the Investment Adviser is
also the owner of another investment advisory firm, Navellier Fund Management,
Inc., and controls other investment advisory entities all of which firms employ
the same basic modern portfolio theories and select many of the same over-the-
counter stocks and other securities which the Investment Adviser intends to
employ and invest in while managing the Portfolios of the Fund. Because many of
the over-the-counter and other securities which Investment Adviser intends to,
or may, invest in have a smaller number of shares available to trade than more
conventional companies, lack of shares available at any given time may result in
the various portfolios of the Fund not being able to purchase or sell all shares
Investment Adviser desires to trade at a given time or period of time, thereby
creating a potential liquidity problem which could adversely affect the
performance of the Fund portfolios. Since the Investment Adviser will be
trading on behalf of the various Portfolios of the Fund in some or all of the
same securities at the same time that Navellier & Associates Inc., Navellier
Fund Management, Inc., The Navellier Series Fund and other Navellier controlled
investment entities are trading, the potential liquidity problem could be
exacerbated. In the event the number of shares available for purchase or sale
in a security or securities is limited and therefore the trade order cannot be
fully executed at the time it is placed, i.e., where the full trade orders of
Navellier & Associates Inc., Navellier Fund Management, Inc., The Navellier
Series Fund and other Navellier controlled investment entities and the Fund
cannot be completed at the time the order is made, Navellier & Associates Inc.,
and the other Navellier controlled investment entities and the Investment
Adviser will allocate their purchase or sale orders in proportion to the dollar
value of the order made by the other Navellier entities, and the dollar value of
the order made by the Investment Adviser. For example, if Navellier &
Associates Inc., and Navellier Fund Management, Inc., each place a $25,000
purchase order and Investment
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Adviser on behalf of the Fund places a $50,000 purchase order for the same stock
and only $50,000 worth of stock is available for purchase, the order would be
allocated $12,500 each of the stock to Navellier & Associates Inc., and
Navellier Fund Management, Inc., and $25,000 of the stock to the Fund. As the
assets of each Portfolio of the Fund increase the potential for shortages of
buyers or sellers increases, which could adversely affect the performance of the
various Portfolios. While the Investment Adviser generally does not anticipate
liquidity problems unless the Fund has assets in excess of two billion dollars
(although liquidity problems could still occur when the Fund has assets of
substantially less than two billion dollars), each investor is being made aware
of this potential risk in liquidity and should not invest in the Fund if he,
she, or it is not willing to accept this potentially adverse risk, and by
investing acknowledges that he, she or it is aware of the risks.
An investment in shares of any Portfolio of the Fund involves certain
speculative considerations. There can be no assurance that any of the
Portfolios objectives will be achieved or that the value of the investment will
increase. An investment in shares of the Aggressive Growth Portfolio may also
involve a higher degree of risk than an investment in shares of a more
traditional open-end diversified investment company because the Aggressive
Growth Portfolio may invest up to 10% of its assets in the securities of any
single issuer and up to 25% of its assets in the securities in any single
industry, thereby creating the risk of concentration which in turn could
potentially create greater volatility or increase the chance of losses. As a
non-diversified investment Portfolio, the Aggressive Growth Portfolio may be
subject to greater fluctuation in the total market value of the Portfolio, and
economic, political or regulatory developments may have a greater impact on the
value of this Portfolio than would be the case if the Portfolio were diversified
among a greater number of issuers. The Aggressive Growth Portfolio intends to
comply with the diversification and other requirements applicable to regulated
investment companies under the Internal Revenue Code.
All securities in which any of the Fund's Portfolios may invest are
inherently subject to market risk, and the market value of the funds investments
will fluctuate. From time to time the Fund may choose to close a portfolio or
portfolios to new investors.
INVESTING IN SECURITIES OF FOREIGN ISSUERS
Investments in foreign securities, particularly those of non-
governmental issuers, involve considerations which are not ordinarily associated
with investing in domestic issuers. These considerations include, among others,
changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information, the
difficulty of interpreting financial information prepared under laws applicable
to foreign securities markets, the impact of political, social, or diplomatic
developments, difficulties in invoking legal process abroad, and the difficulty
of assessing economic trends in foreign countries. The Investment Adviser will
use the same basic selection criteria for investing in foreign securities as it
uses in selecting domestic securities as described in the Investment Objectives
and Policies section of this Prospectus.
While to some extent the risks to the Fund of investing in foreign
securities may be limited, since each Portfolio may not invest more than 25% of
its net asset value in such
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securities and the Fund may only invest in foreign securities which are traded
in the United States securities markets, the risks nonetheless exist.
NET ASSET VALUE
The net asset value of each of the Portfolios is determined by adding
the values of all securities and other assets of that specific Portfolio,
subtracting liabilities, and dividing by the number of outstanding shares of
that Portfolio. (See "Purchase and Pricing of Shares - Valuation of Shares" and
the Statement of Additional Information.)
PORTFOLIO TURNOVER
The annual rate of portfolio turnover for the Navellier Aggressive
Growth Portfolio is unknown since the Fund has no operating history and
therefore no actual portfolio turnover rate presently exists. The Investment
Adviser does not intend to have a portfolio turnover rate in excess of 300% per
annum for the Aggressive Growth Portfolio, however, this is not a restriction on
---
the Investment Adviser and if in the Investment Adviser's judgment a higher
annual portfolio turnover rate is required in order to attempt to achieve a
higher overall Portfolio performance then the Investment Adviser is permitted to
do so. However, high portfolio turnover (100% or more) will result in increased
brokerage commissions, dealer mark-ups, and other transaction costs on the sale
of securities and on reinvestment in other securities and could therefore
adversely affect Portfolio performance. To the extent that increased portfolio
turnover results in sales at a profit of securities held less than three months,
the Fund's ability to qualify as a "regulated investment company" under the
Internal Revenue Code may be affected. (See the Statement of Additional
Information, "Taxes".)
SPECIAL RISK CONSIDERATIONS RELATING TO SECURITIES OF THE PORTFOLIO
For a description of certain other factors, including certain risk
factors, which investors should consider relating to the securities in which the
Portfolio will invest, see "Investment Objectives and Policies".
PERFORMANCE & YIELD
From time to time the Fund may include the performance history of each
Portfolio in advertisements, sales literature, or reports to current or
prospective shareholders. Performance information about the Portfolio is based
on its past performance only and is not an indication of future performance.
Performance history may be expressed as yield or as total return of each
Portfolio.
Each Portfolio's quotations of yield will be based on all investment
income per share earned during a given 30-day period (including dividends and
interest), less expenses accrued during the period ("net investment income") and
are computed by dividing net investment income by the maximum offering price per
share on the last day of the period and multiplying the result by the average
daily number of shares outstanding during the period.
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The "total return" of each Portfolio refers to the average annual
compounded rate of return of the Portfolio over some representative period that
would equate an initial payment of $1,000 at the beginning of a stated period to
the ending redeemable value of the investment, after giving effect to the
reinvestment of all dividends and distributions and deductions of expenses
during the period.
For more information about calculation of the investment performance
of the Portfolio, see the Statement of Additional Information.
MANAGEMENT OF THE FUND
THE BOARD OF TRUSTEES
The Fund's Board of Trustees directs the business and affairs of the
Fund as well as supervises the Investment Adviser, Distributor, accountant,
Transfer Agent and Custodian, as described below.
THE INVESTMENT ADVISER
Navellier Management, Inc., acts as the Investment Adviser of the
Fund. The Investment Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940. The Investment Adviser is responsible for
selecting the securities which will constitute the pool of securities which will
be selected for investment for each Portfolio. Pursuant to a separate
Administrative Services Agreement, the Investment Adviser provides the Fund with
certain administrative services, including accounting and bookkeeping services
and supervising the Fund's compliance with its reporting obligations. The
Investment Adviser may contract for the performance of such services to the
Custodian, Transfer Agent, or others, and may retain all of its 0.25%
administrative services fee or may share some or all of its fee with such other
person(s). The Investment Adviser also provides each Portfolio of the Fund with
a continuous investment program based on its investment research and management
with respect to all securities and investments. The Investment Adviser will
determine from time to time what securities and other investments will be
selected to be purchased, retained, or sold by the Fund.
The Investment Adviser is owned and controlled by its sole
shareholder, Louis G. Navellier (a 100% stockholder). In 1987, Louis Navellier
was in litigation with a business partner and on the advice of his then legal
counsel, as part of a legal strategy, filed a personal bankruptcy petition in
connection with that litigation. The bankruptcy petition was voluntarily
dismissed by Mr. Navellier less than two months later with all creditors being
paid in full. Louis G. Navellier is an affiliated person of the Fund and is
also the sole owner of the Distributor, Navellier Securities Corp. Louis
Navellier is also the sole shareholder of Navellier & Associates Inc. (See the
Statement of Additional Information.) Navellier & Associates Inc., is
registered as an investment adviser with the Securities and Exchange Commission
and with all states which require investment adviser registration. Louis
Navellier is registered as an investment adviser representative or agent in all
states requiring such registration. Louis Navellier and Navellier & Associates
Inc., without admitting
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liability, did in the past agree to a two-week suspension in California and
agreed to pay civil penalties to the States of California, Connecticut, and
Maryland for allegedly not being properly registered as an investment adviser.
Navellier Management, Inc. is also and has been since January 1994, the
investment advisor to The Navellier Series Fund, an open-end diversified
investment company. Louis Navellier is and has been in the business of
rendering investment advisory services to significant pools of capital since
1987.
For information regarding the Fund's expenses and the fees paid to the
Investment Adviser see "Expenses of the Fund" on the following page.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On October 17, 1995, in order to fulfill the requirements of Section
14(a)(1) of the Investment Company Act of 1940, one hundred percent (100%) of
the issued and outstanding shares of the only existing Portfolio of the Fund was
subscribed to for purchase by Louis Navellier under an agreement dated October
17, 1995. Such subscription was made for an aggregate of $100,000 allocated
100% for the Navellier Aggressive Growth Portfolio (to purchase 10,000 shares).
THE DISTRIBUTOR
Navellier Securities Corp., acts as the Fund's Distributor and is
registered as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers ("NASD"). The
Distributor renders its services to the Fund pursuant to a distribution
agreement pursuant to which it serves as the principal underwriter of the Fund's
shares. The Distributor may sell certain of the Fund's Portfolio shares by
direct placements. Through a network established by the Distributor, the Fund's
Portfolio shares may also be sold through selected broker-dealers. (For
information regarding the Fund's expenses and the fees it pays to the
Distributor, see "Expenses of the Fund" following.) Louis G. Navellier, an
affiliate of the Fund and the Investment Adviser, is an officer, director, and
sole shareholder of the Distributor.
THE CUSTODIAN AND THE TRANSFER AGENT
Rushmore Trust and Savings, FSB, 4922 Fairmont Avenue, Bethesda,
Maryland, 20814, telephone: (301) 657-1510 or (800) 622-1386, is Custodian for
the Fund's securities and cash and Transfer Agent for the Fund shares. The
Distributor shall be responsible for the review of applications in order to
guarantee that all requisite and statistical information has been provided with
respect to the establishment of accounts.
EXPENSES OF THE FUND
GENERAL
Each Portfolio is responsible for the payment of its own expenses.
These expenses are deducted from that Portfolio's investment income before
dividends are paid. These
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expenses include, but are not limited to: fees paid to the Investment Adviser,
the Custodian, the Transfer Agent, and the Accountant; Trustees' fees; taxes;
interest; brokerage commissions; organization expenses; securities registration
("blue sky") fees; legal fees; auditing fees; printing and other expenses which
are not directly assumed by the Investment Adviser under its investment advisory
agreement with the Fund. General expenses which are not associated directly with
a specific Portfolio (including fidelity bond and other insurance) are allocated
to each Portfolio based upon their relative net assets.
The Fund and the Investment Adviser have executed a letter
acknowledging that since the inception of the Fund's operations, the Investment
Adviser has paid all of the initial operating expenses of the Fund and may in
the future seek reimbursement from the Fund. Although the Investment Adviser is
under no obligation to continue to pay for the Fund's operating expenses, the
Investment Adviser may continue to pay the Fund's operating expenses without any
immediate reimbursement from the Fund until further notice. The Investment
Adviser has reserved the right to seek reimbursement for past, present, and
future operating expenses of the Fund at any time upon notice to the Fund that
all or a portion of such operating expenses of the Fund shall be required to be
reimbursed to the Investment Adviser, or paid directly by the Fund after the
date of such notice. This could result in the possibility of more recent
investors indirectly paying a portion of expenses incurred prior to their
becoming investors.
COMPENSATION OF THE INVESTMENT ADVISER
The Investment Adviser receives an annual 1.25% fee, payable monthly,
based upon each Portfolio's average daily net assets. This advisory fee is
higher than that generally paid by most other investment companies. The
Investment Adviser also receives a 0.25% annual fee for rendering administrative
services to the Fund pursuant to an Administrative Services Agreement and is
entitled to reimbursement for operating expenses it advances for the Fund.
DISTRIBUTION PLAN
The Fund has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act
(the "Plan"), whereby it reimburses Distributor or others in an amount equal to
0.25% per annum of the average daily net assets of the Aggressive Growth
Portfolio (or any subsequent applicable Portfolio of the Fund) for expenses
incurred for the promotion and distribution of the shares of such Portfolio(s)
of the Fund, including, but not limited to, the printing of prospectuses,
statements of additional information and reports used for sales purposes,
expenses (including personnel of Distributor) of preparation of sales literature
and related expenses, advertisements and other distribution-related expenses,
including a prorated portion of Distributor's overhead expenses attributable to
the distribution of such Portfolio Fund shares. Such payments are made monthly.
The 12b-1 fee includes, in addition to promotional activities, amounts the Fund
may pay to Distributor or others as a service fee to reimburse such parties for
personal services provided to shareholders of the Fund and/or the maintenance of
shareholder accounts. The total amount of 12b-1 fees paid for such personal
services and promotional services shall not exceed 0.25% per year of the average
daily net assets of the applicable Fund Portfolio. The Distributor can keep all
of said 12b-1 fees it receives to the extent it is not required to pay others
for such services. Such Rule 12b-1 fees are made
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<PAGE>
pursuant to the distribution plan(s) and distribution agreements entered into
between such service providers and Distributor or the Fund directly. Payments
in excess of reimbursable expenses under the plan in any year must be refunded.
The Rule 12b-1 expenses and fees in excess of 0.25% per year of the Fund's
average net assets that otherwise qualify for payment may not be carried forward
into successive annual periods. The Plan also covers payments by certain
parties to the extent such payments are deemed to be for the financing of any
activity primarily intended to result in the sale of shares issued by the Fund
within the context of Rule 12b-1. The payments under the Plan are included in
the maximum operating expenses which may be borne by the Fund.
BROKERAGE COMMISSIONS
The Investment Adviser may select selected broker-dealers to execute
portfolio transactions for the Fund, provided that the commissions, fees, or
other remuneration received by such party in exchange for executing such
transactions are reasonable and fair compared to those paid to other brokers in
connection with comparable transactions. In addition, when selecting broker-
dealers for Fund portfolio transactions, the Investment Adviser may consider the
record of such broker-dealers with respect to the sale of shares of the Fund.
(See the Statement of Additional Information.)
REPORTS AND INFORMATION
The Fund will distribute to its shareholders semi-annual reports
containing unaudited financial statements and information pertaining to matters
of the Fund. An annual report containing financial statements together with the
report of the independent auditors of the Fund is distributed to shareholders
each year. Shareholder inquiries should be addressed to The Navellier
Performance Funds, at Call Box 10012, Incline Village, Nevada 89450-1012; Tel:
(800) 887-8671, or to the Transfer Agent, Rushmore Trust and Savings FSB, 4922
Fairmont Avenue, Bethesda, Maryland, 20814, Tel: (301) 657-1510 or (800) 622-
1386.
DESCRIPTION OF SHARES
The Fund is a Delaware business trust organized on October 17, 1995.
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares of beneficial interest. The Board of Trustees has the power to designate
one or more classes ("Portfolios") of shares of beneficial interest and to
classify or reclassify any unissued shares with respect to such classes.
Presently the Fund is offering shares of the Navellier Aggressive Growth
Portfolio described above.
The shares of each Portfolio, when issued, are fully paid and non-
assessable, are redeemable at the option of the holder, are fully transferable,
and have no conversion or preemptive rights. Shares are also redeemable at the
option of the Fund under certain circumstances (see "Redemption of Shares").
Each share of a Portfolio is equal as to earnings, expenses, and assets of the
Portfolio and, in the event of liquidation of the Portfolio, is entitled to an
equal portion of all of the Portfolio's net assets. Shareholders of the Fund
are entitled to one vote for each full share held and fractional votes for
fractional
15
<PAGE>
shares held, and will vote in the aggregate and not by Portfolio except as
otherwise required by law or when the Board of Trustees determines that a matter
to be voted upon affects only the interest of the shareholders of a particular
Portfolio. Voting rights are not cumulative, so that the holders of more than
50% of the shares voting in any election of Trustees can, if they so choose,
elect all of the Trustees. While the Fund is not required, and does not intend,
to hold annual meetings of shareholders, such meetings may be called by the
Trustees at their discretion, or upon demand by the holders of 10% or more of
the outstanding shares of any Portfolio for the purpose of electing or removing
Trustees.
All shares (including reinvested dividends and capital gain
distributions) are issued or redeemed in full or fractional shares rounded to
the third decimal place. No share certificates will be issued. Instead, an
account will be established for each shareholder and all shares purchased will
be held in book-entry form by the Fund.
DIVIDENDS AND DISTRIBUTIONS
All dividends and distributions with respect to the shares of any
Portfolio will be payable in shares at net asset value or, at the option of the
shareholder, in cash. Any shareholder who purchases shares of the Portfolio
prior to the close of business on the record date for a dividend or distribution
will be entitled to receive such dividend or distribution. Dividends and
distributions (whether received in shares or in cash) are treated either as
ordinary income or long-term capital gain for federal income tax purposes.
Between the record date and the cash payment date, the Portfolio retains the use
and benefits of such monies as would be paid as cash dividends.
Each Portfolio will distribute all of its net investment income and
net realized capital gains, if any, annually in December or January.
If a cash payment is requested with respect to the Portfolio, a check
will be mailed to the shareholder. Unless otherwise instructed, the Transfer
Agent will mail checks or confirmations to the shareholder's address of record.
The federal income tax laws impose a four percent (4%) nondeductible
excise tax on each regulated investment company with respect to the amount, if
any, by which such company does not meet distribution requirements specified in
the federal income tax laws. The Portfolio intends to comply with the
distribution requirements and thus does not expect to incur the four percent
(4%) nondeductible excise tax, although the imposition of such excise tax may
possibly occur.
Shareholders will have their dividends and/or capital gain
distributions reinvested in additional shares of the applicable Portfolio(s)
unless they elect in writing to receive such distributions in cash.
Shareholders whose shares are held in the name of a broker or nominee should
contact such broker or nominee to determine whether they want dividends
reinvested or distributed.
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The automatic reinvestment of dividends and distributions will not
relieve participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions. (See "Taxes" following.)
In the case of foreign participants whose dividends are subject to
U.S. income tax withholding and in the case of any participants subject to 31%
federal backup withholding, the Transfer Agent will reinvest dividends after
deduction of the amount required to be withheld.
Experience may indicate that changes in the automatic reinvestment of
dividends are desirable. Accordingly, the Fund reserves the right to amend or
terminate this provision as applied to any dividend or distribution paid
subsequent to written notice of the change sent to shareholders at least 90 days
before the record date for such dividend or distribution.
TAXES
FEDERAL TAXES
Each Portfolio of the Fund is a separate taxpayer and intends to meet
the requirements of Subchapter M of the Internal Revenue Code of 1986 (relating
to regulated investment companies) with respect to diversification of assets,
sources of income, and distributions of taxable income and will elect to be
taxed as a regulated investment company for federal income tax purposes.
However, the Code contains a number of complex tests relating to
qualification which a Portfolio might not meet in any particular year. For
example, if a Portfolio derives 30% or more of its gross income from the sale of
securities held for less than three months, it may fail to qualify. If a
Portfolio did not so qualify, it would be treated for tax purposes as an
ordinary corporation and receive no tax deduction for payments made to
shareholders.
Because each Portfolio of the Fund intends to distribute all of its
net investment income and net realized capital gains at least annually, it is
not expected that any Portfolio of the Fund will be required to pay federal
income tax for any year throughout which it was a regulated investment company
nor, for this reason, is it expected that any Portfolio will be required to pay
the 4% federal excise tax imposed on regulated investment companies that fail to
satisfy certain minimum distribution requirements. However, the possibility of
federal or state income tax and/or imposition of the federal excise tax does
exist.
If a Portfolio pays a dividend in January of any year which was
declared in the last three months of the previous year and was payable to
shareholders of record on a specified date in such a month, the dividend will be
treated as having been paid and received in the previous year.
Dividends (other than capital gains dividends) will be taxable to
shareholders as ordinary income, whether received in shares or cash and will, in
the case of corporate
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<PAGE>
shareholders, generally qualify for the dividends-received deduction to the
extent paid out of qualifying dividends received by the Portfolio.
Capital gains dividends will ordinarily be taxable to shareholders as
long-term capital gain, regardless of how long they have held their shares. A
dividend is a capital gains dividend if it is so designated by the Portfolio and
is paid out of the Portfolio's net capital gain (that is, the excess of the
Portfolio's net long-term capital gain over its net short-term capital loss).
Any dividends paid shortly after a purchase by an investor may have
the effect of reducing the per share net asset value of the investor's shares by
the per share amount of dividends. Furthermore, such dividends, although in
effect a return of capital, are subject to federal income taxes. Therefore,
prior to purchasing shares of the Fund, the investor should carefully consider
the impact of dividends, including capital gains distributions, which are
expected to be or have been announced.
If the Fund redeems some or all of the shares held by any shareholder,
the transaction will generally be treated as a sale or exchange unless the
redemption fails to substantially reduce the shareholder's percentage ownership
interest in the Fund (determined for this purpose using certain specific rules
of constructive ownership). If a redemption of shares is not treated as a sale
or exchange, the amount paid for the shares will be treated as a dividend.
If a redemption is treated as a sale or exchange, the shareholder will
generally recognize gain or loss measured by the difference between the
redemption price and the basis of the shares. This gain or loss will generally
be treated as capital gain (long-term or short-term, depending upon the holding
period for the redeemed shares).
Shareholders will be subject to information reporting with respect to
dividends and redemptions, and may be subject to backup withholding with respect
to dividends at the rate of 31% unless (a) they are corporations or come within
other exempt categories or (b) they provide correct taxpayer identification
numbers, certify as to no loss of exemption from backup withholding, and
otherwise comply with applicable requirements of the law relating to backup
withholding. Any amounts paid as backup withholding will be creditable against
the federal income tax liabilities of the affected shareholders.
The Fund may pay taxes to foreign countries with respect to dividends
or interest it receives from foreign issuers or from domestic issuers that
derive a substantial amount of their revenues in foreign countries, or such
taxes may be withheld at the source by such issuers. The Fund will generally be
entitled to deduct such taxes in computing its taxable income.
STATE AND LOCAL TAXES
The Fund may be subject to state or local taxation in jurisdictions in
which it may be deemed to be doing business. Taxable income of the Fund and its
shareholders for state and
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local purposes may be different from taxable income calculated for federal
income tax purposes.
Each prospective investor is advised to consult his or her tax adviser
for advice as to the federal, state, and local taxation which may be applicable
to such investor in connection with an investment in the Fund.
PURCHASE AND PRICING OF SHARES
PURCHASE OF SHARES
The Fund's various portfolio shares are sold to the general public on
a continuous basis through the Distributor, the Transfer Agent and the
Distributor's network of broker-dealers.
PURCHASE BY MAIL
Investments in the Fund can be made directly to the Distributor or
through selected securities dealers, who have the responsibility to transmit
orders promptly and may charge a processing fee, or through the transfer agent
Rushmore Trust and Savings, FSB.
TO INVEST BY MAIL: Fill out an application designating which Portfolio you are
investing in and make a check payable to "The Navellier Performance Funds."
Mail the check along with the application to:
The Navellier Performance Funds
c/o Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
Purchases by check will normally be credited to an account within one
business day after receipt of payment. Foreign checks will not be accepted. Be
certain to specify which Portfolio or Portfolios you are investing in.
Purchase orders which do not specify the Portfolio in which an
investment is to be made will be invested in the Navellier Aggressive Growth
Portfolio. (See "Purchase and Pricing of Shares - General Purchasing
Information".) Net asset value per share is calculated once daily as of 4 p.m.
E.S.T. on each business day. (See "Purchase and Pricing of Shares - Valuation
of Shares".)
THE NAVELLIER PERFORMANCE FUNDS PORTFOLIOS
The shares of each Portfolio are sold at their net asset value per
share next determined after an order in proper form (completely filled out
application form and additional information or documentation) is received by the
Transfer Agent.
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If an order for shares of a Portfolio is received by the Transfer
Agent by 4 p.m. on any business day, such shares will be purchased at the net
asset value determined as of 4 p.m. on that day. Otherwise, such shares will be
purchased at the net asset value determined as of 4 p.m on the next day.
However, orders received by the Transfer Agent from the Distributor or from
dealers or brokers after the net asset value is determined that day will receive
such net asset value price if the orders were received by the Distributor or
broker or dealer from its customer prior to such determination and were
transmitted to and received by the Transfer Agent prior to its close of business
on that day (normally 4 p.m. E.S.T.). Shares are entitled to receive any
declared dividends on the day following the date of purchase.
PURCHASES THROUGH SELECTED DEALERS
Shares purchased through Selected Dealers will be effected at the net
asset value next determined after the Selected Dealer receives the purchase
order, provided that the Selected Dealer transmits the order to the Transfer
Agent and the Transfer Agent accepts the order by 4:00 p.m. E.S.T. on the day of
determination. See "Valuation of Shares". If an investor's order is not
transmitted and accepted by 4:00 p.m. E.S.T., the investor must settle his or
her entitlement to that day's net asset value with the Selected Dealer.
Certain selected Dealers may effect transactions in shares of the
Portfolios through the National Securities Clearing Corporation's Fund/SERV
system.
Purchases of shares through Selected Dealers not utilizing the
National Securities Clearing Corporation's Fund/SERV system will be effected
when received in proper form by the Transfer Agent, as described above, in the
same manner and subject to the same terms and conditions as are applicable to
shares purchased directly through the Transfer Agent. There is no sales load
charged to the investor on purchases of the Fund's Portfolios (see "The
Navellier Performance Funds" following), whether purchased through a Selected
Dealer or directly through the Transfer Agent; there is however an annual Rule
12b-1 fee.
Shareholders who wish to transfer Fund shares from one broker-dealer
to another should contact the Fund at (800) ________.
TO INVEST BY BANK WIRE: Request a wire transfer to:
Rushmore Federal Savings Bank
Bethesda, MD
Routing Number ____ _____
For Account of The Navellier Performance Funds
Account Number ____ _____
AFTER INSTRUCTING YOUR BANK TO TRANSFER MONEY BY WIRE, YOU MUST
TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510 BETWEEN 8:30 A.M. AND
4:00 P.M. E.S.T. AND TELL US THE AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK
SENDING THE TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. IF THE
PURCHASE
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IS CANCELLED BECAUSE YOUR WIRE TRANSFER IS NOT RECEIVED, YOU MAY BE LIABLE FOR
ANY LOSS THE FUND MAY INCUR.
Such wire should identify the name of the Portfolio, the account
number, the order number (if available), and your name.
TO INVEST BY AUTOMATIC MONTHLY INVESTMENT PLAN:
Shareholders may make automatic monthly purchases of the Fund's shares
by executing an automatic monthly withdrawal application authorizing his/her/its
bank to transfer money from his/her/its checking account to the Transfer Agent
for the automatic monthly purchase of shares of the Fund for the shareholder.
There is no charge by the Fund for this automatic monthly investment plan and
the shareholder can discontinue the service at any time.
GENERAL PURCHASING INFORMATION
The Fund has established a minimum initial investment of $2,000 ($500
in the case of IRA and other retirement plans or qualifying group plans) and
$100 for subsequent investments in any Portfolio. Orders for shares may be made
by mail by completing the Account Application included with this Prospectus and
mailing the completed application and the payment for shares to the Transfer
Agent. Documentation in addition to the information required by the Account
Application may be required when deemed appropriate by the Fund and/or the
Transfer Agent and the Account Application will not be deemed complete until
such additional information has been received.
VALUATION OF SHARES
The net asset value of the shares of each Portfolio of the Fund are
determined once daily as of 4 p.m E.S.T., on days when the New York Stock
Exchange is open for trading. In the event that the New York Stock Exchange or
the national securities exchanges on which stocks are traded adopt different
trading hours on either a permanent or temporary basis, the Trustees of the Fund
will reconsider the time at which net asset value is to be computed. The net
asset value is determined by adding the values of all securities and other
assets of the Portfolio, subtracting liabilities, and dividing by the number of
outstanding shares of the Portfolio. The price at which a purchase is effected
is based on the next calculation of net asset value after the order is received.
In determining the value of the assets of each Portfolio, the
securities for which market quotations are readily available are valued at
market value. Debt securities (other than short-term obligations) are normally
valued on the basis of valuations provided by a pricing service when such prices
are believed to reflect the fair value of such securities. All other securities
and assets are valued at their fair value as determined in good faith by the
Trustees, although the actual calculations may be made by persons acting
pursuant to the direction of the Trustees.
21
<PAGE>
REDEMPTION OF SHARES
GENERAL
A shareholder may redeem shares of each Portfolio at the net asset
value next determined after receipt of a notice of redemption in accordance with
the procedures set forth below and compliance with the further redemption
information and/or additional documentation requirements described in this
Section. As used in this Prospectus, the term "business day" refers to those
days on which stock exchanges trading stocks held by the Fund are open for
business. The Fund may change the following procedures at its discretion.
The shareholder will not be credited with dividends on those shares
being redeemed for the day on which the shares are redeemed by the Fund. A
check for the proceeds of redemption will normally be mailed within seven days
of receipt of any redemption request received by the Transfer Agent. If shares
to be redeemed were purchased by check, the Fund may delay transmittal of
redemption proceeds only until such times as it is reasonably assured that good
payment has been collected for the purchase of such shares, which may be up to
15 days from purchase date. Such delays can be avoided by wiring Federal Funds
in effecting share purchases.
If a shareholder wishes to redeem his or her entire shareholdings in a
Portfolio, he or she will receive, in addition to the net asset value of shares,
all declared but unpaid dividends thereon. The net asset value of the shares
may be more or less than a shareholder's cost depending on the market value of
the portfolio securities at the time of the redemption.
REDEMPTION BY MAIL
A shareholder may redeem shares by mail on each day that the New York
Stock Exchange is open by submitting a written redemption request to:
The Navellier Performance Funds
c/o Rushmore Trust and Savings FSB
4922 Fairmont Avenue
Bethesda, MD 20814
The request for redemption should include the name of the Portfolio,
the account name and number, and should be signed by all registered owners of
the shares in the exact names in which they are registered. Each request should
specify the number or dollar amount of shares to be redeemed or that all shares
in the account are to be redeemed.
REDEMPTIONS BY TELEPHONE
If you have indicated on your Account Application that you wish to
establish telephone redemption privileges, you may redeem shares by calling the
Transfer Agent at 1-800-622-1286 by 4:00 p.m. New York time on any day the NYSE
is open for business.
22
<PAGE>
If any account has more than one owner, the Transfer Agent may rely on
the instructions of any one owner. Each Portfolio of the Fund employs
reasonable procedures in an effort to confirm the authenticity of telephone
instructions, which may include giving some form of personal identification
prior to acting on the telephone instructions. If these procedures are not
followed, the Fund and the Transfer Agent may be responsible for any losses
because of unauthorized or fraudulent instructions. By requesting telephone
redemption privileges, you authorize the Transfer Agent to act upon any
telephone instructions it believes to be genuine, (1) to redeem shares from your
account and (2) to mail or wire transfer the redemption proceeds. You cannot
redeem shares by telephone until 30 days after you have notified the Transfer
Agent of any change of address.
Telephone redemption is not available for shares held in IRAs. Each
Portfolio may change, modify, or terminate its telephone redemption services at
any time upon 30 days' notice.
FURTHER REDEMPTION INFORMATION
Additional documentation regarding a redemption by any means may be
required when deemed appropriate by the Fund and/or the Transfer Agent, and the
request for such redemption will not be considered to have been received in
proper form until such additional documentation has been received. An investor
should contact the Fund or the Transfer Agent to inquire what, if any,
additional documentation may be required.
The Fund reserves the right to modify any of the methods of redemption
or to charge a fee for providing these services upon 30 days' written notice to
shareholders.
Due to the high cost of maintaining accounts of less than $2,000 ($500
for IRA or other qualifying plan accounts), the Fund reserves the right to
redeem shares involuntarily in any such account at their then current net asset
value. Shareholders will first be notified and allowed 30 days to make
additional share purchases to bring their accounts to more than $2,000 ($500 for
IRA or other qualifying plan accounts). An account will not be redeemed
involuntarily if the balance falls below $2,000 ($500 for IRA or other
qualifying plan accounts) by virtue of fluctuations in net asset value rather
than through investor redemptions.
Under certain circumstances, the right of redemption may be suspended
or the redemption may be satisfied by distribution of portfolio securities
rather than cash. Information as to those matters is set forth in the Statement
of Additional Information.
Investors may redeem their shares and instruct the Fund or Transfer
Agent, in writing or by telephone, to either deposit the redemption proceeds in
the money market mutual fund - Fund for Government Investors, Inc. - a regulated
investment company custodied by Rushmore Trust and Savings, FSB, pending further
instructions as to the investor's desire to subsequently reinvest in the Fund or
the investor may direct some other disposition of said redemption proceeds.
OPTION TO MAKE SYSTEMATIC WITHDRAWALS
23
<PAGE>
The owner of $25,000 or more worth of the shares of the Portfolio may
provide for the payment from his/her account of any requested dollar amount (but
not less than $1,000) to him/her or his/her designated payee monthly, quarterly,
or annually. Shares will be redeemed on the last business day of each month.
Unless otherwise instructed, the Transfer Agent will mail checks to the
shareholder at his/her address of record. A sufficient number of shares will be
redeemed to make the designated payment. This redemption option is not
available with respect to shares for which certificates are held by a
shareholder.
CERTAIN SERVICES PROVIDED TO SHAREHOLDERS
STATEMENTS OF ACCOUNT
Statements of Account for each Portfolio will be sent to each
shareholder at least quarterly.
DIVIDEND ELECTION
A shareholder may elect to receive dividends in shares or in cash. If
no election is made, dividends will automatically be credited to a shareholder's
account in additional shares of the Portfolio to which such dividend relates.
