<PAGE>
As Filed With The Securities And Exchange Commission On March 7, 1997
Registration No. 33-80195
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __
Post-Effective Amendment No. 5
THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
One East Liberty Street, Third Floor, Reno, Nevada 89501
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(702) 785-2300
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Mr. Louis G. Navellier
The Navellier Performance Funds
One East Liberty, Third Floor
Reno, Nevada 89501
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service of Process)
Copies to:
Samuel Kornhauser, Esq.
155 Jackson Street, Suite 1807
San Francisco, California 94111
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
It is proposed that this filing will become effective thirty days after filing
pursuant to paragraph (a) of Rule 488.
The Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) under the Investment Company
Act of 1940; accordingly, no fee is payable herewith. The Registrant has
undertaken to file on February 28, 1998, a Rule 24f-2 Notice for its most recent
fiscal year ended December 31, 1997.
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following
pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Letters to Shareholders
Notice of Special Meeting
PART A
Combined Prospectus/Proxy Statement
PART B
Statement of Additional Information
PART C
Other Information
Signatures
Exhibits
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
REGISTRATION STATEMENT ON FORM N-14
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-14 Location in
ITEM NO. REGISTRATION STATEMENT
PART A. INFORMATION REQUIRED IN PROSPECTUS/PROXY STATEMENT
<S> <C>
1. Beginning of Registration Cover Page; Cross Reference Sheet
Statement and Outside Front
Cover Page of Prospectus
2. Beginning and Outside Table of Contents
Back Cover Page of Prospectus
3. Synopsis and Risk Factors Synopsis; Principal Risk Factors
4. Information About the Synopsis; The Proposed Transactions;
Transaction Appendix A
5. Information About the Synopsis; Comparison of Investment
Registrant Objectives and Policies; Principal
Risk Factors; Additional Information
About the Acquiring Fund and the
Acquiring Fund Shares;
Miscellaneous; Current Prospectus of
The Navellier Aggressive Small Cap
Portfolio
6. Information About the Synopsis; Comparison of Investment
Company Being Acquired Objectives and Policies; Principal
Risk Factors; Additional Information
About the Portfolio and the
Portfolio Shares; Current Prospectus
of The Navellier Aggressive Small
Cap Equity Portfolio
7. Voting Information Introduction and Voting Information;
Synopsis
8. Interest of Certain Introduction and Voting Information;
Persons and Experts The Proposed Transactions; Miscellaneous
9. Additional Information Not Applicable
Required for Reoffering
by Persons Deemed to be
Underwriters
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-14 Location in
ITEM NO. REGISTRATION STATEMENT
PART A. INFORMATION REQUIRED IN PROSPECTUS/PROXY STATEMENT
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information Current Statement of Additional
About the Registrant Information of The Navellier
Aggressive Small Cap Portfolio of
The Navellier Performance Funds
PART B: INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION (CONTINUED)
13. Additional Information Current Statement of Additional
About the Company Being Information of The Navellier Series
Acquired Fund
14. Financial Statements Current Annual Report of The
Navellier Performance Funds; Current
Annual Report of The Navellier
Series Fund; "PRO FORMA FINANCIAL
STATEMENTS"
PART C: OTHER INFORMATION
15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
</TABLE>
<PAGE>
LOUIS G. NAVELLIER
AND
NAVELLIER MANAGEMENT INC.
(INVESTMENT ADVISOR TO THE NAVELLIER SERIES FUND)
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
FEBRUARY 28, 1997
TO THE SHAREHOLDERS OF
THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
Dear Shareholder:
A special meeting of the shareholders of The Navellier Aggressive Small Cap
Equity Portfolio (the "Portfolio"), a series of The Navellier Series Fund, will
be held at 10:00 A.M., Pacific Standard Time, on April 25, 1997, at the offices
of The Navellier Series Fund, at One East Liberty Street, Third Floor, Reno,
Nevada 89501 (the "Meeting"). The shareholders of the Portfolio (the
"Shareholders") will vote on an Agreement and Plan of Reorganization (the
"Plan"). Under the Plan, the Navellier Aggressive Small Cap Equity Portfolio
will merge into The Navellier Aggressive Small Cap Portfolio (the "Acquiring
Fund"), a separate portfolio of The Navellier Performance Funds (the
"Reorganization"). The Acquiring Fund has investment objectives and policies
which are essentially the same as those of the Portfolio.
If the Plan is approved and implemented by the Navellier Aggressive Small Cap
Equity Portfolio, the Shareholders of the Portfolio will become shareholders of
the Acquiring Fund and will receive shares of the Acquiring Fund having an
aggregate value equal to the aggregate value of his or her investment in the
Portfolio. No sales charge will be imposed as a result of the Reorganization.
The Reorganization will be conditioned upon receipt of an opinion of counsel
indicating that the Reorganization will qualify as a tax-free reorganization for
Federal income tax purposes.
I and Navellier Management, Inc. (the Investment Advisor to The Navellier Series
Fund's Navellier Aggressive Small Cap Equity Portfolio) (the "Navellier Group")
are proposing a merger of the Navellier Aggressive Small Cap Equity Portfolio
(the "Portfolio") of The Navellier Series Fund into the Navellier Aggressive
Small Cap Portfolio (the "Acquiring Fund") of The Navellier Performance Funds.
The Navellier Group is soliciting your proxy (vote) because we (the "Navellier
Group") believe that the proposed Reorganization should benefit Shareholders by
reducing portfolio operating costs through the elimination or reduction of
duplicate or excessive expenses. I and Navellier Management, Inc. have also
indicated that if the merger is not effected, Navellier Management, Inc. would
resign as Investment Advisor to The Navellier Series Fund and to the Portfolio
because we believe that the payment of duplicative and/or excessive costs by the
Navellier Aggressive Small Cap Equity Portfolio is not in your best interests.
<PAGE>
To the Shareholders of
The Navellier Aggressive Small Cap Equity Portfolio
February 28, 1997
Page 2
The Board of Trustees of The Navellier Series Fund (the "Series Board") has not
voted to approve the proposed Reorganization but rather, has voted to direct
Navellier Management, Inc. to prepare and file this Proxy Solicitation so you,
the Shareholders of the Navellier Aggressive Small Cap Equity Portfolio, can
decide whether to merge the Portfolio into the Navellier Aggressive Small Cap
Portfolio of The Navellier Performance Funds. The Navellier Group believes that
this Reorganization is in the best interest of the Portfolio and the
Shareholders and, therefore, recommends that the Shareholders vote in favor of
approving the Plan.
