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Registration No. 33-80195
811-9142
Filed September 10, 1996
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Pre-Effective Amendment No.
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Post-Effective Ameandment No. 3 X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
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Amendment No. 3 X
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THE NAVELLIER PERFORMANCE FUNDS
One East Liberty, Third Floor
Reno, Nevada 89501
1-800-887-8671
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)
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<S> <C>
[ ] immediately upon filing pursuant to Rule 485 paragraph (b)(1)(vii)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
</TABLE>
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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 February 28, 1997.
Page 1 of ___ pages sequentially numbered. Exhibits are incorporated herein by
reference.
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EXPLANATORY NOTE
This Post-Effective Amendment No. 3 to the Registration Statement contains
the pages of the Prospectus and Statement of Additional Information of The
Navellier Performance Funds which are being amended by this amendment.
This Post-Effective Amendment No. 3 to the Registration Statement
incorporates by reference the Prospectus and Statements of Additional
Information and Exhibits attached as Part C of the Registration Statement filed
December 8, 1995 and EDGARIZED December 19, 1995 and December 20, 1995, Post-
Effective Amendment No. 1 and exhibits filed January 2, 1996 and EDGARIZED on
January 12, 1996 and January 13, 1996, and Post-Effective Amendment No. 2 filed
and EDGARIZED March 15, 1996, with respect to The Navellier Performance Funds,
all of which are incorporated herein by reference in their entirety and no
changes to said Prospectuses or Statements of Additional Information or Exhibits
or Post-Effective Amendment No. 2 all as EDGARIZED are affected by this Post-
Effective Amendment No. 3, except for the amendments to the Prospectus and
Statement of Additional Information and Exhibits and to Post-Effective Amendment
No. 2 filed herewith as part of this Post-Effective Amendment No. 3.
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
CONTENTS
This Registration Statement on Form N-1A consists of the following:
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
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CROSS-REFERENCE SHEET
Part A
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<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 Investment Objectives and
Registrant Policies, General Information,
Risk Considerations
5. Management of Registrant Management of the Fund
5A. Management's Discussion N/A
of Fund Performance
6. Capital Stock and Other General Information
Securities
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 N/A
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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 N/A
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
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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.
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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 three Portfolios: the Navellier Aggressive Growth Portfolio
("Aggressive Growth") - a non-diversified open-end management company portfolio
(See p. __); the Navellier Mid Cap Growth Portfolio ("Mid Cap Growth"), a
diversified open-end management company portfolio investing in mid cap growth
securities (See p. __); and the Navellier Aggressive Small Cap Portfolio
("Aggressive Small Cap"), a diversified open-end management company portfolio
investing in small cap growth securities (See p. __). Additional non-
diversified or diversified portfolios may be added to the Fund in the future.
There can be no assurance that the Portfolios of the Fund will achieve their
investment objectives.
LIKE ALL MUTUAL FUNDS, 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.
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.
One East Liberty, Third Floor
Reno, Nevada 89501
1-800-887-8671
The date of this Prospectus is September 30, 1996
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TABLE OF CONTENTS
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SHAREHOLDER TRANSACTION EXPENSES
AND ANNUAL FUND OPERATING EXPENSES.............................. 1
SUMMARY.............................................................. 3
INVESTMENT OBJECTIVES AND POLICIES................................... 5
SPECIAL INVESTMENT METHODS AND RISKS................................. 8
INVESTMENT RESTRICTIONS.............................................. 10
RISK FACTORS......................................................... 11
PERFORMANCE AND YIELD................................................ 14
MANAGEMENT OF THE FUND............................................... 15
EXPENSES OF THE FUND................................................. 17
REPORTS AND INFORMATION.............................................. 19
DESCRIPTION OF SHARES................................................ 20
DIVIDENDS AND DISTRIBUTIONS.......................................... 21
TAXES................................................................ 22
PURCHASE AND PRICING OF SHARES....................................... 24
REDEMPTION OF SHARES................................................. 27
CERTAIN SERVICES PROVIDED TO SHAREHOLDERS............................ 30
ADDITIONAL INFORMATION............................................... 31
ASSENT TO TRUST INSTRUMENT........................................... 32
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SHAREHOLDER TRANSACTION EXPENSES
AND ANNUAL FUND OPERATING EXPENSES
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Navellier Navellier Navellier
Aggressive Mid Cap Aggressive
Growth Growth Small Cap
Portfolio Portfolio Portfolio/8/
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<S> <C> <C> <C>
Shareholder Transaction Expenses/1/
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Maximum Sales Load Imposed on Purchases 0% 0% 3%/7/
(as a percentage of offering price)...
Maximum Sales Load Imposed on None None None
Reinvested Dividends................. None None None
Redemption Fees.......................... 0-$5 0-$5 0-$5
Exchange Fee/3/..........................
Annual Fund Operating Expenses
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(as a percentage of average net assets)
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Management Fees/4/....................... 1.25% 1.25% 1.15%
12b-1 Fees/2/............................ 0.25% 0.25% None
Other Expenses/5/........................ 0.50% 0.50% 0.40%
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Total Fund Operating Expenses/6/......... 2.00% 2.00% 1.55%
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/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 Adviser may, but is under no obligation to, reimburse the Fund's
expenses now or in the future.
/2/ The Aggressive Growth Portfolio, and the Mid Cap Growth Portfolio do not
charge an initial sales load but do pay an annual 0.25% 12b-1 fee to the
distributor or brokers who have signed a selling agreement with the Fund. The
applicable Portfolio of the Fund pays these brokers or the distributor annually
0.25% of the value of the assets of the applicable Portfolio of the Fund which
were obtained by said broker or distributor. The fee is paid to the broker or
distributor for continuous personal services by such broker or distributor to
investors in the applicable Portfolio. Investors may also be charged a
transaction fee if they effect transactions in fund shares through a broker or
agent. There is no 12b-1 fee charged to shareholders of the Navellier
Aggressive Small Cap Portfolio.
/3/ Shares of the Aggressive Growth Portfolio or the Mid Cap Growth
Portfolio may be exchanged for shares of each other at net asset value without
charge (up to five (5) exchanges per account). There is a charge of $5 per
exchange thereafter. Shares of the Navellier Aggressive Small Cap Portfolio can
be exchanged for shares of the Aggressive Growth Portfolio or the Mid Cap Growth
Portfolio at net asset value without charge (up to five (5) exchanges per
account) but shares of those Portfolios cannot be exchanged for shares of the
Aggressive Small Cap 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, these 0.50% and 0.40% figures
represent an estimate of all other expenses of the Portfolio except the 12b-1
fee.