EXCHANGE PRIVILEGES
Shares of the Navellier Aggressive Growth Portfolio and other
subsequently opened Portfolios in this Fund may be exchanged for one another at
net asset value. Shares of any Portfolio of this Fund may be exchanged for
shares of any Portfolio of The Navellier Series Fund at net asset value subject
to the exchange privilege requirements of the Portfolio being transferred out of
and the exchange privilege requirements of the Portfolio being transferred into.
Exchanges among portfolios of the Fund and/or portfolios of The Navellier Series
Fund may be made only in those states where such exchanges may legally be made.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the Portfolio into which they are being exchanged.
Exchanges are made based on the net asset value next determined of the shares
involved in the exchange. Only one exchange in any 30-day period is permitted.
The Fund reserves the right to restrict the frequency or otherwise modify,
condition, terminate, or impose charges upon the exchange, upon 60 days' prior
written notice to shareholders. Exchanges between Portfolios will be subject to
a $5 exchange fee after five (5) exchanges per year. There is a limit of ten
(10) exchanges per year. Exchanges will be effected by the redemption of shares
of the Portfolio held and the purchase of shares of the other Portfolio. For
federal income tax purposes, any such exchange constitutes a sale upon which a
gain or loss, if any, may be realized, depending upon whether the value of the
shares being exchanged is more or less than the shareholder's adjusted cost
basis. For this purpose, however, a shareholder's cost basis may not include
the sales charge, if any, if the exchange is effectuated within 90 days of the
acquisition of the shares. (See "Taxes".) Shareholders wishing to make an
exchange should contact the Transfer Agent. Exchange requests in the form
required by the Transfer Agent and received by the Transfer Agent prior to 4
p.m. E.S.T. will be effected on the next business day after such request is
received.
24
<PAGE>
ADDITIONAL INFORMATION
The Statement of Additional Information, available upon request,
without charge from the Fund, provides a further discussion of certain sections
of the Prospectus and other information which may be of interest to certain
investors. This Prospectus and the Statement of Additional Information do not
contain all the information included in the Registration Statement filed with
the Securities and Exchange Commission with respect to the securities being
sold, certain portions of which have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The Registration
Statement, including the exhibits filed therewith, may be examined at the office
of the Securities and Exchange Commission in Washington, D.C.
Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and, in
each instance, reference is made to the Statement of Additional Information and
the copy of such contract or other document filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, each such
statement being qualified in all respects by such reference.
ASSENT TO TRUST INSTRUMENT
Every Shareholder, by virtue of having purchased a Share or Interest
shall become a Shareholder and shall be held to have expressly assented and
agreed to be bound by the terms hereof.
25
<PAGE>
Investment Adviser
Navellier Management, Inc.
920 Incline Way, Building #1
Incline Village, NV 89450
(800) 887-8671
Distributor THE NAVELLIER PERFORMANCE FUNDS
Navellier Securities Corp.
920 Incline Way, Building #1
Incline Village, NV 89450
(800) 887-8671
Independent Auditors
Deloitte & Touche, LLP
1900 M Street
Washington, D.C. 20036
(202) 955-6530
Transfer Agent and Custodian
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 622-1386
Counsel
Samuel Kornhauser
Law Offices of Samuel Kornhauser
155 Jackson Street, Suite 1807
San Francisco, CA 94111
(415) 981-6281
Sales Information
Navellier Securities Corp.
920 Incline Way, Building #1
Incline Village, NV 89450
(800) 887-8671
Shareholder Inquiries
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 622-1386 January 1, 1996
26
<PAGE>
NEW ACCOUNT APPLICATION FORM
THE NAVELLIER PERFORMANCE FUNDS
Mail completed forms and all
checks to:
Navellier Securities Corp.
c/o Rushmore
Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
FOR APPLICATION ASSISTANCE OR RETIREMENT PLAN INFORMATION CALL 1-800-887-8671
Circle the Social Security
Number to be used for tax
purposes. If no number is
circled, the first number
provided will be used.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
1. REGISTRATION--Please Print or Type
[ ] Individual 1.__________________________________________________________________________ _____________________________
Use line 1 First Name Initial Last Name Social Security No.
and, if any Occupation:______________________ Date of Birth:___________________
Employer's Name:_________________ Address:___________________________________________________________
[ ] Joint Registrant 2.__________________________________________________________________________ _____________________________
Use line 2 Right of survivorship presumed, unless tenancy in common is indicated Social Security No.
or 3.__________________________________________________________________________ As Custodian For
Custodian Name
[ ] Gifts to Minors 4.__________________________________________________________________________ under the
Use lines 3, 4, Minor's Name
& 5
or 5._________________________ Uniform Gifts to Minors Act. ________________________
State Minor's Soc. Sec. No.
[ ] Corporations 6._________________________________________________________________________________________________________
Partnerships, Name of Corporation or other Entity. If a Trust, include date of trusts instrument
Trusts & Others
Use lines 6 & 7
7.__________________________________________________________________________ _____________________________
Taxpayer Ident. No.
___________________________________________________________________________________________________________________________________
2. MAILING ADDRESS--Please Print or Type
( )
____________________________________________________________________________________________ ________________________________
Street Address Apt.#/Bldg. (Area Code) Home Telephone No.
( )
____________________________________________________________________________________________ ________________________________
City State Zip (Area Code) Home Telephone No.
___________________________________________________________________________________________________________________________________
3. PORTFOLIO SELECTION--Minimum initial investment: $10,000 per Portfolio
$ ________ Navellier Aggressive Growth Portfolio $500 for IRA's, retirement other group plans)
Total $_____________
___________________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
4. INVESTMENT METHOD
[ ] By Check $_______________ (Please make check payable to: The Navellier Performance Funds)
[ ] By Wire $_______________ (Please call 1-800-621-7874 for wiring instructions) Account No. _______________
- -----------------------------------------------------------------------------------------------------------------------------------
5. SYSTEMATIC WITHDRAWAL PLAN [ ] Yes [ ] No
A Withdrawal Plan is available provided that the value of the underlying shares being purchased is $25,000 or more.
(a) The amount of each payment shall be $ ___________ ($1,000 minimum).
(b) Payments are to be: ____ Monthly ____ Quarterly _____ Annually
(c) Payments are to commence on or around the 2nd business day of _____________ (Month, Year). Give the following
information if checks are to
be mailed to you at another
address or paid to someone
other than the registered
owner(s) as shown above:
Name: ________________________________________________________________
Address: ________________________________________________________________
________________________________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
6. DISTRIBUTION OPTION
See Prospectus for details. If no box is checked, all distributions will be reinvested.
All distributions will be reinvested if a withdrawal plan is elected.
CHECK ONE BOX: [ ] All dividends and capital gains reinvested.
[ ] Pay income dividends in cash, reinvest capital gains distributions.
[ ] Reinvest income dividends; pay capital gains distributions in cash.
[ ] Pay income dividends and capital gains distributions in cash.
- -----------------------------------------------------------------------------------------------------------------------------------
7. SHAREHOLDER PRIVILEGES
These privileges are subject to the terms set forth in the Prospectus
Telephone/Expedited Redemption
[ ] Yes. I would like to be able to redeem shares by telephone.
[ ] Deposit redemption proceeds in the money market mutual fund, Fund for Government
Investors, Inc., custodied by Rushmore Trust and Savings, FSB
[ ] Wire redemption proceeds to:
_____________________________
Name of Bank
_____________________________
Type of Account
_____________________________
Account Number
[ ] Mail a check to my address indicated above.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
8. SYSTEMATIC WITHDRAWAL PLAN [ ] Yes [ ] No A Systematic Withdrawal Plan is available for accounts with an
underlying share value of $25,000 or more. If this plan is elected, all distributions will be automatically reinvested.
Minimum withdrawal is $1,000.
Amount of payment $_________________
Payments made: [ ] Monthly [ ] Quarterly [ ] Annually
Payments to commence the 2nd business day of __________________________
Month, Year
- -----------------------------------------------------------------------------------------------------------------------------------
9. SERVICE AGENT IF SHARES ARE BEING PURCHASED THROUGH A SERVICE AGENT, THEN THE NAME OF YOUR SERVICE AGENT MUST APPEAR IN THIS
SECTION OR YOUR APPLICATION CANNOT BE PROCESSED. THIS SECTION SHOULD BE COMPLETED BY YOUR SERVICE AGENT.
- -----------------------------------------------------------------------------------------------------------------------------------
Firm Name
- -----------------------------------------------------------------------------------------------------------------------------------
Address City State Zip (Area Code) Telephone No.
- -----------------------------------------------------------------------------------------------------------------------------------
Name of Representative (Salesperson) and number if any Dealer Code Branch Code
- -----------------------------------------------------------------------------------------------------------------------------------
Authorized Signature and Title Date
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11. INVESTOR FINANCIAL AND INVESTMENT INFORMATION
Annual Income $__________; Net Worth $____________; Investment Objective,
Growth.
12. SIGNATURES & CERTIFICATION
I/We authorize Rushmore Trust and Savings, FSB, as agent for The Navellier
Performance Funds, to honor any requests made in accordance with the terms of
this application, and I/we further affirm that, subject to any limitations
imposed by applicable law, neither Rushmore Trust and Savings, FSB, nor The
Navellier Performance Funds shall be held liable by me/us for any loss,
liability, cost, or expense for acting in accordance with this application, or
any section thereof. I/We understand that all of the shareholder options
described in this application are subject to the terms set forth in the
Prospectus.
I/WE CERTIFY THAT WE HAVE FULL RIGHT, POWER, AUTHORITY, AND LEGAL CAPACITY TO
PURCHASE AND REDEEM SHARES AND AFFIRM THAT I/WE HAVE RECEIVED AND READ THE
PROSPECTUS, AGREE TO ITS TERMS, AND HAVE NOT RELIED ON OR MADE MY/OUR DECISION
TO INVEST IN THE NAVELLIER PERFORMANCE FUNDS ON ANY WRITTEN OR ORAL INFORMATION
OTHER THAN THE WRITTEN INFORMATION CONTAINED IN THE PROSPECTUS, REGISTRATION
STATEMENT AND STATEMENT OF ADDITIONAL INFORMATION. Under penalties of perjury,
I/we certify (i) that the number shown on this form is my/our correct Social
Security Number or Taxpayer Identification Number and (ii) that (1) I/we are not
subject to backup withholding either because I/we have not been notified by the
Internal Revenue Service that I/we are subject to backup withholding as a result
of a failure to report all interest or dividends, or (2) the Internal Revenue
Service has notified me/us that I/we are no longer subject to backup
withholding. If you have been notified by the Internal Revenue Service that you
are currently subject to backup withholding, strike out phrase (2) above.
<TABLE>
<S> <C>
- - Confirmation of Account - Subsequent payments - A new
Establishment - Within a few days application need not be submitted
after the Application is received by with additional payments to an
Rushmore Trust and Savings, FSB, a existing account if a current
confirmation statement(s) showing Application is on file with Rushmore
the account number(s), amount Trust and Savings, FSB. Subsequent
received, shares purchased and price purchases should be identified by
paid per share should be received by account number and account
the registered shareholder for each registration.
Series selected.
X_______________________________________ ________________________________________
Signature (exactly as it appears in Signature (exactly as it appears in
Section 1) Date Section 1) Date
</TABLE>
<PAGE>
PART B
THE NAVELLIER PERFORMANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
DATED JANUARY 1, 1996
This Statement of Additional Information, which is not a prospectus,
should be read in conjunction with the Prospectus of The Navellier Performance
Funds (the "Fund"), dated January 1, 1996, a copy of which Prospectus may be
obtained, without charge, by contacting the Fund, at its mailing address c/o
Navellier Securities, Corp., Call Box 10012, Incline Village, NV 89450; Tel: 1-
800-887-8671.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL INFORMATION AND HISTORY....................... 1
INVESTMENT OBJECTIVES AND POLICIES.................... 1
TRUSTEES AND OFFICERS OF THE FUND..................... 5
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES... 7
THE INVESTMENT ADVISER, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT.......................... 8
BROKERAGE ALLOCATION AND OTHER PRACTICES.............. 11
CAPITAL STOCK AND OTHER SECURITIES.................... 13
PURCHASE, REDEMPTION, AND PRICING OF SHARES........... 13
TAXES................................................. 14
UNDERWRITERS.......................................... 17
CALCULATION OF PERFORMANCE DATA....................... 17
REPORT OF INDEPENDENT ACCOUNTANTS, AND
FINANCIAL STATEMENT................................... 19
APPENDIX.............................................. 20
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
The Fund is a business trust company (organized under the laws of the
State of Delaware on October 17, 1995) and has no prior history of operations.
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT POLICIES. The investment objectives and policies of each
-------------------
Portfolio are described in the "Investment Objectives and Policies" section of
the Prospectus. The following general policies supplement the information
contained in that section of the Prospectus.
CERTIFICATES OF DEPOSIT. Certificates of deposit are generally short-
-----------------------
term, interest-bearing, negotiable certificates issued by banks or savings and
loan associations against funds deposited in the issuing institution.
TIME DEPOSITS. Time deposits are deposits in a bank or other financial
-------------
institution for a specified period of time at a fixed interest rate for which a
negotiable certificate is not received.
BANKER'S ACCEPTANCES. A banker's acceptance is a time draft drawn on a
--------------------
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer, or storage of
goods). The borrower, as well as the bank, is liable for payment, and the bank
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
secondary markets prior to maturity.
COMMERCIAL PAPER. Commercial paper refers to short-term, unsecured
----------------
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at the
time of issuance not exceeding nine months.
CORPORATE DEBT SECURITIES. Corporate debt securities with a remaining
-------------------------
maturity of less than one year tend to become liquid and can sometimes be traded
as money market securities.
UNITED STATES GOVERNMENT OBLIGATIONS. Securities issued or guaranteed as
------------------------------------
to principal and interest by the United States government include a variety of
Treasury securities, which differ only in their interest rates, maturities, and
times of issuance. Treasury bills have a maturity of one year or less.
Treasury notes have maturities of one to seven years, and Treasury bonds
generally have a maturity of greater than five years.
Agencies of the United States government which issue or guarantee
obligations include, among others, export-import banks of the United States,
Farmers' Home Administration, Federal Housing Administration, Government
National Mortgage Association, Maritime Administration, Small Business
Administration, the Defense Security Assistance Agency of the Department of
Defense, and the Tennessee Valley Authority. Obligations of
1
<PAGE>
instrumentalities of the United States government include securities issued or
guaranteed by, among others, the Federal National Mortgage Associates, Federal
Intermediate Credit Banks, Banks for Cooperatives, and the United States Postal
Service. Some of the securities are supported by the full faith and credit of
the United States government; others are supported by the right of the issuer to
borrow from the Treasury, while still others are supported only by the credit of
the instrumentality.
INVESTMENT RESTRICTIONS. The Fund's fundamental policies as they affect
-----------------------
a Portfolio cannot be changed without the approval of a vote of a majority of
the outstanding securities of such Portfolio. A proposed change in fundamental
policy or investment objective will be deemed to have been effectively acted
upon with respect to any Portfolio if a majority of the outstanding voting
securities of that Portfolio votes for the matter. Such a majority is defined
as the lesser of (a) 67% or more of the voting shares of the Fund present at a
meeting of shareholders of the Portfolio, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy or (b)
more than 50% of the outstanding shares of the Portfolio. For purposes of the
following restrictions and those contained in the Prospectus: (i) all
percentage limitations apply immediately after a purchase or initial investment;
and (ii) any subsequent change in any applicable percentage resulting from
market fluctuations or other changes in the amount of total assets does not
require elimination of any security from the Portfolio.
The following investment restrictions are fundamental policies of the
Fund with respect to all Portfolios (unless otherwise specified below) and may
not be changed except as described above. The Fund may not:
1. Purchase any securities or other property on margin; provided,
--------
however, that the Fund may obtain short-term credit as may be necessary for the
- -------
clearance of purchases and sales of securities.
2. Make cash loans, except that the Fund may purchase bonds, notes,
debentures, or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not.
3. Make securities loans, except that the Fund may make loans of the
portfolio securities of any Portfolio, provided that the market value of the
securities subject to any such loans does not exceed 33-1/3% of the value of the
total assets (taken at market value) of such Portfolio.
4. Make investments in real estate or commodities or commodity
contracts, including futures contracts, although the Fund may purchase
securities of issuers which deal in real estate or commodities although this is
not a primary objective of the Portfolio.
5. Invest in oil, gas, or other mineral exploration or development
programs, although the Fund may purchase securities of issuers which engage in
whole or in part in such activities.
2
<PAGE>
6. Purchase securities of companies for the purpose of exercising
management or control.
7. Participate in a joint or joint and several trading account in
securities.
8. Issue senior securities or borrow money, except that the Fund may (i)
borrow money only from banks for any Portfolio for temporary or emergency (not
leveraging) purposes, including the meeting of redemption requests, that might
otherwise require the untimely disposition of securities, provided that any such
borrowing does not exceed 10% of the value of the total assets (taken at market
value) of such Portfolio, and (ii) borrow money only from banks for any
Portfolio for investment purposes, provided that (a) after each such borrowing,
when added to any borrowing described in clause (i) of this paragraph, there is
an asset coverage of at least 300% as defined in the Investment Company Act of
1940, and (b) is subject to an agreement by the lender that any recourse is
limited to the assets of that Portfolio with respect to which the borrowing has
been made. No Portfolio may invest in portfolio securities while the amount of
borrowing of the Portfolio exceeds 5% of the total assets of such Portfolio.
9. Pledge, mortgage, or hypothecate the assets of any Portfolio to an
extent greater than 10% of the total assets of such Portfolio to secure
borrowings made pursuant to the provisions of Item 8 above.
10. Purchase for any Portfolio "restricted securities" (as defined in
Rule 144(a)(3) of the Securities Act of 1933), if, as a result of such purchase,
more than 10% of the net assets (taken at market value) of such Portfolio would
then be invested in such securities nor will the Fund invest in illiquid or
unseasoned securities if as a result of such purchase more than 5% of the net
assets of such portfolio would be invested in either illiquid or unseasoned
securities.
11. Invest more than 10% of the Aggressive Growth Portfolio's assets in
the stock of any single issuer or more than 25% of the Aggressive Growth
Portfolio's assets in a single industry.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values of portfolio securities or amount of net assets shall
not be considered a violation of the restrictions, except as to the 5%, 10% and
300% percentage restrictions on borrowing specified in Restriction Number 8
above.
PORTFOLIO TURNOVER. Each Portfolio has a different expected annual rate
------------------
of portfolio turnover which is calculated by dividing the lesser of purchases or
sales of portfolio securities during the fiscal year by the monthly average of
the value of the Portfolio's securities (excluding from the computation all
securities, including options, with maturities at the time of acquisition of one
year or less). A high rate of portfolio turnover generally involves
correspondingly greater expenses to the Portfolio, including brokerage
commission expenses, dealer mark-ups, and other transaction costs on the sale of
securities, which must be borne directly by the Portfolio. Turnover rates may
vary greatly from year to year as
3
<PAGE>
well as within a particular year and may also be affected by cash requirements
for redemptions of each Portfolio's shares and by requirements which enable the
Fund to receive certain favorable tax treatment. Because the Aggressive Growth
Portfolio is a new fund portfolio with no operating history, no actual turnover
rate can be given at this time. The Fund will attempt to limit the annual
portfolio turnover rate to 300% or less, however this rate may be exceeded if in
the Investment Adviser's discretion securities are or should be sold or
purchased in order to attempt to increase the Portfolio's performance. In
Wisconsin an annual portfolio turnover rate of 300% or more is considered a
speculative activity and under Wisconsin statutes could involve relatively
greater risks or costs to the Fund.
TRUSTEES AND OFFICERS OF THE FUND
The following information, as of October 17, 1995, is provided with
respect to each director and officer of the Fund:
<TABLE>
<CAPTION>
POSITION(S) HELD WITH REGISTRANT PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS AND ITS AFFILIATES PAST FIVE YEARS
- ---------------- -------------------------------- ------------------------------
<S> <C> <C>
Louis Navellier/1/ Trustee, President and Treasurer Mr. Navellier is and has been the
920 Incline Way of The Navellier Series Fund. CEO and President of Navellier
Building 1 Mr. Navellier is also the CEO, & Associates Inc., an investment
Incline Village President, Secretary, and management company since 1988;
NV 89450 Treasurer of Navellier Manage- CEO and President of Navellier
ment, Inc., a Delaware corpora- Management, Inc., an investment
tion which is the Investment management company since May
Adviser to the Fund. Mr. 10, 1993; CEO and President of
Navellier is also CEO, President, Navellier International Manage-
Secretary, and Treasurer of ment, Inc., an investment manage-
Navellier Securities Corp., the ment company, since May 10,
principal underwriter of the 1993; CEO and President of
Fund's shares. Navellier Securities Corp. since
May 10, 1993; CEO and President
of Navellier Fund Management,
Inc., an investment management
company, since November 30,
1995; and has been publisher and
editor of MPT Review from August
1987 to the present and was pub-
lisher and editor of the predecessor
investment advisory newsletter OTC
Insight, which he began in 1980
and wrote through July 1987.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) HELD WITH REGISTRANT PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS AND ITS AFFILIATES PAST FIVE YEARS
- ---------------- -------------------------------- ------------------------------
<S> <C> <C>
Arnold Langsen/2/ None (however, Professor Professor Langsen was Professor
The Langsen Group, Langsen is the President and a Emeritus of Financial Economics,
Inc. of California shareholder of The Langsen School of Business, California State
637 Silver Lake Dr. Group, Inc. of California, which University at Hayward (1973-1992);
Danville, CA 94526 corporation provides consulting Visiting Professor, Financial
services to Navellier & Associates Economics, University of California
Inc.) at Berkeley (1984-1987).
Barry Sander None Currently the President and CEO of
695 Mistletoe Rd., #2 Ursa Major Inc., a stencil manufac-
Ashland, OR 97520 turing firm and has been for the
past eight years.
Joel Rossman None Currently President and CEO of
Personal Stamp Personal Stamp Exchange, Inc., a
Exchange, Inc. manufacturer, designer and distri-
345 S. McDowell butor of rubber stamp products. He
Blvd., Suite 324 has been President and CEO of
Petaluma, CA 94954 Personal Stamp Exchange for the
past 10 years.
Jacques Delacroix None Professor of Business Administra-
- ------------------------ tion, Leavy School of Business,
University of Santa Santa Clara University (1983-
Clara present).
- ------------------------
Santa Clara, CA
- ------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
/1/ This person is an interested person affiliated with the Investment Advisor.
/2/ This person, although technically not an interested person affiliated with
the Investment Advisor, does own a company which provides consulting services to
Navellier & Associates Inc., a company owned by Louis Navellier.
OFFICERS
The officers of the Fund are affiliated with the Investment Adviser and
receive no salary or fee from the Fund. The Fund's disinterested Trustees are
each compensated by the Fund with an annual fee, payable quarterly (calculated
at an annualized rate), of $7,500. The Trustees' fees may be adjusted according
to increased responsibilities if the Fund's assets exceed one billion dollars.
In addition, each disinterested Trustee receives reimbursement for actual
expenses of attendance at Board of Trustees meetings.
The Fund does not expect, in its current fiscal year, to pay aggregate
remuneration in excess of $60,000 for services in all capacities to any (a)
Trustee, (b) officer, (c) affiliated person of the Fund (other than the
Investment Adviser), (d) affiliated person of an affiliate or principal
underwriter of the Fund, or (e) all Trustees and officers of the Fund as a
group.
The Board of Trustees is permitted by the Fund's By-Laws to appoint an
advisory committee which shall be composed of persons who do not serve the Fund
in any other capacity and which shall have no power to dictate corporate
operations or to determine the investments of the Fund. The Fund currently has
no advisory committee.
5
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On October 17, 1995, in order to fulfill the requirements of Section
14(a)(1) of the Investment Company Act of 1940, one hundred percent (100%) of
the issued and outstanding shares of the only existing Portfolio of the Fund was
purchased by Louis Navellier under a subscription agreement dated October 17,
1995. Such subscription for acquisition was made for an aggregate of $100,000
allocated 100% for the Navellier Aggressive Growth Portfolio (to purchase 10,000
shares).
THE INVESTMENT ADVISER, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT
(A) THE INVESTMENT ADVISER
----------------------
The offices of the Investment Adviser (Navellier Management, Inc.) are
located at 920 Incline Way, Building 1, Incline Village, Nevada 89450. The
Investment Adviser began operation in May 1993 and only advises this Fund and
The Navellier Series Fund.
(i) The following individuals own the enumerated shares of
outstanding stock of the Investment Adviser and, as a result, maintain
control over the Investment Adviser:
Shares of Outstanding Stock Percentage of
Name of the Investment Adviser Outstanding Shares
- ---- --------------------------- ------------------
Louis G. Navellier 1,000 100%
(ii) The following individuals are affiliated with the Fund,
the Investment Adviser, and the Distributor in the following capacities:
Name Position
- ---- --------
Louis G. Navellier Trustee, President, and Treasurer of The Navellier
Series Fund; Director, CEO, President, Secretary, and
Treasurer of Navellier Management, Inc.,; Director,
President, CEO, Secretary, and Treasurer of Navellier
Securities Corp.
Alan Alpers Trustee and Secretary of The Navellier Series Fund,
Portfolio Manager of the Aggressive Growth Fund
Portfolio and the Navellier Aggressive Small Cap
Equity Portfolio of the Navellier Series Fund.
(iii) The management fee payable to the Investment Adviser
under the terms of the Investment Advisory Agreement (the "Advisory
Agreement") between the Investment Adviser and the Fund is payable
monthly and is based upon 1.25% of each Portfolio's average daily net
assets. The Investment Adviser has the right, but
6
<PAGE>
not the obligation, to waive any portion or all of its management fee,
from time to time.
Expenses not expressly assumed by the Investment Adviser under
the Advisory Agreement are paid by the Fund. The Advisory Agreement
lists examples of expenses paid by the Fund for the account of the
applicable Portfolio, the major categories of which relate to taxes, fees
to Trustees, legal, accounting, and audit expenses, custodian and
transfer agent expenses, certain printing and registration costs, and
non-recurring expenses, including litigation.
In the event that the annual operating expenses of any
Portfolio, including amounts payable to the Investment Adviser, paid or
payable by such Portfolio for any fiscal year, exceed the expense
limitations applicable to the Portfolio imposed by state securities laws
or regulations thereunder, as such limitations may be adjusted from time
to time, the Investment Adviser shall reduce its management fee to the
extent of such excess and, if required, pursuant to any such laws or
regulations (unless otherwise waived), will reimburse the applicable
Portfolio for annual operating expenses in excess of any such expense
limitation. Presently, California has the most restrictive state expense
limitations applicable to the Fund. Generally, these limitations provide
that the Fund's aggregate annual expenses shall not normally exceed 2-
1/2% of the first $30 million of average net assets, 2% of the next $70
million of average net assets, and 1-1/2% of the remaining average net
assets of the Fund for any fiscal year.
The Advisory Agreement provides that the Investment Adviser
shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund or its investors except for losses (i)
resulting from the willful misfeasance, bad faith, or gross negligence on
its part, (ii) resulting from reckless disregard by it of its obligations
and duties under the Advisory Agreement, or (iii) a loss for which the
Investment Adviser would not be permitted to be indemnified under the
Federal Securities laws.
(iv) Pursuant to an Administrative Services Agreement, the
Investment Adviser receives an annual fee of .25% of the value of the
assets under management and provides or is responsible for the provision
of certain administrative services to the Fund, including, among others,
the preparation and maintenance of certain books and records required to
be maintained by the Fund under the Investment Company Act of 1940. The
Administrative Services Agreement permits the Investment Adviser to
contract out for all of its duties thereunder; however, in the event of
such contracting, the Investment Adviser remains responsible for the
performance of its obligations under the Administrative Services
Agreement. The Investment Adviser has entered into an agreement with
Rushmore Trust and Savings, FSB, to perform, in addition to custodian and
transfer agent services, some or all administrative services and may
contract in the future with other persons or entities to perform some or
all of its administrative services.
7
<PAGE>
In exchange for its services under the Administrative Services
Agreement, the Fund reimburses the Investment Adviser for certain
expenses incurred by the Investment Adviser in connection therewith. The
agreement also allows Investment Adviser to pay to its delegate part or
all of such fees and reimbursable expense payments incurred by it or its
delegate.
The Investment Adviser Agreement permits the Investment Adviser
to act as investment adviser for any other person, firm, or corporation,
and designates the Investment Adviser as the owner of the name
"Navellier" or any use or derivation of the word Navellier. If the
Investment Adviser shall no longer act as investment adviser to the Fund,
the right of the Fund to use the name "Navellier" as part of its title
may, solely at the Investment Adviser's option, be withdrawn.
The Investment Adviser is advancing the Fund's organizational
expenses which have been estimated to be $150,000. The Fund has agreed
to reimburse the Investment Adviser for the organizational and other
expenses it advances, without interest, on a date or dates to be chosen
at the sole discretion of Navellier Management, Inc., at any time after
(i) the Fund has $20 million in total net assets or is breaking even or
making a profit, whichever first occurs. In the event that the total net
assets of the Fund does not attain the foregoing levels before the end of
five years, the unreimbursed portion of such expenses shall become fully
payable at the end of the fifth year. No Portfolio shall be responsible
for the reimbursement of more than its proportionate share of expenses.
(B) THE DISTRIBUTOR
---------------
The Fund's Distributor is Navellier Securities Corp., a Delaware
Corporation organized and incorporated on May 10, 1993. Navellier Securities
Corp. is registered as a broker-dealer with the Securities Exchange Commission
and National Association of Securities Dealers and the various states in which
this Fund's securities will be offered for sale and will be registered with such
agencies and governments before any Fund shares are sold. The Fund's shares
will be continuously distributed by Navellier Securities Corp. (the
"Distributor") located at 920 Incline Way, Building 1, Incline Village,
Nevada, 89450, pursuant to a Distribution Agreement, dated October 17, 1995. The
Distribution Agreement obligates the Distributor to pay certain expenses in
connection with the offering of the shares of the Fund. The Distributor is
responsible for any payments made to its registered representatives as well as
the cost in excess of the 12b-1 fee (discussed below under "Distribution Plan")
of printing and mailing Prospectuses to potential investors and of any
advertising incurred by it in connection with the distribution of shares of the
Fund.
DISTRIBUTION PLAN. The Fund has adopted a Plan pursuant to Rule 12b-1 under the
1940 Act (the "Plan"), whereby it reimburses Distributor or others in an amount
equal to 0.25% per annum of the average daily net assets of the Aggressive
Growth Portfolio or any subsequent applicable Portfolio of the Fund for expenses
incurred by such parties for the promotion and distribution of the shares of
such Portfolio of the Fund, including, but not limited to, the printing of
prospectuses, statements of additional information and reports used for sales
purposes, expenses (including personnel of Distributor) of preparation of sales
literature and
8
<PAGE>
related expenses, advertisements and other distribution-related
expenses, including a prorated portion of Distributor's overhead expenses
attributable to the distribution of such Portfolio Fund shares. Such payments
are made monthly. In addition, pursuant to the Plan, the Fund may pay
Distributor or others a service fee to reimburse such parties for personal
services provided to shareholders of the Fund and/or the maintenance of
shareholder accounts. The total amount of service fees paid by the Fund and
12b-1 promotional fees shall not exceed 0.25% per year of the average daily net
assets of the Fund Portfolio. Such payments are made pursuant to distribution
and/or service agreements entered into between such service providers and
Distributor or the Fund directly. The maximum amount which the Fund may pay for
the promotion and distribution of shares, including service fees, is 0.25% per
year of the average daily net assets of the applicable Fund Portfolio. Payments
in excess of reimbursable expenses under the plan in any year must be refunded.
Further expenses of Distributor other than for service fees in excess of 0.25%
per year of the Fund's average net assets that otherwise qualify for payment may
not be carried forward into successive annual periods. The Plan also covers
payments by certain parties to the extent such payments are deemed to be for the
financing of any activity primarily intended to result in the sale of shares
issued by the Fund within the context of rule 12b-1. The payments under this
Plan are included in the maximum operating expenses which may be borne by the
Fund.
Since the Fund is a newly organized investment company, the Distributor
received no fees or underwriting commissions from the Fund last year.
(C) THE CUSTODIAN AND TRANSFER AGENT
--------------------------------
Rushmore Trust and Savings, FSB, 4922 Fairmont Avenue, Bethesda, Maryland
20814, serves as the custodian of the Fund's portfolio securities and as the
Fund's transfer agent and, in those capacities, maintains certain accounting and
other records of the Fund and processes requests for the purchase or the
redemption of shares, maintains records of ownership for shareholders, and
performs certain other shareholder and administrative services on behalf of the
Fund.
(D) LEGAL COUNSEL
-------------
The Law Offices of Samuel Kornhauser is legal counsel to the Fund, to the
Investment Advisor and to the Distributor.
BROKERAGE ALLOCATION AND OTHER PRACTICES
In effecting portfolio transactions for the Fund, the Investment Adviser
adheres to the Fund's policy of seeking best execution and price, determined as
described below, except to the extent it is permitted to pay higher brokerage
commissions for "brokerage and research services," as defined herein. The
Investment Adviser may cause the Fund to pay a broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission which another broker or dealer would have charged for effecting the
transaction if the Investment Adviser determines in good faith that such amount
of commission is reasonable in relation to the value of the brokerage and
research services provided by such
9
<PAGE>
broker or dealer or that any offset of direct expenses of a Portfolio yields the
best net price. As provided in Section 28(e) of the Securities Exchange Act of
1934, "brokerage and research services" include giving advice as to the value of
securities, the advisability of investing in, purchasing, or selling securities,
and the availability of securities; furnishing analysis and reports concerning
issuers, industries, economic facts and trends, portfolio strategy and the
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement). Brokerage and
research services provided by brokers to the Fund or to the Investment Adviser
are considered to be in addition to and not in lieu of services required to be
performed by the Investment Adviser under its contract with the Fund and may
benefit both the Fund and other clients of the Investment Adviser or customers
of or affiliates of the Investment Advisor. Conversely, brokerage and research
services provided by brokers to other clients of the Investment Adviser or its
affiliates may benefit the Fund.
If the securities in which a particular Portfolio of the Fund invests are
traded primarily in the over-the-counter market, where possible, the Fund will
deal directly with the dealers who make a market in the securities involved
unless better prices and execution are available elsewhere. Such dealers
usually act as principals for their own account. On occasion, securities may be
purchased directly from the issuer. Bonds and money market instruments are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Fund (involving both price paid or received and any net
commissions and other costs paid), the efficiency with which the transaction is
effected, the ability to effect the transaction at all where a large block is
involved, the availability of the broker to stand ready to execute possibly
difficult transactions in the future, and the financial strength and stability
of the broker. Such considerations are judgmental and are weighed by the
Investment Adviser in determining the overall reasonableness of brokerage
commissions paid by the Fund. Some portfolio transactions are subject to the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.,
and subject to obtaining best prices and executions, effected through dealers
who sell shares of the Fund.