WE STRONGLY URGE YOU TO REVIEW, COMPLETE, AND RETURN YOUR PROXY AS SOON AS
POSSIBLE. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. VOTING
YOUR SHARES EARLY WILL HELP TO AVOID COSTLY FOLLOW-UP MAIL AND TELEPHONE
SOLICITATION. AFTER REVIEWING THE ENCLOSED MATERIALS, PLEASE EXERCISE YOUR
RIGHT TO VOTE TODAY BY COMPLETING, DATING, AND SIGNING EACH PROXY CARD YOU
RECEIVE AND MAILING THE PROXY IN THE SELF-ADDRESSED, POSTAGE-PAID ENVELOPE THAT
HAS BEEN ENCLOSED FOR YOUR CONVENIENCE. IT IS VERY IMPORTANT THAT YOU VOTE AND
THAT YOUR VOTING INSTRUCTIONS BE RECEIVED NO LATER THAN APRIL 22, 1997.
Please note that you may receive more than one proxy package if you hold shares
of the Portfolio in more than one account. You should return separate proxy
cards for each such account. If you have any questions, please call The
Navellier Series Fund at 1-800-887-8671.
Sincerely,
Louis G. Navellier
--------------------------------------------------
Shareholder, President and Trustee of The
Navellier Aggressive Small Cap Equity Portfolio of
The Navellier Series Fund and President of
Navellier Management Inc., (Investment Advisor to
The Navellier Aggressive Small Cap Equity
Portfolio of The Navellier Series Fund)
<PAGE>
LOUIS G. NAVELLIER
AND
NAVELLIER MANAGEMENT, INC.
(THE INVESTMENT ADVISOR TO THE NAVELLIER SERIES FUND)
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
_______________
THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
_______________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 1997
To: The Shareholders of The Navellier Aggressive Small Cap Equity Portfolio of
The Navellier Series Fund
You are hereby notified that a Special Meeting of the Shareholders of The
Navellier Aggressive Small Cap Equity Portfolio of The Navellier Series Fund
will be held at the offices of The Navellier Series Fund located at One East
Liberty Street, Third Floor, Reno, Nevada, on April 25, 1997, at 10:00 a.m.
(Pacific Standard Time), for the purpose of considering and voting upon the
following matters:
PROPOSAL 1. With respect to the Aggressive Small Cap Equity Portfolio of The
Navellier Series Fund (the "Portfolio")
To approve or disapprove an Agreement and Plan of Reorganization (the
"Plan"), whereby The Navellier Aggressive Small Cap Equity Portfolio
would transfer all of its assets to The Navellier Aggressive Small Cap
Portfolio (the "Acquiring Fund") of The Navellier Performance Funds in
exchange for shares of beneficial interest in the Acquiring Fund that
would be distributed to the shareholders of The Navellier Aggressive
Small Cap Equity Portfolio. Also, as part of the Plan, the Acquiring
Fund would assume all the liabilities of The Navellier Aggressive
Small Cap Equity Portfolio.
PROPOSAL 2. With respect to the Portfolio:
To transact such other business as properly may come before the
Meeting or any adjournment(s) thereof.
<PAGE>
The transactions contemplated by the Plan of Reorganization, and related
matters, are described in the attached Combined Prospectus/Proxy Statement. A
copy of the form of the Plan is attached as Appendix A thereto.
You are entitled to vote at the Meetings, and any adjournment(s) thereof,
if you owned shares of the Portfolio at the close of business on March 14, 1997.
If you attend the Meeting, you may vote your shares in person. If you do not
expect to attend the meeting, please complete, date, sign, and return the
enclosed proxy card in the enclosed self-addressed, postage-paid return
envelope.
February 28, 1997 Louis G. Navellier
_____________________________________________
_
Shareholder and Trustee of The Navellier
Aggressive Small Cap Equity Portfolio of The
Navellier Series Fund, and President of
Navellier Management, Inc. (Investment
Advisor to The Navellier Series Fund)
<PAGE>
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, THEN
PLEASE DATE AND SIGN THE CARD AND RETURN THE PROXY CARD IN THE ENVELOPE
PROVIDED. IF YOU SIGN, DATE AND RETURN THE PROXY CARD BUT GIVE NO VOTING
INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" EACH APPLICABLE PROPOSAL NOTICED
ABOVE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE AND DELAY OF FURTHER
SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR PROXY CARD PROMPTLY SO
THAT A QUORUM MAY BE ENSURED. A VOTE OF 67% OF THE SHARES OF THE PORTFOLIO
WHICH ARE PRESENT IN PERSON OR BY PROXY AND ENTITLED TO VOTE (IF MORE THAN 50%
OF THE OUTSTANDING SHARES OF RECORD ARE PRESENT IN PERSON OR BY PROXY) OR MORE
THAN 50% OF THE OUTSTANDING SHARES ENTITLED TO VOTE, WHICHEVER IS LESS, IS
REQUIRED TO PASS ANY PROPOSAL, SO RETURN OF YOUR PROXY IS IMPORTANT. UNLESS
PROXY CARDS SUBMITTED BY CORPORATIONS AND PARTNERSHIPS ARE SIGNED BY THE
APPROPRIATE PERSONS AS INDICATED IN THE VOTING INSTRUCTIONS ON THE PROXY CARD,
SUCH PROXY CARDS CANNOT BE VOTED.
Louis G. Navellier
______________________________________
Shareholder and Trustee of The Navellier
Aggressive Small Cap Equity Portfolio of The
Navellier Series Fund, and President of
Navellier Management, Inc. (Investment
Advisor to The Navellier Aggressive Small Cap
Equity Portfolio)
<PAGE>
[PRELIMINARY COPY]
PROXY SOLICITATION
BY
LOUIS G. NAVELLIER
AND
NAVELLIER MANAGEMENT, INC.