/6/ This includes the annual 0.25% 12b-1 fee for the Aggressive Growth
Portfolio and the Mid Cap Growth Portfolio (there is no 12b-1 fee for the
Aggressive Small Cap Portfolio), which has the effect of increasing annual
operating expenses.
/7/ The 3% sales charge is reduced to 2.5% on initial purchases between
$25,000 and $49,999.99, 2% for purchases between $50,000 and $74,999.99, 1.50%
for purchases between $75,000 and $99,999.99 and 1% for purchases between
$100,000 and $999,999.99. There is no sales charge for purchases of $1 million
or more.
/8/ The Navellier Aggressive Small Cap is closed to new investors. It
will, however, take additional investments from existing shareholders or from
Navellier Series Fund shareholders and from financial advisors and financial
planners.
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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:
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<CAPTION>
Navellier Navellier Navellier
Aggressive Mid Cap Aggressive
Growth Growth Small Cap
Portfolio Portfolio Portfolio
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<S> <C> <C> <C>
One-Year.........$21 $21 $46
Three-Year.......$64 $64 $79
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The foregoing examples assume (a) that an investor maintains an average of
$1,000 invested in the Portfolio; (b) no sales load for the Aggressive Growth
Portfolio and the Mid Cap Growth Portfolio and a 3% sales load for the Navellier
Aggressive Small Cap Portfolio, (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 examples shown above should not be considered a representation of past
or future expenses. Actual expenses of each Portfolio of the Fund may be
greater or less than those shown above.
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SUMMARY
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 is 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". 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 (See p. __ for greater
detail.)
The Mid Cap Growth and the Aggressive Small Cap Portfolios also employ
aggressive investment strategies and can experience substantial fluctuations,
including declines, so that shares may be worth less than when originally
purchased. However, because these Portfolios can only invest up to 5% of their
assets in the securities of any single issuer, in theory they should not pose as
great a risk of fluctuation as the Aggressive Growth Portfolio, although there
can be no such assurance (See pp. __ for greater detail).
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., One East Liberty, Third Floor, Reno, Nevada 89501; 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.
Investment Adviser
Navellier Management, Inc. (the "Investment Advisor") administers the
assets of each of the existing three Portfolios of the Fund and determines which
securities will be selected as investments for each of the existing Portfolios
of the Fund. Louis Navellier, the President and CEO of the Investment Advisor,
refined the Modern Portfolio Theory investment 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. Louis
Navellier and Alan Alpers are the Portfolio Managers involved in the day-to-day
investment activities of the Aggressive Growth Portfolio. Louis Navellier and
Alan Alpers are also the Portfolio Managers involved in the day-to-day
investment activities of the Mid Cap Growth Portfolio and the Aggressive Small
Cap Portfolio. The Investment Advisor receives an annual advisory fee, equal to
1.25% of the average daily net asset value of assets under management for the
Aggressive Growth Portfolio and the Mid Cap Growth Portfolio and receives a fee
equal to 1.15% of the average daily net asset value of assets under management
for the Aggressive Small Cap Portfolio. The advisory fee for each Portfolio is
payable monthly, based upon a percentage of that Portfolio's average daily net
assets. The advisory fees paid to the Investment Advisor are higher than those
generally paid by most other investment companies. The existing Portfolios of
the Fund are paying these higher advisory fees based
3
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on their desire to retain Navellier Management, Inc.'s specific application of
Modern Portfolio Theory, its particular method of analyzing securities and its
investment advisory services.
Distribution of Shares
Navellier Securities Corp. (the "Distributor") acts as the sole underwriter
for the shares of each of the Portfolios of the Fund. The Distributor is a
corporation wholly owned by Louis Navellier, who also owns 100% of Navellier
Management, Inc., the Fund's Investment Advisor. The Distributor may sell
shares of each Portfolio of the Fund directly to investors or shares may be
purchased through a network of broker-dealers selected by the Distributor. The
Distributor will compensate these selected dealers for shareholder services by
paying them directly, or by allowing them to receive annually all or a portion
of the 0.25% annual 12b-1 fee paid on the Aggressive Growth Portfolio and on the
Mid Cap Growth Portfolio. No 12b-1 fee is paid on the Aggressive Small Cap
Portfolio.
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, the Mid Cap Growth Portfolio and the
Aggressive Small Cap 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 one company or companies which the Investment Adviser
believes represents an opportunity for significant capital appreciation. The
Investment Adviser will not invest more than 10% of the Portfolio's assets in
the securities 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
Adviser can concentrate more of the Portfolio's assets in the stock of a single
company or in the securities 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
company 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 the securities of 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 securities 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. Securities 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.
Investment Objectives of the Navellier Mid Cap Growth Portfolio
The Mid Cap Growth Portfolio invests in securities traded in all United
States markets. It is a diversified portfolio, meaning it limits its investment
in the securities of any single company (issuer) to a maximum of 5% of the
Portfolio assets and further limits its investments to a maximum of 25% of the
Portfolio's assets in any one industry group. The Mid Cap Growth Portfolio
seeks long term capital appreciation through investments in securities of mid
cap companies (companies with market capitalization of between $1 Billion and $5
Billion) which the Investment Advisor feels are undervalued in the
marketplace.
5
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Investors in the Mid Cap Growth Portfolio pay no initial sales charge (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 the Mid Cap Growth
Portfolio. Navellier Securities Corp. is the principal distributor for the Mid
Cap Growth Portfolio's shares. This Portfolio should not be considered suitable
for investors seeking current income.
Investment Objectives of the Navellier Aggressive Small Cap Portfolio
The Aggressive Small Cap Portfolio invests in securities traded in the
United States securities markets of domestic issuers and of foreign issuers.
The sole objective of the Aggressive Small Cap Portfolio will be to seek to
achieve long term growth of capital primarily through investments in securities
of small cap companies (companies with market capitalization of less than $1
Billion) with appreciation potential. 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.