The Board of Trustees of the Fund will periodically review the
performance of the Investment Adviser of its respective responsibilities in
connection with the placement of portfolio transactions on behalf of the Fund
and review the commissions paid by the Fund over representative periods of time
to determine if they are reasonable in relation to the benefits to the Fund.
The Board of Trustees will periodically review whether the recapture for
the benefit of the Fund of some portion of the brokerage commissions or similar
fees paid by the Fund on portfolio transactions is legally permissible and
advisable. At present, no recapture arrangements are in effect. The Board of
Trustees will review whether recapture opportunities are available and are
legally permissible, and, if so, will determine, in the exercise of their
business judgment, whether it would be advisable for the Fund to seek such
recapture.
10
<PAGE>
CAPITAL STOCK AND OTHER SECURITIES
The rights and preferences attached to the shares of each Portfolio are
described in the Prospectus. (See "Description of Shares".) The Investment
Company Act of 1940 requires that where more than one class or series of shares
exists, each class or series must be preferred over all other classes or series
in respect of assets specifically allocated to such class or series. Rule 18f-2
under the Act provides that any matter required to be submitted by the
provisions of the Investment Company Act or applicable state law, or otherwise,
to the holders of the outstanding voting securities of an investment company
such as the Fund shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each class or
series affected by such matter. Rule 18f-2 further provides that a class or
series shall be deemed to be affected by a matter unless the interests of each
class or series in the matter are substantially identical or that the matter
does not affect any interest of such class or series. However, the Rule exempts
the selection of independent public accountants, the approval of principal
distribution contracts, and the election of Trustees from the separate voting
requirements of the Rule.
PURCHASE, REDEMPTION, AND PRICING OF SHARES
REDEMPTION OF SHARES. The Prospectus, under "Redemption of Shares"
--------------------
describes the requirements and methods available for effecting redemption. The
Fund may suspend the right of redemption or delay payment more than seven days
(a) during any period when the New York Stock Exchange or any other applicable
exchange, is closed (other than a customary weekend and holiday closing), (b)
when trading on the New York Stock Exchange, or any other applicable exchange,
is restricted, or an emergency exists as determined by the Securities and
Exchange Commission ("SEC") or the Fund so that disposal of the Fund's
investments or a fair determination of the net asset values of the Portfolios is
not reasonably practicable, or (c) for such other periods as the SEC by order
may permit for protection of the Portfolio's shareholders.
The Fund normally redeems shares for cash. However, the Board of
Trustees can determine that conditions exist making cash payments undesirable.
If they should so determine, redemption payments could be made in securities
valued at the value used in determining net asset value. There may be brokerage
and other costs incurred by the redeeming shareholder in selling such
securities.
DETERMINATION OF NET ASSET VALUE. As described in the Prospectus under
--------------------------------
"Purchase and Pricing of Shares - Valuation of Shares," the net asset value of
shares of each Portfolio of the Fund is determined once daily as of 4 p.m. New
York time on each day during which the New York Stock Exchange, or other
applicable exchange, is open for trading. The New York Stock Exchange is
scheduled to be closed for trading on the following days: New Year's Day,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. The Board of Trustees of the Exchange
reserves the right to change this schedule. In the event that the New York
Stock Exchange or the national securities exchanges on which small cap equities
are traded adopt different
11
<PAGE>
trading hours on either a permanent or temporary basis, the Board of Trustees of
the Fund will reconsider the time at which net asset value is to be computed.
VALUATION OF ASSETS. In determining the value of the assets of any
-------------------
Portfolio of the Fund, the securities for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price, or, if no sales are reported - as is the case with
many securities traded over-the-counter - the last reported bid price. Debt
securities (other than short-term obligations, which are valued on the basis of
amortized cost) are normally valued on the basis of valuations provided by a
pricing service when such prices are believed to reflect the fair value of such
securities. Prices provided by a pricing service may be determined without
exclusive reliance on quoted prices and take into account appropriate factors
such as institution-size trading in similar groups of securities, yield, quality
of issue, trading characteristics, and other market data. All other securities
and assets are valued at their fair value as determined in good faith by the
Board of Trustees, although the actual calculations may be made by persons
acting pursuant to the direction of the Board of Trustees.
TAXES
In the case of a "series fund" (that is, a regulated investment company
having more than one segregated portfolio of investments the beneficial
interests in which are owned by the holders of a separate series of stock), each
investment portfolio is treated as a separate corporation for federal income tax
purposes. The Fund will be deemed a series fund for this purpose and, thus,
each Portfolio will be deemed a separate corporation for such purpose.
Each Portfolio of the Fund intends to qualify as a regulated investment
company for federal income tax purposes. Such qualification requires, among
other things, that each Portfolio (a) make a timely election to be a regulated
investment company, (b) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities (including options and futures) or
foreign currencies, (c) derive less than 30% of its gross income from the sale
or other disposition within three months of purchase of (i) stock or securities,
(ii) options, futures, or forward contracts (other than options, futures, or
forward contracts on foreign currencies), or (iii) foreign currencies or
options, futures, or forward contracts on foreign currencies that are not
directly related to its principal business of investing in stocks or securities
(or options and futures with respect to stocks or securities), and (d) diversify
its holdings so that at the end of each fiscal quarter (i) 50% of the market
value of its assets is represented by cash, government securities, securities of
other regulated investment companies, and securities of one or more other
issuers (to the extent the value of the securities of any one such issuer owned
by the Portfolio does not exceed 5% of the value of its total assets and 10% of
the outstanding voting securities of such issuer) and (ii) not more than 25% of
the value of its assets is invested in the securities (other than government
securities and securities of other regulated investment companies) of any one
industry. These requirements may limit the ability of the Portfolios to engage
in transactions involving options and futures contracts.
12
<PAGE>
If each Portfolio qualifies as a regulated investment company, it will
not be subject to federal income tax on its "investment company taxable income"
(calculated by excluding the amount of its net capital gain, if any, and by
excluding the dividends-received and net operating loss deductions) or "net
capital gain" (the excess of its long-term capital gain over its net short-term
capital loss) which is distributed to shareholders. In determining taxable
income, however, a regulated investment company holding stock on the record date
for a dividend is required to include the dividend in income on the later of the
ex-dividend date or the date of acquisition.
Dividends paid out of net investment income and net short-term capital
gains of a Portfolio will be taxable to shareholders as ordinary income
regardless of whether such distributions are reinvested in additional shares or
paid in cash. If a portion of a Portfolio's net investment income is derived
from dividends from domestic corporations, a corresponding portion of the
dividends paid out of such income may be eligible for the dividends-received
deduction. Corporate shareholders will be informed as to the portion, if any,
of dividends received by them which will qualify for the dividends-received
deduction.
Dividends paid out of the net capital gain of a Portfolio that are
designated as capital gain dividends by the Fund will be taxable to shareholders
as long-term capital gains regardless of how long the shareholders have held
their shares. Such dividends will not be eligible for the dividends-received
deduction. If shares of the Fund to which such capital gains dividends are
attributable are held by a shareholder for less than 31 days and there is a loss
on the sale or exchange of such shares, then the loss, to the extent of the
capital gain dividend or undistributed capital gain, is treated as a long-term
capital loss.
All distributions, whether received in shares or cash, must be reported
by each shareholder on his federal income tax return. Taxable dividends
declared in October, November, or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been paid by the Fund and received by such shareholders on December 31 of
the year if such dividend is actually paid by the Fund during January of the
following year.
Any dividends paid shortly after a purchase by an investor may have the
effect of reducing the per share net asset value of the investor's shares by the
per share amount of the dividends. Furthermore, such dividends, although in
effect a return of capital, are subject to federal income taxes. Therefore,
prior to purchasing shares of the Fund, the investor should carefully consider
the impact of dividends, including capital gains distributions, which are
expected to be or have been announced.
The redemption of all or part of the shares of a series held by any
shareholder will generally be treated as a sale or exchange unless the
redemption fails to substantially reduce the shareholder's percentage ownership
interest in the related Portfolio (determined for this purpose using certain
specific rules of constructive ownership). Any redemption that does not
substantially reduce a shareholder's percentage ownership interest in a
Portfolio may be treated as a dividend.
If a redemption is treated as a sale or exchange, the shareholder will
generally recognize gain or loss measured by the difference between the
redemption price and the basis
13
<PAGE>
of the shares. This gain will generally be treated as capital gain (long-term or
short-term, depending upon the shareholder's holding period for the redeemed
shares).
The exchange of the shares in one Portfolio for shares in another
Portfolio will be treated as a taxable exchange for federal income tax purposes.
If the exchange occurs within 90 days of the acquisition of the original shares,
however, the shareholder's basis in the original shares will not include the
sales charge, if any, to the extent such charge does not exceed the amount that
would have been charged on the acquisition of the second-acquired shares if such
shares were acquired directly. To the extent that the sales charge, if any,
paid upon acquisition of the original shares is not taken into account in
determining the shareholder's gain or loss from the disposition of the original
shares, it is added to the basis of the newly acquired shares.
On or before January 31 of each year, the Fund will issue to each person
who was a shareholder at any time in the prior year a statement of the federal
income tax status of all distributions made to such shareholder.
Shareholders who fail to provide correct taxpayer identification numbers
or fail to certify as to no loss of exemption from backup withholding or
otherwise fail to comply with applicable requirements of the law relating to
backup withholding will be subject to backup withholding with respect to
dividends at the rate of 31% unless they are corporations or come within other
exempt categories. Any amounts paid as backup withholding will be creditable
against the federal income tax liabilities of the affected shareholders. All
shareholders should consult their own tax advisers with regard to the tax
consequences applicable to their respective investments in the Fund.
The foregoing discussion relates solely to United States federal income
tax laws as applicable to United States persons (that is, citizens and residents
of the United States and domestic corporations, partnerships, trusts, and
estates). Each shareholder who is not a United States person should consult his
tax adviser regarding the United States and non-United States tax consequences
of ownership of shares, including the possibility that distributions by the Fund
may be subject to a United States withholding tax at the rate of 30% (or at a
lower rate under an applicable United States income tax treaty).
Each Portfolio will be subject to a nondeductible excise tax for any year
equal to 4% of the "required distribution" for the year over the "distributed
amount" for the year. For this purpose, the term "required distribution" means,
with respect to any year, the sum of (a) 98% of the Portfolio's "ordinary
income" (that is, its taxable income determined by excluding its net capital
gain, if any, by disallowing the dividends-received and net operating loss
deductions, and by not taking into account any capital gain or loss), (b) 98% of
its net capital gain income (that is, the excess of capital gains over capital
losses) for the one-year period ending on December 31 of the year, and (c) the
"prior year shortfall" (that is, the excess, if any, of the "grossed-up required
distribution" for the prior year over the "distributed amount" for such year).
For this purpose, the term "grossed-up required distribution" means, with
respect to any year, the required distribution for the year (determined by
including 100% of the Portfolio's ordinary income and capital gain net income)
and the term "distributed amount" means, with respect to any year, the sum of
(a) the amount of dividends-paid or deemed paid during the year, (b) any amount
on which the Portfolio is
14
<PAGE>
required to pay corporate tax for the year, and (c) the excess, if any, of the
distributed amount for the prior year over the required distribution for such
year.
The individual Portfolios will not be subject to tax in Delaware for any
year in which they each qualify as a regulated investment company. They may,
however, be subject to such tax for any year in which they do not so qualify and
may be subject to tax in certain other states where they are deemed to be doing
business. Moreover, distributions may be subject to state and local taxes. In
those states which have income tax laws, the tax treatment of such Portfolios
and the tax treatment of shareholders with respect to distributions may be
different from the federal income tax treatment of such persons.
UNDERWRITERS
The Fund's shares will be continuously distributed through Navellier
Securities Corp. (the "Distributor") located at 920 Incline Way, Building No. 1,
Incline Village, Nevada 89450, pursuant to a distribution agreement dated
October 17, 1995. The Distributor has a one and a half year business history
but no history of selling this Fund's shares.
The Distributor acts as the sole principal underwriter of the Fund's
shares. Through a network established by the Distributor, the Fund's shares may
also be sold through selected investment brokers and dealers. For a description
of the Distributor's obligations to distribute the Fund's securities, see "The
Investment Adviser, Distributor, Custodian and Transfer Agent - Distributor."
CALCULATION OF PERFORMANCE DATA
Performance information for each Portfolio may appear in advertisements,
sales literature, or reports to shareholders or prospective shareholders.
Performance information in advertisements and sales literature may be expressed
as yield or total return on the applicable Portfolio.
Quotations of yield for the applicable Portfolio will be based on all
investment income per share earned during a particular 30-day period (including
dividends and interest), less expenses accrued during the period ("net
investment income"), and are computed by dividing net investment income by the
value of the Fund on the last day of the period, according to the following
formula:
a-b
YIELD = 2 [ [--- + 1] /6/-1 ]
cd
where a = dividends and interest earned, as calculated in accordance with
the SEC's instructions, during the period by the Portfolio
b = expenses accrued for the period (net of any reimbursements)
15
<PAGE>
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period
The average annual total return on such Portfolios represents an
annualization of each Portfolio's total return ("T" in the formula below) over a
particular period and is computed by finding the current percentage rate which
will result in the ending redeemable value ("ERV" in the formula below) of a
$1,000 payment/*/ ("P" in the formula below) made at the beginning of a one-,
five-, or ten-year period, or for the period from the date of commencement of
the Portfolio's operation, if shorter ("n" in the formula below). The following
formula will be used to compute the average annual total return for the
Portfolio:
P (1 + T) /N/ = ERV
In addition to the foregoing, each Portfolio may advertise its total
return over different periods of time by means of aggregate, average, year-by-
year, or other types of total return figures.
Since the Aggressive Growth Portfolio has not been in operation for a
year, no performance figures for that Portfolio are included.
Performance information for the Portfolios shall reflect only the
performance of a hypothetical investment in the Portfolios during the particular
time period on which the calculations are based. Performance information should
be considered in light of the investment objectives and policies,
characteristics and quality of the particular Portfolio, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future.
Each Portfolio may, from time to time, include in advertisements
containing total return the ranking of those performance figures relative to
such figures for groups of mutual funds categorized by Lipper Analytical
Services, or other services, as having the same investment objectives. The
total return may also be used to compare the performance of the Portfolio
against certain widely acknowledged outside standards or indices for stock and
bond market performance. The Standard & Poor's Composite Index of 500 stocks
("S&P 500") is a market value-weighted and unmanaged index showing the changes
in the aggregate market value of 500 stocks relative to the base period 1941-43.
The S&P 500 is composed almost entirely of common stocks of companies listed on
the New York Stock Exchange, although the common stocks of a few companies
listed on the American Stock Exchange or traded over-the-counter are included.
As summarized in the Prospectus under the heading "Performance and Yield," the
total return of each Portfolio may be quoted in advertisements and sales
literature.
16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
17
<PAGE>
APPENDIX
--------
A-1 AND P-1 COMMERCIAL PAPER RATINGS
- ------------------------------------
Each of the Portfolios will invest only in commercial paper which, at the
date of investment, is rated A-1 by Standard & Poor's Corporation ("S&P") or P-1
by Moody's Investors Services, Inc. ("Moody's"), or, if not rated, is issued or
guaranteed by companies which at the date of investment have an outstanding debt
issue rated AA or higher by Standard & Poor's or Aa or higher by Moody's.
Commercial paper rated A-1 by S&P has the following characteristics: (1)
liquidity ratios are adequate to meet cash requirements; (2) long-term senior
debt is rated "A" or better; (3) the issuer has access to at least two
additional channels of borrowing; (4) basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; (5) typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and (6) the reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
(1) evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationship which exists with
the issuer; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and preparations
to meet such obligations.
22
<PAGE>
PART C
OTHER INFORMATION
ITEM 24 FINANCIAL STATEMENTS AND EXHIBITS
1. FINANCIAL STATEMENTS:
(a) N/A
(b) Included in Part B of this Registration Statement:
(i) Statement of Assets and Liabilities as of December __, 1995.
(c) Included in Part C of this Registration Statement: none
All other statements and schedules have been omitted because they are not
applicable or the information is shown in the Financial Statements or Financial
Highlights or notes thereto.
<TABLE>
<CAPTION>
2. EXHIBITS:
Exhibit Number Description
-------------- -----------
<S> <C>
1.1 Certificate of Trust of Registrant
1.2 Declaration of Trust of Registrant
2 By-Laws of Registrant
3 None
4 None
5 Investment Management Agreement between Registrant
and Navellier Management, Inc., dated October 17,
1995
6.1 Distribution Agreement dated October 17, 1995
6.2 Selected Dealer Agreement (specimen)
7 None
8.1 Administrative Services, Custodian, Transfer
Agreement with Rushmore Trust and Savings, FSB
8.2 Navellier Administrative Services Agreement
9.0 Trustee Indemnification Agreements
10 Opinion and Consent of Counsel
11 Consent of Independent Auditors
12 None
13 Subscription Agreement between The Navellier
Performance Funds and Louis Navellier, dated
October 17, 1995
13.1 Investment Adviser Operating Expense Reimbursement
Agreement
14 None
15 12b-1 Plan
16 N/A
</TABLE>
23
<PAGE>
ITEM 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
(a) As is described in the Statement of Additional Information
("Control Persons and Principal Holders of Securities") the Fund was initially
controlled by Louis Navellier, the sole stockholder, officer, and director of
the Investment Adviser, who also serves as Trustee and in various officer
positions with the Fund (as described more fully under "The Investment Adviser,
Distributor, Custodian and Transfer Agent" in the Statement of Additional
Information).
(b) The Distributor Navellier Securities Corp. (incorporated under the
laws of the State of Delaware) is wholly-owned by Louis G. Navellier, who is
also a stockholder, director, and officer of the Investment Adviser and a
Trustee and officer of the Fund.
ITEM 26 NUMBER OF HOLDERS OF SECURITIES
The following table indicates the number of record holders of each class
of securities of the Fund, as of October 17, 1995:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Common Stock In fulfillment of the provisions of Section
14(a)(1) of the Investment Company Act, prior to
the effectiveness hereof (and prior to sales to any
other persons), Louis G. Navellier/1/ purchased and
became the holder of 100% of the issued and
outstanding shares of the first and so far only
portfolio of the series of Portfolios of the Fund.
The number and price of the shares so purchased are
described in the Statement of Additional
Information.
</TABLE>
ITEM 27 INDEMNIFICATION
The Fund shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers, or
trustees of another organization in which it has any interest, as a shareholder,
creditor, or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit, or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be threatened, while in office
or thereafter, by reason of his being or having been such a Trustee, officer,
employee, or agent, except with respect to any matter as to which he shall have
been adjudicated to have acted in bad faith, willful misfeasance, gross
negligence, or reckless disregard of his duties; provided, however, that as to
any matter disposed of by a compromise payment by such Person,
__________________________
/1/ This person is an interested person affiliated with the Investment Adviser.
24
<PAGE>
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless there has been a
determination that such person did not engage in bad faith, willful misfeasance,
gross negligence, or reckless disregard of his duties involved in the conduct of
his office by the court or other body approving the settlement or other
disposition or by a reasonable determination, based upon review of readily
available facts (as opposed to a full trial-type inquiry), that he did not
engage in such conduct by written opinion from independent legal counsel
approved by a majority of a quorum of trustees who are neither interested
persons nor parties to the proceedings. The rights accruing to any person under
these provisions shall not exclude any other right to which he may be lawfully
entitled; provided that no person may satisfy any right of indemnity or
reimbursement granted herein or to which he may otherwise be entitled except out
of the Fund Property. A majority of a quorum of disinterested non-party
Trustees may make advance payments in connection with indemnification under this
section, provided that the indemnified person shall have given a written
undertaking adequately secured to reimburse the Fund in the event it is
subsequently determined that he is not entitled to such indemnification, or a
majority of a quorum of disinterested non-party Trustees or independent counsel
determine, after a review of readily available facts, that the person seeking
indemnification will probably be found to be entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to the Trustees, officers, and controlling persons of
the Fund pursuant to the provisions described under this Item 27, or otherwise,
the Fund has been advised that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Fund of expenses incurred or paid by
a Trustee, officer, or controlling person of the Fund in the successful defense
of any action, suit, or proceeding) is asserted by such Trustee, officer, or
controlling person in connection with the securities being registered, the Fund
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Fund may purchase and maintain insurance on behalf of an officer,
Trustee, employee, or agent protecting such person, to the full extent permitted
by applicable law, from liability incurred by such person as officer, Trustee,
employee, or agent of the Fund or arising from his activities in such capacity.
Section 9 of the Distribution Agreement between the Fund and Navellier
Securities Corp., provides for indemnification of the parties thereto under
certain circumstances.
ITEM 28 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Set forth below is a description of any other business, profession,
vocation, or employment of a substantial nature in which each investment adviser
of the Fund and each director, officer, or partner of any such investment
adviser, is or has been at any time during the past two fiscal years, engaged
for his own account or in the capacity of director, officer, employee, partner,
or trustee:
25
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions Held with Registrant Principal Occupations During Past
Business Address and Its Affiliates Two Years
- ---------------- ------------------ ---------
<S> <C> <C>
Louis Navellier Trustee, President, and Mr. Navellier is and has been the
920 Incline Way Treasurer of The Navellier CEO and President of Navellier &
Incline Village Series Fund. Mr. Navellier is Associates Inc., an investment
NV 89450 also the CEO, President, management company since 1988;
Treasurer, and Secretary of is and has been CEO and President
Navellier Management, Inc., a of Navellier Management, Inc.; the
Delaware Corporation which is Investment Advisor to this Fund
the Investment Adviser to the and The Navellier Series Fund;
Fund. Mr. Navellier is also President and CEO of Navellier
CEO, President, Secretary, and Securities Corp., the principal
Treasurer of Navellier & Underwriter to this Fund and The
Associates Inc., Navellier Navellier Series Fund; CEO and
Publications, Inc., MPT Review President of Navellier Fund
Inc., and Navellier International Management, Inc. and investment
Management, Inc. advisory company, since November
30, 1995; and has been publisher
and editor of MPT Review from
August 1987 to the present, and
was publisher and editor of the
predecessor investment advisory
newsletter OTC Insight, which he
began in 1980 and wrote through
July 1987.
</TABLE>
ITEM 29 PRINCIPAL UNDERWRITERS
(a) The Distributor does not currently act as principal underwriter,
depositor, or investment adviser for any investment company other than the Fund
and The Navellier Series Fund.
(b) The following information is provided, as of the date hereof, with
respect to each director, officer, or partner of each principal underwriter
named in response to Item 21:
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
Louis Navellier CEO, President, Trustee, President,
920 Incline Way Director, Treasurer, CEO, Treasurer
Incline Village NV 89450 and Secretary
</TABLE>
(c) As of the date hereof, no principal underwriter who is not an
affiliated person of the Fund has received any commissions or other compensation
during the Fund's last fiscal year.
26
<PAGE>
ITEM 30 LOCATION OF ACCOUNTS AND RECORDS
All accounts, records, and other documents required to be maintained
under Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained at the office of The Navellier Performance Funds located at 920
Incline Way, Building One, Incline Village, Nevada 89450, and the offices of the
Fund's Custodian and Transfer agent at 4922 Fairmont Avenue, Bethesda, MD 20814.
ITEM 31 MANAGEMENT SERVICES
Other than as set forth in Part A and Part B of this Registration
Statement, the Fund is not a party to any management-related service contract.
ITEM 32 UNDERTAKINGS
The Fund hereby undertakes to furnish each person to whom a prospectus is
delivered a copy of the latest annual report to shareholders, upon request and
without change.
The Fund hereby undertakes that if it is requested by the holders of at
least 10% of its outstanding shares to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee, it will do so and
will assist in communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Incline Village, and State of Nevada on the 7th day
of November 1995.
THE NAVELLIER PERFORMANCE FUNDS
/s/ LOUIS NAVELLIER
By: ___________________________
Louis Navellier
President and Trustee
The Navellier Performance Funds, and each person whose signature appears
below hereby constitutes and appoints Louis Navellier as such person's true and
lawful attorney-in-fact, with full power to sign for such person and in such
person's name, in the capacities indicated below, any and all amendments to this
Registration Statement, hereby ratifying and confirming such person's signature
as it may be signed by said attorney-in-fact to any and all amendments to said
Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons or their
attorneys-in-fact pursuant to authorization given on October 17, 1995, in the
capacities and on the date indicated:
/s/ LOUIS NAVELLIER
________________________ Trustee and President (Principal
Louis Navellier/1/ Executive Officer), Treasurer December 7, 1995
/s/ ARNOLD LANGSEN
________________________ Trustee
Arnold Langsen/2/ December 7, 1995
/s/ BARRY SANDER
________________________ Trustee
Barry Sander December 7, 1995
/s/ JOEL ROSSMAN
________________________ Trustee
Joel Rossman December 7, 1995
/s/ JACQUES DELACROIX
________________________ Trustee
Jacques Delacroix December 7, 1995
_________________________________
/1/ This person is an interested person affiliated with the Investment Advisor.
/2/ This person, although not an interested person affiliated with the
Investment Advisor, does own a corporation which provides consulting
services to Navellier & Associates Inc., a corporation owned by Louis
Navellier.
28
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that THE NAVELLIER PERFORMANCE FUNDS, a
Delaware Business Trust (the "Trust"), and each of its undersigned officers and
Trustees hereby nominate, constitute and appoint Louis Navellier his true and
lawful attorney-in-fact and agent, for him and in his name, place and stead in
any and all capacities, to make, execute and sign the original and all
amendments to the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933 and the Investment Company Act of 1940, and to file with
the Securities and Exchange Commission and any other regulatory authority having
jurisdiction over the offer and sale of shares of the Trust, such amendments,
and any and all amendments and supplements thereto, and any and all exhibits and
other documents requisite in connection therewith granting unto said attorney,
full power and authority to do and perform each and every act necessary and/or
appropriate as fully to all intents and purposes as the Trust and the
undersigned officers and Trustees themselves might or could do.
IN WITNESS WHEREOF, THE NAVELLIER PERFORMANCE FUNDS has caused this power
of attorney to be executed in its name by its Chairman and attested by its
Secretary, and the undersigned officers and Trustees have hereunto set their
hands this 17th day of October 1995.
THE NAVELLIER PERFORMANCE FUNDS
/s/ Louis G. Navellier
By:____________________________
Louis G. Navellier
ATTEST:
/s/ Samuel Kornhauser
- ---------------------------
Samuel Kornhauser, Attorney
/s/ Jacques Delacroix
____________________________
Jacques Delacroix
/s/ Barry Sander
____________________________
Barry Sander
/s/ Joel Rossman
____________________________
Joel Rossman
/s/ Arnold Langsen
____________________________
Arnold Langsen
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
*********
EXHIBITS
TO
FORM N-1A
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940
**********
THE NAVELLIER PERFORMANCE FUNDS
920 INCLINE WAY, BLDG. 1
INCLINE VILLAGE, NEVADA 89450
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
No. Description Numbered Page
- ------- ----------------------------------------------------------- --------------
<C> <S> <C>
1.0 None (Financial Statement)
1.1 Certificate of Trust of Registrant 72
1.2 Declaration of Trust of Registrant 75
2 By-Laws of Registrant 126
3 None
4 None
5 Investment Advisory Agreement between Registrant and 137
Navellier Management, Inc., dated October 17, 1995
6.1 Distribution Agreement dated October 17, 1995 144
6.2 Selected Dealer Agreement (specimen) 155
7 None
8.1 Administrative Services Agreement between Registrant and 160
Rushmore Trust and Savings, FSB
8.2 Administrative Services Agreement between Registrant and 169
Navellier Management, Inc., dated October 17, 1995
9 Trustee Indemnification Agreements 175
10 Opinion and Consent of Counsel 196
11 Consent of Independent Auditors 198-A
12 None
13 Subscription Agreement between The Navellier Performance Funds 200
and Louis Navellier dated October 17, 1995
13.1 Investment Adviser Operating Expense Reimbursement Agreement 202
14 None
15 12b-1 Plan
16 N/A 205
</TABLE>
<PAGE>
EXHIBIT 1.1
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
----------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF BUSINESS
TRUST REGISTRATION OF "THE NAVELLIER PERFORMANCE FUNDS", FILED IN THIS OFFICE ON
THE SEVENTEENTH DAY OF OCTOBER, A.D. 1995, AT 1 O'CLOCK P.M.
[SEAL] /s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7683629
DATE: 10-23-95
<PAGE>
CERTIFICATE OF TRUST
--------------------
THE NAVELLIER PERFORMANCE FUNDS
-------------------------------
The undersigned, constituting all the members of the Board of Trustees of
The Navellier Performance Funds (the "Trust"), in order to form a Delaware
business trust pursuant the provisions of the Delaware Business Trust Act (12
Del.C. Section 3801 et seq.), do hereby certify the following:
1. The name of the Delaware business trust is
THE NAVELLIER PERFORMANCE FUNDS
2. The registered office of the Trust in Delaware is the The Company
Corporation, Corporation Trust Centre, 201 North Walnut, County of New Castle,
Wilmington, Delaware 19801.
3. Prior to the issuance of beneficial interests, the Trust will become a
registered investment company under the Investment Company Act of 1940, as
amended.
4. The registered agent for service of process on the Trust is the The
Company Corporation, Three Christiana Centre, 201 North Walnut, County of New
Castle, Wilmington, Delaware 19801.
5. This Certificate of Trust shall be effective the date it is filed with
the Office of the Delaware Secretary of State.
6. Section 3804 (a) of the Delaware Business Trust Act shall apply to
limit the liabilities of any Series of this Trust solely to the liabilities,
debts, obligations, and expenses incurred, contracted for, or otherwise
existing, incurred, or accrued with respect to that Series and shall only be
enforceable against the assets of that particular Series and not against the
assets of the business trust generally.
IN WITNESS WHEREOF, the undersigned Trustees of The Navellier Performance
Funds have executed this Certificate of Trust as of the 17th day of October,
1995.
/s/ LOUIS G. NAVELLIER /s/ JACQUES DELACROIX
- ----------------------------- ---------------------------
Louis G. Navellier, Trustee Jacques Delacroix, Trustee
/s/ BARRY SANDER /s/ ARNOLD LANGSEN
- ----------------------------- ---------------------------
Barry Sander, Trustee Arnold Langsen, Trustee
/s/ JOEL ROSSMAN
- -----------------------------
Joel Rossman, Trustee
[SEAL]
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:00 PM 10/17/1995
950238505 -- 2553256
<PAGE>
EXHIBIT 1.2
<PAGE>
DECLARATION OF TRUST
OF
THE NAVELLIER PERFORMANCE FUNDS
DATED OCTOBER 17, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I............................................................ 1
NAMES AND DEFINITIONS.............................................. 1
NAME.............................................................. 1
DEFINITIONS....................................................... 1
Section 1.02..................................................... 1
ARTICLE II........................................................... 3
BENEFICIAL INTEREST................................................ 3
SHARES OF BENEFICIAL INTEREST..................................... 3
Section 2.01..................................................... 3
Section 2.02..................................................... 4
REGISTER OF SHARES AND SHARE CERTIFICATES......................... 4
Section 2.03..................................................... 4
TRANSFER OF SHARES................................................ 5
Section 2.04..................................................... 5
TREASURY SHARES................................................... 5
Section 2.05..................................................... 5
ESTABLISHMENT OF SERIES........................................... 6
Section 2.06..................................................... 6
INVESTMENT IN THE TRUST........................................... 7
Section 2.07..................................................... 7
ASSETS AND LIABILITIES OF SERIES.................................. 7
Section 2.08..................................................... 7
NO PREEMPTIVE RIGHTS.............................................. 9
Section 2.09..................................................... 9
PERSONAL LIABILITY OF SHAREHOLDERS................................ 9
Section 2.10..................................................... 9
ASSENT TO TRUST INSTRUMENT........................................ 10
Section 2.11..................................................... 10
ARTICLE III.......................................................... 10
THE TRUSTEES....................................................... 10
MANAGEMENT OF THE TRUST........................................... 10
Section 3.01..................................................... 10
INITIAL TRUSTEES.................................................. 11
Section 3.02..................................................... 11
TERM OF OFFICE OF TRUSTEES........................................ 11
Section 3.03..................................................... 11
VACANCIES AND APPOINTMENT OF TRUSTEES............................. 12
Section 3.04..................................................... 12
TEMPORARY ABSENCE OF TRUSTEE...................................... 13
Section 3.05..................................................... 13
NUMBER OF TRUSTEES................................................ 13
Section 3.06..................................................... 13
EFFECT OF DEATH, RESIGNATION, ETC., OF A TRUSTEE.................. 13
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 3.07..................................................... 13
OWNERSHIP OF ASSETS OF THE TRUST.................................. 13
Section 3.08..................................................... 13
ARTICLE IV........................................................... 14
POWERS OF THE TRUSTEES............................................. 14
POWERS............................................................ 14
Section 4.01..................................................... 14
ISSUANCE AND REPURCHASE OF SHARES................................. 18
Section 4.02..................................................... 18
TRUSTEES AND OFFICERS AS SHAREHOLDERS............................. 19
Section 4.03..................................................... 19
ACTION OF THE TRUSTEES............................................ 19
Section 4.04..................................................... 19
CHAIRMAN OF THE TRUSTEES.......................................... 20
Section 4.05..................................................... 20
PRINCIPAL TRANSACTIONS............................................ 20
Section 4.06..................................................... 20
ARTICLE V............................................................ 21
EXPENSES OF THE TRUST.............................................. 21
TRUSTEE REIMBURSEMENT............................................. 21
Section 5.01..................................................... 21
ARTICLE VI........................................................... 22
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER, AND TRANSFER
AGENT.............................................................. 22
INVESTMENT ADVISER................................................ 22
Section 6.01..................................................... 22
PRINCIPAL UNDERWRITER............................................. 23
Section 6.02..................................................... 23
TRANSFER AGENT.................................................... 23
Section 6.03..................................................... 23
PARTIES TO CONTRACT............................................... 23
Section 6.04..................................................... 23
PROVISIONS AND AMENDMENTS......................................... 24
Section 6.05..................................................... 24
ARTICLE VII.......................................................... 25
SHAREHOLDERS' VOTING POWERS AND MEETINGS........................... 25
VOTING POWERS..................................................... 25
Section 7.01..................................................... 25
MEETINGS.......................................................... 26
Section 7.02..................................................... 26
QUORUM AND REQUIRED VOTE.......................................... 26
Section 7.03..................................................... 26
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE VIII........................................................ 27
CUSTODIAN.......................................................... 27
APPOINTMENT AND DUTIES............................................ 27
Section 8.01..................................................... 27
CENTRAL CERTIFICATE SYSTEM........................................ 28
Section 8.02..................................................... 28
ARTICLE IX........................................................... 29
DISTRIBUTIONS AND REDEMPTIONS...................................... 29
DISTRIBUTIONS..................................................... 29
Section 9.01..................................................... 29
REDEMPTIONS....................................................... 30
Section 9.02..................................................... 30
DETERMINATION OF NET ASSET VALUE AND VALUATION OF
PORTFOLIO ASSETS................................................. 30
Section 9.03..................................................... 30
SUSPENSION OF THE RIGHT OF REDEMPTION............................. 32
Section 9.04..................................................... 32
REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY............................................... 32
Section 9.05..................................................... 32
ARTICLE X............................................................ 33
LIMITATION OF LIABILITY AND INDEMNIFICATION........................ 33
NO PERSONAL LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES,
OR AGENTS....................................................... 33
Section 10.01.................................................... 33
INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES, AGENTS.......... 34
Section 10.02.................................................... 34
LIABILITY OF SHAREHOLDERS; INDEMNIFICATION........................ 35
Section 10.03.................................................... 35
NO BOND REQUIRED OF TRUSTEES...................................... 35
Section 10.04.................................................... 35
NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS,
ETC.............................................................. 35
Section 10.05.................................................... 35
RELIANCE ON EXPERTS, ETC. ........................................ 36
Section 10.06.................................................... 36
SHAREHOLDERS...................................................... 37
Section 10.07.................................................... 37
ARTICLE XI........................................................... 37
MISCELLANEOUS...................................................... 37
TRUST NOT A PARTNERSHIP........................................... 37
Section 11.01.................................................... 37
</TABLE>
iii
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<TABLE>
<S> <C>
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY........................................................... 38
Section 11.02................................................... 38
ESTABLISHMENT OF RECORD DATES..................................... 38
Section 11.03.................................................... 38
TERMINATION OF TRUST.............................................. 39
Section 11.04.................................................... 39
REORGANIZATION.................................................... 40
Section 11.05.................................................... 40
FILING OF COPIES, REFERENCES, HEADINGS............................ 41
Section 11.06.................................................... 41
APPLICABLE LAW.................................................... 42
Section 11.07.................................................... 42
AMENDMENTS........................................................ 43
Section 11.08.................................................... 43
FISCAL YEAR....................................................... 43
Section 11.09.................................................... 43
USE OF THE WORD "NAVELLIER"....................................... 44
Section 11.10.................................................... 44
PROVISIONS IN CONFLICT WITH LAW................................... 44
Section 11.11.................................................... 44
</TABLE>
iv
<PAGE>
DECLARATION OF TRUST
OF
THE NAVELLIER PERFORMANCE FUNDS
THIS TRUST INSTRUMENT is made October 17, 1995 by Louis G. Navellier, Arnold
Langsen, Barry Sander, Joel Rossman, and Jacques Delacroix (the "Trustees").
WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust as a
series open end management investment company under this Trust Instrument as
herein set forth below.
ARTICLE I
---------
NAMES AND DEFINITIONS
---------------------
NAME
- ----
Section 1.01. The name of the trust created hereby is "The Navellier
------------
Performance Funds."
DEFINITIONS.
- -----------
Section 1.02. Wherever used herein, unless otherwise required by the
------------
context or specifically provided:
(a) "Bylaws" means the Bylaws referred to in Article IV, Section 4.01(e)
hereof, as from time to time amended;
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(b) The term "Commission" has the meaning given it in the 1940 Act. The
terms "Affiliated Person," "Assignment," "Interested Person," and "Principal
Underwriter" shall have the meanings given them in the 1940 Act, as modified by
or interpreted by any applicable order or orders of the Commission or any rules
or regulations adopted or interpretive releases of the Commission thereunder.
"Majority Shareholder Vote" shall have the same meaning as the term "vote of a
majority of the outstanding voting securities" is given in the 1940 Act, as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted or interpretive releases of the Commission
thereunder.
(c) The "Delaware Act" refers to Chapter 38 of Title 12 of the Delaware
Code entitled "Treatment of Delaware Business Trusts," as it may be amended from
time to time.
(d) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.03 hereof;
(e) "Outstanding Shares" means those Shares shown from time to time in the
books of the Trust or its Transfer Agent as then issued and outstanding, or, if
Shares are not issued, then the Shares which would have been issued if Shares
had been issued, but shall not include Shares which have been redeemed or
repurchased by the Trust and which are at the time held in the treasury of the
Trust;
(f) "Series" or "Portfolio" means a series or portfolio of Shares of the
Trust established in accordance with the provisions of Article II, Section 2.06
hereof.
(g) "Shareholder" means a record owner of Outstanding Shares of the Trust;
(h) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
2
<PAGE>
(i) The "Trust" refers to The Navellier Performance Funds and reference to
the Trust, when applicable to one or more Series of the Trust, shall refer to
any such Series;
(j) The "Trustees" means the person or persons who has or have signed this
Trust Instrument, so long as he or they shall continue in office in accordance
with the terms hereof, and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with the provisions of Article
III hereof, and reference herein to a Trustee or to the Trustees shall refer to
the individual Trustees in their capacity as Trustees hereunder;
(k) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of one or
more of the Trust or any Series, or the Trustees on behalf of the Trust or any
Series.
(l) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, as amended from time to time.
ARTICLE II
----------
BENEFICIAL INTEREST
-------------------
SHARES OF BENEFICIAL INTEREST
- -----------------------------
Section 2.01. The beneficial interest in the Trust shall be divided into
------------
such transferable Shares of one or more separate and distinct Series or classes
of a Series as the Trustees shall from time to time create and establish. The
number of Shares of each Series, and class thereof, authorized hereunder is
unlimited. Each Share shall have no par value. All Shares issued hereunder,
including, without limitation, Shares issued in connection with a dividend in
Shares or a split or reverse split of Shares, shall be fully paid and
nonassessable.
3
<PAGE>
ISSUANCE OF SHARES
- ------------------
Section 2.02. The Trustees in their discretion may, from time to time,
------------
without vote of the Shareholders, issue Shares, in addition to the then issued
and outstanding Shares and Shares held in the treasury, to such party or parties
and for such amount and type of consideration, subject to applicable law,
including cash or securities, at such time or times and on such terms as the
Trustees may deem appropriate, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with, the
assumption of liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/100th of a Share or integral
multiples thereof.
REGISTER OF SHARES AND SHARE CERTIFICATES
- -----------------------------------------
Section 2.03. A register shall be kept at the principal office of the
------------
Trust or an office of the Trust's transfer agent which shall contain the names
and addresses of the Shareholders of each Series, the number of Shares of that
Series (or any class or classes thereof) held by them respectively, and a record
of all transfers thereof. As to Shares for which no certificate has been
issued, such register shall be conclusive as to who are the holders of the
Shares and who shall be entitled to receive dividends or other distributions or
otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall
be entitled to receive payment of any dividend or other distribution, nor to
have notice given him as herein or in the Bylaws provided, until he has given
his address to the transfer agent or such other officer or agent of the Trustees
as shall keep the said register for entry thereon. The Trustees, in their
4
<PAGE>
discretion, may authorize the issuance of share certificates and promulgate
appropriate rules and regulations as to their use. Such certificates may be
issuable for any purpose limited in the Trustees' discretion. In the event that
one or more certificates are issued, whether in the name of a shareholder or a
nominee, such certificate or certificates shall constitute evidence of ownership
of Shares for all purposes, including transfer, assignment, or sale of such
Shares, subject to such limitations as the Trustees may, in their discretion,
prescribe.
TRANSFER OF SHARES
- ------------------
Section 2.04. Except as otherwise provided by the Trustees, Shares shall
------------
be transferable on the records of the Trust only by the record holder thereof or
by his agent thereunto duly authorized in writing, upon delivery to the Trustees
or the Trust's transfer agent of a duly executed instrument of transfer,
together with a Share certificate, if one is outstanding, and such evidence of
the genuineness of each such execution and authorization and of such other
matters as may be required by the Trustees. Upon such delivery the transfer
shall be recorded on the register of the Trust. Until such record is made, the
Shareholder of record shall be deemed to be holder of such Shares for all
purposes hereunder, and neither the Trustees nor the Trust, nor any transfer
agent or registrar nor any officer, employee, or agent of the Trust shall be
affected by any notice of the proposed transfer.
TREASURY SHARES
- ---------------
Section 2.05. Shares held in the treasury shall, until reissued pursuant
------------
to Section 2.02 hereof, not confer any voting rights on the Trustees, nor shall
such Shares be entitled to any dividends or other distributions declared with
respect to the Shares.
5
<PAGE>
ESTABLISHMENT OF SERIES
- -----------------------
Section 2.06. The Trust created hereby shall consist of one or more
------------
Series, and separate and distinct records shall be maintained by the Trust for
each Series and the assets associated with any such Series shall be held and
accounted for separately from the assets of the Trust or any other Series. The
Trustees shall have full power and authority, in their sole discretion, and
without obtaining any prior authorization or vote of the Shareholders of any
Series of the Trust, to establish and designate and to change in any manner any
such Series of Shares or any classes of initial or additional Series and to fix
such preferences, voting powers, rights and privileges of such Series or classes
thereof as the Trustees may from time to time determine, to divide or combine
the Shares or any Series or classes thereof into a greater or lesser number, to
classify or reclassify any issued Shares or any Series or classes thereof into
one or more Series or classes of Shares, and to take such other action with
respect to the Shares as the Trustees may deem desirable. The establishment and
designation of any Series shall be effective upon the adoption of a resolution
by a majority of the Trustees setting forth such establishment and designation
and the relative rights and preferences of the Shares of such Series. A Series
may issue any number of Shares and need not issue shares. At any time that there
are no Shares outstanding of any particular Series previously established and
designated, the Trustees may by a majority vote abolish that Series and the
establishment and designation thereof.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series, or classes thereof, as the context may require.
All provisions herein relating to the Trust shall apply equally to each Series
of the Trust, and each class thereof, except as the context otherwise requires.
6
<PAGE>
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his pro rata share of distributions of income and
capital gains, if any, made with respect to such Series. Upon redemption of his
Shares, such Shareholder shall be paid solely out of the funds and property of
such Series of the Trust.
INVESTMENT IN THE TRUST
- -----------------------
Section 2.07. The Trustees shall accept investments in any Series of the
------------
Trust from such persons and on such terms as they may from time to time
authorize. At the Trustees' discretion, such investments, subject to applicable
law, may be in the form of cash or securities in which the affected Series is
authorized to invest, valued as provided in Article IX, Section 9.03 hereof.
Investments in a Series shall be credited to each Shareholder's account in the
form of full Shares at the Net Asset Value per Share next determined after the
investment is received; provided, however, that the Trustees may, in their sole
discretion, (a) fix the Net Asset Value per Share of the initial capital
contribution, (b) impose a sales charge, contingent deferred sales charge or
12b-1 fees in connection with investments in the Trust in such manner and at
such time determined by the Trustees, or (c) issue fractional Shares.
ASSETS AND LIABILITIES OF SERIES
- --------------------------------
Section 2.08. All consideration received by the Trust for the issue or
------------
sale of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange, or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be held
and accounted for separately from the other assets of the Trust and of every
other Series
7
<PAGE>
and may be referred to herein as "assets belonging to" that Series. The assets
belonging to a particular Series shall belong to that Series for all purposes,
and to no other Series, subject only to the rights of creditors of that Series.
In addition, any assets, income, earnings, profits or funds, or payments and
proceeds with respect thereto, which are not readily identifiable as belonging
to any particular Series, shall be allocated by the Trustees between and among
one or more of the Series in such manner as the Trustees, in their sole
discretion, deem fair and equitable. Each such allocation shall be conclusive
and binding upon the Shareholders of all Series for all purposes, and such
assets, income, earnings, profits or funds, or payments and proceeds with
respect thereto shall be assets belonging to that Series. The assets belonging
to a particular Series shall be so recorded upon the books of the Trust, and
shall be held by the Trustees in trust for the benefit of the holders of Shares
of that Series. The assets belonging to each particular Series shall be charged
with the liabilities of that Series and all expenses, costs, charges, and
reserves attributable to that Series. Any general liabilities, expenses, costs,
charges, or reserves of the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated and charged by the
Trustees between or among any one or more of the Series in such manner as the
Trustees, in their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
for all purposes. Without limitation of the foregoing provisions of this Section
2.08, but subject to the right of the Trustees in their discretion to allocate
general liabilities, expenses, costs, charges, or reserves as herein provided,
the debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular Series shall be enforceable
against the assets of such Series only, and not against the assets of the Trust
generally. Notice of this contractual limitation on inter-Series liabilities
may, in the Trustees' sole discretion, be set forth in the
8
<PAGE>
certificate of trust of the Trust (whether originally or by amendment) as filed
or to be filed in the Office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on inter-Series liabilities (and the statutory
effect under Section 3804(a) of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each Series. Any person
extending credit to, contracting with, or having any claim against any Series
may look only to the assets of that Series to satisfy or enforce any debt,
liability, obligation or expense incurred, contracted for, or otherwise existing
with respect to that Series. No Shareholder or former Shareholder of any Series
shall have a claim on or any right to any assets allocated or belonging to any
other Series.
NO PREEMPTIVE RIGHTS
- --------------------
Section 2.09. Shareholders shall have no preemptive or other right to
------------
subscribe to any additional Shares or other securities issued by the Trust or
the Trustees, whether of the same or other Series.
PERSONAL LIABILITY OF SHAREHOLDERS
- ----------------------------------
Section 2.10. Pursuant to Section 3803(a) of the Delaware Act, each
------------
Shareholder of the Trust and of each Series shall not be personally liable for
the debts, liabilities, obligations and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or by or on behalf of any Series.
The Trustees shall have no power to bind any Shareholder personally or to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay by way of subscription for any Shares or otherwise. Every note, bond,
contract, or other undertaking issued by or on behalf of the Trust or the
Trustees relating to the Trust or
9
<PAGE>
to a Series shall include a recitation limiting the obligation represented
thereby to the Trust or to one or more Series and its or their assets (but the
omission of such a recitation shall not operate to bind any Shareholder or
Trustee of the Trust).
ASSENT TO TRUST INSTRUMENT
- --------------------------
Section 2.11. Every Shareholder, by virtue of having purchased a Share or
------------
Interest shall become a Shareholder and shall be held to have expressly assented
and agreed to be bound by the terms hereof, and shall further be held to have
expressly assented to and agreed that he/she or it has relied solely on the
Prospectus, Registration Statement, and Statement of Additional Information and
any written sales material given him in connection with the offering and his
investment in this Fund and has not relied on any other representation, promise,
or statement by any agent, broker, dealer, or other person or entity not
expressly contained in said written documents.
ARTICLE III
-----------
THE TRUSTEES
------------
MANAGEMENT OF THE TRUST
- -----------------------
Section 3.01. The Trustees shall have exclusive and absolute control
------------
over the Trust Property and over the business of the Trust to the same extent as
if the Trustees were the sole owners of the Trust Property and business in their
own right, but with such powers of delegation as may be permitted by this Trust
Instrument. The Trustees shall have power to conduct the business of the Trust
and carry on its operations in any and all of its branches and maintain offices
both within and without the State of Delaware, in any and all states of the
United States of America, in the District of Columbia, in any and all
commonwealths, territories, dependencies, colonies, or possessions of the United
States of America, and in
10
<PAGE>
any foreign jurisdiction, and to do all such other things and execute all such
instruments as they deem necessary, proper, or desirable in order to promote the
interests of the Trust, although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Trust Instrument, the presumption shall be in favor of a grant of power to
the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the Trustees
may be exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning of record a plurality of the Shares voting at a meeting
of Shareholders. Such a meeting shall be held on a date fixed by the Trustees.
In the event that less than a majority of the Trustees holding office have been
elected by Shareholders, the Trustees then in office will call a Shareholders'
meeting for the election of Trustees.
INITIAL TRUSTEES
- ----------------
Section 3.02. The initial Trustees shall be the persons named herein.
------------
On a date fixed by the Trustees, the Shareholders shall elect five (5) Trustees,
as specified by the Trustees pursuant to Section 3.06 of this Article III.
TERM OF OFFICE OF TRUSTEES
- --------------------------
Section 3.03. The Trustees shall hold office during the lifetime of
------------
this Trust, and until its termination as herein provided; except (a) that any
Trustee may resign his trust by written instrument signed by him and delivered
to the other Trustees, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may
11
<PAGE>
be removed at any time by written instrument, signed by at least two-thirds of
the number of Trustees prior to such removal, specifying the date when such
removal shall become effective; (c) that any Trustee who requests in writing to
be retired or who has died, become physically or mentally incapacitated by
reason of disease or otherwise, or is otherwise unable to serve, may be retired
by written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least two-
thirds of the outstanding Shares.
VACANCIES AND APPOINTMENT OF TRUSTEES
- -------------------------------------
Section 3.04. In case of the declination to serve, death,
------------
resignation, retirement, removal, physical or mental incapacity by reason of
disease or otherwise, or a Trustee is otherwise unable to serve, or an increase
in the number of Trustees, a vacancy shall occur. Whenever a vacancy in the
Board of Trustees shall occur, until such vacancy is filled, the other Trustees
shall have all the powers hereunder and the certificate of the other Trustees of
such vacancy shall be conclusive. In the case of an existing vacancy, the
remaining Trustees shall fill such vacancy by appointing such other person as
they in their discretion shall see fit consistent with the limitations under the
1940 Act. Such appointment shall be evidenced by a written instrument signed by
a majority of the Trustees in office or by resolution of the Trustees, duly
adopted, which shall be recorded in the minutes of a meeting of the Trustees,
whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement, resignation, or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation, or increase in number of
12
<PAGE>
Trustees. As soon as any Trustee appointed pursuant to this Section 3.04 shall
have accepted this trust, the trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any further act or
conveyance, and he shall be deemed a Trustee hereunder. The power to appoint a
Trustee pursuant to this Section 3.04 is subject to the provisions of Section
16(a) of the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
- ----------------------------
Section 3.05. Any Trustee may, by power of attorney, delegate his
------------
power for a period not exceeding six months at any one time to any other Trustee
or Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
NUMBER OF TRUSTEES
- ------------------
Section 3.06. The number of Trustees shall be five (5) or such number
------------
as shall be fixed from time to time by a majority of the Trustees.
EFFECT OF DEATH, RESIGNATION, ETC., OF A TRUSTEE
- ------------------------------------------------
Section 3.07. The declination to serve, death, resignation,
------------
retirement, removal, incapacity, or inability of the Trustees, or any one of
them, shall not operate to terminate the Trust or to revoke any existing agency
created pursuant to the terms of this Trust Instrument.
OWNERSHIP OF ASSETS OF THE TRUST
- --------------------------------
Section 3.08. The assets of the Trust and of each Series shall be
------------
held separate and apart from any assets now or hereafter held in any capacity
other than as Trustee hereunder by the Trustees or any successor Trustees.
Legal title in all of the assets of the Trust and the right to conduct any
business shall at all times be considered as vested in the Trustees on behalf of
the Trust, except that the Trustees may cause legal title to any Trust Property
to be held by, or in the name of the Trust, or in the name of any person as
nominee. No
13
<PAGE>
Shareholder shall be deemed to have a severable ownership in any individual
asset of the Trust or of any Series or any right of partition or possession
thereof, but each Shareholder shall have, except as otherwise provided for
herein, a proportionate undivided beneficial interest in the Trust or Series.
The Shares shall be personal property giving only the rights specifically set
forth in this Trust Instrument.
ARTICLE IV
----------
POWERS OF THE TRUSTEES
----------------------
POWERS
- ------
Section 4.01. The Trustees in all instances shall act as principals,
------------
and are and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider necessary
or appropriate in connection with the management of the Trust. The Trustees
shall not in any way be bound or limited by present or future laws or customs in
regard to trust investments, but shall have full authority and power to make any
and all investments which they, in their sole discretion, shall deem proper to
accomplish the purpose of this Trust without recourse to any court or other
authority. Subject to any applicable limitation in this Trust Instrument or the
Bylaws of the Trust and applicable federal law, the Trustees shall have power
and authority, including but not limited,
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested, without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease
any or all of the assets of the Trust;
14
<PAGE>
(b) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging, or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of an obligation or engagement of any other Person and
to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders; such
Bylaws shall be deemed incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(g) To employ one or more banks, trust companies, or companies that
are members of a national securities exchange, or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws.;
(h) To retain one or more transfer agents and shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the
Bylaws;
(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager, custodian,
underwriter, or other agent or independent contractor;
15
<PAGE>
(k) To sell or exchange any or all of the assets of the Trust,
subject to the provisions of Article XI, Section 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered, or other negotiable form; or
either in the name of the Trust or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;
(o) to establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II thereof and to establish classes of
such Series having relative rights, powers, and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804(a) of the Delaware Act,
to allocate assets, liabilities, and expenses of the Trust to a particular
Series or to apportion the same between or among two or more Series, provided
that any liabilities or expenses incurred by a particular Series shall be
payable solely out of the assets belonging to that Series as provided for in
Article II hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation, or merger of any corporation or concern, any security of which is
held in the Trust; to consent
16
<PAGE>
to any contract, lease, mortgage, purchase, or sale of property by such
corporation or concern, and to pay calls or subscriptions with respect to any
security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or class, and to require the
redemption of the Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the
powers of the Trustees to said committees and to adopt a committee charter
providing for such responsibilities, membership (including Trustees, officers,
or other agents of the Trust therein) and any other characteristics of said
committees as the Trustees may deem proper. Notwithstanding the provisions of
this Article IV, and in addition to such provisions or any other provision of
this Trust Instrument or of the Bylaws, the Trustees may by resolution appoint a
committee consisting of less than the whole number of Trustees then in office,
which committee may be empowered to act for and bind the Trustees and the Trust,
as if the acts of such committee were the acts of all the Trustees then in
office, with respect to the institution, prosecution, dismissal, settlement,
review, or investigation of any action, suit, or proceeding which shall be
pending or threatened to be brought before any court, administrative agency, or
other adjudicatory body;
(v) To interpret the investment policies, practices, or limitations of
any Series;
17
<PAGE>
(w) To establish a registered office and have a registered agent in
the State of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable,
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees. Any action by one or
more of the Trustees in their capacity as such hereunder shall be deemed an
action on behalf of the Trust or the applicable Series, and not an action in an
individual capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or upon
their order.
ISSUANCE AND REPURCHASE OF SHARES
- ---------------------------------
Section 4.02. The Trustees shall have the power to issue, sell,
------------
repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of,
and otherwise deal in Shares and, subject to the provisions set forth in Article
II and Article IX, to apply to any such repurchase, redemption, retirement,
cancellation, or acquisition of Shares any funds or
18
<PAGE>
property of the Trust, or the particular Series of the Trust, with respect to
which such Shares are issued.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
- -------------------------------------
Section 4.03. Any Trustee, officer, or other agent of the Trust may
------------
acquire, own, and dispose of Shares to the same extent as if he were not a
Trustee, officer, or agent; and the Trustees may issue and sell or cause to be
issued and sold Shares to and buy such Shares from any such person or any firm
or company in which he is interested, subject only to the general limitations
herein contained as to the sale and purchase of such Shares; and all subject to
any restrictions which may be contained in the Bylaws.
ACTION OF THE TRUSTEES
- ----------------------
Section 4.04. The Trustees shall act by majority vote at a meeting
------------
duly called or by unanimous written consent without a meeting or by telephone
meeting provided a quorum of Trustees participate in any such telephone meeting,
unless the 1940 Act requires that a particular action be taken only at a meeting
at which the Trustees are present in person. At any meeting of the Trustees, a
majority of the Trustees shall constitute a quorum. Meetings of the Trustees
may be called orally or in writing by the Chairman of the Board of Trustees or
by any two other Trustees. Notice of the time, date, and place of all meetings
of the Trustees shall be given by the party calling the meeting to each Trustee
by telephone, telefax, or telegram sent to his home or business address at least
24 hours in advance of the meeting or by written notice mailed to his home or
business address at least 72 hours in advance of the meeting. Notice need not
be given to any Trustee who attends the meeting without objecting to the lack of
notice or who executes a written waiver of notice with respect to the meeting.
Any meeting conducted by telephone shall be deemed to take place at the
principal office of the Trust, as determined by the Bylaws or by the Trustees.
Subject
19
<PAGE>
to the requirements of the 1940 Act, the Trustees by majority vote may delegate
to any one or more of their number their authority to approve particular matters
or take particular actions on behalf of the Trust. Written consents or waivers
of the Trustees may be executed in one or more counterparts. Execution of a
written consent or waiver and delivery thereof to the Trust may be accomplished
by telefax.
CHAIRMAN OF THE TRUSTEES
- ------------------------
Section 4.05. The Trustees shall appoint one of their number to be
------------
Chairman of the Board of Trustees. The Chairman shall preside at all meetings
of the Trustees, shall be responsible for the execution of policies established
by the Trustees and the administration of the Trust, and may be (but is not
required to be) the chief executive, financial and/or accounting officer of the
Trust.
PRINCIPAL TRANSACTIONS
- ----------------------
Section 4.06. Except to the extent prohibited by applicable law, the
------------
Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with any investment adviser, distributor,
or transfer agent for the Trust or with any Interested Person of such person;
and the Trust may employ any such person, or firm or company in which such
person is an Interested Person, as broker, legal counsel, registrar, investment
adviser, distributor, transfer agent, dividend disbursing agent, custodian, or
in any other capacity upon customary terms.
20
<PAGE>
ARTICLE V
---------
EXPENSES OF THE TRUST
---------------------
TRUSTEE REIMBURSEMENT
- ---------------------
Section 5.01. Subject to the provisions of Article II, Section 2.08
------------
hereof, the Trustees shall be reimbursed from the Trust estate or the assets
belonging to the appropriate Series for their expenses and disbursements,
including, without limitation, fees and expenses of Trustees who are not
Interested Persons of the Trust, interest expense, taxes, fees and commissions
of every kind, expenses of pricing Trust portfolio securities, expenses of
issue, repurchase and redemption of shares, including expenses attributable to a
program of periodic repurchases or redemptions, expenses of registering and
qualifying the Trust and its Shares under federal and state laws and regulations
or under the laws of any foreign jurisdiction, charges of third parties,
including investment advisers, managers, custodians, transfer agents, portfolio
accounting and/or pricing agents, and registrars, expenses of preparing and
setting up in type prospectuses and statements of additional information and
other related Trust documents, expenses of printing and distributing
prospectuses sent to existing Shareholders, auditing and legal expenses, reports
to Shareholders, expenses of meetings of Shareholders and proxy solicitations
therefor, insurance expenses, association membership dues and for such non-
recurring items as may arise, including litigation to which the Trust (or a
Trustee acting as such) is a party, and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses, and liabilities the Trustees shall have a lien on the
assets belonging to the appropriate Series, or in the case of an expense
allocable to more than one Series, on the assets of each such Series, prior to
any rights or interests of the Shareholders thereto. This Section shall not
preclude the Trust from directly paying any of the aforementioned fees and
expenses.
21
<PAGE>
ARTICLE VI
----------
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER, AND TRANSFER AGENT
-------------------------------------------------------------
INVESTMENT ADVISER
- ------------------
Section 6.01. The Trustees may in their discretion, from time to
------------
time, enter into an investment advisory or management contract or contracts with
respect to the Trust or any Series whereby the other party or parties to such
contract or contracts shall undertake to furnish the Trustees with such
management, investment advisory, statistical and research facilities and
services, and such other facilities and services, if any, and all upon such
terms and conditions as the Trustees may, in their discretion, determine;
provided, however, that the initial approval and entering into of such contract
or contracts shall be subject to a Majority Shareholder Vote. Notwithstanding
any other provision of this Trust Instrument, the Trustees may authorize any
investment adviser (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales, or exchanges
of portfolio securities, other investment instruments of the Trust, or other
Trust Property on behalf of the Trustees, or may authorize any officer, agent,
or Trustee to effect such purchases, sales, or exchanges pursuant to
recommendations of the investment adviser (and all without further action by the
Trustees). Any such purchases, sales, and exchanges shall be deemed to have
been authorized by all of the Trustees.
The Trustees may authorize, subject to applicable requirements of the
1940 Act, including those relating to Shareholder approval, the investment
adviser to employ, from time to time, one or more sub-advisers to perform such
of the acts and services of the investment adviser, and upon such terms and
conditions, as may be agreed upon between the investment adviser and sub-
adviser. Any reference in this Trust Instrument to the investment adviser shall
be deemed to include such sub-advisers, unless the context otherwise requires.
22
<PAGE>
PRINCIPAL UNDERWRITER
- ---------------------
Section 6.02. The Trustees may in their discretion from time to time
------------
enter into an exclusive or non-exclusive underwriting contract or contracts
providing for the sale of Shares, whereby the Trust may either agree to sell
Shares to the other party to the contract or appoint such other party its
sales agent for such Shares. In either case, the contract shall be on such
terms and conditions, if any, as may be prescribed in the Bylaws, and such
further terms and conditions as the Trustees may in their discretion determine
not inconsistent with the provisions of this Article VI, or the Bylaws; and such
contract may also provide for the repurchase or sale of Shares by such other
party as principal or as agent of the Trust.
TRANSFER AGENT
- --------------
Section 6.03. The Trustees may, in their discretion, from time to
------------
time enter into one or more transfer agency and Shareholder service contracts
whereby the other party or parties shall undertake to furnish the Trustees with
transfer agency and Shareholder services. The contract or contracts shall be on
such terms and conditions as the Trustees may, in their discretion, determine
not inconsistent with the provisions of this Trust Instrument or of the Bylaws.
PARTIES TO CONTRACT
- -------------------
Section 6.04. Any contract of the character described in Sections
------------
6.01, 6.02, and 6.03 of this Article VI or any contract of the character
described in Article VIII hereof may be entered into with any corporation, firm,
partnership, trust, or association, although one or more of the Trustees or
officers of the Trust may be an officer, director, trustee, shareholder, or
member of such other party to the contract, and no such contract shall be
invalidated or rendered void or voidable by reason of the existence of any
relationship, nor
23
<PAGE>
shall any person holding such relationship be disqualified from voting on or
executing the same in his capacity as Shareholder and/or Trustee, nor shall any
person holding such relationship be liable merely by reason of such relationship
for any loss or expense to the Trust under or by reason of said contract or
accountable for any profit realized directly or indirectly therefrom, provided
that the contract when entered into was not inconsistent with the provisions of
this Article VI or Article VIII hereof or of the Bylaws. The same person
(including a firm, corporation, partnership, trust, or association) may be the
other party to contracts entered into pursuant to Sections 6.01, 6.02, and 6.03
of this Article VI or pursuant to Article VIII hereof, and any individual may be
financially interested or otherwise affiliated with persons who are parties to
any or all of the contracts mentioned in this Section 6.04.
PROVISIONS AND AMENDMENTS
- -------------------------
Section 6.05. Any contract entered into pursuant to Sections 6.01 or
------------
6.02 of this Article VI shall be consistent with and subject to the requirements
of Section 15 of the 1940 Act or other applicable Act of Congress hereafter
enacted with respect to its continuance in effect, its termination, and the
method of authorization and approval of such contract or renewal thereof, and no
amendment to any contract, entered into pursuant to Section 6.01 of this Article
VI shall be effective unless assented to in a manner consistent with the
requirements of said Section 15, as modified by any applicable rule, regulation,
or order of the Commission.
24
<PAGE>
ARTICLE VII
-----------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
VOTING POWERS
- -------------
Section 7.01. The Shareholders shall have power to vote only (i) for
------------
the election of Trustees as provided in Article III, Sections 3.01 and 3.02
hereof, (ii) for the removal of Trustees as provided in Article III, Section
3.03(d) hereof, (iii) with respect to any investment advisory or management
contract as provided in Article VI, Sections 6.01 and 6.05 hereof, and (iv) with
respect to such additional matters relating to the Trust as may be required by
law, by this Trust Instrument, or the Bylaws, or any registration of the Trust
with the Commission or any state, or as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares
shall be voted separately by individual Series, except (i) when required by the
1940 Act, Shares shall be voted in the aggregate and not by individual Series;
and (ii) when the Trustees have determined that the matter affects the interests
of more than one Series, then the Shareholders of all such Series shall be
entitled to vote thereon. The Trustees may also determine that a matter affects
only the interests of one or more classes of a Series, in which case any such
matter shall be voted on by such class or classes. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the Election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the Bylaws. A proxy may
be given in writing. The Bylaws may provide that proxies may also, or may
instead, be given by any electronic or telecommunications device or in any other
manner. Notwithstanding anything else herein or in the Bylaws, in the event a
proposal by anyone other than the officers or Trustees of the Trust is submitted
to a vote of
25
<PAGE>
the Shareholders of one or more Series or of the Trust, or in the event of any
proxy contest or proxy solicitation or proposal in opposition to any proposal by
the officers or Trustees of the Trust, Shares may be voted only in person or by
written proxy. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required or permitted by law, this Trust
Instrument, or any of the Bylaws of the Trust to be taken by Shareholders.
MEETINGS
- --------
Section 7.02. The first Shareholders' meeting shall be held in order
------------
to elect Trustees as specified in Section 3.02 of Article III hereof at the
principal office of the Trust or such other place as the Trustees may designate.
Meetings may be held within or without the State of Delaware. Special meetings
of the Shareholders of any Series may be called by the Trustees and shall be
called by the Trustees upon the written request of Shareholders owning at least
one-tenth of the Outstanding Shares entitled to vote. Whenever ten or more
Shareholders meeting the qualifications set forth in Section 16(c) of the 1940
Act, as the same may be amended from time to time, seek the opportunity of
furnishing materials to the other Shareholders with a view to obtaining
signatures on such a request for a meeting, the Trustees shall comply with the
provisions of said Section 16(c) with respect to providing such Shareholders
access to the list of the Shareholders of record of the Trust or the mailing of
such materials to such Shareholders of record, subject to any rights provided to
the Trust or any Trustees provided by said Section 16(c). Notice shall be sent,
by First Class Mail or such other means determined by the Trustees, at least 15
days prior to any such meeting.