(THE INVESTMENT ADVISOR TO THE NAVELLIER AGGRESSIVE SMALL
CAP EQUITY PORTFOLIO OF THE NAVELLIER SERIES FUND)
_______________
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
COMBINED PROSPECTUS/PROXY STATEMENT
This combined prospectus/proxy statement is being furnished in connection with
the solicitation of proxies by Louis G. Navellier and Navellier Management,
Inc., the Investment Advisor to the Navellier Aggressive Small Cap Equity
Portfolio ("Portfolio") of The Navellier Series Fund ("Fund"), for use at a
special meeting of shareholders ("Shareholders") of the Navellier Aggressive
Small Cap Equity Portfolio ("Portfolio"), a series of The Navellier Series Fund
("Fund"), to be held at 10:00 a.m., Pacific Standard Time, on April 25, 1997, at
the offices of The Navellier Series Fund located at One East Liberty Street,
Third Floor, Reno, Nevada, and at any adjournment(s) thereof (the "Meeting").
The Navellier Series Fund is a series investment company organized as a Business
Trust in the State of Delaware. with one class of common stock outstanding, with
such class representing an interest in a separate series of The Navellier Series
Fund. Since only one portfolio currently exists, all shareholders of the Fund
and Portfolio are being solicited in connection with the Meeting.
The purpose of the Meeting is to consider an Agreement and Plan of
Reorganization (the "Plan"), which would effect the reorganization of the
Portfolio into The Navellier Aggressive Small Cap Portfolio (the "Acquiring
Fund") of The Navellier Performance Funds, and the transactions contemplated
thereby, as described below (collectively, the "Reorganization"). The Navellier
Performance Funds is a series open-end investment company which seeks capital
appreciation by investing in growth securities. The Plan has been proposed by
Mr. Navellier and Navellier Management, Inc. (the Fund's Investment Advisor),
(the "Navellier Group") who would like the Portfolio merged into the Acquiring
Fund. The Board of Trustees of The Navellier Series Fund (the "Navellier
Board") has not approved the Plan but has instead directed Navellier Management,
Inc. to prepare a proxy solicitation so that a shareholders meeting of the
Portfolio could be held to vote on the Plan. Pursuant to the Plan, all of the
assets of the Portfolio would be acquired by the Acquiring Fund (which has
investment policies essentially the same as those of the Portfolio), in exchange
for shares of beneficial interest in the Acquiring Fund ("Acquiring Fund
Shares") and the assumption by the Acquiring Fund of all the liabilities of the
Portfolio. Specifically, it is proposed that the assets of the Portfolio be
transferred to the Acquiring Fund in exchange for Acquiring Fund Shares of value
<PAGE>
equal to the assets transferred from the Portfolio. Following such transfer,
the Acquiring Fund Shares received by the Portfolio would then be distributed
pro rata to the shareholders of the Portfolio, and then the Portfolio would be
liquidated. As a result of the proposed transactions, each shareholder of the
Portfolio would receive a number of full and fractional Acquiring Fund Shares
having a total net asset value equal, on the effective date of the
Reorganization, to the net asset value of the Shareholder's shares of common
stock in the Portfolio.
This combined prospectus/proxy statement, which should be retained for future
reference, sets forth concisely the information about the Portfolio and the
Acquiring Fund, and the transactions contemplated by the proposed
Reorganization, that an investor should know before voting on the proposed
Reorganization. A copy of the current Prospectus of The Navellier Performance
Funds dated November 26, 1996 is included with this combined prospectus/proxy
statement for each Shareholder of the Portfolio, and is incorporated by
reference herein.
A Statement of Additional Information regarding The Navellier Performance Funds
dated November 26, 1996 has been filed with the Securities and Exchange
Commission (the "Commission") and is incorporated by reference herein. Copies
of these documents also may be obtained without charge by contacting Navellier
Management Inc. ("NMI"), which provides administrative services to the Acquiring
Fund, at One East Liberty Street, Third Floor, Reno, Nevada 89501, or by
telephoning Navellier Management, Inc., toll-free at 1-800-887-8671.
A Prospectus and a Statement of Additional Information regarding the Portfolio
dated April 29, 1996 also has been filed with the Commission and each is
incorporated by reference herein. Copies of these Portfolio documents also may
be obtained without charge by contacting Navellier Management, Inc., at One East
Liberty Street, Third Floor, Reno, Nevada 89501, or by telephoning Navellier
Management, Inc., toll-free at 1-800-887-8671.
A Statement of Additional Information dated March 7, 1997, relating to the
proposed transactions described in this combined prospectus/proxy statement,
including historical financial statements, has been filed with the Commission
and is incorporated by reference herein. Copies of this Statement of Additional
Information may be obtained without charge by contracting Navellier Management,
Inc., at One East Liberty Street, Third Floor, Reno, Nevada 89501, or by
telephoning Navellier Management, Inc., toll-free at 1-800-887-8671.
____________________
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.
____________________
The date of this Combined Prospectus/Proxy Statement is March 7, 1997
2
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
Page
----
Introduction and Voting Information. . . . . . . . . . . . . . . . . . .
Special Meeting; Voting of Proxies; Adjournment . . . . . . . . . .
Proxy Solicitation. . . . . . . . . . . . . . . . . . . . . . . . .
Revocation of Proxies . . . . . . . . . . . . . . . . . . . . . . .
No Dissenters' Rights of Appraisal. . . . . . . . . . . . . . . . .
Additional Voting Information . . . . . . . . . . . . . . . . . . .
Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Proposed Reorganization . . . . . . . . . . . . . . . . . . . .
Investment Objectives and Policies. . . . . . . . . . . . . . . . .
Operations of The Navellier Aggressive Small Cap Portfolio of
The Navellier Performance Funds ("Acquiring Fund") Following
the Reorganization. . . . . . . . . . . . . . . . . . . . . . . .
Management Fees, Administrative Fees, and Other Operating
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases and Exchanges . . . . . . . . . . . . . . . . . . . . . .
Redemption Procedures and Fees. . . . . . . . . . . . . . . . . . .
Dividends and Distributors; Automatic Reinvestment. . . . . . . . .
Federal Tax Consequences of the Proposed Reorganization . . . . . .
Costs and Expenses of the Reorganization. . . . . . . . . . . . . .
Continuation of Shareholder Accounts; Share Certificates. . . . . .