Each of the Portfolios 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, each Portfolio may retain cash or invest all or any portion
of its assets in cash equivalents, including money market mutual funds. Under
normal conditions, a Portfolio's holdings in such non-equity securities should
not exceed 35% of the total assets of the Portfolio. If a Portfolio's assets,
or a portion thereof, are retained in cash or money market funds or money market
mutual funds, such cash will, in all probability, be deposited in interest-
bearing or money market accounts or Rushmore's money market mutual funds.
Rushmore Trust & Savings, FSB is also the Fund's Transfer Agent and Custodian.
Cash deposits by the Fund in interest bearing instruments issued by Rushmore
Trust & 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, for each of the Portfolios, all of their
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
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Aggressive Growth Portfolio, the Mid Cap Growth Portfolio and the Aggressive
Small Cap 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. Each Portfolio 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 Aggressive Growth Portfolio as to the type, operating
history, or dividend paying record of companies or industries in which the
Portfolios may invest; the principal criteria for investment is that the
securities provide opportunities for capital growth. The Aggressive Growth
Portfolio 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 for
investment by the Aggressive Growth Portfolio, 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, when investing for the Aggressive Growth Portfolio, may
also purchase common stocks of well known, highly researched, large companies if
the Investment Adviser believes such common stocks offer opportunity for long-
term capital growth.
7
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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."
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.
Any 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 meet 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
8
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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.
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.
Each 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.
9
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INVESTMENT RESTRICTIONS
The Aggressive Growth Portfolio can invest up to 10% of its assets in
securities of a single issuer and up to 25% of its assets in securities of
companies in a single industry. The Mid Cap Growth Portfolio and the Aggressive
Small Cap Portfolio can each invest up to 5% of their assets in the securities
of a single issuer and each can invest up to 25% of its assets in the securities
of a single industry. None of the Portfolios of the Fund may 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. Each of the existing Portfolios of the Fund are also prohibited
from investing in or selling puts, calls, straddles (or any combination
thereof). Each of the existing Portfolios of the Fund are prohibited from
investing in derivatives. Each of the existing Portfolios 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 on 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.
10
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RISK FACTORS
Lack of Operating History and Experience
The Aggressive Growth Portfolio went effective December 28, 1995 and
has less than one year of operations. The Mid Cap Growth Portfolio and the
Aggressive Small Cap Portfolio, are newly organized investment company
portfolios 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 or
their experience with The Navellier Series Fund 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 $1.8 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 which manage assets and/or act
as subadvisors, 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 one or more of the
Portfolios of the Fund not being able to purchase or sell all shares which
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., other Navellier controlled investment entities and The
Navellier Series Fund 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
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<PAGE>
Management, Inc., each place a $25,000 purchase order and Investment 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 securities and each Portfolio of the Fund may only
invest in foreign securities which are
12
<PAGE>
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 each of the three existing
Portfolios is unknown since none of the three Portfolios has an operating
history of more than a year 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 any of the Portfolios, 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".
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<PAGE>
PERFORMANCE & YIELD
From time to time the Fund may include the performance history of each
Portfolio (and if appropriate, the performance history of the Investment
Advisor and/or the Portfolio Manager in managing comparable asset accounts) in
advertisements, sales literature, or reports to current or prospective
shareholders. Performance information about the Portfolio or if appropriate a
Portfolio manager or the Investment Advisor 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.
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 each Portfolio, see the Statement of Additional Information.
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<PAGE>
MANAGEMENT OF THE FUND
The Board of Trustees
The Fund's Board of Trustees directs the business and affairs of each
Portfolio 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 to each of
the three existing Portfolios 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 each Portfolio of the Fund with certain
administrative services, including accounting and bookkeeping services and
supervising each Portfolio'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 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 adviser 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".
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<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 under which it serves as the principal underwriter of the shares of
each existing Portfolio of the Fund. The Distributor may sell certain of the
Fund's Portfolio shares by direct placements. Through a network established by
the Distributor, each of 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 & 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.
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<PAGE>
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 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 Investment Advisor may, but is not obligated to, from
time to time advance funds, or directly pay, for expenses of the Fund and may
seek reimbursement of or waive reimbursement of those advanced expenses.
Compensation of the Investment Adviser
The Investment Adviser receives an annual 1.25% fee for investment
management of The Aggressive Growth Portfolio, an annual 1.25% fee for
investment management of the Mid Cap Growth Portfolio and an annual 1.15% fee
for investment management of the Aggressive Small Cap Portfolio. Each fee is
payable monthly, based upon each Portfolio's average daily net assets. These
advisory fees are higher than those 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 up to
0.25% per annum of the average daily net assets of the Aggressive Growth
Portfolio and the Mid Cap Growth Portfolio (but not the Aggressive Small Cap
Portfolio) 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 such Portfolio may pay to Distributor or others as a service
fee to reimburse such parties for personal services provided to shareholders of
such Portfolio 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 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 Portfolio's average net
17
<PAGE>
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 such Portfolio
within the context of Rule 12b-1. The payments under the Plan are included in
the maximum operating expenses which may be borne by each Portfolio.
Brokerage Commissions
The Investment Adviser may select selected broker-dealers to execute
portfolio transactions for the Portfolios of 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.)
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<PAGE>
REPORTS AND INFORMATION
The Fund will distribute to the shareholders of each Portfolio semi-
annual reports containing unaudited financial statements and information
pertaining to matters of each Portfolio of the Fund. An annual report containing
financial statements for each Portfolio, together with the report of the
independent auditors for each Portfolio of the Fund is distributed to
shareholders each year. Shareholder inquiries should be addressed to The
Navellier Performance Funds, at One East Liberty, Third Floor, Reno, Nevada
89501; Tel: (800) 887-8671, or to the Transfer Agent, Rushmore Trust & Savings,
FSB, 4922 Fairmont Avenue, Bethesda, Maryland, 20814, Telephone: (301) 657-1510
or (800) 622-1386.
19
<PAGE>
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 three Portfolios - the Navellier
Aggressive Growth Portfolio, the Navellier Mid Cap Growth Portfolio and the
Navellier Aggressive Small Cap Portfolio, each of which is 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 each Portfolio 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 each Portfolio of the Fund are entitled to one vote for each
full share held and fractional votes for fractional 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 second 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.
20
<PAGE>
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
return of capital, ordinary income or long-term capital gain for federal income
tax purposes. Between the record date and the cash payment date, each 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.
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. Each 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.
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.
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<PAGE>
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 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
22
<PAGE>
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
Each Portfolio of 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
each Portfolio of the Fund and its shareholders for state and 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.