QUORUM AND REQUIRED VOTE
- ------------------------
Section 7.03. One-third of Shares entitled to vote in person or by
------------
proxy shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any
26
<PAGE>
provision of law or of this Trust Instrument permits or requires that holders of
any Series shall vote as a Series (or that holders of a class shall vote as a
class), then one-third of the aggregate number of Shares of that Series (or that
class) entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series (or that class). Any lesser number shall
be sufficient for adjournments. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original meeting, without
the necessity of further notice. Except when a larger vote is required by law or
by any provision of this Trust Instrument or the Bylaws, a majority of the
Shares voted in person or by proxy shall decide any questions and a plurality
shall elect a Trustee, provided that where any provision of law or of this Trust
Instrument permits or requires that the holders of any Series shall vote as a
Series (or that the holders of any class shall vote as a class), then a majority
of the Shares present in person or by proxy of that Series or, if required by
law, a Majority Shareholder Vote of that Series (or class), voted on the matter
in person or by proxy shall decide that matter insofar as that Series (or class)
is concerned. Shareholders may act by unanimous written consent. Actions taken
by Series (or class) may be consented to unanimously in writing by Shareholders
of that Series.
ARTICLE VIII
------------
CUSTODIAN
---------
APPOINTMENT AND DUTIES
- ----------------------
Section 8.01. The Trustees shall at all times employ a bank, a
------------
company that is a member of a national securities exchange, or a trust company
as custodian with authority as its agent, but subject to such restrictions,
limitations, and other requirements, if any, as may be contained in the Bylaws
of the Trust:
27
<PAGE>
(1) to hold the securities owned by the Trust and deliver the same
upon written order or oral order confirmed in writing;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the Trustees may
direct; and
(3) to disburse such funds upon orders or vouchers; and the Trust may
also employ such custodian as its agent:
(4) to keep the books and accounts of the Trust or of any Series or
class and furnish clerical and accounting services; and
(5) to compute, if authorized to do so by the Trustees, the Net Asset
Value of any Series, or class thereof, in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and sub-custodian and approved by the Trustees, provided that in every
case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof, or such other person as may be
permitted by the Commission, or otherwise in accordance with the 1940 Act.
CENTRAL CERTIFICATE SYSTEM
- --------------------------
Section 8.02. Subject to such rules, regulations, and orders as the
------------
Commission may adopt, the Trustees may direct the custodian to deposit all or
any part of the securities owned by the Trust in a system for the central
handling of securities established by a national securities exchange or a
national securities association registered with the Commission under the
Securities Exchange Act of 1934, as amended, or such other person as may be
permitted
28
<PAGE>
by the Commission, or otherwise in accordance with the 1940 Act, pursuant to
which system all securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only upon the
order of the Trust or its custodians, sub-custodians, or other agents.
ARTICLE IX
----------
DISTRIBUTIONS AND REDEMPTIONS
-----------------------------
DISTRIBUTIONS
- -------------
Section 9.01. (a) The Trustees may from time to time declare and pay
------------
dividends or other distributions with respect to any Series. The amount of such
dividends or distributions and the payment of them and whether they are in cash
or any other Trust Property shall be wholly in the discretion of the Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans, or related plans as the Trustees
shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary
notwithstanding, the Trustees may at any time declare and distribute a stock
dividend pro rata among the Shareholders of a particular Series, or class
thereof, as of the record date of that Series fixed as provided in Section (b)
hereof.
29
<PAGE>
REDEMPTIONS
- -----------
Section 9.02. In case any holder of record of Shares of a particular
------------
Series desires to dispose of his Shares or any portion thereof, he may deposit
at the office of the transfer agent or other authorized agent of that Series a
written request or such other form of request as the Trustees may from time to
time authorize, requesting that the Series purchase the Shares in accordance
with this Section 9.02; and the Shareholder so requesting shall be entitled to
require the Series to purchase, and the Series or the principal underwriter of
the Series shall purchase his said Shares, but only at the Net Asset Value
thereof (as described in Section 9.03 of this Article IX). The Series shall
make payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series and payment for such Shares shall be
made by the Series or the principal underwriter of the Series to the Shareholder
of record within seven (7) days after the date upon which the request is
effective. Upon redemption, shares shall become Treasury shares and may be re-
issued from time to time.
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
- ------------------------------------------------------------------
Section 9.03. The term "Net Asset Value" of any Series shall mean
------------
that amount by which the assets of that Series exceed its liabilities, all as
determined by or under the direction of the Trustees. Such value shall be
determined separately for each Series and shall be determined on such days and
at such times as the Trustees may determine. Such determination shall be made
with respect to securities for which market quotations are readily available, at
the market value of such securities; and with respect to other securities and
assets, at the fair value as determined in good faith by the Trustees; provided,
however, that the Trustees, without Shareholder approval, may alter the method
of valuing portfolio
30
<PAGE>
securities insofar as permitted under the 1940 Act and the rules, regulations,
and interpretations thereof promulgated or issued by the Commission, or insofar
as permitted by any Order of the Commission applicable to the Series. The
Trustees may delegate any of their powers and duties under this Section 9.03
with respect to valuation of assets and liabilities. The resulting amount, which
shall represent the total Net Asset Value of the particular Series, shall be
divided by the total number of shares of that Series outstanding at the time,
and the quotient so obtained shall be the Net Asset Value per Share of that
Series. At any time the Trustees may cause the Net Asset Value per Share last
determined to be determined again in similar manner, and may fix the time when
such redetermined value shall become effective. If, for any reason, the net
income of any Series, determined at any time, is a negative amount, the Trustees
shall have the power with respect to that Series (i) to offset each
Shareholder's pro rata share of such negative amount from the accrued dividend
account of such Shareholder, or (ii) to reduce the number of Outstanding Shares
of such Series by reducing the number of Shares in the account of each
Shareholder by a pro rata portion of that number of full and fractional Shares
which represents the amount of such excess negative net income, or (iii) to
cause to be recorded on the books of such Series an asset account in the amount
of such negative net income (provided that the same shall thereupon become the
property of such Series with respect to such Series and shall not be paid to any
Shareholder), which account may be reduced by the amount of dividends declared
thereafter upon the Outstanding Shares of such Series on the day such negative
net income is experienced, until such asset account is reduced to zero; (iv) to
combine the methods described in clauses (i) and (ii) and (iii) of this
sentence; or (v) to take any other action they deem appropriate, in order to
cause (or in order to assist in causing) the Net Asset Value per Share of such
Series to remain at a constant amount per Outstanding Share
31
<PAGE>
immediately after each such determination and declaration. The Trustees shall
also have the power not to declare a dividend out of net income for the purpose
of causing the Net Asset Value per Share to be increased. The Trustees shall not
be required to adopt, but may at any time adopt, discontinue, or amend the
practice of maintaining the Net Asset Value per Share of the Series at a
constant amount.
SUSPENSION OF THE RIGHT OF REDEMPTION
- -------------------------------------
Section 9.04. The Trustees may declare a suspension of the right of
------------
redemption or postpone the date of payment as permitted under the 1940 Act.
Such suspension shall take effect at such time as the Trustees shall specify but
not later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment until the Trustees shall declare the suspension at an end. In the
case of a suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the Net Asset
Value per Share next determined after the termination of the suspension. In the
event that any Series is divided in to classes, the provisions of this Section
9.03, to the extent applicable as determined in the discretion of the Trustees
and consistent with applicable law, may be equally applied to each such class.
REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED INVESTMENT COMPANY
- ------------------------------------------------------------------------
Section 9.05. If the Trustees shall, at any time and in good faith,
------------
be of the opinion that direct or indirect ownership of Shares of any Series has
or may become concentrated in any Person to an extent which would disqualify any
Series as a regulated investment company under the Internal Revenue Code, then
the Trustees shall have the power (but not the obligation) by lot or other means
deemed equitable by them (i) to call for redemption by
32
<PAGE>
any such person of a number, or principal amount, of Shares sufficient to
maintain or bring the direct or indirect ownership of Shares into conformity
with the requirements for such qualification, and (ii) to refuse to transfer or
issue Shares to any person whose acquisition of the Shares in question would
result in such disqualification. The redemption shall be effected at the
redemption price and in the manner provided in this Article IX.
The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the provisions of the Internal
Revenue Code, or to comply with the requirements of any other taxing authority.
ARTICLE X
---------
LIMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------
NO PERSONAL LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES, OR AGENTS
- -----------------------------------------------------------------
Section 10.01. No Trustee, officer, employee, or agent of the Trust
-------------
shall be subject to any personal liability whatsoever, in his official or
individual capacity, to any Person, other than the Trust or its Shareholders,
in connection with Trust Property or the affairs of the Trust, save only that
arising from his bad faith, willful misfeasance, gross negligence, or reckless
disregard of his duty to such Person; and all such Persons shall look solely to
the Trust Property for satisfaction of claims of any nature against a Trustee,
officer, employee, or agent of the Trust arising in connection with the affairs
of the Trust. No Trustee, officer, employee, or agent of the Trust shall be
liable to the Trust, Shareholders of Interests therein, or to any Trustee,
officer, employee, or agent thereof for any action or failure to act (including,
without limitation, the failure to compel in any way any former or acting
Trustee
33
<PAGE>
to redress any breach of trust) except for his own bad faith, willful
misfeasance, gross negligence, or reckless disregard of his duties.
INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES, AGENTS
- --------------------------------------------------------
Section 10.02. The Trust shall indemnify each of its Trustees,
-------------
officers, employees, and agents (including Persons who serve at its request as
directors, officers, or trustees of another organization in which it has any
interest, as a shareholder, creditor, or otherwise) against all liabilities and
expenses (including amounts paid in satisfaction of judgments, in compromise, as
fines and penalties, and as counsel fees) reasonably incurred by him in
connection with the defense or disposition of any action, suit, or other
proceeding, whether civil or criminal, in which he may be involved or with which
he may be threatened, while in office or thereafter, by reason of his being or
having been such a Trustee, officer, employee, or agent, except with respect to
any matter as to which he shall have been adjudicated to have acted in bad
faith, willful misfeasance, gross negligence, or reckless disregard of his
duties; provided, however, that as to any matter disposed of by a compromise
payment by such Person, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless there has been a determination that such Person did not engage
in bad faith, willful misfeasance, gross negligence, or reckless disregard of
the duties involved in the conduct of his office by the court or other body
approving the settlement or other disposition or by a reasonable determination,
based upon review of readily available facts (as opposed to a full trial-type
inquiry), that he did not engage in such conduct by written opinion from
independent legal counsel approved by the Trustees. The rights accruing to any
Person under these provisions shall not exclude any other right to which he may
be lawfully entitled; provided that no Person may satisfy any right of indemnity
or reimbursement granted herein or in Section 10.01 or to which he may
34
<PAGE>
be otherwise entitled except out of the Trust Property. The Trustees may make
advance payments in connection with indemnification under this Section 10.02,
provided that the indemnified Person shall have given a written undertaking to
reimburse the Trust in the event it is subsequently determined that he is not
entitled to such indemnification.
LIABILITY OF SHAREHOLDERS; INDEMNIFICATION
- ------------------------------------------
Section 10.03. "Shareholders" shall mean as of any particular time
-------------
any or all holders of record of interests in the Trust or in Trust Property, as
the case may be, at such time. The Trust shall indemnify and hold each
Shareholder harmless from and against any claim or liability to which such
Shareholder may become subject solely by reason of his being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability (upon proper and timely request by the Shareholder). The rights
accruing to a Shareholder under this Section 10.03 shall not exclude any other
right to which such Shareholder may be lawfully entitled, nor shall anything
herein contained restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically provided
herein.
NO BOND REQUIRED OF TRUSTEES
- ----------------------------
Section 10.04. No Trustee shall, as such, be obligated to give any
-------------
bond or surety or other security for the performance of any of his duties
hereunder.
NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC.
- ----------------------------------------------------------
Section 10.05. No purchaser, lender, or other Person dealing with the
-------------
Trustees or any officer, employee, or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer,
35
<PAGE>
employee, or agent, or be liable for the application of money or property paid,
loaned, or delivered to, or on the order of, the Trustees or of said officer,
employee, or agent. Every obligation, contract, instrument, certificate, or
other interest or undertaking of the Trust, and every other act or thing
whatsoever executed in connection with the Trust, shall be conclusively taken to
have been executed or done by the executors thereof only in their capacity as
Trustees, officers, employees, or agents of the Trust. Every written obligation,
contract, instrument, certificate, or other interest or undertaking of the Trust
made by the Trustees or by any officer, employee, or agent of the Trust, in his
capacity as such, shall contain an appropriate recital to the effect that the
Trustee, officer, employee, and agent of the Trust shall not personally be bound
by or liable thereunder, nor shall resort be had to their private property for
the satisfaction of any obligation or claim thereunder, and appropriate
references shall be made therein to the Declaration, and may contain any further
recital which they may deem appropriate, but the omission of such recital shall
not operate to impose personal liability on any of the Trustees, officers,
employees, or agents of the Trust. The Trustees may maintain insurance for the
protection of the Trust Property, Shareholders, Trustees, officers, employees,
and agents in such amount as the Trustees shall deem advisable.
RELIANCE ON EXPERTS, ETC.
- -------------------------
Section 10.06. Each Trustee and officer or employee of the Trust
-------------
shall, in the performance of his duties, be fully and completely justified and
protected with regard to any act or any failure to act resulting from reliance
in good faith upon the books of account or other records of the Trust, upon an
opinion of counsel, or upon reports made to the Trust by any of its officers or
employees or by any Investment Adviser, Administrator, accountant, appraiser, or
other experts or consultants selected with reasonable care by the Trustees,
36
<PAGE>
officers, or employees of the Trust, regardless of whether such counsel or
expert may also be a Trustee.
SHAREHOLDERS
- ------------
Section 10.07. In case any Shareholder or former Shareholder of any
-------------
Series shall be held to be personally liable solely by reason of his being or
having been a Shareholder of such Series and not because of his acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his heirs, executors, administrators, or other legal representatives, or, in the
case of a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense arising from
such liability. The Trust, on behalf of the affected Series, shall, upon
request by the Shareholder, assume the defense of any claim made against the
Shareholder for any act or obligation of the Series and satisfy any judgement
thereon from the assets of the Series.
ARTICLE XI
----------
MISCELLANEOUS
-------------
TRUST NOT A PARTNERSHIP
- -----------------------
Section 11.01. It is hereby expressly declared that a trust and not a
-------------
partnership is created hereby. No Trustee hereunder shall have any power to
bind personally either the Trust's officers or any Shareholder. All persons
extending credit to, contracting with, or having any claim against the Trust or
the Trustees shall look only to the assets of the appropriate Series or (if the
Trustees shall have yet to have established Series) of the Trust for payment
under such credit, contract, or claim; and neither the Shareholders nor the
Trustees, nor any of their agents, whether past, present, or future, shall be
personally liable
37
<PAGE>
therefor. Nothing in this Trust Instrument shall protect a Trustee against any
liability to which the Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
- -------------------------------------------------------------
Section 11.02. The exercise by the Trustees of their powers and
-------------
discretions hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested.
Subject to the provisions of Article X hereof and to Section 11.01 of this
Article XI, the Trustees shall not be liable for errors of judgment or mistakes
of fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Trust Instrument, and subject to
the provisions of Article X hereof and Section 11.01 of this Article XI, shall
be under no liability for any act or omission in accordance with such advice or
for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is obtained.
ESTABLISHMENT OF RECORD DATES
- -----------------------------
Section 11.03. The Trustees may close the Share transfer books of the
-------------
Trust for a period not exceeding sixty (60) days preceding the date of any
meeting of Shareholders, or the date for the payment of any dividends or other
distributions, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect; or in lieu of
closing the stock transfer books as aforesaid, the Trustees may fix in advance a
date, not exceeding sixty (60) days preceding the date of any meeting of
Shareholders, or the date for payment of any dividend or other distribution, or
the date for the allotment of rights, or the date when any change or conversion
or exchange of Shares shall go into effect, as a record date for the
determination of the Shareholders entitled to
38
<PAGE>
notice of, and to vote at, any such meeting, or entitled to receive payment of
any such dividend or other distribution, or to any such allotment of rights, or
to exercise the rights in respect of any such change, conversion, or exchange of
Shares, and in such case such Shareholders and only such Shareholders as shall
be Shareholders of record on the date so fixed shall be entitled to such notice
of, and to vote at, such meeting, or to receive payment of such dividend or
other distribution, or to receive such allotment or rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any Shares on the
books of the Trust after any such record date fixed as aforesaid.
TERMINATION OF TRUST
- --------------------
Section 11.04. (a) This Trust shall continue without limitation of
-------------
time but subject to the provisions of sub-section (b) of this Section 11.04.
(b) The Trustees may, subject to a Majority Shareholder Vote of each
Series affected by the matter or, if applicable, to a Majority Shareholder Vote
of the Trust, and subject to a vote of a majority of the Trustees:
(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another trust, partnership, association, or
corporation, or to a separate series of shares thereof, organized under the laws
of any state which trust, partnership, association, or corporation is an open-
end management investment company as defined in the 1940 Act, or is a series
thereof, for adequate consideration which may include the assumption of all
outstanding obligations, taxes, and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of beneficial
interest, stock, or other ownership interests of such trust, partnership,
association, or corporation or of a series thereof; or
39
<PAGE>
(ii) at any time sell and convert into money all of the assets of the
Trust or any affected Series.
Upon making reasonable provision, in the determination of the
Trustees, for the payment of all such liabilities in either (i) or (ii), by such
assumption or otherwise, the Trustees shall distribute the remaining proceeds or
assets (as the case may be) of each Series (or class) ratably among the holders
of Shares of that Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in sub-section (b), the Trust or any affected
Series shall terminate, and the Trustees and the Trust shall be discharged of
any and all further liabilities and duties hereunder and the right, title, and
interest of all parties with respect to the Trust or Series shall be cancelled
and discharged.
Upon termination of the Trust, following completion of winding up of
its business, the Trustees shall cause a certificate of cancellation of the
Trust's certificate of trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
REORGANIZATION
- --------------
Section 11.05. Notwithstanding anything else herein, the Trustees, in
-------------
order to change the form of organization of the Trust, may, without prior
Shareholder approval, (i) cause the Trust to merge or consolidate with or into
one or more trusts, partnerships, associations, or corporations so long as the
surviving or resulting entity is an open-end management investment company under
the 1940 Act, or is a series thereof, that will succeed to or assume the Trust's
registration under that Act and which is formed, organized, or existing under
the laws of a state, commonwealth, possession, or colony of the United States,
or (ii) cause the Trust to incorporate under the laws of Delaware. Any
agreement of merger or
40
<PAGE>
consolidation or certificate of merger may be signed by a majority of Trustees,
and facsimile signatures conveyed by electronic or telecommunication means shall
be valid.
Pursuant to and in accordance with the provisions of Section 3815(f)
of the Delaware Act, and notwithstanding anything to the contrary contained in
this Trust Instrument, an agreement of merger or consolation approved by the
Trustees in accordance with this Section 11.05 may effect any amendment to the
Trust Instrument or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.
FILING OF COPIES, REFERENCES, HEADINGS
- --------------------------------------
Section 11.06. The original or a copy of this Trust Instrument and of
-------------
each amendment hereof or Trust Instrument supplemental hereto shall be kept at
the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer or Trustee of the
Trust as to whether or not any such amendments or supplements have been made and
as to any matters in connection with the Trust hereunder, and with the same
effect as if it were the original, may rely on a copy certified by an officer or
Trustee of the Trust to be a copy of this Trust Instrument or of any such
amendment or supplemental Trust Instrument. In this Trust Instrument or in any
such amendment or supplemental Trust Instrument, references to this Trust
Instrument, and all expressions like "herein," hereof," and "hereunder," shall
be deemed to refer to this Trust Instrument as amended or affected by any such
supplemental Trust Instrument. All expressions like "his," "he," and "him,"
shall be deemed to include the feminine and neuter, as well as masculine,
genders. Headings are placed herein for convenience of reference only, and in
case of any conflict, the text of this Trust Instrument, rather than the
headings,
41
<PAGE>
shall control. This Trust Instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
APPLICABLE LAW
- --------------
Section 11.07. The trust set forth in this instrument is made in the
-------------
State of Delaware, and the Trust and this Trust Instrument, and the rights and
obligations of the Trustees and Shareholders hereunder, are to be governed by
and construed and administered according to the Delaware Act and the laws of
said State; provided, however, that there shall not be applicable to the Trust,
the Trustees, or this Trust Instrument (a) the provisions of Section 3540 of
Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents, or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding, or disposition of
real or personal property, (iv) fees or other sums payable to trustees,
officers, agents, or employees of a trust, (v) the allocation of receipts and
expenditures to income or principal, (vi) restrictions or limitations on the
permissible nature, amount, or concentration of trust investments or
requirements relating to the titling, storage, or other manner of holding of
trust assets, or (vii) the establishment of fiduciary or other standards or
responsibilities or limitations on the acts or powers of trustees, which are
inconsistent with the limitations or liabilities or authorities and powers of
the Trustees set forth or referenced in this Trust Instrument. The Trust shall
be of the type commonly called a "business trust," and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust under Delaware law. The Trust specifically reserves
the right to
42
<PAGE>
exercise any of the powers or privileges afforded to trusts or actions that may
be engaged in by trusts under the Delaware Act, and the absence of a specific
reference herein to any such power, privilege, or action shall not imply that
the Trust may not exercise such power or privilege or take such actions.
AMENDMENTS
- ----------
Section 11.08. Except as specifically provided herein, the Trustees
-------------
may, without shareholder vote, amend, or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto, or an
amended and restated trust instrument. Shareholders shall have the right to
vote (i) on any amendment which would affect their right to vote granted in
Section 7.01 of Article VII hereof, (ii) on any amendment to this Section 11.08,
(iii) on any amendment as may be required by law or by the Trust's registration
statement filed with the Commission, and (iv) on any amendment submitted to them
by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series shall be authorized by vote of the Shareholders of each
Series affected, and no vote of shareholders of a Series not affected shall be
required. Notwithstanding anything else herein, any amendment to Article X
hereof shall not limit the rights to indemnification or insurance provided
therein with respect to action or omission of Covered Persons prior to such
amendment.
FISCAL YEAR
- -----------
Section 11.09. The fiscal year of the Trust shall end on December 31;
-------------
provided, however, that the Trustees may, without Shareholder approval, change
the fiscal year of the Trust.
43
<PAGE>
USE OF THE WORD "NAVELLIER"
- --------------------------
Section 11.10. Louis G. Navellier ("Navellier") has consented to, and
-------------
granted a non-exclusive license for, the use by any Series or by the Trust of
the identifying word "Navellier" in the name of any Series or of the Trust.
Such consent is subject to revocation by Navellier in its discretion, if
Navellier or any entity owned or controlled by Louis Navellier or subsidiary or
affiliate thereof is not employed as the investment adviser of each Series of
the Trust. As between the Trust and Navellier, Navellier controls the use of
the name of the Trust insofar as such name contains the identifying word
"Navellier." Navellier may, from time to time, use the identifying word
"Navellier" in other connections and for other purposes, including, without
limitation, in the names of other investment companies, corporations, or
businesses which it may manage, advise, sponsor, or own, or in which it may have
a financial interest. Navellier may require the Trust or any Series thereof to
cease using the identifying word "Navellier" in the name of the Trust or any
Series thereof if the Trust or any Series thereof ceases to employ Navellier or
a subsidiary or affiliate thereof as investment adviser.
PROVISIONS IN CONFLICT WITH LAW
- -------------------------------
Section 11.11. The provisions of this Trust Instrument are severable,
-------------
and if the Trustees shall determine, with the advice of counsel, that any of
such provisions are in conflict with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code, or with other applicable laws
and regulations, the conflicting provision shall be deemed never to have
constituted a part of this Trust Instrument; provided, however, that such
determination shall not affect any of the remaining provisions of this Trust
Instrument, or render invalid or improper any action taken or omitted prior to
such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction,
44
<PAGE>
such invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any other
jurisdiction or any other provision of this Trust Instrument in any
jurisdiction.
IN WITNESS WHEREOF, the undersigned, being all of the initial Trustees
of the Trust, have executed this instrument this 17th day of October, 1995.
/s/ Louis G. Navllier
_______________________________________
Louis G. Navellier, as Trustee
and not individually.
/s/ Barry Sander
_______________________________________
Barry Sander, as Trustee
and not individually.
/s/ Joel Rossman
_______________________________________
Joel Rossman, as Trustee
and not individually.
/s/ Arnold Langsen
_______________________________________
Arnold Langsen, as Trustee
and not individually.
/s/ Jacques Delacroix
_______________________________________
Jacques Delacroix, as Trustee
and not individually.
45
<PAGE>
EXHIBIT 2
<PAGE>
BYLAWS
OF
THE NAVELLIER PERFORMANCE FUNDS
These Bylaws of The Navellier Performance Funds (the "Trust"), a
Delaware business trust, are subject to the Trust Instrument of the Trust dated
October 17, 1995 as from time to time amended, supplemented or restated (the
"Trust Instrument"). Capitalized terms used herein which are defined in the
Trust Instrument are used as therein defined.
ARTICLE I
---------
PRINCIPAL OFFICE
----------------
The principal office of the Trust shall be located at 920 Incline Way,
Building 1, Incline Village, Nevada, or such other location as the Trustees
may, from time to time, determine. The Trust may establish and maintain such
other offices and places of business as the Trustees may, from time to time,
determine.
ARTICLE II
----------
OFFICERS AND THEIR ELECTION
---------------------------
Officers
- --------
Section 1. The officers of the Trust shall be a President, a
---------
Treasurer, a Secretary, and such other officers as the Trustees may from time to
time elect. The Trustees may delegate to any officer or committee the power to
appoint any subordinate officers or agents. It shall not be necessary for any
Trustee or other officer to be a holder of Shares in the Trust.
Election of Officers
- --------------------
Section 2. The Treasurer and Secretary shall be chosen by the
---------
Trustees. The President shall be chosen by and from the Trustees. Two or more
offices may be held by a single person. Subject to the provisions of Section 12
hereof, the President, the Treasurer, and the Secretary shall each hold office
until their successors are chosen and qualified, and all other officers shall
hold office at the pleasure of the Trustees.
Resignations
- ------------
Section 3. Any officer of the Trust may resign, notwithstanding
---------
Section 2 hereof, by filing a written resignation with the President, the
Trustees, or the Secretary, which resignation shall take effect on being so
filed or at such time as may be therein specified.
1
<PAGE>
ARTICLE III
-----------
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
------------------------------------------
Management of the Trust - General
- ---------------------------------
Section 1. The business and affairs of the Trust shall be managed by,
---------
or under the direction of, the Trustees, and they shall have all powers
necessary and desirable to carry out their responsibilities, so far as such
powers are not inconsistent with the laws of the State of Delaware, the Trust
Instrument, or with these Bylaws.
Executive and Other Committees
- ------------------------------
Section 2. The Trustees may elect from their own number an executive
---------
committee, which shall have any or all the powers of the Trustees while the
Trustees are not in session. The Trustees may also elect from their own number
other committees from time to time. The number composing such committees and
the powers conferred upon the same are to be determined by vote of a majority of
the Trustees. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or
duties shall keep records of its meetings and shall report its actions to the
Trustees. The Trustees shall have power to rescind any action of any committee,
but no such rescission shall have retroactive effect.
Compensation
- ------------
Section 3. Each Trustee and each committee member may receive such
---------
compensation for his services and reimbursement for his expenses as may be fixed
from time to time by resolution of the Trustees.
Chairman of the Trustees.
- ------------------------
Section 4. The Trustees shall appoint from among their number a
---------
Chairman who shall serve as such at the pleasure of the Trustees. When present,
he shall preside at all meetings of the Shareholders and the Trustees, and he
may, subject to the approval of the Trustees, appoint a Trustee to preside at
such meetings in his absence. He shall perform such other duties as the
Trustees may from time to time designate.
President
- ---------
Section 5. The President shall be the chief executive officer of the
---------
Trust and, subject to the direction of the Trustees, shall have general
administration of the business and policies of the Trust. Except as the
Trustees may otherwise order, the President shall have the power to grant,
issue, execute, or sign such powers of attorney, proxies, agreements, or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust or any Series thereof. He shall also have the power to
employ attorneys, accountants,
2
<PAGE>
and other advisers and agents and counsel for the Trust. The President shall
perform such duties additional to all of the foregoing as the Trustees may from
time to time designate.
Treasurer
- ---------
Section 6. The Treasurer shall be the principal financial and
---------
accounting officer of the Trust. He shall deliver all funds and securities of
the Trust which may come into his hands to such company as the Trustees shall
employ as Custodian in accordance with the Trust Instrument and applicable
provisions of law. He shall make annual reports regarding the business and
condition of the Trust, which reports shall be preserved in Trust records, and
he shall furnish such other reports regarding the business and condition of the
Trust as the Trustees may from time to time require. The Treasurer shall
perform such additional duties as the Trustees may from time to time designate.
Secretary
- ---------
Section 7. The Secretary shall record in books kept for the purpose
---------
all votes and proceedings of the Trustees and the Shareholders at their
respective meetings. He shall have the custody of the seal of the Trust. The
Secretary shall perform such additional duties as the Trustees may from time to
time designate.
Vice President
- --------------
Section 8. Any Vice President of the Trust shall perform such duties
---------
as the Trustees or the President may from time to time designate. At the
request or in the absence or disability of the President, the Vice President
(or, if there are two or more Vice Presidents, then the senior of the Vice
Presidents present and able to act) may perform all the duties of the President
and, when so acting, shall have all the powers of and be subject to all the
restrictions upon the President.
Assistant Treasurer
- -------------------
Section 9. Any Assistant Treasurer of the Trust shall perform such
---------
duties as the Trustees or the Treasurer may from time to time designate, and, in
the absence of the Treasurer, the senior Assistant Treasurer, present and able
to act, may perform all the duties of the Treasurer.
Assistant Secretary
- -------------------
Section 10. Any Assistant Secretary of the Trust shall perform such
----------
duties as the Trustees or the Secretary may from time to time designate, and, in
the absence of the Secretary, the senior Assistant Secretary, present and able
to act, may perform all the duties of the Secretary.
3
<PAGE>
Subordinate Officers
- --------------------
Section 11. The Trustees from time to time may appoint such other
----------
officers or agents as they may deem advisable, each of whom shall have such
title, hold office for such period, have such authority, and perform such duties
as the Trustees may determine. The Trustees from time to time may delegate to
one or more officers or committees of Trustees the power to appoint any such
subordinate officers or agents and to prescribe their respective terms of
office, authorities, and duties.
Surety Bonds
- ------------
Section 12. The Trustees may require any officer or agent of the
----------
Trust to execute a bond (including, without limitation, any bond required by the
Investment Company Act of 1940, as amended ("the 1940 Act") and the rules and
regulations of the Securities and Exchange Commission ("Commission") to the
Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his duties to the Trust,
including responsibility for negligence and for the accounting of any of the
Trust's property, funds, or securities that may come into his hands.
Removal
- -------
Section 13. Any officer may be removed from office whenever, in the
----------
judgment of the Trustees, the best interest of the Trust will be served thereby,
by the vote of a majority of the Trustees given at any regular meeting or any
special meeting of the Trustees. In addition, any officer or agent appointed in
accordance with the provisions of Section 11 hereof may be removed, either with
or without cause, by any officer upon whom such power of removal shall have been
conferred by the Trustees.
Remuneration
- ------------
Section 14. The salaries or other compensation, if any, of the
----------
officers of the Trust shall be fixed from time to time by resolution of the
Trustees.
ARTICLE IV
----------
SHAREHOLDERS' MEETINGS
----------------------
Special Meetings
- ----------------
Section 1. A special meeting of the Shareholders shall be called by
---------
the Secretary whenever (i) ordered by the Trustees or (ii) requested in writing
by the holder or holders of at least 10% of the Outstanding Shares entitled to
vote. If the Secretary, when so ordered or requested, refuses or neglects for
more than 30 days to call such special meeting, the Trustees or the Shareholders
so requesting may, in the name of the Secretary, call the meeting by giving
notice thereof in the manner required when notice is given by the Secretary. If
the meeting is a meeting of the Shareholders of one or more Series or classes of
Shares, but not a meeting of all Shareholders of the Trust, then only special
meetings of
4
<PAGE>
the Shareholders of such one or more Series or Classes shall be called, and only
the Shareholders of such one or more Series or Classes shall be entitled to
notice of and to vote at such meeting.
Notices
- -------
Section 2. Except as above provided, notices of any meeting of the
---------
Shareholders shall be given by the Secretary by delivering or mailing, postage
prepaid, to each Shareholder entitled to vote at said meeting, written or
printed notification of such meeting at least 15 days before the meeting, to
such address as may be registered with the Trust by the Shareholder. Notice of
any Shareholder meeting need not be given to any Shareholder if a written waiver
of notice, executed before or after such meeting, is filed with the record of
such meeting, or to any Shareholder who shall attend such meeting in person or
by proxy. Notice of adjournment of a Shareholders' meeting to another time or
place need not be given, if such time and place are announced at the meeting or
reasonable notice is given to persons present at the meeting and the adjourned
meeting is held within a reasonable time after the date set for the original
meeting.
Voting - Proxies
- ----------------
Section 3. Subject to the provisions of the Trust Instrument,
---------
Shareholders entitled to vote may vote either in person or by proxy, provided
that either (i) an instrument authorizing such proxy to act is executed by the
Shareholder in writing and dated not more than 11 months before the meeting,
unless the instrument specifically provides for a longer period, or (ii) the
Trustees adopt by resolution an electronic, telephonic, computerized, or other
alternative to execution of a written instrument authorizing the proxy to act,
which authorization is received not more than 11 months before the meeting.
Proxies shall be delivered to the Secretary of the Trust or other person
responsible for recording the proceedings before being voted. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by one of them, unless at or prior to exercise of such proxy the Trust
receives a specific written notice to the contrary from any one of them. Unless
otherwise specifically limited by their terms, proxies shall entitle the holder
thereof to vote at any adjournment of a meeting. A proxy purporting to be
exercised by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden or proving invalidity
shall rest on the challenger. At all meetings of the Shareholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voters, the validity of proxies, and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting. Except as otherwise provided
herein or in the Trust Instrument, as these Bylaws or such Trust Instrument may
be amended or supplemented from time to time, all matters relating to the
giving, voting, or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and the
Shareholders were shareholders of a Delaware corporation.
5
<PAGE>
Place of Meeting
- ----------------
Section 4. All special meetings of the Shareholders shall be held at
---------
the principal place of business of the Trust or at such other place in the
United States as the Trustees may designate.
Action Without a Meeting
- ------------------------
Section 5. Any action to be taken by Shareholders may be taken
---------
without a meeting if all Shareholders entitled to vote on the matter consent to
the action in writing and the written consents are filed with the records of
meetings of Shareholders of the Trust. Such consent shall be treated for all
purposes as a vote at a meeting of the Trustees held at the principal place of
business of the Trust.