Form of Organization of the Acquiring Fund. . . . . . . . . . . . .
Comparison of Investment Objectives and Policies . . . . . . . . . . . .
Investment Objectives and Policies. . . . . . . . . . . . . . . . .
Certain Investment Restrictions and Limitations . . . . . . . . . .
Principal Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . .
The Proposed Transactions. . . . . . . . . . . . . . . . . . . . . . . .
Agreement and Plan of Reorganization. . . . . . . . . . . . . . . .
Reasons for the Proposed Transactions . . . . . . . . . . . . . . .
Description of Securities to Be Issued. . . . . . . . . . . . . . .
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . .
Pro Forma Capitalization and Ratios . . . . . . . . . . . . . . . .
Dissolution of the Portfolios . . . . . . . . . . . . . . . . . . .
Navellier Group Recommendation. . . . . . . . . . . . . . . . . . .
Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information About the Acquiring Fund and the Acquiring
Fund's shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information About the Portfolio and the Portfolio Shares. . .
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available Information . . . . . . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Experts. . . . . . . . . . . . . . . . . .
Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix A: Form of Agreement and Plan of Reorganization
3
<PAGE>
PART A
<PAGE>
SOLICITATION BY LOUIS G. NAVELLIER
AND
NAVELLIER MANAGEMENT, INC.
(THE INVESTMENT ADVISOR TO THE NAVELLIER SERIES FUND)
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
_______________
THE NAVELLIER SERIES FUND
(NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO)
_______________
COMBINED PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
APRIL 25, 1997
_______________
INTRODUCTION AND VOTING INFORMATION
SPECIAL MEETING; VOTING OF PROXIES; ADJOURNMENT
This combined prospectus/proxy statement is being furnished to the shareholders
of The Navellier Series Fund's Navellier Aggressive Small Cap Equity Portfolio
("Portfolio") in connection with the solicitation by Louis G. Navellier and
Navellier Management, Inc. (the Investment Advisor to the Portfolio)
(collectively the "Navellier Group") of proxies to be used at a special meeting
of the shareholders of this Portfolio to be held on April 25, 1997 at 10:00 a.m.
at the offices of The Navellier Series Fund, located at One East Liberty Street,
Third Floor, Reno, Nevada 89501, and at any adjournment(s) thereof (the
"Meeting"). The purpose of the Meeting is to vote on the proposed
Reorganization (the "Plan") to merge the Portfolio into The Navellier Aggressive
Small Cap Portfolio (the "Acquiring Fund"), which is a series of The Navellier
Performance Funds, pursuant to the terms and conditions of the Plan, as
described below in greater detail. A vote on the approval or disapproval of the
Plan will be conducted at the Meeting by the shareholders of the Portfolio.
Shareholders of record of the Portfolio at the close of business on March 14,
1997 (the "Record Date") will be entitled to vote at the Meeting. Such holders
of shares of beneficial interest in the Portfolio ("Portfolio Shares") are
entitled to one vote for each Portfolio Share held and to fractional votes for
fractional Portfolio Shares held. A quorum for the Portfolio must be present in
person or represented by Proxy for the transaction of business at the Meeting.
The holders of record of a majority of the Portfolio Shares outstanding at the
close of business on that Record Date present in person or represented by proxy
will constitute a quorum for the Meeting of the Shareholders of the Portfolio.
4
<PAGE>
A quorum being present, the approval at the Meeting by the shareholders of the
Portfolio for the Reorganization requires the affirmative vote of at least 67%
of the outstanding shares of the Portfolio present in person or represented by
proxy at the Meeting or more than 50% of the outstanding shares entitled to
vote, whichever is less.
If either (i) a quorum is not present at the Meeting or (ii) a quorum is present
but sufficient votes in favor of a matter proposed at the Meeting (a
"Proposal"), as set forth in the Notice of this Meeting, are not received by
April 22, 1997, then the persons named as attorneys and proxies in the enclosed
proxy ("Proxies") may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of at least 33% of the shares entitled to vote. The persons
named as Proxies will vote those proxies that such persons are required to vote
FOR such Proposal in favor of such an adjournment and will vote those proxies
required to be voted AGAINST such Proposal against such an adjournment. A
Shareholder vote may be taken on a Proposal in this combined prospectus/proxy
statement prior to any such adjournment if sufficient votes have been received
and it is otherwise appropriate.
The individuals named as Proxies on the enclosed proxy card will vote in
accordance with your direction, as indicated thereon, if your proxy card is
received and is properly executed. If you properly execute your proxy and give
no voting instructions with respect to a Proposal, your shares will be voted in
favor of the Proposal. The duly-appointed Proxies, in their discretion, may
vote upon such other matters as may properly come before the Meeting. Mr.
Navellier and the Navellier Group are not aware of any other matters to come
before the Meeting.
Since the Proposal for the Portfolio to approve the merger Plan, or any other
Proposal, requires the affirmative vote of at least 67% of the Portfolio Shares
present in person or represented by proxy at the Meeting or a majority of the
outstanding voting shares, whichever is less, an abstention from voting on the
Plan, or any other Proposal, effectively is a vote against the Plan, or any such
other Proposal. If a broker returns a "non-vote" proxy, indicating a lack of
authority to vote on the Plan, or any other Proposal, then the Portfolio Shares
covered by such broker non-vote shall be deemed present at the Meeting for the
purposes of determining a quorum, but shall not be deemed to be represented at
the Meeting for the purposes of calculating the number of Portfolio Shares
present in person or represented by proxy at the Meeting with respect to the
Plan or any other Proposal.
PROXY SOLICITATION
Proxies will be solicited by mail and, if necessary to obtain the requisite
representation of Shareholders, Mr. Navellier also may solicit proxies by
telephone, telegraph, and/or personal interview by representatives of Mr.