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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 & 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 & 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.
If an order for shares of a Portfolio is received by the Transfer Agent by
4:00 p.m. on any business day, such shares will be purchased at the net asset
value determined as of 4:00 p.m. New York Time on that day. Otherwise, such
shares will be purchased at the net asset value determined as of 4:00 p.m. New
York Time on the next business 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 4:00 p.m. New York Time).
Shares are entitled to receive any declared dividends on the day following the
date of purchase.
24
<PAGE>
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. New York Time on the
day of determination. See "Valuation of Shares". If an investor's order is not
transmitted and accepted by 4:00 p.m. New York Time, the investor must settle
his or her entitlement to that day's net asset value with the Selected Dealer.
Investors may also purchase shares of the Fund by telephone through a Selected
Dealer by having the Selected Dealer telephone the Transfer Agent with the
purchase order. Investors may be charged a transaction fee if they effect
transactions in Fund shares through a broker or agent.
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, whether purchased through a
Selected Dealer or directly through the Transfer Agent; there is however an
annual Rule 12b-1 fee (except as to the Aggressive Small Cap Portfolio).
Shareholders who wish to transfer Fund shares from one broker-dealer to
another should contact the Fund at (800) 621-7874.
To Invest By Bank Wire: Request a wire transfer to:
Rushmore Federal Savings Bank
Bethesda, MD
Routing Number 0550 71084
For Account of The Navellier Performance Funds
Account Number 029 385770
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. NEW YORK TIME 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 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.
25
<PAGE>
To Invest By Automatic Monthly Investment Plan:
Shareholders may make automatic monthly purchases of a Portfolio'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 Portfolio for the
shareholder. There is no charge by the Portfolio for this automatic monthly
investment plan and the shareholder can discontinue the service at any time.
General Purchasing Information
Each of the existing Portfolios of 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.
The Fund reserves the right to not accept an applicant's proposed investment in
any of the Fund's shares.
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. New York Time, 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 Portfolio 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.
26
<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 Portfolio. 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 & 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 New
York Stock Exchange is open for business.
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
27
<PAGE>
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 & 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
The owner of $25,000 or more worth of the shares of any 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
28
<PAGE>
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.
29
<PAGE>
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 each Portfolio in this Fund may be exchanged for one another at
net asset value. 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. 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 4:00 p.m. New York Time will be effected on the next business day
after such request is received.
30
<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.
31
<PAGE>
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.
32
<PAGE>
Investment Adviser
Navellier Management, Inc.
One East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
Distributor THE NAVELLIER PERFORMANCE FUNDS
Navellier Securities Corp.
One East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
Independent Auditors
Deloitte & Touche, LLP
1900 M Street
Washington, D.C. 20036
(202) 955-6530
Transfer Agent and Custodian
Rushmore Trust & 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.
One East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
Shareholder Inquiries
Rushmore Trust & Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 622-1386
September 30, 1996
33
<PAGE>
Navellier New Account Application For a retirement account
Performance application call 800-887-8671
Funds
====================================================-
800-887-8671
Mail Application & Checks to:
The Navellier Performance Funds
c/o Rushmore Trust & Savings
4922 Fairmont Ave.
Bethesda, MD 20814
800-622-1386
<TABLE>
<CAPTION>
- ---------------------- ======================================================================================================
<S> <C>
Registration 1. Individual
------------------------------------------------------------------------------------------
First Name Initial Last Name
[_] Individual
Use lines 1 & 3
2. Joint Tenant
----------------------------------------------------------------------------------------
[_] Joint Account with First Name Initial Last Name
Rights of Survivor
Lines 1, 2 & 3 Rights of survivor will be applied unless otherwise indicated
[_] Joint Account with
Tenancy in Common 3. Social Security No. Date of Birth
Lines 1, 2 & 3 --------------------------------------- ----------------------------
S.S.# to be used for tax purposes
[_] Gift to Minor
Lines 4 & 5 4. Uniform Gift to Minor
-------------------------------------------------------------------------------
OR Custodian's Name/State
5.
[_] Corporations, -----------------------------------------------------------------------------------------------------
Partnerships, Minor's Name Minor's Social Security No. Date of Birth
Trusts & Others
Lines 6 & 7 6.
-----------------------------------------------------------------------------------------------------
Name of Corporation or Entity Tax ID Number
7. Registration Type: Corporation Partnership Unincorporated Association
--- --- ---
Trust - Date of Trust
--- -------------------------------
Please include a copy of the first and last pages of your trust agreement.
- ---------------------- =======================================================================================================
Mailing Address Street or P.O. Box
-------------------------------------------------------------------------------------
Complete if different from City State Zip
above address label ------------------------------ --------------------------------- ---------------------------
Telephone: Home Work
-------------------------------------- -------------------------------------------
Your Residency: [_] U.S. [_] Resident Alien [_] Non-Resident Alien
Specify Country
-------------------------------------------------
- ---------------------- =======================================================================================================
Investment Portfolio Amount
--------- ------
[_] Navellier Aggressive Growth Portfolio $_____________
Make check payable to: [_] Navellier Mid Cap Growth Portfolio $_____________
The Navellier Performance [_] Navellier Aggressive Small Cap Portfolio $_____________
Funds
[_] By check $ [_] By wire $
--------------------------------- -------------------------------------
From Account No.
------------------------------------
Minimum initial investment is $2,000 ($500 for IRAs, call 800-887-8671 for an IRA application).
Make checks payable to The Navellier Performance Funds. Call 800-622-1386 for wiring instructions or
see the prospectus.
- ---------------------- =======================================================================================================
Dividends [_] Reinvest dividends and capital gains. [_] Reinvest dividends, pay capital gains.
and Capital Gains
Distributions [_] Pay dividends and capital gains in cash. [_] Pay dividends, reinvest capital gains.
All dividends and capital gains distributions will be reinvested if no box is checked. All
distributions will be reinvested if a withdrawal plan is elected.
- ---------------------- =======================================================================================================
</TABLE>
<PAGE>
<TABLE>
- ---------------------- =======================================================================================================
<S> <C>
Investor Financial
& Investment Info. Annual Income: $ Net Worth: $
Required by NASD ------------------------------ --------------------------------------------
Investment Objective: [_] Growth
- ---------------------- =======================================================================================================
Shareholder Telephone/Expedited Redemption - please check all that apply. These privileges are subject to the
Privileges terms set forth in the Prospectus.