ARTICLE V
---------
TRUSTEES' MEETINGS
------------------
Special Meetings
- ----------------
Section 1. Special meetings of the Trustees may be called orally or
---------
in writing by the Chairman of the Board of Trustees or any two other Trustees.
Regular Meetings
- ----------------
Section 2. Regular meetings of the Trustees may be held at such
---------
places and at such times as the Trustees may from time to time determine; each
Trustee present at such determination shall be deemed a party calling the
meeting, and no call or notice will be required to such Trustee provided that
any Trustee who is absent when such determination is made shall be given notice
of the determination by the Chairman or any two other Trustees, as provided for
in Section 4.04 of the Trust Instrument.
Quorum
- ------
Section 3. A majority of the Trustees shall constitute a quorum for
---------
the transaction of business, and an action of a majority of the quorum shall
constitute action of the Trustees.
Notice
- ------
Section 4. Except as otherwise provided, notice of any special
---------
meeting of the Trustees shall be given by the party calling the meeting to each
Trustee, as provided for in Section 4.04 of the Trust Instrument. A written
notice may be mailed, postage prepaid, addressed to him at his address as
registered on the books of the Trust, or, if not so registered, at his last
known address.
6
<PAGE>
Place of Meeting
- ----------------
Section 5. All special meetings of the Trustees shall be held at the
---------
principal place of business of the Trust or such other place as the Trustees may
designate. Any meeting may adjourn to any place.
Special Action
- --------------
Section 6. When all the Trustees shall be present at any meeting,
---------
however called or wherever held, or shall assent to the holding of the meeting
without notice, or shall sign a written assent thereto filed with the record of
such meeting, the acts of such meeting shall be valid as if such meeting had
been regularly held.
Action by Consent
- -----------------
Section 7. Any action by the Trustees may be taken without a meeting
---------
if a written consent thereto is signed by all the Trustees and filed with the
records of the Trustees' meeting. Such consent shall be treated, for all
purposes, as a vote at a meeting of the Trustees held at the principal place of
business of the Trustees.
Participation in Meetings by Conference Telephone
- -------------------------------------------------
Section 8. Trustees may participate in a meeting of Trustees by
---------
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting. Any meeting conducted by
telephone shall be deemed to take place at and from the principal office of the
Trust.
ARTICLE VI
----------
SHARES OF BENEFICIAL INTEREST
-----------------------------
Beneficial Interest
- -------------------
Section 1. The beneficial interest in the Trust shall at all times be
---------
divided into such transferable Shares of one or more separate and distinct
Series, or classes thereof, as the Trustees shall from time to time create and
establish. The number of Shares is unlimited, and each Share of each Series or
class thereof shall be without par value and shall represent an equal
proportionate interest with each other Share in the Series, none having priority
or preference over another, except to the extent that such priorities or
preferences are established with respect to one or more classes of shares
consistent with applicable law and any rule or order of the Commission.
7
<PAGE>
Transfer of Shares
- ------------------
Section 2. The Shares of the Trust shall be transferable, so as to
---------
affect the rights of the Trust, only by transfer recorded on the books of the
Trust, in person, by attorney, or by written and notarized direction of the
shareholder.
Equitable Interest Not Recognized
- ---------------------------------
Section 3. The Trust shall be entitled to treat the holder of record
---------
of any Share or Shares of beneficial interest as the holder in fact thereof, and
shall not be bound to recognize any equitable or other claim or interest in such
Share or Shares on the part of any other person except as may be otherwise
expressly provided by law.
Share Certificate
- -----------------
Section 4. No certificates certifying the ownership of Shares shall
---------
be issued except as the Trustees may otherwise authorize. The Trustees may
issue certificates to a Shareholder of any Series or class thereof for any
purpose, and the issuance of a certificate to one or more Shareholders shall not
require the issuance of certificates generally. In the event that the Trustees
authorize the issuance of Share certificates, such certificate shall be in the
form proscribed from time to time by the Trustees and shall be signed by the
President or a Vice President and by the Treasurer, Assistant Treasurer,
Secretary, or Assistant Secretary. Such signatures may be facsimiles if the
certificate is signed by a transfer or shareholder services agent or by a
registrar, other than a Trustee, officer, or employee of the Trust. In case any
officer who has signed or whose facsimile signature has been placed on such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Trust with the same effect as if he or she were
such officer at the time of issue.
In lieu of issuing certificates for Shares, the Trustees or the
transfer or shareholder services agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such Shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
Loss of Certificate
- -------------------
Section 5. In the case of the alleged loss or destruction or the
---------
mutilation of a Share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may prescribe.
Discontinuance of Issuance of Certificates
- ------------------------------------------
Section 6. The Trustees may at any time discontinue the issuance of
---------
Share certificates and may, by written notice to each Shareholder, require the
surrender of Share certificates to the Trust for cancellation. Such surrender
and cancellation shall not affect the ownership of Shares in the Trust.
8
<PAGE>
ARTICLE VII
-----------
OWNERSHIP OF ASSETS OF THE TRUST
--------------------------------
The Trustees, acting for and on behalf of the Trust, shall be deemed
to hold legal and beneficial ownership of any income earned on securities held
by the Trust issued by any business entity formed, organized, or existing under
the laws of any jurisdiction other than a state, commonwealth, possession, or
colony of the United States or the laws of the United States.
ARTICLE VIII
------------
INSPECTION OF BOOKS
-------------------
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and regulations
the accounts and books of the Trust or any of them shall be open to the
inspection of the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees or by resolution of the Shareholders.
ARTICLE IX
----------
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
----------------------------------------------
The Trust may purchase and maintain insurance on behalf of any Covered
Person or employee of the Trust, including any Covered Person or employee of the
Trust who is or was serving at the request of the Trust as a Trustee, officer,
or employee of a corporation, partnership, joint venture, trust, or in any other
capacity or in any other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Trustees would have the power to indemnify him against such
liability.
The Trust may not acquire or obtain a contract for insurance that
protects or purports to protect any Trustee or officer of the Trust against any
liability to the Trust or its Shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
ARTICLE X
---------
SEAL
----
The seal of the Trust shall be circular in form bearing the
inscription:
THE NAVELLIER PERFORMANCE FUNDS - 1995
THE STATE OF DELAWARE
The form of the seal shall be subject to alteration by the Trustees,
and the seal may be used by causing it or a facsimile to be impressed or affixed
or printed or otherwise reproduced.
9
<PAGE>
Any officer or Trustee of the Trust shall have authority to affix the
seal of the Trust to any document, instrument, or other paper executed and
delivered by or on behalf of the Trust; however, unless otherwise required by
the Trustees, the seal shall not be necessary to be placed on and its absence
shall not impair the validity of any document, instrument, or other paper
executed by or on behalf of the Trust.
ARTICLE XI
----------
FISCAL YEAR
-----------
The fiscal year of the Trust shall end on such date as the Trustees
shall from time to time determine.
ARTICLE XII
-----------
AMENDMENTS
----------
These Bylaws may be amended at any meeting of the Trustees of the
Trust by a majority vote.
ARTICLE XIII
------------
REPORTS TO SHAREHOLDERS
-----------------------
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the Trust including financial statements which shall
be certified at least annually by independent public accountants.
XIV
---
HEADINGS
--------
Headings are placed in these Bylaws for convenience of reference only,
and in case of any conflict, the text of these Bylaws rather than the headings
shall control.
10
<PAGE>
EXHIBIT 5
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
-----------------------------
AGREEMENT made as of the 17th day of October, 1995, by and between THE
NAVELLIER PERFORMANCE FUNDS, a business trust organized under the laws of the
State of Delaware (the "Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware
corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end
management investment company and is being registered as such under the
Investment Company Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund is currently comprised of one portfolio designated
as the "Navellier Aggressive Growth Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser
under the Investment Advisers Act of 1940, and engages in the business of acting
as investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Fund desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Fund;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the Fund and the Adviser agree as follows:
1. Duties as Adviser. The Fund hereby appoints the Adviser to act as
-----------------
the investment adviser to the Fund with respect to all of the Fund's Portfolios
(the "Portfolios"), and, subject to the supervision of the Board of Trustees of
the Fund, to provide investment advisory services to the Fund as hereinafter set
forth: (i) to obtain and evaluate such information and advice relating to the
economy, securities markets, and securities as it deems necessary or useful to
discharge its duties hereunder; (ii) to continuously manage the assets of the
Fund in a manner consistent with applicable law and the investment objectives
and policies set forth in the most current prospectus and statement of
additional information of the Fund under the Securities Act of 1933 (the
"Prospectus"); (iii) to determine which issuers will be deemed "Qualified
Issuers" (as defined in the Prospectus); (iv) to determine the timing of
purchases, sales, and dispositions of securities; (v) to take such further
action in its sole discretion (but always in compliance with applicable law and
the Prospectus) without obligation to give prior notice to the Board of Trustees
of the Fund, or the Custodian, including the placing of purchase and sale orders
on behalf of the Fund as it shall deem necessary and appropriate; (vi) to
furnish to or place at the disposal of the Fund such of the information,
evaluations, analyses, and opinions formulated or obtained by it in the
discharge of its duties as the Fund may, from time to time, reasonably request;
(vii) to take such actions necessary or appropriate to carry out the decisions
of the Fund's Board of Trustees; (viii) to make decisions for the Fund as to the
manner in which voting rights, rights to consent to trust action, and any other
rights pertaining to how the Fund's portfolio securities shall be exercised
("Portfolio Voting Rights"). The Fund has directed the
<PAGE>
Custodian, and Custodian as agreed, to act in accordance with the instructions
of the Adviser. The Adviser shall at no time have custody of or physical control
over the investment account assets or securities, and the Adviser shall not be
liable for any act or omission of the Custodian. The Adviser shall maintain
records required under the Investment Advisers Act of 1940 ("Advisers Act") and
shall make them available to the Fund or its designees for review or inspection
upon demand and at the Adviser's expense.
2. Allocation of Charges and Expenses. The Adviser shall bear the
----------------------------------
cost of rendering the investment advisory services to be performed by it under
this Agreement and shall, at its expense, maintain such staff and employ or
retain personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Fund, furnish
the services of such members of the Adviser's organization as may be duly
elected to be officers of the Fund, subject to their individual consent to serve
and to any limitations imposed by law.
The Fund will pay or cause to be paid all other expenses of the Fund
(except for the expenses to be paid by the Fund's Distributor), including,
without limitation, the following: (i) services rendered by the Custodian and
the Transfer Agent, (ii) fees, voluntary assessments, and other expenses
incurred in connection with membership in investment company organizations,
(iii) cost of stock certificates, reports, proxy materials and notices to
shareholders, and other like miscellaneous expenses, (iv) brokerage commissions
and other brokerage expenses, (v) taxes (including any income or franchise
taxes), and any fees payable to federal, state, and other governmental agencies,
(vi) fees and salaries payable to the Trustees, officers, and advisory board
members of the Fund, if any, (vii) auditing the Fund's books and accounts,
(viii) the cost of bookkeeping and accounting services, (ix) any and all Fund
legal expenses, (x) costs of mailing and tabulating proxies and costs of
shareholders' and Trustees' meetings, (xi) the cost of investment company
literature and other publications provided by the Fund to its Trustees and
officers, (xii) costs of any liability, uncollectible items of deposit and other
insurance or fidelity bonds, (xiii) any extraordinary expenses (including fees
and disbursements of counsel) incurred by the Fund, (xiv) costs of printing and
mailing monthly statements and confirmations, (xv) expense of organizing the
Fund, (xvi) filing fees and expenses relating to the registration and
qualification of the Fund's shares under federal and/or state securities laws
and maintaining such registrations and qualifications and (vii) other expenses
properly payable by the Fund.
3. Compensation of the Adviser. For the services to be rendered by
---------------------------
the Adviser hereunder, the Fund shall pay to the Adviser, on a monthly basis, an
annual fee of one and a quarter percent (1.25%) (the "Management Fee") of the
Fund's average daily net assets for the Navellier Aggressive Small Cap Equity
Portfolio and a one and a quarter percent (1.25%) management fee for any other
Portfolio subsequently opened and managed by Adviser.
<PAGE>
Payment of the Adviser's compensation for the preceding month shall be made as
promptly as possible after the last day of each such month. The compensation for
the period from the effective date hereof to the next succeeding last day of the
month shall be prorated according to the proportion which such period bears to
the full month ending on such date, and provided further that, upon any
termination of this Agreement before the end of the month, such compensation for
the period from the end of the last month ending prior to such termination shall
be prorated according to the proportion which such period bears to a full month,
and shall be payable upon the date of termination. If the annual operating
expenses borne by the Fund relating to any Portfolio, including amounts payable
to the Adviser hereunder paid or payable by such Portfolio for any fiscal year,
exceed the applicable expense limitations imposed by state securities laws or
regulations thereunder (as same may be adjusted from time to time), the Adviser
will reduce its Management Fee to the extent of such excess and if required,
pursuant to any such laws or regulations ((unless otherwise waived), will
reimburse the applicable Portfolio for annual operating expenses in excess of
any such expense limitation up to the amount of the Management Fee payable to it
during that fiscal year with respect to such Portfolio. The Adviser has the
right, but not the obligation, to waive any portion or all of its Management
Fee, from time to time.
The "average daily net assets" of each Portfolio for a particular
period shall be determined by adding together all calculations of net assets, as
regularly computed for such Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. Limitations of Liability of Adviser. The Adviser shall not be
-----------------------------------
liable for any error of judgment or mistake of law or fact, or, for any loss
suffered by the Fund or its investors in connection with the matters to which
this Agreement relates, except (i) a loss resulting from willful misfeasance,
bad faith, or gross negligence on the part of the Adviser in the performance of
its duties, or from reckless disregard by the Adviser of its obligations and
duties under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Fund also
agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. Duration and Termination of this Agreement. This Agreement shall
------------------------------------------
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Fund; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the fund, and, in addition, (c) by the vote of
a majority of the Trustees of the Fund who are not parties hereto nor interested
persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Fund, or by a vote of a majority (as
defined in the Act) of the outstanding voting securities of the Fund, in either
case upon written notice to the Adviser, and it may be terminated by the Adviser
upon sixty (60) days' written notice to the Fund. This Agreement shall
automatically terminate in the event of its assignment, within the
<PAGE>
meaning of the Act, unless such automatic termination shall be prevented by an
exemptive order of the Securities and Exchange Commission.
6. Separate Contract. This Agreement is separate and distinct form,
-----------------
and neither affects nor is affected by (i) the Fund's Distribution Agreement,
and (ii) the Fund's Administrative Services Agreement. Nothing contained in
this Agreement shall prevent the Adviser or any affiliated person of the Adviser
from acting as investment adviser or manager for any other person, firm,
corporation, or other entity and shall not in any way bind or restrict the
Adviser or any such affiliated person from buying, selling, or trading any
securities, commodities, futures contracts, or options on such contracts for
their own accounts or for the account of others for whom they may be acting.
Nothing in this Agreement shall limit or restrict the right of any director,
officer, or employee of the Adviser to engage in any other business or to devote
his time and attention in part to the management or other aspects of any other
business whether of a similar or dissimilar nature.
7. Amendment. This Agreement may be amended from time to time by
---------
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Fund, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Fund) cast in person at a
meeting called for that purpose, and by the holders of a majority (as defined in
the Act) of the outstanding voting securities of the Portfolios of the Fund to
which this Agreement is applicable.
This Agreement may be amended by agreement of the parties without the
vote or consent of the shareholders of the Fund to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Fund nor the Investment Adviser shall be liable for failing to do so.
8. Binding Effect. This Agreement shall be binding upon, and inure
--------------
to the benefit of the Fund and the Adviser and their respective successors.
9. Name of the Fund. The Fund acknowledges that the name "Navellier"
----------------
is and shall remain the sole property of the Adviser, notwithstanding the use
thereof by the Fund. The Fund may use the name "The Navellier Series Fund" or
any name derived from the name "Navellier" only for so long as this Agreement or
any extension, renewal, or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of the Adviser and for only so long as Navellier Management, Inc.,
remains as Adviser to the Fund. At such time as such an agreement shall no
longer be in effect, or Adviser's services have terminated, the Fund will (to
the extent that it is lawfully able) cease to use such a name or any other name
connected with the Adviser or any organization which shall have succeeded to the
business of the Adviser.
10. Definitions. Capitalized terms used herein without definition
-----------
shall have the meanings ascribed thereto in the Prospectus. For the purpose of
this Agreement, the terms "vote of a majority of the outstanding voting
securities," "assignment," "affiliated person,"
<PAGE>
and "interested person" shall have the respective meanings specified in the
Investment Company Act of 1940.
11. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. Applicable Law. This Agreement shall be governed by, and
--------------
construed in accordance with the laws of the State of Delaware. Any dispute or
controversy arising out of this Agreement shall be either submitted to
arbitration (if both parties agree) in Reno, Nevada (near the Fund's principal
place of business) in accordance with the rules and regulations of the National
Association of Securities Dealers, Inc., or decided by a trier of fact in a
federal or state court in Reno, Nevada, and in no other jurisdiction or court
venued outside of Reno, Nevada.
13. Acknowledgement of Receipt of Form ADV Part II. The Fund hereby
----------------------------------------------
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. Integration of All Prior Discussions, Negotiations and
------------------------------------------------------
Agreements. This Agreement integrates all prior discussions, negotiations and
- ----------
agreements between the parties relating to Adviser's and Fund's agreement
relating to the performance of investment advisory services for the Fund, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written in Incline Village,
Nevada.
THE NAVELLIER PERFORMANCE FUNDS
By: /s/ Barry Sander
----------------------------------
Barry Sander, Trustee
By: /s/ Joel Rossman
-----------------------------------
Attest: Joel Rossman, Trustee
/s/ ^^?? By: /s/ Arnold Langsen
- ------------------------- -----------------------------------
Arnold Langsen, Trustee
By: /s/ Jacques Delacroix
-----------------------------------
Attest: Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By: /s/ Louis Navellier
-----------------------------------
Louis Navellier, President
Attest:
/s/
- --------------------------
<PAGE>
EXHIBIT 6.1
<PAGE>
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT, made as of this 17th day of October 1995, by and between
The Navellier Performance Funds, a business trust organized under the laws of
the State of Delaware (the "Fund"), and Navellier Securities Corp., a
corporation organized under the laws of the State of Delaware (the
"Distributor").
W I T N E S S E T H
- - - - - --- - - -
WHEREAS, the Fund is registering as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and intends to
engage in business as an open-end management investment company;
WHEREAS, the Fund desires to employ the Distributor to act as
principal underwriter (as defined in the Act) with respect to the continuous
offering of its shares of common stock, at no par value (the "Shares), which
shall initially be sold in the first of a series of portfolios (the "Navellier
---------
Aggressive Growth Portfolio"), along with any other series as may be created in
the future, from time to time (the "Portfolios"), and the Distributor is willing
to serve in such capacity pursuant to the terms and conditions of this
Agreement;
WHEREAS, this Agreement has been approved by a vote of the Board of
Trustees of the Fund, including a majority of the Trustees who are not
"interested persons" of the Fund, as defined in the Act, and who have no direct,
or indirect financial interest in the operation of this Agreement (the
"disinterested Trustees") cast in person at a meeting called for the purpose of
voting on this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed by and between the parties hereto as follows:
1. Appointment of the Distributor.
------------------------------
(a) The Fund hereby appoints the Distributor as the principal
underwriter and distributor of each of the Fund's Portfolios whether now
existing or hereafter created, to sell and to arrange for the sale of Shares to
the public on the terms set forth in this Agreement and the Distributor hereby
accepts such appointment and agrees to act in accordance herewith. The Fund,
during the term of this Agreement, shall sell Shares to the Distributor upon the
terms and conditions set forth herein.
(b) The Distributor agrees to purchase Shares, as principal for its
own account, from the Fund and to sell Shares, as principal, to investors and
dealers, upon the terms described herein and in the Fund's prospectus (the
"Prospectus") and statement of additional information (the "Statement of
Additional Information") included in the Fund's Registration Statement (the
"Registration Statement") last filed with the Securities and Exchange Commission
(the "SEC") and declared effective under the 1933 Act and 1940 Act or as said
Prospectus and Statement of Additional Information may be otherwise amended or
supplemented from time to time thereafter.
1
<PAGE>
2. Exclusive Nature of Duties. The Distributor shall be the
--------------------------
exclusive representative of the Fund, in respect of the Portfolios, and act as
its principal underwriter and distributor, except that neither the exclusive
rights granted to the Distributor to sell the Shares nor the right to receive
compensation under Section 3(b) hereof or otherwise hereunder shall apply to
Shares issued by the Fund (i) in connection with the merger or consolidation of
any other investment company or personal holding company with the Fund or the
Portfolios or the acquisition by purchase or otherwise of all (or substantially
all) of the assets or outstanding shares of any such company by the Fund or the
Portfolios, or (ii) pursuant to reinvestment of dividends or capital gains
distributions.
3. Purchase of Shares from the Fund and Compensation of Distributor.
----------------------------------------------------------------
(a) Subsequent to the effective date of the Registration Statement,
the Fund will commence a continuous offering of the Shares. During such
continuous offering, the Distributor shall have the right to buy from the Fund
the Shares needed, but not more than the Shares needed (except for clerical
errors in transmissions), to fill unconditional orders for Shares placed with
the Distributor by investors or securities dealers. The price which the
Distributor shall pay for the Shares so purchased from the Fund shall be the net
asset value (determined as set forth in Section 3(e) hereof) used in determining
the public offering price on which such orders were based.
(b) The Rule 12b-1 fee provided for in Section 8 hereof and in the
12b-1 Plan of even date herewith shall constitute the entire compensation (and
fees reimbursed) of the Distributor for acting as principal underwriter and
distributor of the Portfolios.
(c) The Shares of the Navellier Aggressive Growth Portfolio are to be
resold by the Distributor to investors at the net asset value, or to Selected
Dealers (as hereinafter defined) having agreements with the Distributor upon the
terms and conditions set forth in Section 7 hereof.
(d) The public offering price(s) of the Shares, i.e., the price per
share at which the Distributor or Selected Dealers (as hereinafter defined) may
sell the Shares to the public, shall be the net asset value plus sales charge,
if any, of each Portfolio as set forth in the then current Prospectus and the
Statement of Additional Information relating to the Shares. If the public
offering price does not equal an even cent, the public offering price may be
adjusted to the nearest cent. All payments to the Fund hereunder shall be made
in the manner set forth in Section 3(g).
(e) The net asset value of the shares of each Portfolio of the Fund
shall be determined by the Fund or any agent of the Fund once daily at the times
and otherwise in accordance with the terms set forth in the Prospectus and the
Statement of Additional Information and guidelines established by the Board of
Trustees of the Fund, from time to time.
(f) The Fund shall have the right to suspend the sale of the Shares at
times when redemption is suspended pursuant to the conditions set forth in
Section 4(c) hereof. The Fund shall also have the right to suspend the sale of
the Shares if trading on the New York Stock Exchange or other exchange or system
on which stocks of the Fund are traded
2
<PAGE>
shall have been suspended, if a banking moratorium shall have been declared by
federal or state authorities, or if there shall have been some other
extraordinary event, which, in the judgment of the Fund, makes it impracticable
to sell the Shares. The Fund also reserves the right to suspend the sale of
Shares at any time, in the absolute discretion of its Board of Trustees.
(g) The Fund, or any agent of the Fund designated in writing by the
Fund, shall be promptly advised of all purchase orders for Shares received by
the Distributor, or Transfer Agent. Any order may be rejected by the Fund;
provided, however, that the Fund will not arbitrarily or without reasonable
- -------- -------
cause refuse to accept orders for the purchase of Shares. The Distributor (or
its agent) upon receipt of payment therefore will enter the purchase and
ownership on its books (in lieu of issuing stock certificates) or a statement
confirming the issuance of Shares. The Distributor agrees to cause such payment
and such instructions to be delivered promptly to the Fund (or its agent).
4. Repurchase or Redemption of Shares.
----------------------------------
(a) Any of the outstanding shares of any Portfolio may be tendered for
redemption at any time, and the Fund agrees to redeem the Shares so tendered in
accordance with the applicable provisions set forth in the Prospectus and the
Statement of Additional Information. The price to be paid to redeem the Shares
shall be equal to the net asset value calculated in accordance with the
provisions of Section 3(e) hereof. All payments by the Fund hereunder shall be
made in the manner set forth below.
The Fund, on behalf of the applicable Portfolio, shall pay the total
amount of the redemption price subsequent to its having received the notice of
redemption in proper form, all in accordance with applicable provisions of the
Prospectus and the Statement of Additional Information on or before the seventh
day after receipt of notice of redemption.
(b) The Distributor is authorized, as agent for the Fund, to
repurchase Shares from investors and Selected Dealers in accordance with the
applicable provisions set forth in the then current Prospectus and the Statement
of Additional Information. The Distributor shall promptly transmit to the
Fund's Transfer Agent for redemption, all orders so received from Selected
Dealers or investors for the repurchase of Shares. The Distributor shall be
responsible for the accuracy of instructions transmitted to the Fund's transfer
agent in connection with all such repurchases.
(c) The Fund may suspend the right of redemption or dealer payment
more than seven days (a) during any period when the New York Stock Exchange or
other exchange is closed (other than a customary weekend and holiday closing),
(b) when trading on any Exchange is restricted or an emergency exists as
determined by the Securities and Exchange Commission or the Fund so that
disposal of the Fund's investments or determination of the net asset value of
the Portfolios is not reasonably practicable, or (c) during any other period
when the Securities and Exchange Commission, by order, so permits.
3
<PAGE>
5. Duties of the Fund.
------------------
(a) The Fund shall furnish to the Distributor copies of all
information (including, without limitation, sales literature and
advertisements), financial statements and other papers prepared (or caused by
the Fund to be prepared) for publication or distribution which refer in any way
to the Distributor, prior to the use thereof, and shall not use such material if
the Distributor reasonably objects in writing within five (5) business days (or
such other time as may be mutually agreed) after receipt thereof. The foregoing
sentence shall survive the termination of this Agreement. The Fund shall furnish
or otherwise make available to the Distributor such other information as the
Distributor may reasonably request for use in connection with the distribution
of the Shares, including one certified copy, upon request by the Distributor, of
all financial statements prepared by the Fund, in respect of the Portfolios, and
examined by independent accountants. The Fund shall, subject to the provisions
of Section 8 hereof, make available to the Distributor such number of copies of
the Prospectus and the Statement of Additional Information as the Distributor
shall reasonably request.
(b) The Fund shall take, from time to time, but subject to the
necessary approval of the Portfolios' shareholders (as may be required by
applicable law), all necessary action to fix the number of its authorized Shares
and to register the Shares under the 1933 Act, to the end that there will be
available for sale such number of the Shares as investors may reasonably be
expected to purchase.
(c) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of the Shares for sale under the
securities laws of such states as the Distributor and the Fund may approve. Any
such qualification may be withheld, terminated or withdrawn by the Fund at any
time in its discretion. The Distributor shall furnish such information and
other material relating to its affairs and activities as may be required by the
Fund in connection with such qualification.
(d) The Fund shall immediately advise the Distributor (i) when any
post-effective amendment to its Registration Statement or any further amendment
or supplement thereto or any further Registration Statement or amendment or
supplement thereto becomes effective, (ii) of any request by the SEC for
amendment to the Registration Statement or the then effective Prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, or the
initiation of any proceedings for that purpose, and (iv) of the happening of any
event which makes untrue any material statement made in the Registration
Statement or the current Prospectus or which, in the opinion of counsel for the
Fund, requires the making of a change in the Registration Statement or the
current Prospectus in order to make the statements therein not misleading. In
case of the happening at any time of any event which materially affects the Fund
or its securities and which should be set forth in a supplement to or an
amendment of the then effective Prospectus in order to make the statements
therein not misleading, the Fund shall prepare and furnish to the Distributor
such amendment or amendments to the then effective Prospectus, as will correct
the Prospectus so that as corrected it will not contain, or such supplement or
supplements to the then effective Prospectus which, when read in conjunction
with the then effective Prospectus, will make the combined
4
<PAGE>
information not contain any untrue statement of a material fact or any omission
to state any material fact necessary in order to make the statements in the then
effective Prospectus not misleading. The Fund shall, if at any time the SEC
shall issue any stop order suspending the effectiveness of the Registration
Statement, make reasonable effort to obtain the prompt lifting of such order.
(e) Except as otherwise contemplated by Section 8(a) hereof, the Fund
shall, at the expense of the Distributor, furnish, in reasonable quantities upon
request of the Distributor, copies of Prospectuses, Statements of Additional
Information, Proxies and annual and interim reports of the Fund, in respect of
the Portfolios.
6. Duties of the Distributor.
-------------------------
(a) The Distributor shall devote reasonable time and effort to effect
sales of the Shares (but only in states and other jurisdictions in which it may
legally do so), but shall not be obligated to sell any specific number of
Shares. The services of the Distributor hereunder are not to be deemed
exclusive and nothing herein contained shall prevent the Distributor from
entering into distribution or dealer arrangements with other investment
companies so long as the performance of its obligations hereunder are not
impaired thereby.
(b) Neither the Distributor nor any Selected Dealer nor any other
person is authorized by the Fund to give any information or to make any
representations, other than those contained in the Registration Statement or
related Prospectus and Statement of Additional Information and any sales
literature specifically approved by the Fund.
(c) The Distributor shall cooperate with the Fund in effecting the
qualifications contemplated by Section 5(c) hereof.
(d) The Distributor shall furnish to the Fund copies of all
information including, without limitation, sales literature and advertisements,
financial statements and other papers prepared (or caused by the Distributor to
be prepared) for the publication or distribution, which refer in any way to the
Fund, prior to the use thereof, and shall not use such material if the Fund
reasonably objects in writing within (5) business days (or such other time as
may be mutually agreed) after receipt thereof. The foregoing sentence shall
survive the termination of this Agreement.
(e) In selling the Shares, the Distributor shall use its best efforts
in all respects to duly conform with the requirements of all applicable federal,
state and foreign laws. In connection therewith, the Distributor shall use its
best efforts in granting any Distributor's Consent under Section 7(b) hereof, to
make certain that such Foreign Offer or Sale does not violate applicable law or
otherwise cause the Fund to have any liability with respect to such Foreign
Offer or Sale.
7. Selected Dealer Agreements.
--------------------------
(a) The Distributor shall have the right to enter into selected dealer
agreements ("Selected Dealer Agreements") with securities dealers of its choice
(the "Selected
5
<PAGE>
Dealers") for the sale of Shares. In connection with such sales by Selected
Dealers, the Selected Dealer Agreement shall provide that the portion of the
Sales Charge which may be allocated to Selected Dealers shall be limited to all
or a portion of the Sales Charge as stated in the Fund's then current
Prospectus. In making agreements with Selected Dealers, the Distributor shall
act only as principal and not as agent for the Fund. Shares sold to Selected
Dealers shall be for resale by such dealers only at the public offering price(s)
set forth in the Prospectus and the Statement of Additional Information.
(b) The Distributor shall offer and sell Shares only to such Selected
Dealers as are (i) members in good standing of the National Association of
Securities Dealers (the "NASD"), or (ii) exempt from membership in the NASD. In
any Selected Dealer Agreement, the Distributor shall require the Selected Dealer
to obtain the written consent of the Distributor (the "Distributor's Consent")
prior to such Selected Dealer's making, causing to be made or otherwise
participating, directly or indirectly, in the making of any offer or sale of any
of the Fund's shares to any individual, corporation, partnership, trust, joint
venture, or other person or entity located outside of the United States of
America (a "Foreign Offer or Sale"). Such Selected Dealer Agreements shall also
provide that any Foreign Offer or Sale shall be made only upon the terms and in
accordance with the conditions set forth in the Distributor's Consent.
(c) The Distributor shall adopt and follow procedures, as approved by
the Fund, for the confirmation of sales and Shares to investors and Selected
Dealers, the collection of amounts payable by investors and Selected Dealers on
such sales, and the cancellation of unsettled transactions, as may be necessary
to comply with the requirements of the National Association of Securities
Dealers, as such requirements may from time to time exist.
8. Expenses.
--------
(a) Pursuant to its 12b-1 Distribution Plan and in order to further
enhance the distribution of the shares, the Fund shall, on a monthly basis,
reimburse the Distributor for the particular expenditures incurred by it in
connection with the distribution of such Fund portfolio Shares. Such
expenditures shall include, but shall not be limited to, the payment of
compensation (including incentive compensation such as continuing payments) to
financial consultants, sales and marketing personnel, broker-dealers, other
financial institutions and other organizations to obtain various distribution
related services for the Fund. These services include, among others, processing
new shareholder account application, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of transactions by customers and
serving as a source of information to customers in answering their questions
concerning the Fund and their transactions with the Fund. The Distributor is
also authorized to incur and be reimbursed for expenses for advertising, the
preparation and distribution of sales literature and other promotional
activities on behalf of the Fund. In addition, the Fund authorizes payment of
the cost of preparing, printing and distributing the Prospectuses and Statements
of Additional Information to prospective investors. The aggregate amount of any
annual distribution fees reimbursed under the 12b-1 Plan shall not exceed 0.25%
of the Fund's aggregate average daily net assets during any year with respect to
the Navellier Aggressive Growth Portfolio or any subsequent portfolio.
6
<PAGE>
The Fund is not obligated to pay any distribution expenses in excess
of the distribution fees to be reimbursed with respect to any one Portfolio,
pursuant to this Section 8.(a). In addition, any expenses of distribution of
the Fund's shares accrued by the Distributor in any one fiscal year of the Fund
may not be paid from distribution fees received from the Fund in subsequent
fiscal years and also will not be used to pay any interest expense, carrying
charges or other financing costs or overhead of the Distributor. "Overhead
costs" include items of expense generally referred to as overhead, including,
without limitation, costs related to leases, depreciation, salaries, payroll
taxes, supplies and insurance.
(b) The Fund shall, on a monthly basis, reimburse the Distributor for
particular expenditures incurred by it in connection with the distribution of
such Shares. Such expenditures shall include the cost of (i) preparation,
filing and printing of any Registration Statements and Prospectuses required to
be filed by or under applicable federal, state or foreign law, (ii) the
preparation and mailing of annual and interim reports, Prospectuses and proxy
material to current shareholders, (iii) qualifications of Shares for sale (and
the Fund as a broker, as applicable) under the securities laws of such states or
other jurisdiction as shall be selected by the Fund and the Distributor in
accordance with Section 5(c) hereof and the costs and expenses payable to each
such state or other jurisdiction for continuing qualifications therein.
(c) The Fund will not pay any of Distributor's interest expenses,
carrying charges, or other financing costs or the overhead of the Distributor.
"Overhead costs" include items of expense generally referred to as overhead,
including, without limitation, costs related to leases, depreciation, salaries,
payroll taxes, supplies and insurance.