Navellier, Navellier Management, Inc., employees of Navellier Management, Inc.,
the Investment Adviser to the Portfolio, or their affiliates, and by
representatives of any independent proxy solicitation service retained for the
Meeting including Shareholder Solicitation Corporation, a proxy solicitation
firm. Navellier Management, Inc., whose principal location is One East Liberty
Street, Third Floor, Reno, Nevada 89501, will bear the costs of its
solicitation, including the costs such as the preparation and mailing of the
notice, the combined prospectus/proxy statement, and the proxy, and the
solicitation of proxies, including reimbursement to persons who forward proxy
materials to their clients, and the expenses connected with the solicitation of
these proxies in person, by telephone, or by telegraph. Banks, brokers, and
other persons holding Portfolio Shares registered in their names or in the names
of their nominees will be reimbursed for their expenses incurred in sending
proxy materials to and obtaining proxies from the beneficial owners of such
Portfolio Shares.
The vote of the shareholders of the Acquiring Fund is not being solicited, since
their approval or consent is not necessary for the approval of the
Reorganization.
5
<PAGE>
REVOCATION OF PROXIES
You may revoke your proxy: (i) at any time prior to the proxy's exercise by
written notice to the Secretary of The Navellier Series Fund at the above
address prior to the Meeting; (ii) by the subsequent execution and return of
another proxy prior to the Meeting; or (iii) by being present and voting in
person at the Meeting and giving oral notice of revocation to the Chairman of
the Meeting.
NO DISSENTERS' RIGHTS OF APPRAISAL
The purpose of the Meeting is to vote on the proposed Reorganization of the
Portfolio into the Acquiring Fund, as described below in greater detail. The
Portfolio is a separate series of The Navellier Series Fund. The Declaration of
Trust of The Navellier Series Fund (the "Declaration of Trust") does not entitle
shareholders to appraisal rights (i.e., to demand the fair value of their
shares) in the event of a reorganization or merger. Consequently, the
shareholders will be bound by the terms of the Plan, if the Plan is approved at
the Meeting for the Portfolio. Any Shareholder, however, may redeem his or her
Portfolio Shares at net asset value prior to the closing date of the proposed
Reorganization.
ADDITIONAL VOTING INFORMATION
As of the Record Date, there were outstanding and entitled to be voted
__________ Portfolio Shares. As of the Record Date [Charles Schwab & Company,
San Francisco, California held for the benefit of others ____% of the Portfolio.
The Fidelity Group held for the benefit of others ___% of the Portfolio and
Smith Barney, held for the benefit of others __% of the Portfolio. Trustees and
officers of The Navellier Series Fund own in the aggregate less than __% of the
shares of the Portfolio. To the knowledge of Mr. Navellier, no other person
then owned more than 5% of the outstanding shares of the Portfolio.
As more fully described in this combined prospectus/proxy statement, the Meeting
has been called for the following purposes:
PROPOSAL 1. With respect to the Aggressive Small Cap Equity Portfolio of The
Navellier Series Fund (the "Portfolio")
To approve or disapprove an Agreement and Plan of Reorganization (the
"Plan"), whereby The Navellier Aggressive Small Cap Equity Portfolio
would transfer all of its assets to The Navellier Aggressive Small Cap
Portfolio (the "Acquiring Fund") of The Navellier Performance Funds in
exchange for shares of beneficial interest in the Acquiring Fund that
would then be distributed to the shareholders of The Navellier
Aggressive Small Cap Equity Portfolio. Also, as part of the Plan, the
Acquiring Fund would assume all the liabilities of The Navellier
Aggressive Small Cap Equity Portfolio.
PROPOSAL 2. With respect to the Aggressive Small Cap Equity Portfolio of The
Navellier Series Fund (the "Portfolio")
To transact such other business as properly may come before the
Meeting or any adjournment(s) thereof.
As described below, a quorum being present, the approval by the Portfolio of any
Proposal considered at the Meeting requires the affirmative vote of at least 67%
of the Portfolio Shares present in person or represented by proxy at the Meeting
or more than 50% of the outstanding shares entitled to vote, whichever is less.
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MR. NAVELLIER AND NAVELLIER MANAGEMENT, INC., WHO REQUESTED THIS MEETING,
RECOMMEND THAT THE REORGANIZATION DESCRIBED HEREIN BE APPROVED.
SYNOPSIS
The following is a summary of certain information contained elsewhere in this
combined prospectus/proxy statement, including the prospectuses of the Portfolio
and the Acquiring Fund and the Agreement and Plan or Reorganization.
Shareholders should read this entire combined prospectus/proxy statement
carefully.
THE PROPOSED REORGANIZATION
Shareholders of the Portfolio will be asked at the Meeting to vote upon and
approve the Plan, which provides for the Reorganization of the Portfolio. A
copy of the form of the Plan is set forth in Appendix A to this combined
prospectus/proxy statement. Pursuant to the Plan, the Portfolio, which is a
series of The Navellier Series Fund, a diversified, open-end management
investment company organized as a business trust under the laws of the State of
Delaware, would be merged into the Acquiring Fund of The Navellier Performance
Funds. The Acquiring Fund is a series of THE NAVELLIER PERFORMANCE FUNDS, an
open-end management investment company organized under the laws of the State of
Delaware as a business trust. The Plan sets forth the terms and conditions
under which the proposed Reorganization may be consummated. The Independent
Trustees (who are not "interested persons" as that term is defined in the
Investment Company Act of 1940) of The Navellier Series Fund who initially voted
against the Reorganization, have instructed Navellier Management, Inc. to
prepare this proxy solicitation so that the shareholders of the Portfolio can
vote on whether or not to merge the Portfolio into the Acquiring Fund. THE
NAVELLIER GROUP BELIEVES THE REORGANIZATION PLAN SHOULD BE APPROVED.