[_] 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 & Savings, FSB.
[_] Wire redemption proceeds to:
----------------------------------------------------------------------
Name of Bank
-------------------------------------------- --------------------------------------------------
Type of Account Account Number
[_] Mail a check to my address indicated above.
- ---------------------- =======================================================================================================
Systematic [_] Yes A Systematic Withdrawal Plan is available for accounts with an underlying share value of $25,000
Withdrawal [_] No or more. If this plan is elected, all distributions will be automatically reinvested.
Plan Minimum withdrawal is $1,000.
Amount of payment $
---------------------------------------------------
Payments made: [_] Monthly [_] Quarterly [_] Annually
Optional Payments to commence the 2nd business day of:
--------------------------------------------
Month, Year
If checks are to be sent to another address or paid to someone other than the registered owner
shown on application, please provide the following:
Name:
--------------------------------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------------------------------
- ---------------------- =======================================================================================================
Broker Firm
Information ---------------------------------------------------------------------------------------------------
Mailing Address City
------------------------------------------------- ----------------------------------
If shares are being State Zip Phone
purchased through a ------------------------------------------ ------------- ----------------------------------
Service Agent, Agent
should complete Dealer Code Office Code Rep. Number
this section. --------------------------- ------------------ -------------------------
Agent Name Agent Signature:
---------------------------------- -------------------------------------------
- ---------------------- =======================================================================================================
Signatures I/We authorize Rushmore Trust & Savings, FSB, as custodian and transfer agent for The Navellier
& Certification 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
Confirmation of Account & Savings, FSB, nor The Navellier Performance Funds shall be held liable by me/us for any loss,
Establishment: Soon liability, cost, or expense for acting in accordance with this application, or any section thereof.
after all essential items I/We understand that all of the shareholder options described in this application are subject to the
are received by the terms set forth in the Prospectus.
custodian, a confirmation
statement(s) showing I/WE CERTIFY THAT WE HAVE FULL RIGHT, POWER, AUTHORITY, AND LEGAL CAPACITY TO PURCHASE AND REDEEM
account number(s), amount SHARES AND AFFIRM THAT I/WE HAVE RECEIVED AND READ THE PROSPECTUS, AGREE TO ITS TERMS, AND HAVE NOT
received, shares RELIED ON OR MADE MY/OUR DECISION TO INVEST IN THE NAVELLIER PERFORMANCE FUNDS ON ANY WRITTEN OR ORAL
purchased, and price paid INFORMATION OTHER THAN THE WRITTEN INFORMATION CONTAINED IN THE PROSPECTUS, REGISTRATION STATEMENT AND
per share will be sent to STATEMENT OF ADDITIONAL INFORMATION. Under penalties of perjury, I/we certify (i) that the number shown
the registered on this form is my/our correct Social Security Number or Taxpayer Identification Number and (ii) that
shareholder. (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
Subsequent Payments: A report all interest or dividends, or (2) the IRS has notified me/us that I am/we are no longer
new application need not subject to backup withholding. If you have been notified by the IRS that you are currently subject
be submitted with to backup withholding strike out phrase (2) above.
additional payments to an
existing account if a
current application is on
file with the custodian.
Subsequent purchases
should be identified by X X
account number and ----------------------------------------------- ----------------------------------------------------
account registration name. Signature as it appears on Line No. 1 Date Joint Signature (if applicable) Date
</TABLE>
<PAGE>
PART B
THE NAVELLIER PERFORMANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
DATED SEPTEMBER 30, 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 September 30, 1996, a copy of which Prospectus may be obtained,
without charge, by contacting the Fund, at its mailing address c/o Navellier
Securities, Corp., One East Liberty, Third Floor, Reno, Nevada 89501; Tel:
1-800-887-8671.
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY............................................ 1
INVESTMENT OBJECTIVES AND POLICIES......................................... 1
TRUSTEES AND OFFICERS OF THE FUND.......................................... 5
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES........................ 8
THE INVESTMENT ADVISER, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT............................................. 9
BROKERAGE ALLOCATION AND OTHER PRACTICES................................... 13
CAPITAL STOCK AND OTHER SECURITIES......................................... 15
PURCHASE, REDEMPTION, AND PRICING OF SHARES................................ 16
TAXES...................................................................... 17
UNDERWRITERS............................................................... 20
CALCULATION OF PERFORMANCE DATA............................................ 21
REPORT OF INDEPENDENT ACCOUNTANTS, AND
FINANCIAL STATEMENT...................................................... 23
APPENDIX................................................................... 24
<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 less than one year of operations
as of September 30, 1996.
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
1
<PAGE>
Agency of the Department of Defense, and the Tennessee Valley Authority.
Obligations of 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 securities of any single issuer or more than 25% of the Aggressive Growth
Portfolio's assets in a single industry; invest more than 5% of the assets of
the Mid Cap Growth Portfolio or Aggressive Small Cap Portfolio in securities of
any single issuer or more than 25% of the assets of such Portfolios 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,
3
<PAGE>
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 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 each
of the existing Portfolios is a new fund portfolio which has not been in
operation for a year, no actual turnover rate can be given at this time. The
Fund will attempt to limit the annual portfolio turnover rate of each Portfolio
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.
4
<PAGE>
TRUSTEES AND OFFICERS OF THE FUND
The following information, as of September 30, 1996, is provided with
respect to each trustee and officer of the Fund:
<TABLE>
<CAPTION>
Position(s) Held with
Registrant and Its Principal Occupation(s)
Name and Address Affiliates During Past Five Years
- ---------------- ----------------------- -------------------------
<S> <C> <C>
Louis Navellier/1/ Trustee, President and Mr. Navellier is and has
One East Liberty Treasurer of The been the CEO and
Third Floor Navellier Performance President of Navellier &
Reno, NV 89501 Funds. Mr. Navellier Associates Inc., an
is also the CEO, investment management
President, Secretary, company since 1988; CEO
and Treasurer of and President of
Navellier Management, Navellier Management,
Inc., a Delaware Inc., an investment
corporation which is management company since
the Investment Adviser May 10, 1993; Trustee of
to the Fund. Mr. the Navellier Series
Navellier is also CEO, Fund; CEO and President
President, Secretary, of Navellier
and Treasurer of International Management,
Navellier Securities Inc., an investment
Corp., the principal management company, since
underwriter of the May 10, 1993; CEO and
Fund's shares. President of Navellier
Securities Corp. since May
10, 1993; Trustee of the
Navellier Series Fund; 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 publisher and editor
of the predecessor
investment advisory
newsletter OTC Insight,
which he began in 1980 and
wrote through July 1987.