(d) The Fund shall not bear the expense of the registration or
qualification of the Distributor as a dealer or a broker under federal, state or
other applicable law or the expenses of continuing such registration or
qualification.
9. Indemnification.
---------------
(a) The Fund agrees with the Distributor, for the benefit of the
Distributor and each person, if any, who controls the Distributor within the
meaning of Section 15 of the Securities Act and each and all and any of them, to
indemnify and hold harmless the Distributor and any such controlling person from
and against any and all losses, claims, damages or liabilities, joint or several
(including reasonable legal fees and expenses) to which they or any of them may
become subject under the Securities Act or under any other statute, at common
law or otherwise, and to reimburse the Distributor and such controlling persons,
if any, for any legal or other expenses (including the cost of any investigation
and preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that this indemnity agreement shall not apply to amounts paid
- -------- -------
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
7
<PAGE>
statements therein not misleading, which statement or omission was made in
reliance upon information furnished in writing to the Fund by the Distributor
for inclusion in any such Registration Statement or Prospectus or any amendment
thereof or supplement thereto. The Distributor and each such controlling person
shall, within thirty (30) days after the complaint shall have been served upon
the Distributor or such controlling person in respect of which indemnity may be
sought from the Fund on account of its agreement contained in this paragraph,
notify the Fund in writing of the commencement thereof. The omission of the
Distributor of such controlling person so to notify the Fund of any such
litigation shall relieve the Fund from any liability which it may have to the
Distributor or such controlling person on account of the indemnity agreement
contained in this paragraph if such failure to timely notify the Fund has
resulted in substantial prejudice to the Fund, but shall not relieve the Fund
from any liability which it may have to the Distributor or controlling person
otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Distributor
or any such controlling person and notice of the commencement thereof shall have
been timely given to the Fund, the Fund shall be entitled to participate in
(and, to the extent that it shall wish, to direct) the defense thereof at its
own expense, but such defense shall be conducted by counsel of good standing and
reasonably satisfactory to the Distributor or such controlling person(s) or
defendant(s) in the litigation. The indemnity agreement of the Fund contained in
this paragraph shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Distributor or any such
controlling person, and shall survive any delivery of shares of the Fund. The
Fund agrees to notify the Distributor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
(b) Anything herein to the contrary notwithstanding, the agreement in
subparagraph (a) of this Section, insofar as it constitutes a basis of
reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
(c) The Distributor agrees to indemnify and hold harmless the Fund and
its Trustees and such officers as shall have signed any Registration Statement
filed with the Commission from and against any and all losses, claims,
8
<PAGE>
damages, or liabilities, joint or several, to which the Fund or such Trustees or
officers may become subject under the Securities Act, under any other statute,
at common law or otherwise, and will reimburse the Fund or such Trustees or
officers for any legal or other expenses (including the cost of any
investigation and preparation) reasonably incurred by it or them or any of them
in connection with any litigation, whether or not resulting in any liability,
insofar as such losses, claims, damages, liabilities, or litigation arise out
of, or are based upon, any untrue statement or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, which statement or omission was made by the
Fund in reliance upon information furnished in writing to the Fund by the
Distributor for inclusion in any Registration Statement or any Prospectus, or
any amendment thereof or supplement thereto or otherwise for distribution or
publication. The Distributor shall not be liable for amounts paid in settlement
of any such litigation if such settlement was effected without its consent. The
Fund and its Trustees and such officers or defendant(s), in any such litigation,
shall, within thirty (30) days after the complaint shall have been served upon
the Fund or any such Trustee or officer in respect of which indemnity may be
sought from the Distributor or account of its agreement contained in this
paragraph, notify the Distributor in writing of the commencement thereof. The
omission of the Fund or such Trustee or officer so to notify the Distributor of
any such litigation shall relieve the Distributor from any liability which it
may have to the Fund or such Trustee or officer of liability which it may have
to the Fund or such Trustee or officer on account of the indemnity agreement
contained in this paragraph, but shall not relieve the Distributor from any
liability which it may have to the Fund or such Trustee or officer otherwise
than on account of the indemnity agreement contained in this paragraph. In case
any such litigation shall be brought against the Fund or any such Trustee or
officer and timely notice of the commencement thereof shall have been so given
to the Distributor, the Distributor shall be entitled to participate in (and, to
the extent it shall wish, to direct) the defense thereof at its own expense, but
such defense shall be conducted by counsel of good standing and satisfactory to
the Fund. The indemnity agreement of the Distributor contained in this paragraph
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Fund and shall survive any delivery of
shares of the Fund. The Fund agrees to notify the Distributor promptly of the
commencement of any litigation or proceeding against it or any of its officers
or Trustees or against any such controlling person of which it may be advised in
connection with the issue and sale of the Fund's shares.
(d) Notwithstanding any provision contained in this Agreement, no
party hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
(e) Except as expressly provided in subparagraphs (a) and (c) hereof,
the agreements herein set forth have been made and are made solely for the
benefit of the Fund, the Distributor, and the persons expressly provided for in
subparagraphs (a) and (c), their respective heirs, successor, personal
representatives and assigns, and except as so provided, nothing expressed or
mentioned herein is intended or shall be construed to give any person, firm or
corporation, other than the Fund, the Distributor, and the persons expressly
provided for in subparagraphs (a) and (c), any legal or equitable right, remedy
or claim under or in respect of this Agreement or any representation, warranty
or agreement herein contained. Except as so provided, the terms "heirs,
successors, personal representatives and assigns" shall not include any
purchaser of shares merely because of such purchase.
9
<PAGE>
10. Duration, Termination and Amendment of this Agreement.
-----------------------------------------------------
This Agreement shall become effective on the date it shall be approved
by a vote of the Board of Trustees of the Fund and of a majority of the
disinterested Trustees, and shall, unless terminated as hereinafter provided,
continue in effect for a period of more than one (1) year from such date so long
as such continuance is specifically approved at least annually by a vote of the
Board of Trustees of the Fund and of a majority of the disinterested Trustees or
by vote of a majority of the outstanding voting securities of the Fund. This
Agreement may be terminated by the Fund at any time or by the Distributor on
sixty (60) days' written notice to the Fund. No provisions of this Agreement
may be changed, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought and approved by a majority of
the disinterested Trustees.
11. Notices.
-------
Any notice of other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, to the Distributor or to the Fund, each at 920 Incline
Way, Incline Village, Nevada 89450.
12. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware and any action arising out of a breach of this
Agreement shall be brought in the State or federal court in Reno, Nevada.
ATTEST: THE NAVELLIER PERFORMANCE FUNDS
^^^???
- ----------------------------- By: /s/ Barry Sander
----------------------------
Barry Sander, Trustee
By: /s/ Joel Rossman
----------------------------
Joel Rossman, Trustee
By: /s/ Jacques Delacroix
----------------------------
Jacques Delacroix, Trustee
By: /s/ Arnold Langsen
----------------------------
Arnold Langsen, Trustee
ATTEST: NAVELLIER SECURITIES CORP.
- ----------------------------- By: /s/ Louis Navellier
----------------------------
Louis Navellier, President
10
<PAGE>
EXHIBIT 6.2
<PAGE>
Navellier Securities Corp.
920 Incline Way
Incline Village, Nevada 89450
SELECTED DEALER AGREEMENT
_____________, 1995
Dear Sir/Madam:
We invite you, upon the following terms and conditions, to participate as
principal in the distribution of the shares of any of the mutual funds including
The Navellier Performance Funds, of which we are, or may become, Distributor
(hereinafter collectively referred to as the "Funds" and each individually as a
"Fund"):
1. You are to offer and sell such shares only at the public offering
prices which shall be then currently in effect in accordance with the terms of
the then current prospectus of the Fund. You agree to act only as principal in
such transactions and shall not have authority to act as transfer agent for the
Fund, for us, or for any other dealer in any respect. All orders are subject to
acceptance or rejection by us or the Fund (or its agent) (in such party's sole
discretion) and become effective only upon confirmation by us or the Fund (or
its agent).
2. On each purchase of shares by you from us, the total sales charges, if
any, to selected dealers shall be as stated in the Fund's then current
prospectus.
Such sales charges, if any, to selected dealers are subject to reductions
under circumstances as described in the Fund's then current prospectus.
There is no sales charge to selected dealers on the reinvestment of
dividends or capital gains distributions or upon any merger or consolidation of
any other entity with the Fund or the acquisition of the assets or shares of any
entity by the Fund.
3. As a selected dealer, you are hereby authorized (i) to place orders
directly with the Fund for shares to be resold by us to you, at all times,
subject to (a) the applicable terms and conditions governing the placement of
orders by us set forth in the Distribution Agreement between us and the Fund,
and (b) applicable compensation provisions set forth in the Fund's then current
prospectus, and (c) instructions issued by us from time to time, and (ii) to
tender shares directly to the Fund or its transfer agent for redemption subject
to (a) the applicable terms and conditions set forth in the Distribution
Agreement, (b) the provisions of the Fund's then current prospectus, or (c)
instructions issued by us from time to time. You appoint the transfer agent for
the Fund as your agent to execute customers' purchases of fund shares sold to
you by us in accordance with the terms and provisions of any account, program,
plan or service established or used by your customers and to confirm each such
<PAGE>
purchase to your customers on your behalf, and you guarantee the legal capacity
of your customers so purchasing such shares and any co-owners of such shares.
4. Repurchases of shares will be made at the net asset value of such
shares in accordance with the then current prospectus of the Fund.
5. You represent that you are either (i) a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD") or (ii) that you
are exempt from membership in the NASD. If you are a member of the NASD, any
termination of such membership in good standing shall terminate this Agreement.
6. Regardless of whether or not you are a member of the NASD this
Agreement is in all respects subject to, and you agree to abide by all the rules
and regulations of the NASD concerning the distribution of securities of open-
end investment companies, including, without limitation, Section 26 of Article
III of the Rules of Fair Practice of the NASD which shall control any provisions
to the contrary in this Agreement.
7. You agree:
(a) To purchase shares only from us or from your customers.
(b) To purchase shares from us only for the purpose of covering
purchase orders already received or for your own bona fide
investment.
(c) That you will not purchase any shares from your customers at
prices lower than the redemption or repurchase prices then quoted
by the Fund. You shall, however, be permitted to sell shares for
the account of their record owners to the Fund at the repurchase
prices currently established for such shares and may charge the
owner a fair commission for handling the transaction.
(d) That you will not withhold placing customers' orders for shares
so as to profit yourself as a result of such withholding.
(e) You will not make, cause to be made, or otherwise participate,
directly or indirectly, in the making of, any offer or sale (a
"Foreign Offer or Sale") of any of the Fund's shares to any
individual, corporation, partnership, trust, joint venture or
other person or entity located outside of the geographical
boundaries of the United States of America without first
obtaining our written consent. Any Foreign Offer or Sale will be
made only upon the terms and in accordance with the conditions
set forth in such consent.
(f) Except as provided by Section 12 hereof, all expenses which you
incur in connection with your activities under this Agreement
will be borne by you.
(g) You will do due diligence to satisfy yourself that the Fund is a
suitable investment for the customer for whom you are
purchasing shares.
<PAGE>
8. We shall not accept from you any conditional orders for shares.
Confirmations of purchases of shares (or the delivery of share certificates, if
any) shall be made by the Fund only against receipt of the purchase price. If
payment for the purchase is not received within the time customary for such
payments, the sale may be cancelled forthwith without any responsibility or
liability on our part or on the part of the Fund (in which case you will be
responsible for any loss, including loss or profit, suffered by the Fund
resulting from your failure to make payment as aforesaid), or, at our option, we
may sell the shares so ordered back to the Fund (in which case we may hold you
responsible for any loss, including loss or profit suffered by us resulting from
your failure to make payment as aforesaid).
9. You will not offer or sell any of the shares except under
circumstances that will result in compliance with the applicable federal, state
and foreign securities and other applicable laws and in connection with sales
and offers to sell shares you will furnish to each person to whom any such sale
or offer is made a copy of the Fund's then current prospectus. We shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by us herein. Nothing herein contained however, shall be
deemed to be a condition, stipulation or provision binding any persons acquiring
any security to waive compliance with any provision of the Securities Act of
1933, or of the Rules and Regulations of the Securities and Exchange Commission,
or to relieve the parties hereto from any liability arising under the Securities
Act of 1933.
10. No person is authorized to make any representations concerning shares
of the Fund except those contained in the then current prospectus and printed
information issued by the Fund or by us as information supplemental to such
prospectus. We shall supply you with prospectuses and reasonable quantities of
supplemental sales literature, sales bulletins, and additional information as
same are issued. You agree not to use other advertising or sales material
relating to the Fund unless approved in writing by us in advance of such use.
Any printed information furnished by us other than the then current prospectus
for the Fund, periodic reports and proxy solicitation materials are our sole
responsibility and not the responsibility of the Fund, and you agree that the
Fund shall have no liability or responsibility to you in these respects unless
expressly assumed thereby in connection therewith.
11. Either party to this Agreement may cancel this Agreement by giving
written notice to the other. Such notice shall be deemed to have been given on
the date on which it was either delivered personally to the other party, or was
mailed postpaid or delivered to a telegraph office for transmission to the other
party at his or its address as shown below. If you are a member of the NASD,
upon your ceasing to be a member in good standing of the NASD, this Agreement
shall automatically terminate. This Agreement and any schedule of distribution
assistance payments adopted pursuant to paragraph 12 hereof may be amended by us
at any time and your placing of an order after the effective date of any such
amendment shall constitute your acceptance thereof.
12. As compensation for your marketing and customer services, we shall pay
you 75% of the Sales Charge, if any, paid by each investor you obtain for the
Fund and, if applicable, an annual 12b-1 fee, payable pro rata monthly, (as set
forth in the Distribution Agreement between The Navellier Performance Funds and
Navellier Securities Corp.) of 0.25% of the value of the assets of each investor
you obtain for the Fund.
<PAGE>
13. Our obligations to you under this Agreement are subject to all the
provisions of any distributorship agreement entered into between us and the
Fund, a copy of which you hereby acknowledge receiving. You understand and
agree that in performing your services covered by this Agreement you are acting
as principal, and that we are in no way responsible for any of your acts, or the
acts of your employees or representatives, and that neither you nor your
employees, representatives, or agents is our agent, partner, or employee, or the
agent or employee of the Fund.
14. This Agreement shall be construed in accordance with the laws of the
State of Nevada and shall be binding upon both parties hereto when signed by us
and accepted by you in the space provided below. In the event of any
disagreement or litigation arising out of or concerning this Agreement the
parties agree that such litigation or arbitration (if both parties agree to
arbitration) shall only be brought and decided in a court or arbitration located
in Reno, Nevada. The prevailing party to such action shall be entitled, in
addition to any other relief, to its reasonable attorneys' fees, costs, and
expenses.
NAVELLIER SECURITIES CORP.
By:____________________________
(Authorized Signature)
Firm Name____________________________________________
Address______________________________________________
City ________________________ State _____ Zip Code ________
ACCEPTED BY (signature) __________________________________________
Name (print)________________________ Title _____________________
Date__________ 19_________ Telephone # _________________
Please return two signed copies of this Agreement
(one of which will be signed by us and thereafter
returned to you) in the
accompanying return envelope to:
Navellier Securities Corp.
920 Incline Way, Building No. 1
Incline Village, Nevada 89450
<PAGE>
EXHIBIT 8.1
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
THE NAVELLIER PERFORMANCE FUNDS
AND RUSHMORE TRUST AND SAVINGS, FSB
This Administrative Services Agreement (the "Agreement") is entered into
this 6th day of December, 1995 by and between The Navellier Performance Funds
(the "Fund") and Rushmore Trust and Savings, FSB ("RTS", sometimes hereinafter
referred to as the "Administrator").
RECITALS
I. WHEREAS RTS and its personnel have expertise and experience in
providing administrative services to registered investment companies, and
II. WHEREAS The parties wish to set forth herein the manner and terms upon
which services will be provided.
NOW THEREFORE, the parties hereto agree as follows:
EMPLOYMENT OF RTS
1. RTS shall provide shareholder services, transfer agent, custodian and
administrative services to the Fund as set forth in EXHIBIT I to this Agreement.
2. As compensation for the services to be rendered by the Administrator
as provided above, the Fund shall pay the Administrator in accordance with the
fee schedule in EXHIBIT II to this Agreement. The fees will be paid monthly.
However, during the first three months, beginning on the date the Fund goes
"effective", the monthly minimum charges set forth in Exhibit II attached hereto
will be waived (i.e., only actual fees will be charged) and during the next
three months the monthly minimum fees charged will total $2500/month. In the
event of termination of this Agreement, the fees shall be computed on the basis
of the period ending on the last business day on which this Agreement is in
effect subject to a pro rata adjustment based on the number of days elapsed in
the current month as a percentage of the total number of days in such month.
3. Subject to and in accordance with the governing instruments of the
Fund and of the Administrator respectively, directors, officer, agents and
stockholders of the Fund are or
-1-
<PAGE>
may be interested in the Administrator (or any successor thereof) as
shareholders or otherwise; and the effect of any such inter-relationships shall
be governed by said governing instruments and the applicable provisions of the
Investment Company At of 1940.
4. This Agreement shall continue in effect until the first meeting of
the shareholders of the Fund (but in no event longer than two years from the
date hereof), and if approved at such shareholders' meeting, until two years
from the date hereof, and thereafter only so long as such continuance is
approved at least annually by a vote of a majority of the Fund's Board of
Directors, including the votes of a majority of the Directors who are not
parties to such Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting such approval. Provided,
however, that (a) this Agreement may be terminated without penalty either by
votes of the Board of Directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund, on sixty-days proper written notice
to the Administrator, (b) this Agreement shall automatically terminate in the
event of its assignment (within the meaning of the Investment Company Act of
1940), and (c) this Agreement may be terminated by the Administrator on sixty-
days prior written notice to the Fund. Any notice under this Agreement shall be
given in writing, addressed and delivered, or mailed postpaid, to the other
party at any office of such party. As used in this Agreement, the terms
"interested persons" and "vote of a majority of the outstanding securities"
shall have the respective meanings set forth in Section 2(a)(19) and Section
2(a)(42) of the Investment Company Act of 1940.
5. The services of the Administrator to the Fund hereunder are not to be
deemed exclusive, and the Administrator shall be free to render similar services
to others so long as its services hereunder are not impaired thereby. The
Administrator shall for purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
6. No provisions of this Agreement shall be deemed to protect the
Administrator against any liability to the Fund or its shareholders to which it
otherwise would be subject by reason of any willful misfeasance, bad faith or
negligence in the performance of its duties or the reckless disregard of its
obligations under this Agreement. Nor shall any provisions hereof be deemed to
protect any Director or officer of the Fund against any such liability to which
he might otherwise be subject by reason of any wilful misfeasance, bad faith or
negligence in the performance of his duties or the reckless disregard of his
obligations. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
-2-
<PAGE>
7. Upon delivery of services by RTS to the Fund, RTS shall prepare and
submit to the Fund an invoice for the amounts to be paid by the Fund under the
Agreement. The invoice shall contain a description of the services rendered. The
calculation of the amount of the invoice shall be in accordance with the fee
schedule as set forth in EXHIBIT II which has been reviewed as to the
reasonableness of the amounts by the Directors of the Fund who are not
"interested persons" of the Fund. Within thirty (30) days of receipt of such
invoice, the Fund shall pay to RTS all amounts indicated as due and payable
except for those amounts, if any, which are in dispute.
8. If the Fund or its designees shall dispute any amounts in the invoice,
the Fund shall give RTS written notice of such discrepancy and the amount
thereof. Within ten (10) days after receipt of such notice, RTS shall either
agree with the Fund as to the amount of the discrepancy or inform the Fund in
writing that RTS disputes the existence or amount of the discrepancy. If RTS
disputes the existence or amount of the discrepancy, the parties agree that for
a period of thirty (30) days they shall use their best efforts to resolve such
dispute on a mutually satisfactory basis.
9. Any dispute or disagreement arising between RTS and the Fund in
conjunction with any provision of this Agreement, or the compliance or
non-compliance therewith, or the validity or enforceability thereof which is not
settled within thirty (30) days (or such other period as may be mutually agreed
upon) from the date that either party informs the other in writing that such
dispute or disagreement exists, may be resolved by litigation or may with the
written consent of both RTS and the Fund be settled by arbitration in accordance
with rules set by a three member panel, one member each selected by RTS and the
Fund and the third being an attorney selected by mutual agreement of RTS and the
Fund, with all charges submitted by said attorney to be shared equally by RTS
and the Fund. A decision shall be rendered by the panel within thirty (30) days
of a meeting held in such place or places as may be agreed by the panel, and RTS
and the Fund shall comply with such decision. If both parties agree in writing
to submit to arbitration then the decision of the panel shall be final and not
subject to judicial review, and judgment may be entered thereon in accordance
with applicable law in any court having jurisdiction thereof.
10. Absent willful misfeasance, bad faith, negligence or reckless
disregard of duties, RTS shall not be liable to the Fund for any special,
incidental, or consequential damages for losses arising out of relating to the
performance of its obligations under this Agreement, whether or not such damages
or losses were caused by the acts of omissions of RTS or its employees. RTS is
fully responsible for the accurate transmission to the Fund of information
provided to RTS by third parties but is not responsible for the accuracy of the
information so provided.
-3-
<PAGE>
11. All documents, information and files which may be or have been
furnished by RTS to the Fund and which may be produced or prepared by RTS in
connection with this Agreement shall be and remain confidential and the
exclusive property of the Fund.
12. RTS will preserve for periods required in Rule 31a-2 of the General
Rules and Regulations under the Investment Company Act of 1940 such records
maintained by it as required to be maintained by Rule 31a-1 of such rules.
13. All books and records of RTS, insofar as such books and records
pertain to the services, shall be available for inspection by the Fund and its
agents at the offices of RTS during regular business hours, upon prior written
notice to RTS by the Fund. RTS shall on the same or next day provide the Fund
and/or its agents including Navellier Securities Corp. and/or Navellier
Management, Inc. confirmation of all investor activities including but not
limited to initial investment, additions, withdrawals, and account balances, and
shall arrange for a computer link-up so that the Fund and/or its said agents
shall have computer access to all investor account information. RTS shall
further arrange that all information relating to such investor accounts and all
information relating to persons requesting a Fund prospectus, and investor and
prospective investor mailing and telephone information, mailing list, databases,
etc., are kept strictly confidential and remain the exclusive property and trade
secret information of the Fund, Navellier Securities Corp. and Navellier
Management, Inc., and such information shall not be used by RTS or anyone else
for any purpose except with the express written consent of the Fund. RTS shall
further insure that none of its employees or agents or independent contractors
uses such information for any purpose except with the express written consent of
the Fund. RTS shall further insure that none of its employees, agents or
independent contractors has access to such information (computer or hard copy)
except those employees specifically designated and approved by the Fund.
14. Neither RTS nor the Fund shall be considered to be in default in the
performance of their respective obligations hereunder to the extent that the
performance of any such obligation or obligations is prevented or delayed by Act
of God or any cause reasonably beyond the control of RTS or the Fund, as the
case may be. In the event of equipment breakdown beyond its control, RTS shall
take reasonable steps to minimize service interruptions.
15. The services as provided by RTS in accordance with this Agreement
shall not be deemed accepted until the Fund has notified RTS in writing of the
Fund's receipt of services and of its acceptance or rejection of such services.
16. RTS and the Fund may amend, modify or supplement this Agreement only
by a written instrument executed by both RTS and the Fund. If any such
amendment, modification or supplement causes an
-4-
<PAGE>
increase or decrease in the price of, or time required for, the performance of
this Agreement, an equitable adjustment shall be made, and this adjustment shall
be mutually agreed upon by RTS and the Fund and the Agreement modified in
writing accordingly.
17. All notices, demands and other communications required or permitted to
be given hereunder shall be made in writing and shall be deemed to be duly given
if personally delivered or if deposited in the United States mail, registered or
certified mail, with postage prepaid, and addressed to the appropriate party at
the address set forth below, or at such other address as the parties may
designate in writing delivered in accordance with the provisions of this Section
17.
If to RTS:
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD. 20814
Attention: Daniel L. O'Connor, Chairman
If to the Fund:
Navellier Performance Funds
920 Incline Way, Bldg. One
Incline Village, NV 89450-5695
18. RTS shall have no right to the use of, or otherwise, the name or any
derivative of the name Navellier, and shall not use such name or derivative in
any way, including but not limited to, advertising, publications, or
testimonials, without the express written consent of Louis Navellier.
19. RTS shall arrange to have the Fund and its officers and trustees added
as additional named insureds to RTS's fidelity bond. RTS will also provide IRA
and Keogh accounts to Fund investors at the same fees charged to Rushmore Group
investors.
20. This Agreement is intended by the parties as a full expression of
their agreement with respect to the subject matter hereof and a complete and
exclusive statement of the terms thereof. No course of prior dealings between
the parties shall be relevant or admissible to supplement, explain, or vary any
of the terms of this Agreement. No representations, undertakings, or agreements
have been made or relied upon in the making of this Agreement other than those
specifically set forth herein.
21. This Agreement shall be governed by and construed in accordance with
the laws of the State of Nevada and shall be binding upon and shall inure to the
benefit of the parties hereto, and litigation between the parties out of or
related to this agreement shall only be brought in the state or federal court
located in
-5-
<PAGE>
Reno, Nevada, and in the event of such litigation the prevailing party shall
be entitled to its reasonable attorneys fees and costs.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
WITNESS: RUSHMORE TRUST AND SAVINGS, FSB
^^^ ^^^^^
__________________________________
By: Chief Financial Officer
WITNESS: NAVELLIER PERFORMANCE FUNDS
^^^^^
___________________________________
By:
-6-
<PAGE>
EXHIBIT I
RUSHMORE TRUST AND SAVINGS, FSB
DESCRIPTION OF SERVICES
-----------------------
SHAREHOLDER SERVICING AND TRANSFER AGENT SERVICES
- -------------------------------------------------
Services included:
Maintenance of individual shareholders accounts
Posting all transactions
Preparation of periodic shareholder statements
(including annual and semi-annual shareholder reports)
Preparation of transaction confirmations
Income distributions
Respond to inquiries from shareholders
Process account changes such as name or address
CUSTODIAN SERVICES
- ------------------
Services included:
Safekeeping of securities
Delivery of securities sold
Receipt of securities purchased
Retain Fund cash in separate account(s)
Receive and process investor funds for purchases of Fund shares
ADMINISTRATIVE SERVICES
- -----------------------
Services included:
General ledger accounting
Portfolio accounting
Daily share pricing (Daily Net Asset Value calculation)
Maintenance of records and regulatory reporting per SEC regulations
DIRECT FUND EXPENSES NOT INCLUDED:
- ----------------------------------
SEC registration fees
State "blue sky fees":
Director fees and expenses
Insurance
Legal fees
Prospectus preparation
Tax return preparation
Shareholder report preparation
Printing
Postage
Printing of statement stock
Mailing envelopes
Postage
-7-
<PAGE>
EXHIBIT II
FEE SCHEDULE
------------
BASE CHARGE
- -----------
Monthly fee payable at the annual rate of 10 basis points (10/100's one
percent) of average daily net assets.
Does not apply to balance in Fund for Government Investors, Inc. or the Rushmore
- --------------
Fund, Inc. money market funds.
SHAREHOLDER SERVICING AND TRANSFER AGENT SERVICES
- -------------------------------------------------
Monthly account maintenance $1.00
Shareholder transaction charge $1.00
Minimum monthly charge $2,500.00
CUSTODIAN SERVICES
- ------------------
Portfolio transaction charge $10.00
(does not include Mortgage Backed Securities, Foreign or Options transactions)
Charges applied to any discretionary security transaction such as buy,
sell, tender, conversion, maturity, free receipt/delivery, in-kind distribution,
etc. Does not apply to dividend and interest payments or to cash transaction in
--------------
the Fund for Government Investors, Inc. or Rushmore Fund, Inc. money market
funds.
Minimum monthly charge $1,500.00
ADMINISTRATIVE SERVICES
- -----------------------
Monthly charge $1,500.00
-8-
<PAGE>
EXHIBIT 8.2
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 17th day of October, 1995, by and between THE
NAVELLIER PERFORMANCE FUNDS, a business trust organized under the laws of the
State of Delaware (the "Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware
corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund is currently comprised of one portfolio designated as the
"Navellier Aggressive Growth Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is registering as an investment adviser under the
Investment Advisers Act of 1940, and will be engaged in the business of acting
as investment adviser and providing certain other services to the Fund; and
WHEREAS, the Fund desires to retain the Adviser to render certain
additional services to the Fund regarding certain bookkeeping, accounting, and
administrative services (the "Services") in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, the Adviser desires to be retained to perform such services on
said terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and the Adviser agree as follows:
1. Duties of Adviser: (a) The Fund hereby retains the Adviser to provide
-----------------
to the Fund: (A) such accounting and bookkeeping services and functions as are
reasonably necessary for the operation of the Fund. Such services shall
include, but shall not be limited to, preparation and maintenance of the
following books, records, and other documents: (1) journals containing daily
itemized records of all purchases and sales, and receipts and deliveries of
securities, and all receipts and disbursements of cash, and all other debits and
credits, in the form required by Rule 31a-1(b)(1) under the Investment Company
Act; (2) general and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, in the form required by Rules
31a-1(b)(2)(i)-(iii) under the Investment Company Act; (3) a securities record
or ledger reflecting separately for each portfolio security as of trade date all
"long" and "short" positions carried by the Fund for the account of each
Portfolio, if any, and showing the location of all securities long and the off-
setting position to all securities short, in the form required by Rule 31a-
1(b)(3) under the Investment Company Act; (4) a record of all portfolio
purchases or sales, in the form required by Rule 31a-1(b)(6) under the
Investment Company Act; (5) a record of all puts, calls, spreads, straddles,
and all other options, if any, in which any Portfolio has any direct or indirect
interest or which any Portfolio has granted or guaranteed, in the form required
by Rule 31a-1(b)(7)
<PAGE>
under the Investment Company Act; (6) a record of the proof of money balances in
all ledger accounts maintained pursuant to this Agreement, in the form required
by Rule 31a-1(b)(8) under the Investment Company Act; and (7) price mark-up
sheets and such records as are necessary to reflect the determination of each
Portfolio's net asset value. The foregoing books and records shall be maintained
by the Adviser in accordance with and for the time periods specified by
applicable rules and regulations, including Rule 31a-2 under the Investment
Company Act. All such books and records shall be the property of the Fund and
upon request therefore, the Adviser shall surrender to the Fund such of the
books and records so requested; and (B) certain administrative services
including, but not limited to, administrative services to shareholders of the
Fund and to respond to inquiries related to shareholder accounts.
(b) The services to be provided hereunder shall also include
supervisory services relating to the preparation and filing with the appropriate
offices of any reports or other documents, on behalf of the Fund, as shall be
required by applicable law and requested by the Fund, from time to time,
including but not limited to tax returns, financial statements, and such Forms
N-1A and other filings required by the securities laws of the United States or
any state as may be requested form time to time by the Fund.
2. Provision of Personnel. The Adviser shall, at its own expense,
----------------------
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall, from time to time, determine to be necessary or
useful to the performance of its obligations under this Agreement. Without
limiting the generality of the foregoing, such staff and personnel shall be
deemed to include officers of the Adviser and persons employed or otherwise
retained by the Adviser to provide or assist in providing of the Services to the
Fund.
3. Provision of Certain Facilities and Equipment. The Adviser shall
---------------------------------------------
provide such office space, facilities, and equipment (including, but not limited
to, computer equipment, communication lines and supplies) and such clerical help
and other services as shall be necessary to provide the services to the Fund.
In addition, the Adviser may arrange, on behalf of the Fund and its Portfolios,
to obtain: (1) data processing and/or all of the above services, subject to
approval by a majority of the Fund's Board of Trustees, as necessary to assist
it in providing the Services to the Fund, and (2) pricing information regarding
the Fund's investment securities from such company or companies as are approved
by a majority of the Fund's Board of Trustees, and the Fund shall be financially
responsible to such company or companies as aforesaid, for the reasonable cost
of such services.
4. Provision of Information to the Adviser. The Fund will, from time to
---------------------------------------
time, furnish or otherwise make available to the Adviser such information
relating to the business and affairs of the Fund as the Adviser may reasonably
require in order to discharge its duties and obligations hereunder.
5. Reimbursement of Expenses of Adviser. The Fund shall reimburse the
------------------------------------
Adviser for such direct expenses, including, but not limited to, (i) those
listed in paragraph 1(b) and 3 above, incurred on behalf of the Fund that are
associated with the providing of the Services, and (ii) those paid to any
delegates of the Adviser pursuant to Section 13 hereof. In no event, however,
shall such reimbursement exceed levels that are fair and reasonable in
<PAGE>
light of the usual and customary charges made by others for services of the same
nature and quality. Reimbursement under this Agreement shall be calculated and
paid monthly.
The Adviser shall not be required to pay any filing fees and expenses
incurred in connection with the filing of reports or documents pursuant to
section 1(b) herein, or required to be filed by applicable federal or state law,
which fees or expenses shall be borne directly by the Fund.
6. Access to Records. The Adviser will permit representatives of the
-----------------
Fund, including the Fund's independent auditors, to have reasonable access to
the personnel and records of the Adviser in order to enable such representatives
to monitor the quality of services being provided and the determination of
reimbursements due the Adviser pursuant to this Agreement. In addition, the
Adviser shall promptly deliver to the Board of Trustees of the Fund such
information as may reasonably be requested form time to time to permit the Board
of Trustees to make an informed determination regarding continuation of this
Agreement and the payments contemplated to be made hereunder.
7. Limitation of Liability of Adviser. The Adviser shall not be liable
----------------------------------
for any error of judgment or mistake of law or fact, or for any loss suffered by
the Fund or its investors in connection with the matters to which this Agreement
relates, except (i) a loss resulting from willful misfeasance, bad faith, or
gross negligence on the part of the Adviser in the performance of its duties or
from reckless disregard by the Adviser of its obligations and duties under this
Agreement, or (ii) a loss for which the Adviser would not be permitted to be
indemnified under the Federal Securities laws.
8. Duration of Agreement. This Agreement shall become effective as of the
---------------------
date of execution hereof and shall remain in effect for two (2) years from the
date hereof and from year to year thereafter, provided such continuance is
approved at least annually by the vote of a majority of the Trustees of the Fund
who are not parties to this Agreement or "interested persons" (as defined in the
Investment Company Act) of any such party, which vote must be cast in person at
a meeting called for the purpose of voting on such approval; and further
provided, however, that (a) the Fund may, at any time and without the payment of
- -------- -------
any penalty, terminate this Agreement upon written notice to the Adviser; (b)
this Agreement shall immediately terminate in the event of its "assignment"
(within the meaning of the Investment company Act) to the extent that it would
similarly be required to terminate under similar circumstances if it were an
advisory contract subject to the provisions of Section 15 of the Investment
Company Act and the rules thereunder; and (c) the Adviser may terminate this
Agreement without payment of penalty on sixty days' written notice to the Fund.
Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed post-paid, to the other party at the principal office of
such party.
9. Governing Law. This Agreement shall be construed in accordance with
-------------
the laws of the State of Delaware and the applicable provisions of the
Investment Company Act. To the extent the applicable law of the State of
Delaware or any of the provisions herein conflict with the applicable provisions
of the Investment Company Act, the latter shall control.
10. Separate Contract. This Agreement is separate and distinct from, and
-----------------
neither affects nor is affected by (i) the Distribution Agreement in effect
between the Fund and
<PAGE>
Navellier Securities Corp., a Delaware Corporation, or (ii) the Investment
Advisory Agreement in effect between the Adviser and the Fund.
11. Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the Fund and the Adviser and their respective successors.
12. Amendment. No amendment or modification of this Agreement shall be
---------
effective unless in writing signed by other parties and witnessed and until
approved by a majority of the outstanding shares of the Fund.
13. Delegation of Duties. The Adviser may delegate each duty to be
--------------------
performed by it hereunder; provided, however, that notwithstanding any such
-------- -------
delegation, the Adviser shall remain responsible for the performance of the
duties to be performed by it hereunder as though such delegation had not
occurred.
14. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
15. Compensation. The Fund shall, in addition to reimbursing Adviser for
------------
expenses as described in Section 5, pay Adviser an annual fee payable monthly
equal to .25% of the Fund's average daily net asset value for performing such
administrative services.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Incline Village, Nevada.
THE NAVELLIER PERFORMANCE FUNDS
By: /s/ Louis Navellier
----------------------------
Louis Navellier, Trustee
ATTEST:
By: /s/ Jacques Delacroix
----------------------------
Jacques Delacroix, Trustee
/s/ ^^^ By: /s/ Barry Sander
- ------------------------- ----------------------------
Barry Sander, Trustee
By: /s/ Joel Rossman
----------------------------
Joel Rossman, Trustee
By: /s/ Arnold Langsen
----------------------------
Arnold Langsen, Trustee
Attest:
/s/
- -------------------------
NAVELLIER MANAGEMENT, INC.
By: /s/ Louis Navellier
----------------------------
Louis Navellier
President
<PAGE>
EXHIBIT 9
<PAGE>
TRUSTEE INDEMNIFICATION AGREEMENT
---------------------------------
In consideration of Louis Navellier ("Trustee"), acting as a trustee of The
Navellier Performance Funds (the "Fund"), pursuant to a Declaration of Trust
dated October 17, 1995, the Fund and Trustee agree as follows: Trustee will use
his best efforts in performing his Trustee obligations, but in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of his
obligations, Trustee shall not be liable to the Fund, or any of the Fund's
investors, for any error of judgment or mistake of law or fact, for any act or
omission by Trustee or for any losses sustained by the Fund, or the Fund's
investors.
The Fund shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers, or
trustees of another organization in which it has any interest, as a shareholder,
creditor, or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit, or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be threatened, while in office
or thereafter, by reason of his being or having been such a Trustee, officer,
employee, or agent, except with respect to any matter as to which he shall have
been adjudicated to have acted in bad faith, willful misfeasance, gross
negligence, or reckless disregard of his duties; provided, however, that as to
any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such person did not engage in bad faith, willful misfeasance, gross negligence,
or reckless disregard of his duties involved in the conduct of his office by the
court or other body approving the
<PAGE>
settlement or other disposition or by a reasonable determination, based upon
review of readily available facts (as opposed to a full trial-type inquiry),
that he did not engage in such conduct by written opinion from independent legal
counsel approved by a majority of a quorum of trustees who are neither
interested persons nor parties to the proceedings. The rights accruing to any
person under these provisions shall not exclude any other right to which he may
be lawfully entitled; provided that no person may satisfy any right of indemnity
or reimbursement granted herein or to which he may otherwise be entitled except
out of the Fund Property. A majority of a quorum of disinterested non-party
Trustees may make advance payments in connection with indemnification under this
section, provided that the indemnified person shall have given a written
undertaking adequately secured to reimburse the Fund in the event it is
subsequently determined that he is not entitled to such indemnification, or a
majority of a quorum of disinterested non-party Trustees or independent counsel
determine, after a review of readily available facts, that the person seeking
indemnification will probably be found to be entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to the Trustees, officers, and controlling persons of
the Fund pursuant to the provisions described under this Item 27, or otherwise,
the Fund has been advised that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Fund of expenses incurred or paid by
a Trustee, officer, or controlling person of the Fund in the successful defense
of any action, suit, or proceeding) is asserted by such Trustee, officer, or
controlling person in connection with the securities being registered, the Fund
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
<PAGE>
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Fund may purchase and maintain insurance on behalf of an officer,
Trustee, employee, or agent protecting such person, to the full extent permitted
by applicable law, from liability incurred by such person as officer, Trustee,
employee, or agent of the Fund or arising from his activities in such capacity.
This Agreement may be amended from time to time by written agreement signed
by all of the parties; provided, that such amendment shall be approved both by
the vote of a majority of Trustees of the Fund, including a majority of Trustees
who are not interested persons of the Trustee to this Agreement (other than as
Trustees of the Fund) cast in person at a meeting called for that purpose, and
by the holders of a majority (as defined in the Act) of the outstanding voting
securities of the Fund to which this Agreement is applicable.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Fund to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Fund nor the Trustee shall be liable for failing to do so.
<PAGE>
In the event of any litigation or disagreement between the parties
regarding the subject of this indemnification, the prevailing party shall, in
addition to any other relief, be paid its reasonable attorneys' fees and costs
as determined by the court or trier of fact hearing said dispute. The parties
agree that any litigation arising out of this indemnification shall only be
brought and heard and shall only be venued in a federal or state court in Reno,
Nevada.
THE NAVELLIER PERFORMANCE FUNDS
Dated as of October 17, 1995
By: /s/ Jacques Delacroix
----------------------------
Jacques Delacroix, Trustee
By: /s/ Barry Sander
----------------------------
Barry Sander, Trustee
By: /s/ Joel Rossman
----------------------------
Joel Rossman, Trustee
By: /s/ Arnold Langsen
----------------------------
Arnold Langsen, Trustee
ACCEPTED AND AGREED
By: /s/ Louis Navellier
--------------------------
Louis Navellier, Trustee
<PAGE>
TRUSTEE INDEMNIFICATION AGREEMENT
---------------------------------
In consideration of Barry Sander ("Trustee"), acting as a trustee of The
Navellier Performance Funds (the "Fund"), pursuant to a Declaration of Trust
dated October 17, 1995, the Fund and Trustee agree as follows: Trustee will use
his best efforts in performing his Trustee obligations, but in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of his
obligations, Trustee shall not be liable to the Fund, or any of the Fund's
investors, for any error of judgment or mistake of law or fact, for any act or
omission by Trustee or for any losses sustained by the Fund, or the Fund's
investors.
The Fund shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers, or
trustees of another organization in which it has any interest, as a shareholder,
creditor, or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit, or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be threatened, while in office
or thereafter, by reason of his being or having been such a Trustee, officer,
employee, or agent, except with respect to any matter as to which he shall have
been adjudicated to have acted in bad faith, willful misfeasance, gross
negligence, or reckless disregard of his duties; provided, however, that as to
any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such person did not engage in bad faith, willful misfeasance, gross negligence,
or reckless disregard of his duties involved in the conduct of his office by the
court or other body approving the
<PAGE>
settlement or other disposition or by a reasonable determination, based upon
review of readily available facts (as opposed to a full trial-type inquiry),
that he did not engage in such conduct by written opinion from independent legal
counsel approved by a majority of a quorum of trustees who are neither
interested persons nor parties to the proceedings. The rights accruing to any
person under these provisions shall not exclude any other right to which he may
be lawfully entitled; provided that no person may satisfy any right of indemnity
or reimbursement granted herein or to which he may otherwise be entitled except
out of the Fund Property. A majority of a quorum of disinterested non-party
Trustees may make advance payments in connection with indemnification under this
section, provided that the indemnified person shall have given a written
undertaking adequately secured to reimburse the Fund in the event it is
subsequently determined that he is not entitled to such indemnification, or a
majority of a quorum of disinterested non-party Trustees or independent counsel
determine, after a review of readily available facts, that the person seeking
indemnification will probably be found to be entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to the Trustees, officers, and controlling persons of
the Fund pursuant to the provisions described under this Item 27, or otherwise,
the Fund has been advised that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Fund of expenses incurred or paid by
a Trustee, officer, or controlling person of the Fund in the successful defense
of any action, suit, or proceeding) is asserted by such Trustee, officer, or
controlling person in connection with the securities being registered, the Fund
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
<PAGE>
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Fund may purchase and maintain insurance on behalf of an officer,
Trustee, employee, or agent protecting such person, to the full extent permitted
by applicable law, from liability incurred by such person as officer, Trustee,
employee, or agent of the Fund or arising from his activities in such capacity.
This Agreement may be amended from time to time by written agreement signed
by all of the parties; provided, that such amendment shall be approved both by
the vote of a majority of Trustees of the Fund, including a majority of Trustees
who are not interested persons of the Trustee to this Agreement (other than as
Trustees of the Fund) cast in person at a meeting called for that purpose, and
by the holders of a majority (as defined in the Act) of the outstanding voting
securities of the Fund to which this Agreement is applicable.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Fund to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Fund nor the Trustee shall be liable for failing to do so.
<PAGE>
In the event of any litigation or disagreement between the parties
regarding the subject of this indemnification, the prevailing party shall, in
addition to any other relief, be paid its reasonable attorneys' fees and costs
as determined by the court or trier of fact hearing said dispute. The parties
agree that any litigation arising out of this indemnification shall only be
brought and heard and shall only be venued in a federal or state court in Reno,
Nevada.
THE NAVELLIER PERFORMANCE FUNDS
Dated as of October 17, 1995
By: /s/ Louis Navellier
----------------------------
Louis Navellier, Trustee
By: /s/ Jacques Delacroix
----------------------------
Jacques Delacroix, Trustee
By: /s/ Barry Sander
----------------------------
Barry Sander, Trustee
By: /s/ Joel Rossman
----------------------------
Joel Rossman, Trustee
ACCEPTED AND AGREED
By: /s/ Arnold Langsen
------------------------
Arnold Langsen, Trustee
<PAGE>
TRUSTEE INDEMNIFICATION AGREEMENT
---------------------------------
In consideration of Arnold Langsen ("Trustee"), acting as a trustee of The
Navellier Performance Funds (the "Fund"), pursuant to a Declaration of Trust
dated October 17, 1995, the Fund and Trustee agree as follows: Trustee will use
his best efforts in performing his Trustee obligations, but in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of his
obligations, Trustee shall not be liable to the Fund, or any of the Fund's
investors, for any error of judgment or mistake of law or fact, for any act or
omission by Trustee or for any losses sustained by the Fund, or the Fund's
investors.
The Fund shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers, or
trustees of another organization in which it has any interest, as a shareholder,
creditor, or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit, or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be threatened, while in office
or thereafter, by reason of his being or having been such a Trustee, officer,
employee, or agent, except with respect to any matter as to which he shall have
been adjudicated to have acted in bad faith, willful misfeasance, gross
negligence, or reckless disregard of his duties; provided, however, that as to
any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such person did not engage in bad faith, willful misfeasance, gross negligence,
or reckless disregard of his duties involved in the conduct of his office by the
court or other body approving the
<PAGE>
settlement or other disposition or by a reasonable determination, based upon
review of readily available facts (as opposed to a full trial-type inquiry),
that he did not engage in such conduct by written opinion from independent legal
counsel approved by a majority of a quorum of trustees who are neither
interested persons nor parties to the proceedings. The rights accruing to any
person under these provisions shall not exclude any other right to which he may
be lawfully entitled; provided that no person may satisfy any right of indemnity
or reimbursement granted herein or to which he may otherwise be entitled except
out of the Fund Property. A majority of a quorum of disinterested non-party
Trustees may make advance payments in connection with indemnification under this
section, provided that the indemnified person shall have given a written
undertaking adequately secured to reimburse the Fund in the event it is
subsequently determined that he is not entitled to such indemnification, or a
majority of a quorum of disinterested non-party Trustees or independent counsel
determine, after a review of readily available facts, that the person seeking
indemnification will probably be found to be entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to the Trustees, officers, and controlling persons of
the Fund pursuant to the provisions described under this Item 27, or otherwise,
the Fund has been advised that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Fund of expenses incurred or paid by
a Trustee, officer, or controlling person of the Fund in the successful defense
of any action, suit, or proceeding) is asserted by such Trustee, officer, or
controlling person in connection with the securities being registered, the Fund
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
<PAGE>
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Fund may purchase and maintain insurance on behalf of an officer,
Trustee, employee, or agent protecting such person, to the full extent permitted
by applicable law, from liability incurred by such person as officer, Trustee,
employee, or agent of the Fund or arising from his activities in such capacity.
This Agreement may be amended from time to time by written agreement signed
by all of the parties; provided, that such amendment shall be approved both by
the vote of a majority of Trustees of the Fund, including a majority of Trustees
who are not interested persons of the Trustee to this Agreement (other than as
Trustees of the Fund) cast in person at a meeting called for that purpose, and
by the holders of a majority (as defined in the Act) of the outstanding voting
securities of the Fund to which this Agreement is applicable.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Fund to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Fund nor the Trustee shall be liable for failing to do so.
<PAGE>
In the event of any litigation or disagreement between the parties
regarding the subject of this indemnification, the prevailing party shall, in
addition to any other relief, be paid its reasonable attorneys' fees and costs
as determined by the court or trier of fact hearing said dispute. The parties
agree that any litigation arising out of this indemnification shall only be
brought and heard and shall only be venued in a federal or state court in Reno,
Nevada.
THE NAVELLIER PERFORMANCE FUNDS
Dated as of October 17, 1995
By: /s/ Louis Navellier
----------------------------
Louis Navellier, Trustee
By: /s/ Jacques Delacroix
----------------------------
Jacques Delacroix, Trustee
By: /s/ Barry Sander
----------------------------
Barry Sander, Trustee
By: /s/ Arnold Langson
----------------------------
Arnold Langson, Trustee
ACCEPTED AND AGREED
By: /s/ Joel Rossman
--------------------------
Joel Rossman, Trustee
<PAGE>
TRUSTEE INDEMNIFICATION AGREEMENT
---------------------------------
In consideration of Joel Rossman ("Trustee"), acting as a trustee of The
Navellier Performance Funds (the "Fund"), pursuant to a Declaration of Trust
dated October 17, 1995, the Fund and Trustee agree as follows: Trustee will use
his best efforts in performing his Trustee obligations, but in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of his
obligations, Trustee shall not be liable to the Fund, or any of the Fund's
investors, for any error of judgment or mistake of law or fact, for any act or
omission by Trustee or for any losses sustained by the Fund, or the Fund's
investors.
The Fund shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers, or
trustees of another organization in which it has any interest, as a shareholder,
creditor, or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit, or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be threatened, while in office
or thereafter, by reason of his being or having been such a Trustee, officer,
employee, or agent, except with respect to any matter as to which he shall have
been adjudicated to have acted in bad faith, willful misfeasance, gross
negligence, or reckless disregard of his duties; provided, however, that as to
any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such person did not engage in bad faith, willful misfeasance, gross negligence,
or reckless disregard of his duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or by a
reasonable determination, based upon review of
<PAGE>
settlement or other disposition or by a reasonable determination, based upon
review of readily available facts (as opposed to a full trial-type inquiry),
that he did not engage in such conduct by written opinion from independent legal
counsel approved by a majority of a quorum of trustees who are neither
interested persons nor parties to the proceedings. The rights accruing to any
person under these provisions shall not exclude any other right to which he may
be lawfully entitled; provided that no person may satisfy any right of indemnity
or reimbursement granted herein or to which he may otherwise be entitled except
out of the Fund Property. A majority of a quorum of disinterested non-party
Trustees may make advance payments in connection with indemnification under this
section, provided that the indemnified person shall have given a written
undertaking adequately secured to reimburse the Fund in the event it is
subsequently determined that he is not entitled to such indemnification, or a
majority of a quorum of disinterested non-party Trustees or independent counsel
determine, after a review of readily available facts, that the person seeking
indemnification will probably be found to be entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to the Trustees, officers, and controlling persons of
the Fund pursuant to the provisions described under this Item 27, or otherwise,
the Fund has been advised that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Fund of expenses incurred or paid by
a Trustee, officer, or controlling person of the Fund in the successful defense
of any action, suit, or proceeding) is asserted by such Trustee, officer, or
controlling person in connection with the securities being registered, the Fund
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
<PAGE>
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Fund may purchase and maintain insurance on behalf of an officer,
Trustee, employee, or agent protecting such person, to the full extent permitted
by applicable law, from liability incurred by such person as officer, Trustee,
employee, or agent of the Fund or arising from his activities in such capacity.
This Agreement may be amended from time to time by written agreement signed
by all of the parties; provided, that such amendment shall be approved both by
the vote of a majority of Trustees of the Fund, including a majority of Trustees
who are not interested persons of the Trustee to this Agreement (other than as
Trustees of the Fund) cast in person at a meeting called for that purpose, and
by the holders of a majority (as defined in the Act) of the outstanding voting
securities of the Fund to which this Agreement is applicable.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Fund to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Fund nor the Trustee shall be liable for failing to do so.
<PAGE>
In the event of any litigation or disagreement between the parties
regarding the subject of this indemnification, the prevailing party shall, in
addition to any other relief, be paid its reasonable attorneys' fees and costs
as determined by the court or trier of fact hearing said dispute. The parties
agree that any litigation arising out of this indemnification shall only be
brought and heard and shall only be venued in a federal or state court in Reno,
Nevada.
THE NAVELLIER PERFORMANCE FUNDS
Dated as of October 17, 1995
By: /s/ Louis Navellier
----------------------------
Louis Navellier, Trustee
By: /s/ Jacques Delacroix
----------------------------
Jacques Delacroix, Trustee
By: /s/ Joel Rossman
----------------------------
Joel Rossman, Trustee
By: /s/ Arnold Langson
----------------------------
Arnold Langson, Trustee
ACCEPTED AND AGREED
By: /s/ Barry Sander
--------------------------
Barry Sander, Trustee
<PAGE>
TRUSTEE INDEMNIFICATION AGREEMENT
---------------------------------
In consideration of Jacques Delacroix ("Trustee"), acting as a trustee of
The Navellier Performance Funds (the "Fund"), pursuant to a Declaration of Trust
dated October 17, 1995, the Fund and Trustee agree as follows: Trustee will use
his best efforts in performing his Trustee obligations, but in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of his
obligations, Trustee shall not be liable to the Fund, or any of the Fund's
investors, for any error of judgment or mistake of law or fact, for any act or
omission by Trustee or for any losses sustained by the Fund, or the Fund's
investors.
The Fund shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers, or
trustees of another organization in which it has any interest, as a shareholder,
creditor, or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit, or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be threatened, while in office
or thereafter, by reason of his being or having been such a Trustee, officer,
employee, or agent, except with respect to any matter as to which he shall have
been adjudicated to have acted in bad faith, willful misfeasance, gross
negligence, or reckless disregard of his duties; provided, however, that as to
any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such person did not engage in bad faith, willful misfeasance, gross negligence,
or reckless disregard of his duties involved in the conduct of his office by the
court or other body approving the
<PAGE>
settlement or other disposition or by a reasonable determination, based upon
review of readily available facts (as opposed to a full trial-type inquiry),
that he did not engage in such conduct by written opinion from independent legal
counsel approved by a majority of a quorum of trustees who are neither
interested persons nor parties to the proceedings. The rights accruing to any
person under these provisions shall not exclude any other right to which he may
be lawfully entitled; provided that no person may satisfy any right of indemnity
or reimbursement granted herein or to which he may otherwise be entitled except
out of the Fund Property. A majority of a quorum of disinterested non-party
Trustees may make advance payments in connection with indemnification under this
section, provided that the indemnified person shall have given a written
undertaking adequately secured to reimburse the Fund in the event it is
subsequently determined that he is not entitled to such indemnification, or a
majority of a quorum of disinterested non-party Trustees or independent counsel
determine, after a review of readily available facts, that the person seeking
indemnification will probably be found to be entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to the Trustees, officers, and controlling persons of
the Fund pursuant to the provisions described under this Item 27, or otherwise,
the Fund has been advised that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Fund of expenses incurred or paid by
a Trustee, officer, or controlling person of the Fund in the successful defense
of any action, suit, or proceeding) is asserted by such Trustee, officer, or
controlling person in connection with the securities being registered, the Fund
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
<PAGE>
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Fund may purchase and maintain insurance on behalf of an officer,
Trustee, employee, or agent protecting such person, to the full extent permitted
by applicable law, from liability incurred by such person as officer, Trustee,
employee, or agent of the Fund or arising from his activities in such capacity.
This Agreement may be amended from time to time by written agreement signed
by all of the parties; provided, that such amendment shall be approved both by
the vote of a majority of Trustees of the Fund, including a majority of Trustees
who are not interested persons of the Trustee to this Agreement (other than as
Trustees of the Fund) cast in person at a meeting called for that purpose, and
by the holders of a majority (as defined in the Act) of the outstanding voting
securities of the Fund to which this Agreement is applicable.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Fund to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Fund nor the Trustee shall be liable for failing to do so.
<PAGE>
In the event of any litigation or disagreement between the parties
regarding the subject of this indemnification, the prevailing party shall, in
addition to any other relief, be paid its reasonable attorneys' fees and costs
as determined by the court or trier of fact hearing said dispute. The parties
agree that any litigation arising out of this indemnification shall only be
brought and heard and shall only be venued in a federal or state court in Reno,
Nevada.
THE NAVELLIER PERFORMANCE FUNDS
Dated as of October 17, 1995
By: /s/ Louis Navellier
----------------------------
Louis Navellier, Trustee
By: /s/ Barry Sander
----------------------------
Barry Sander, Trustee
By: /s/ Joel Rossman
----------------------------
Joel Rossman, Trustee
By: /s/ Arnold Langsen
----------------------------
Arnold Langsen, Trustee
ACCEPTED AND AGREED
By: /s/ Jacques Delacroix
--------------------------
Jacques Delacroix, Trustee
<PAGE>
EXHIBIT 10
<PAGE>
[LETTERHEAD OF SAMUEL KORNHAUSER]
December 7, 1995
The Navellier Performance Funds
920 Incline Way, Bldg. One
Incline Village, NV 89450
Gentlemen:
I have acted as counsel to The Navellier Performance Funds (the "Fund") in
connection with the preparation of a Registration Statement on Form N-1A for
filing with the Securities and Exchange Commission, covering shares of common
stock at no par value, of the Fund.
I have prepared and examined the Declaration of Trust and By-Laws of the
Fund, the Registration Statement, and such other corporate records and documents
as I have deemed necessary for the purpose of this opinion. I also have
examined such other documents, papers, statues, and authorities as I deemed
necessary to form a basis for the opinion hereinafter expressed. In my
examination of such material, I have assumed the genuineness of all signatures
and the conformity to original documents of all copies submitted to me. As to
various questions of fact material to such opinion, I have relied upon
statements and certificates of officers and representatives of the Fund and
others.
I am admitted only to the bar of the States of California and Ohio. As to
various questions arising under the laws of the State of Delaware, I have relied
on statues and various other registered Delaware business trust documents.
Based upon the foregoing, I am of the opinion that the shares of common
stock, no par value, of the Fund to be issued in accordance with the terms of
the offering as set forth in the Prospectus included as part of the Registration
Statement, have been duly and validly authorized for issuance by the Board of
Trustees of the Fund and, when issued and sold as described in the Registration
Statement, will be legally issued, fully paid, and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference of my name in
<PAGE>
the Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to any application made by or on behalf of the Fund or any
Distributor or dealer in connection with the registration and qualification of
the fund or its common stock under the securities laws of any state or
jurisdiction. In giving such permission, I do not admit hereby that I come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
LAW OFFICES OF SAMUEL KORNHAUSER
By: /s/ Samuel Kornhauser
-----------------------------
Samuel Kornhauser
SK:ll
<PAGE>
EXHIBIT 11.0
<PAGE>
EXHIBIT 13
<PAGE>
SUBSCRIPTION FOR SHARES
-----------------------
October 17, 1995
The Board of Trustees
of The Navellier Performance Funds
Gentlemen:
The undersigned hereby offers to purchase an aggregate of 10,000 shares of
common stock (no par value per share) of The Navellier Performance Funds (the
"Fund") for the consideration set forth below. This subscription and purchase
is made for investment purposes without any present intention of redeeming or
selling the shares subscribed for and purchased.
Number of Purchase
Portfolio Shares Price
- --------- --------- --------
Navellier Aggressive
Growth Portfolio 10,000 $100,000
Very truly yours,
/s/ Louis Navellier
-----------------------
Louis Navellier
<PAGE>
EXHIBIT 13.1
<PAGE>
Navellier Management, Inc.
920 Incline Way
Incline Village, NV 89450
As of October 17, 1995
The Navellier Performance Funds
920 Incline Way
Incline Village, NV 89450
Re: Investment Adviser Operating Expenses Reimbursement
Gentlemen:
Since the inception of operations of The Navellier Performance Funds (the
"Fund"), Navellier Management, Inc. (the "Adviser"), has paid the operating
expenses of the Fund without requiring reimbursement from the Fund. The purpose
of this letter is to obtain an acknowledgment from the Fund that (i) the Adviser
has been under no obligation to pay such operating expenses, and (ii) the
Adviser is under no obligation to continue to pay the Fund's operating expenses
now or in the future.
Notwithstanding the foregoing, until further notice to the contrary, the
Adviser will continue to pay the Fund's operating expenses without requiring
current reimbursement from the Fund. The Adviser reserves the right to require
reimbursement in the future for operating expenses of the Fund at any time upon
notice to the Fund that all past and presently accrued operating expenses of the
Fund shall be required to be reimbursed to the Adviser, or paid directly by the
Fund.
<PAGE>
If the foregoing accurately reflects the Fund's understanding regarding the
matters discussed herein, please sign and return the enclosed copy of this
letter.
Very truly yours,
NAVELLIER MANAGEMENT, INC.
By: /s/ Louis Navellier
----------------------------
Louis Navellier, President
ACKNOWLEDGED AND
AGREED as to THE NAVELLIER PERFORMANCE FUNDS
the 17th day of October, 1995:
By: /s/ Barry Sander
----------------------------
Barry Sander, Trustee
By: /s/ Joel Rossman
----------------------------
Joel Rossman, Trustee
By: /s/ Arnold Langsen
----------------------------
Arnold Langsen, Trustee
By: /s/ Jacques Delacroix
----------------------------
Jacques Delacroix, Trustee
<PAGE>
EXHIBIT 15
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
RULE 12b-1 DISTRIBUTION PLAN
This distribution plan (the "Rule 12 b-1 Distribution Plan" or the "Plan"),
has been adopted by The Navellier Performance Funds, a registered open-end
investment company organized as a Delaware Business Trust (the "Fund"), pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act").
W H E R E A S
- - - - - - -
The Fund presently distributes its shares of capital stock through a
contractual arrangement with a principal distributor, Navellier Securities Corp.
(the "Principal Distributor"), duly qualified to act on behalf of the Fund in
such capacity, which contract has been approved by the Fund's Board of Trustees
in accordance with requirements of the Act (the "Distribution Agreement").
Pursuant to the Distribution Agreement, the Principal Distributor may enter into
service agreements ("Service Agreements") with certain securities dealers,
financial institutions or other industry professionals, such as investment
advisers, accountants and estate planning firms (severally, a "Service
Organization") for distribution and promotion of, administration of, and
servicing investors in, the Fund's shares.
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Under this proposal, the Fund and its Investment Advisor (the "Advisor")
may from time to time and from their own funds or from such other resources as
may be permitted by rules of the Securities and Exchange Commission, make
payments as defined in Section 2 hereof ("Service Payments") to Service
Organizations for distribution and service assistance as defined in Section 3
hereof ("Distribution and Service Assistance").
In voting to approve the Plan and related Service Agreement, the Board
requested and evaluated such information as it deemed necessary to an informed
determination and has concluded, in the exercise of their reasonable business
judgment and in light of their respective fiduciary duties, that there is a
reasonable likelihood that the plan will benefit the Fund and its shareholders.
NOW, THEREFORE, in consideration of the foregoing, the Fund hereby adopts
this Plan under the Act:
1. The Distributor shall act as distributor of the Fund's shares pursuant
to the Distribution Agreement and shall receive from the Fund an annual 12b-1
fee, payable monthly, of 0.25% of the average daily net assets of the applicable
Portfolio(s). The Distributor may enter into Service Agreements with Service
Organizations for Distribution and Service Assistance.
2. The Fund shall pay all costs and expenses in connection with the
preparation, printing and distribution of the Fund's prospectuses, shareholder
reports, statements of additional information and financial statements for its
current shareholders.
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3. (a) There shall be paid periodically to the Distributor or one or
more Service Organizations a Service Payment in respect of the Fund's shares
owned by shareholders for whom the Distributor or Service Organization is the
dealer of record or holder of record, or owned by shareholders for whom the
Distributor or Service Organization provides Distribution and Service Assistance
("Clients"). Service Payments shall be paid by the Fund, or the Fund shall
reimburse the Principal Distributor, in full, for Service Payments made to a
Service Organization, in an amount not exceeding .25 of 1% of the average daily
net asset value of the Fund's shares owned by Clients during the period Service
Payments are being made to the Service Organization. The Service Payments are
subject to compliance by the Service Organization and the Principal Distributor
with the terms of the Service Agreement between the Service Organization and the
Principal Distributor.
(b) For the purposes of determining the Service Payment payable to a
Service Organization, the value of the Fund's net assets shall be computed in
accordance with the Fund's prospectus as amended from time to time.
(c) Distribution and Service Assistance, as defined in this Plan,
shall include, but not be limited to, inter alia, (i) formulating and
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implementing marketing and promotional activities, including, but not limited
to, direct mail promotions and television, radio, newspaper, magazine and other
mass media advertising; (ii) arranging and contracting for the preparation and
printing of prospectuses, statements of additional information for prospective
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investors, sales literature and the mailing and distribution thereof; (iii)
procuring, evaluating and providing to the Fund such information, analyses and
opinions with respect to marketing and promotional activities as the Fund may,
from time to time, reasonably request; (iv) providing office space and
equipment, telephone facilities and dedicated personnel as is necessary to
provide the services hereunder; (v) answering Client inquiries regarding the
Fund and assisting Clients in changing dividend options, account designations
and addresses; (vi) performing subaccounting; (vii) establishing and maintaining
Client accounts and records; (viii) processing purchase and redemption
transactions; (ix) providing automatic investment in Fund shares of Client cash
account balances; (x) providing periodic statements showing a client's account
balance and integrating such statements with those of other transactions and
balances in the Client's other accounts serviced by the Service Organization;
and (xi) arranging for bank wires and such other services as the Fund may
request, to the extent that the Service Organization is permitted by applicable
statute, rule or regulation. Anything stated herein to the contrary
notwithstanding and subject to the rules and regulations of the Act, any Service
Payments made pursuant to this Plan shall cover any series or class of shares of
capital stock of the Fund as to which the Plan is effective.
(d) In each year that this Plan remains in effect, the Distributor of
the Fund and/or the Manager shall prepare and furnish to the Board of Trustees
of the Fund and the Trustees shall review, at least quarterly, written reports,
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complying with the requirements of Rule 12b-1 under the Act, of the amounts
expended under the Plan and purposes for which such expenditures were made.
4. The Fund will allocate the amounts expended by it under the Plan to
each series or class of securities of the Fund as to which the Plan is effective
in the proportion that the average daily net asset values of such series or
class of securities bears to the average daily net assets of all such series or
classes of securities as to which the Plan is effective.
5. The Plan shall become effective upon approval by (a) a vote of (i) the
Fund's Board of Trustees and (ii) the Qualified Trustees (as defined in Section
8 hereof), cast in person at a meeting called for the purpose of voting thereon,
and (b) with respect to any series or class of securities of the Fund, at least
a majority vote of the outstanding voting securities of such series and class of
the Fund, as defined in Section 2(a)(42) of the Act.
6. This Plan shall remain in effect for one year from its adoption date
and may be continued thereafter if this Plan is approved at least annually by a
vote of the Board of Trustees of the Fund, and of the Qualified Trustees, cast
in person at a meeting called for the purpose of voting on such Plan. This Plan
may not be amended in order to increase materially the amounts to be expended in
accordance with Sections 2 and 3(a) hereof without approval of each series or
class of securities affected in accordance with Section 5 hereof. All material
amendments to this Plan must be approved by a vote of the Board of Trustees of
the
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Fund, and of the Qualified Trustees, cast in person at a meeting called for
the purpose of voting thereon.
7. This Plan may be terminated at any time by a majority vote of the
Trustees who are not interested persons (as defined in Section 2(a)(19) of the
Act) of the Fund ("Independent Trustees") and have no direct or indirect
financial interest in the operation of the Plan or in any agreements related to
the Plan ("Qualified Trustees") or with respect to any series or class of
securities of the Fund, by vote of a majority of the outstanding voting
securities of such series or class of the Fund, as defined in Section 2(a)(42)
of the Act.
8. While this Plan shall be in effect, the selection and nomination of
the Independent Trustees of the Fund shall be committed to the discretion of the
Independent Trustees then in office.
9. Any termination or noncontinuance of a Service Agreement by the
Principal Distributor with a particular Service Organization shall have no
effect on similar agreements between the Principal Distributor and other Service
Organizations.
10. The Distributor is not obligated by this Plan to execute a Service
Agreement with a qualifying Service Organization nor is it required to pay all
or any portion of the 12b-1 fee to any service organization. The Distributor
shall be entitled to retain the entire amount of the 12b-1 fee (to the extent it
is entitled to such fee) attributable to its promotional efforts and/or services
it provides to clients it obtained for the Fund.
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11. The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, or the agreements or such report, as
the case may be, the first two years in an easily accessible place.
Dated: October 17, 1995
THE NAVELLIER PERFORMANCE FUNDS
By /s/ Louis Navellier
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Louis Navellier, Trustee
By /s/ Barry Sander
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Barry Sander, Trustee
By /s/ Joel Rossman
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Joel Rossman, Trustee
By /s/ Arnold Langsen
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Arnold Langsen, Trustee
By /s/ Jacques Delacroix
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Jacques Delacroix, Trustee
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