The consummation of the proposed transactions contemplated by the Reorganization
is subject to a number of conditions set forth in the Plan, some of which
conditions may be waived by The Navellier Series Fund Board of Trustees or The
Navellier Performance Funds Board of Trustees, or by an authorized officer of
those Funds, as appropriate. See "The Proposed Transactions -- Agreement and
Plan of Reorganization." Among the significant conditions (which may not be
waived) for the Reorganization of the Portfolio are (i) the receipt by each of
the Funds of an opinion of counsel (or a revenue ruling of the U.S. Internal
Revenue Service) as to certain Federal income tax aspects of the Reorganization
(see "The Proposed Transactions -- Federal Income Tax Consequences") and (ii)
the approval of the Plan by the affirmative vote of at least 67% of the
Portfolio Shares present in person or by proxy at a quorum of shareholders or
the holders of at least a majority of the outstanding voting Shares of the
Portfolio, whichever is less. The Plan provides, with respect to the
Reorganization, for the acquisition of all the assets of the Portfolio by
Acquiring Fund in exchange for Acquiring Fund Shares and the assumption by
Acquiring Fund of all the liabilities of the Portfolio. The Acquiring Fund
Shares received by Portfolio then would be distributed pro rata to the
Shareholders of the Portfolio, and the outstanding Portfolio Shares of the
Portfolio would be cancelled and the Portfolio would be liquidated. The
Reorganization is anticipated to occur on April 28, 1997, or such later date as
the parties may agree (the "Closing Date"). As a result of the proposed
transactions contemplated by the Reorganization, each shareholder would receive
a number of full and fractional shares of the corresponding Acquiring Fund
having a total net asset value equal in value to the net asset value of his or
her Portfolio Shares in the Portfolio as of the Closing Date of the
Reorganization.
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The following sets forth the Portfolio and the corresponding Acquiring Fund:
Portfolio of Acquiring Fund of
The Navellier Series Fund The Navellier Performance Funds
------------------------- -------------------------------
The Navellier Aggressive The Navellier Aggressive
Small Cap Equity Portfolio Small Cap Portfolio
For the reasons set forth below under "The Proposed Transactions -- Reasons for
the Proposed Transactions", the Navellier Group, including Mr. Navellier and the
Investment Adviser, have concluded that the Reorganization would be in the best
interests of the Portfolio and its shareholders and that the interests of
existing shareholders will not be diluted as a result of the transactions
contemplated by the Reorganization. The Navellier Group, therefore, has
submitted the Plan effecting the Reorganization for approval at the Meeting by
the shareholders of the Portfolio and recommends approval of the Plan.
INVESTMENT OBJECTIVES AND POLICIES
GENERAL. The Acquiring Fund and Portfolio each are chartered the same, i.e. to
invest in equities of small cap issuers. There is no difference in investment
style. Both the Acquiring Fund and the Portfolio are managed by the same
Investment Adviser, Navellier Management, Inc.
The investment objective of the Portfolio and of the Acquiring Fund is a
fundamental policy which may not be changed without the approval of a vote of at
least a "majority" (as that term is defined in the 1940 Act) of the outstanding
shares, respectively, of the Portfolio or the Acquiring Fund. All other
investment policies of the Portfolio and of the Acquiring Fund that are not
specified as fundamental are not fundamental policies and may be changed by the
Acquiring Fund Board of Trustees and the Portfolio Board of Trustees,
respectively, without shareholder approval.
THE NAVELLIER SMALL CAP EQUITY PORTFOLIO ("PORTFOLIO"). The investment
objective of the Portfolio is 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 is no notable difference between the investment policies of the Portfolio
and the Acquiring Fund.
The investment objective of the Acquiring Fund is 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. The Acquiring Fund is a newly organized Portfolio of
The Navellier Performance Funds. The Acquiring Fund has no significant history
of operations.
For further discussion of the comparisons in the investment policies of the
Acquiring Fund and of the Portfolio, see "Comparison of Investment Objectives
and Policies" in this combined prospectus/proxy statement.
OPERATIONS OF THE NAVELLIER PERFORMANCE FUNDS AND THE ACQUIRING FUND FOLLOWING
THE REORGANIZATION
The Navellier Performance Funds and the Acquiring Fund will continue to operate
substantially the same as each did prior to the Reorganization. The
responsibilities, powers and fiduciary duties of the Trustees of The Navellier
Performance Funds are essentially the same as those of the Trustees of the
Portfolio. Subject to the provisions of The Navellier Performance Funds
Declaration of Trust, dated October 17, 1995 (the "Trust Declaration"), the
business of The Navellier Performance Funds and the Acquiring Fund is managed by
the Navellier Performance Funds Board of Trustees (the "Trust Board"), which has
all powers necessary and appropriate to carry out that business responsibility.
The Trust
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Board supervises the business affairs and investments of the Acquiring Fund.
The Acquiring Fund of The Navellier Performance Funds receives investment
advisory services from Navellier Management, Inc. (the "Investment Adviser")
which is also the Investment Adviser to the Portfolio. Administrative services
for The Navellier Performance Funds are provided for by the Investment Adviser.
MANAGEMENT FEES, ADMINISTRATIVE FEES, AND OTHER OPERATING EXPENSES
MANAGEMENT FEES. The Investment Adviser currently acts as the Investment
Adviser to the Portfolio pursuant to an investment management agreement between
The Navellier Series Fund and Investment Adviser (the "Series Fund Management
Contract"). The Investment Adviser also manages the investment and reinvestment
of the assets of the Acquiring Fund, subject to the general supervision and
control of the officers and trustees of The Navellier Performance Funds. The
Portfolio pays Investment Adviser an investment advisory fee at an annual rate
of 1.25% of the aggregate average daily net asset value of the Portfolio. The
Acquiring Fund will pay Investment Adviser an investment advisory fee at an
annual rate of 1.15% of the aggregate average daily net asset value of the
Acquiring Fund.
Investment Adviser complies with any applicable state regulations which may
require Investment Adviser to make reimbursements, respectively to Portfolio or
Acquiring Fund in the event that Portfolio's or Acquiring Fund's respective
aggregate operating expenses, including the management fee, but generally
excluding taxes, interest, brokerage commissions, distribution fees, and
extraordinary expenses, are in excess of specific applicable limitations.
ADMINISTRATIVE FEES AND OTHER OPERATING EXPENSES. Portfolio pays its own
operating costs. Pursuant to an Administrative Services Agreement, Portfolio
pays Investment Adviser an annual fee, pro rata monthly, of 0.25% of the
aggregate average daily net asset value of the Portfolio to provide
administrative services including shareholder servicing services to the
Portfolio. The Acquiring Fund has an Administrative Services Agreement with the
Investment Adviser which has the same terms as the Investment Adviser's
Administrative Services Agreement with Portfolio.
The following sets forth the fund operating expenses (as a percentage of the
average daily net assets) for the Portfolio for the twelve-month period ended
December 31, 1996. Adjacent to the column for Portfolio expenses is presented
the expected fund operating expenses (as a percentage of the average daily net
assets) of the Acquiring Fund into which the Portfolio would merge under the
Plan.