Arnold Langsen/2/ Trustee (however, Professor Langsen is
The Langsen Group, Inc. of Professor Langsen is Professor Emeritus of
California the President and a Financial Economics,
637 Silver Lake Dr. shareholder of The School of Business,
Danville, CA 94526 Langsen Group, Inc. of California State
California, which University at Hayward
corporation provides (1973-1992); Visiting
consulting services to Professor, Financial
Navellier & Associates Economics, University of
Inc.; California at Berkeley
(1984-1987).
Barry Sander Trustee Currently the President
695 Mistletoe Rd., #2 and CEO of Ursa Major
Ashland, OR 97520 Inc., a stencil
manufacturing firm and
has been for the past
eight years.
Joel Rossman Trustee Currently President and
Personal Stamp CEO of Personal Stamp
Exchange, Inc. Exchange, Inc., a
360 Sutton Place manufacturer, designer
Santa Rosa, CA and distributor of rubber
95407 stamp products. He has
been President and CEO of
Personal Stamp Exchange
for the past 10 years.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
Jacques Delacroix Trustee Professor of Business
University of Administration, Leavy
Santa Clara School of Business, Santa
Santa Clara, CA Clara University
(1983-present).
</TABLE>
- --------------------------------------------------------------------------------
/1/ This person is an interested person affiliated with the Investment Adviser.
/2/ This person, although technically not an interested person affiliated with
the Investment Adviser, does own a company which provides consulting services to
Navellier & Associates Inc., a company owned by Louis Navellier.
6
<PAGE>
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.
7
<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).
8
<PAGE>
THE INVESTMENT ADVISER, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT
(a) The Investment Adviser
----------------------
The offices of the Investment Adviser (Navellier Management, Inc.) are
located at One East Liberty, Third Floor, Reno, Nevada 89501. 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:
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
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.; one of the Portfolio Managers of the
Aggressive Growth Portfolio, the Mid Cap Growth
Portfolio, the Aggressive Small Cap Portfolio and the
Aggressive Small Cap Equity Portfolio of the Navellier
Series Fund.
Alan Alpers Trustee and Secretary of The Navellier Series Fund,
Portfolio Manager of the Aggressive Growth Fund
Portfolio and one of the Portfolio Managers of the
Navellier Aggressive Small Cap Equity Portfolio of the
Navellier Series Fund.
</TABLE>
(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 the Aggressive Growth Portfolio's and of the Mid Cap Growth
Portfolio's and 1.15% of the Aggressive Small Cap Portfolio's average daily
net assets. The Investment Adviser has the right, but 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
9
<PAGE>
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 &
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.
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
10
<PAGE>
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., or the Investment Advisor can
elect to waive reimbursement of some or all of such advances. 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 One East Liberty, Third Floor, Reno, Nevada 89501,
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
up to 0.25% per annum of the average daily net assets of the Aggressive Growth
Portfolio and 0.25% per annum of the average daily net assets of the Mid Cap
Growth Portfolio and of any subsequent Portfolio (except the Aggressive Small
Cap 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 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
11
<PAGE>
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. Investors
may also be charged a transaction fee if they effect transactions in fund shares
through a broker or agent.
(c) The Custodian and Transfer Agent
--------------------------------
Rushmore Trust & 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 Adviser and to the Distributor.
12
<PAGE>
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 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 Adviser. 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
13
<PAGE>
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.
14
<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.
15
<PAGE>
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 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.
16
<PAGE>
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.
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
17
<PAGE>
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 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.
18
<PAGE>
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 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.
19
<PAGE>
UNDERWRITERS
The Fund's shares will be continuously distributed through Navellier
Securities Corp. (the "Distributor") located at One East Liberty, Third Floor,
Reno, Nevada 89501, pursuant to a distribution agreement dated October 17, 1995.
The Distributor has a two year business history but only a nine month 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."
20
<PAGE>
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)
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 none of the Portfolios has been in operation for a year, no
performance figures for any 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
21
<PAGE>
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.
22
<PAGE>
JUNE 30, 1996 FINANCIAL STATEMENTS
June 30, 1996 Navallier Aggressive Growth Portfolio
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Securities at Value (Note 1, see portfolio for cost information.. $79,093,211
Cash in Custodian Bank........................................... 139,877
Receivable for Shares Sold....................................... 1,291,768
Receivable for Securities Sold................................... 557,342
Interest Receivable.............................................. 24,607
Dividends Receivable............................................. 6,208
Unamortized Organizational Costs (Note 1)........................ 113,190
-----------
Total Assets................................................... 81,226,203
-----------
Liabilities
Payable for Securities Purchased................................. 649,639
Payable for Shares Redeemed...................................... 116,195
Investment Advisory Fee Payable (Note 2)......................... 76,447
Administrative Fee Payable (Note 2).............................. 15,289
Distribution Plan Fee Payable (Note 4)........................... 15,289
Other Payables and Accrued Expenses.............................. 15,289
Organizational Expenses Payable to Adviser (Note 1).............. 113,190
-----------
Total Liabilities.............................................. 1,001,338
-----------
Net Assets......................................................... $80,224,865
-----------
Shares Outstanding................................................. 6,149,318
-----------
Net Asset Value Per Share.......................................... $13.05
===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
For the Six Months Ended
June 30, 1996 Navallier Aggressive Growth Portfolio
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Interest (Note 1)................................................ $ 82,169
Dividends (Note 1)............................................... 15,899
----------
Total Investment Income........................................ 98,068
----------
Expenses
Investment Advisory Fee (Note 2)................................. 167,709
Administrative Fee (Note 2)...................................... 33,542
Distribution Plan Fees (Note 4).................................. 33,542
Transfer Agent and Custodian Fee (Note 3)........................ 28,668
Trustees' Fees................................................... 15,000
Organizational Expense (Note 1).................................. 12,600
Insurance........................................................ 8,125
Printing......................................................... 7,160