TABLE
PORTFOLIO ACQUIRING FUND
--------- --------------
Management Fees 1.25% 1.15%
Administrative Fees 0.25% 0.25%
Other Expenses 0.36% 0.25%
(before waiver of (pro forma)
reimbursement by
investment advisor)
Total Fund
Operating Expenses 1.86% 1.65%
(before waiver of (pro forma)
reimbursement by
investment advisor)
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As reflected above, it is expected that the Acquiring Fund will have lower total
operating expenses than those historically incurred by Portfolio. Mr. Navellier
believes that the lower management fee charged to the Acquiring Fund and
avoiding or reducing duplicative costs by merging the Portfolio into the
Acquiring Fund will save the Portfolio in excess of $100,000 per year by
reducing the fees paid to trustees, outside counsel to the independent trustees,
reducing duplicative printing and mailing and reduced management fees, and that
the Reorganizations would be advantageous to and in the best interests of the
Shareholders. See "The Proposed Transactions -- Reasons for the Proposed
Transactions".
PURCHASES AND EXCHANGES
Acquiring Fund Shares and Portfolio Shares both are sold in a continuous
offering and are offered to the public, and may be purchased through securities
dealers or directly from the Portfolio's or the Acquiring Fund's underwriter,
Navellier Securities Corp., at the net asset value next computed after the
receipt of a purchase order. A sales charge varying from 3% to 0% is imposed by
the Portfolio on any purchase of Portfolio Shares but no sales charge is imposed
by Acquiring Fund or Navellier Securities Corp. on any purchase of Acquiring
Fund Shares; however, securities dealers may charge a processing fee for orders
transmitted by such dealers to the Acquiring Fund or the Portfolio.
Upon the effectiveness of the Reorganization, shareholders of the Acquiring Fund
Shares will be entitled to the exchange privileges currently offered with
respect to Acquiring Fund Shares. The Acquiring Fund currently offers an
exchange privilege, including telephone exchange privileges, which, subject to
certain restrictions, permits shares of any of the two other portfolios of The
Navellier Performance Funds to be exchanged for shares of the Acquiring Fund.
These exchanges are based upon each Portfolio's net asset value per share next
computed following receipt of a properly-executed exchange request, without any
sales charge, and are not subject to an early withdrawal fee. These exchanges
also may be made only between identically-registered accounts, and this exchange
privileges also is available only in states where the shares to be acquired may
be legally sold. Except for the foregoing, there are no material differences
between the exchange privileges which shareholders of the Portfolio currently
have and the exchange privilege which such shareholders will have as
shareholders of the Acquiring Funds upon effectiveness of the Reorganization.
The Acquiring Fund has reserved the right to reject or refuse, at Acquiring
Fund's discretion, any order for the purchase of its shares in whole or in part.
REDEMPTION PROCEDURES AND FEES
Acquiring Fund Shares and Portfolio Shares both may be redeemed at a redemption
price equal to the net asset value of the shares as next computed following the
receipt of a request for redemption in proper form. Payment of redemption
proceeds for redeemed Acquiring Fund Shares and for redeemed Portfolio Shares
ordinarily are made within seven days after receipt of a redemption request in
proper form and documentation. Shares of the Acquiring Fund and Portfolio
Shares may be redeemed without charge.
DIVIDENDS AND DISTRIBUTIONS; AUTOMATIC REINVESTMENT
The Acquiring Fund and Portfolio each declares and pays dividends from the net
investment income and short-term capital gains, if any, to shareholders during
December of each year and distributes long-term capital gains, if any, to
shareholders on an annual basis in December.
The income dividends and capital gains distributions for investors in the
Acquiring Fund and in the Portfolio are each automatically reinvested, without
sales charge, in additional shares of the Acquiring
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Fund and of the Portfolio respectively at the applicable net asset value of such
shares calculated on the ex-dividend date unless such an investor has requested
otherwise in writing.
FEDERAL TAX CONSEQUENCES OF THE PROPOSED REORGANIZATION
The Acquiring Fund and the Portfolio will receive, as a condition to the
Reorganization, an opinion of Samuel Kornhauser, counsel to The Navellier
Performance Funds, to the effect, for Federal income tax purposes, that the
proposed Reorganization will constitute a tax-free reorganization within the
meaning of Section 368(a)(1)(C) of the U.S. Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, it is believed that no gain or loss
generally will be recognized by The Navellier Performance Funds or by the
Acquiring Fund, by The Navellier Series Fund or the Portfolio, or by their
respective shareholders (see "The Proposed Transactions -- Federal Income Tax
Consequences").
COSTS AND EXPENSES OF THE REORGANIZATION
The Navellier Group will bear the costs, expenses, and professional fees
incurred by them in the preparation and mailing of this notice and this combined
prospectus/proxy statement and the proxy, and in their solicitation of proxies,
which may include reimbursement to broker-dealers and others who forward proxy
materials to their clients and the costs of a professional solicitation firm.
See "Introduction and Voting Information -- Proxy Solicitation".
CONTINUATION OF SHAREHOLDER ACCOUNTS; SHARE CERTIFICATES
As a result of the proposed transactions contemplated by the Reorganization of
the Portfolio into the Acquiring Fund, Shareholders would cease to be
shareholders of the Portfolio and would receive on the books of the Acquiring
Fund, that number of full and fractional Acquiring Fund Shares having an
aggregate net asset value equal to the aggregate net asset value of his or her
Portfolio Shares as of the close of business on the Closing Date.
The Acquiring Fund will establish accounts on the Closing Date for Shareholders
which will contain the appropriate number of Acquiring Fund Shares. Acceptance
of Acquiring Fund Shares by a Shareholder will be deemed to be authorization of
the Acquiring Fund and its agents to establish, with respect to the Acquiring
Fund, all of the account options, including telephone redemptions, if any, and
dividend and distribution options, as have been established for the
Shareholder's Portfolio account. Shareholders who are receiving payments under
an Automatic Investment Plan, with respect to Portfolio Shares, will retain the
same rights and privileges as to Acquiring Fund Shares under such an Automatic
Investment Plan after the Reorganization. Similarly, no further action will be
necessary in order to continue, with respect to Acquiring Fund Shares, any
retirement plan currently maintained by a Shareholder with respect to Portfolio
Shares.