Registration Fees................................................ 4,393
Audit Fees....................................................... 4,250
Other Expenses................................................... 2,923
----------
Total Expenses................................................. 317,912
Less Expenses Reimbursed by Investment Adviser (Note 2)........ (49,577)
----------
Net Expenses................................................. 268,335
----------
Net Investment Loss................................................ (170,267)
----------
Net Realized Gain on Investment Transactions....................... 7,664
Net Change in Unrealized Appreciation of Investments............... 1,994,713
----------
Net Gains on Investments........................................... 2,002,377
----------
Net Increase in Net Assets Resulting from Operations............... $1,832,110
==========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
Navallier Aggressive Growth Portfolio
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, 1996 December 31, 1995*
------------- ------------------
<S> <C> <C>
From Investment Activities
Net Investment Income (Loss)................................... $ (170,267) $ 21
Net Realized Gain on Investment Transactions................... 7,664 --
Net Change in Unrealized Appreciation (Depreciation)
of Investments............................................... 1,994,713 (84)
------------ -----------
Net Increase (Decrease) in Net Assets Resulting
from Operations............................................ 1,832,110 (63)
------------ -----------
Distributions to Shareholders
From Net Investment Income..................................... -- --
From Net Realized Capital Gains................................ -- --
------------ -----------
Total Distributions to Shareholders.......................... -- --
------------ -----------
From Share Transactions
Net Proceeds from Sales of Shares.............................. 88,894,714 200,000
Reinvestment of Distributions.................................. -- --
Cost of Shares Redeemed........................................ (10,801,896) --
------------ -----------
Net Increase in Net Assets Resulting from
Share Transactions......................................... 78,092,818 200,000
------------ -----------
Total Increase in Net Assets............................... 79,924,928 199,937
Net Assets--Beginning of Period.................................. 299,937 100,000
------------ -----------
Net Assets--End of Period........................................ $ 80,224,865 $ 299,937
============ ===========
Shares
Sold........................................................... 6,955,701 20,020
Issued in Reinvestment of Distributions........................ -- --
Redeemed....................................................... (836,403) --
------------ -----------
Net Increase in Shares....................................... 6,119,298 20,020
============ ===========
</TABLE>
- --------------------------------------------------------------------------------
*From Commencement of Operations December 28, 1995.
See Notes to Financial Statements.
Navallier Aggressive Growth Portfolio
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, 1996 December 31, 1995*
------------- ------------------
<S> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of Period........................... $ 9.99 $ 10.00
-------- --------
Income from Investment Operations:
Net Investment Income (Loss)................................. (0.081) 0.002
Net Realized and Unrealized Gains (Losses) on Securities..... 3.141 (0.008)
-------- --------
Total from Investment Operations........................... 3.060 (0.006)
-------- --------
Distributions to Shareholders:
From Net Investment Income................................... -- --
From Net Realized Capital Gains.............................. -- --
-------- --------
Total Distributions to Shareholders........................ -- --
-------- --------
Net Increase (Decrease) in Net Asset Value..................... 3.06 (0.01)
-------- --------
Net Asset Value--End of Period................................. $ 13.05 $ 9.99
======== ========
Total Investment Return/A/....................................... 30.63 % (0.10) %
Ratios to Average Net Assets:
Expenses After Reimbursement (Note 2)/B/....................... 2.00 % 2.00 %
Expenses Before Reimbursement (Note 2)/B/...................... 2.37 % 27.25 %
Net Investment Income (Loss)/B/................................ (1.27)% 2.59 %
Supplementary Data:
Portfolio Turnover Rate........................................ 33.2 % --
Net Assets at End of Period (000's omitted).................... $80.225 $300
Number of Shares Outstanding at End of Period (000's omitted).. 6.149 30
</TABLE>
- ---------
/A/Total returns for periods of less than one year are not annualized.
/B/Annualized.
- --------------------------------------------------------------------------------
*From Commencement of Operations December 28, 1995.
See Notes to Financial Statements.
June 30, 1996 Navallier Aggressive Growth Portfolio
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
The Navallier Performance Funds (the "Fund") is registered with the Secu-
rities and Exchange Commission under the Investment Company Act of 1940, as
amended, (the "Act") as an open-end investment company which offers its shares
in a series of no-load non-diversified portfolios. The Fund is authorized to
issue an unlimited number of shares of capital stock with no slated par value.
The Fund presently consists of one portfolio, the Navallier Aggressive Growth
Portfolio (the "Portfolio"), a non diversified open-end management portfolio.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain esti-
mates and assumptions at the date of the financial statements. The following
is a summary of significant accounting policies which the Fund follows:
(a) Listed securities are valued at the last sales price of the New
York Stock Exchange and other major exchanges. Over-the-Counter securities
are valued at the last sales price. If market quotations are not readily
available, the Board of Trustees will value the Fund's securities in good
faith. The Trustees will periodically review this method of valuation and
recommend changes which may be necessary to assume that the Fund's instru-
ments are valued at fair value.
(b) Security transactions are recorded on the trade date (the date the
order to buy or sell is executed). Interest income is accrued on a daily
basis. Dividend income is recorded on the ex-dividend date. Realized gains
and losses from securities transactions are computed on an identified cost
basis.
(c) Dividends from net investment income are declared and paid annually.
Dividends are re-invested in additional shares unless shareholders request
payment in cash. Net capital gains, if any, are distributed annually.
(d) The Fund intends to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies and will distribute
all net investment income to its shareholders. Therefore, no Federal income
tax provision is required.
(e) Organizational expenses of the Fund totaling $126,000 are being
deferred and amortized over 60 months beginning with the public offering of
shares. Any redemption by an initial investor during the amortization period
will be reduced by a prorata portion of any of the unamortized organizational
expenses. Such proration is to be calculated by dividing the number of
initial shares redeemed by the number of initial shares outstanding at the
date of redemption. At June 30, 1996, unamortized organizational costs were
$113,190.
2. Investment Advisory Fees and Other Transactions with Affiliates
Investment advisory services are provided by Navallier Management, Inc.
("the Adviser"). Under an agreement with the Adviser, the Fund pays a fee at the
annual rate of 1.25% of the daily net assets of the Portfolio. The Adviser also
receives an annual fee equal to 0.25% of the Fund's average daily net assets in
connection with the rendering of services under the administrative services
agreement and is reimbursed by the Fund for operating expenses incurred on
behalf of the Fund. An officer and trustee of the Fund is also an officer and
director of the Adviser.
Under an agreement between the Fund and the Adviser related to payment of
operating expenses, the Adviser has reserved the right to seek reimbursement for
the past, present and future operating expenses of the Fund paid by the Adviser,
at any time upon notice to the Fund. At December 31, 1995, the Adviser
voluntarily agreed not to seek future reimbursement of all unreimbursed past
expenses incurred on behalf of the Fund. During the period ended June 30, 1996,
the Adviser paid operating expenses of the Fund totaling $83,119. Under the
operating expense agreement, the Adviser requested, and the Fund reimbursed,
$33,542 of such expenses. The Adviser voluntarily agreed not to seek future
reimbursement of $49,577 of such 1996 expenses.
June 30, 1996 Navallier Aggressive Growth Portfolio
- -------------------------------------------------------------------------------
Navallier Securities Corp. (the "Distributor") acts as the Fund's Distri-
butor and is registered as a broker-dealer under the Securities and Exchange
Act of 1934. The Distributor, which is the principal underwriter of the Fund's
shares, renders its services to the Fund pursuant to a distribution agreement.
An officer and trustee of the Fund is also an officer and director of the
Distributor.
3. Transfer Agent and Custodian
Rushmore Trust and Savings, FSB ("Rushmore Trust"), provides transfer
agency, dividend disbursing and other shareholder services to the Fund. In
addition, Rushmore Trust serves as custodian of the Fund's assets. Fees paid to
Rushmore Trust are based upon a fee schedule approved by the Board of Trustees.
4. Distribution Plan
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Act, whereby it reimburses the Distributor or others in an
amount not to exceed 0.25% per annum of the average daily net assets of the
Portfolio for expenses incurred in the promotion and distribution of shares of
the Portfolio. These expenses include, but are not limited to, the printing of
prospectuses, statements of additional information, and reports used for sales
purposes, expenses of preparation of sales literature and related expenses
(including Distributor personnel), advertisements and other distribution-related
expenses, including a prorated portion of the Distributor's overhead expenses
attributable to the distribution of shares. Such payments are made monthly. The
12b-1 fee includes, in addition to promotional activities, the amount the Fund
may pay to the 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. Such Rule 12b-1 fees are made pursuant to
the Plan and distribution agreements entered into between such service providers
and the Distributor or the Fund directly.
5. Securities Transactions
For the period ended June 30, 1996, purchases of securities were
$79,545,548 and sales of securities were $8,874,532. These totals exclude
short-term securities.
6. Net Unrealized Appreciation/Depreciation of Investments
As of June 30, 1996, net appreciation of investments for Federal income tax
purposes was $1,480,820 of which $6,147,467 related to appreciated investments
and $4,666,647 related to depreciated investments. At June 30, 1996, the cost of
the Fund's securities for Federal income tax purposes was $77,612,391.
7. Net Assets
At June 30, 1996, net assets consisted of the following:
Paid-In-Capital $78,392,818
Net Investment Loss (170,246)
Accumulated Realized Gain on Investments 7,664
Net Unrealized Appreciation of Investments 1,994,629
-----------
NET ASSETS $80,224,865
===========
<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.
24
<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 28, 1995.
(ii) Statement of Assets and Liabilities of the Mid Cap Growth
Portfolio as of September __, 1996.
(iii) Statement of Assets and Liabilities of the Aggressive
Small Cap Portfolio as of September __, 1996.
(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.
2. Exhibits:
Exhibit Number Description
-------------- -----------
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 & 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
25
<PAGE>
17, 1995
13.1 Investment Adviser Operating Expense Reimbursement
Agreement
14 None
15 12b-1 Plan
16 N/A
26
<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:
Title of Class Number of Record Holders
-------------- ------------------------
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.
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.
27
<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:
28
<PAGE>
Name and Principal
- ------------------
Business Address
- ----------------
Louis Navellier
One East Liberty
Third Floor
Reno, NV 89501
Positions Held with Registrant and Its Affiliates
- -------------------------------------------------
Trustee, President, and Treasurer of The Navellier Performance Funds, one of
Portfolio Managers of the Aggressive Growth Portfolio, the Mid Cap Growth
Portfolio and the Aggressive Small Cap Portfolio. Mr. Navellier is also the
CEO, President, Treasurer, and Secretary of Navellier Management, Inc., a
Delaware Corporation which is the Investment Adviser to the Fund. Mr. Navellier
is also CEO, President, Secretary, and Treasurer of Navellier & Associates Inc.,
Navellier Publications, Inc., MPT Review Inc., and Navellier International
Management, Inc.
Principal Occupations During Past Two Years
- -------------------------------------------
Mr. Navellier is and has been the CEO and President of Navellier & Associates
Inc., an investment management company since 1988; is and has been CEO and
President of Navellier Management, Inc.; one of the Portfolio Managers for the
Investment Adviser to this Fund and The Navellier Series Fund; President and CEO
of Navellier Securities Corp., the principal Underwriter to this Fund and The
Navellier Series Fund; CEO and President of Navellier Fund Management, Inc. and
investment 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.
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, Director Trustee, President, CEO,
One East Liberty, Treasurer, and Secretary Treasurer
Third Floor
Reno, NV 89501
</TABLE>
(c) As of the date hereof, no principal underwriter who is not an
affiliated person
29
<PAGE>
of the Fund has received any commissions or other compensation during the Fund's
last fiscal year.
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 One East
Liberty, Third Floor, Reno, Nevada 89501, 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.
30
<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 Post-Effective
Amendment No. 3 to Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Reno, and State of Nevada
on the 10th day of September, 1996.
I certify that there has been no material event since the effective date of
the Registration Statement requiring disclosure in the Prospectus and that this
post-effective amendment No. 3 meets all the requirements of Rule 485(b)(1)(vii)
for immediate effectiveness.
THE NAVELLIER PERFORMANCE FUNDS
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:
<TABLE>
<S> <C> <C>
Trustee and President
- ------------------------ (Principal Executive September 10, 1996
Louis Navellier/2/ Officer), Treasurer
Trustee
- ------------------------
Joel Rossman/2/ September 10, 1996
Trustee
- ------------------------
Barry Sander September 10, 1996
Trustee
- ------------------------
Arnold Langsen September 10, 1996
Trustee and Secretary
- ------------------------
Jacques Delacroix September 10, 1996
</TABLE>
- ------------------------
/2/These persons are interested persons affiliated with the Investment Advisor.
31