As a series of a Delaware business trust, the Acquiring Fund will not issue
certificates evidencing ownership of Acquiring Fund Shares. Shareholders of
Portfolio will have their beneficial interests in Portfolio cancelled on the
books of The Navellier Series Fund and Portfolio in order to receive Acquiring
Fund Shares on the books of Acquiring Fund as a result of the Reorganization.
No sales or other charges will be imposed in connection with the issuance of
Acquiring Fund Shares to Portfolio Shareholders pursuant to the Reorganization.
FORM OF ORGANIZATION OF THE NAVELLIER PERFORMANCE FUNDS
The Navellier Performance Funds is an unincorporated voluntary association
organized under the laws of the State of Delaware as a business trust pursuant
to the Declaration of Trust. The operations of The Navellier Performance Funds
and the Acquiring Fund (a Portfolio of The Navellier Performance
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Funds) are governed by this Declaration of Trust, by The Navellier Performance
Funds' By-Laws, and by Delaware Law, as applicable. The Navellier Series Fund
is an unincorporated voluntary association organized under the laws of the State
of Delaware as a business trust. The operations of The Navellier Series Fund
and the Portfolio are governed by The Navellier Series Fund Declaration of Trust
dated May 28, 1993, and by Delaware law, as applicable. Both The Navellier
Performance Funds and The Navellier Series Fund, as well as their series
investment portfolios, are subject to the provisions of the 1940 Act, and the
rules and regulations of the Commission thereunder. The Navellier Performance
Funds is authorized to issue an unlimited number of shares of beneficial
interest in one or more series investment portfolios or funds. Currently, The
Navellier Performance Funds is composed of three (3) separate investment
portfolios: The Navellier Aggressive Growth Portfolio, The Navellier Mid Cap
Growth Portfolio and The Navellier Aggressive Small Cap Portfolio ("the
Portfolio"). See "The Proposed Transactions - Description of Securities to Be
Issued".
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
As discussed below, the investment objective and policies of the Acquiring Fund
and the Portfolio are essentially the same.
INVESTMENT OBJECTIVE AND POLICIES
GENERAL. The Acquiring Fund and the Portfolio each invest in the common stocks
of small cap companies (companies with market capitalization of less than $1
Billion).
INVESTMENT OBJECTIVE OF THE ACQUIRING FUND.
The Investment Objective of The Navellier Aggressive Small Cap Portfolio (the
Acquiring Fund) is to achieve long-term growth of capital primarily through
investment in small cap companies with appreciation potential. 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. The Portfolio should not be considered suitable
for investors seeking current income. Investors in this Portfolio pay no sales
charge and no 12b-1 fee.
INVESTMENT OBJECTIVE OF THE PORTFOLIO
The investment objective of the Portfolio is the same as the investment
objective of the Acquiring Fund. The Portfolio's investment objective is to
achieve long-term growth of capital primarily through investment in small cap
companies with appreciation potential. The Navellier 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 Navellier
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. Investors in this Portfolio pay a sales
charge of between 3% and 0%. There is no 12b-1 fee.
OTHER INVESTMENTS. Both the Acquiring Fund and the Portfolio may, for temporary
defensive purposes or to maintain cash or cash equivalents to meet anticipated
redemptions, also invest in debt securities and money market funds if, in the
opinion of the Investment Adviser, such investment will further their
12
<PAGE>
cash needs or temporary defensive needs. In addition, when the Investment
Adviser feels that market or other conditions warrant it, for temporary
defensive purposes, both the Acquiring Fund and the Portfolio may retain cash or
invest all or any portion of their assets in cash equivalents, including money
market mutual funds. Under normal conditions, both the Acquiring Fund's and
Portfolio's holdings in such non-equity securities should not exceed 35% of the
total assets of such fund. If either the Acquiring Fund's or the 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 both the Acquiring Fund and the Portfolio 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. Money market investments have no
FDIC protection and deposits in Rushmore Trust & Savings, FSB accounts have only
$100,000 protection.
CERTAIN INVESTMENT RESTRICTIONS AND LIMITATIONS
The investment restrictions and limitations of Acquiring Fund and those of the
Portfolio are substantially similar, except as described below. Unless
otherwise specified, the investment restrictions and limitations are considered
to be "fundamental" policies, and, as such, may not be changed without approval
of the holders of a "majority" (as that term is defined in the 1940 Act) of
Acquiring Fund's or Portfolio's respective outstanding shares.
Both the Acquiring Fund and Portfolio may not:
1. Purchase securities of any issuer, other than obligations issued or
guaranteed as to principal and interest by the United States government or its
agencies or instrumentalities, if immediately thereafter (i) more than 5% of
Acquiring Fund's or Portfolio's total assets (taken at market value) would be
invested in the securities of such issuer, or (ii) more than 10% of the voting
securities of any class of such issuer would be held by Acquiring Fund or by
Portfolio.
2. Concentrate the Portfolio investments of Acquiring Fund or of
Portfolio in any one industry. To comply with this restriction, no security may
be purchased for Acquiring Fund or Portfolio if such purchase would cause the
value of the aggregate investment of Acquiring Fund or of Portfolio in any one
industry to be 25% or more of Acquiring Fund's or Portfolio's total assets
(taken at market value).
3. Purchase any securities or other property on margin, or engage in
short sales of securities (unless it owns, or by virtue of its ownership of
other securities has the right to obtain without payment of any additional
consideration securities equivalent in kind and amount to the securities sold);
PROVIDED, HOWEVER, that both Acquiring Fund and Portfolio may obtain short-term
credit as may be necessary for the clearance of purchases and sales of
securities.
4. Make cash loans, except that both the Acquiring Fund and Portfolio may
purchase bonds, notes, debentures, or similar obligations which are customarily
purchased by institutional investors whether publicly distributed or not.
5. Make securities loans, except that both the Acquiring Fund and
Portfolio may make loans of the securities of Acquiring Fund or of 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
Acquiring Fund or Portfolio.
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6. Make investments in real estate or commodities or commodity contracts,
including futures contracts, although both Acquiring Fund and Portfolio may
purchase securities of issuers which deal in real estate or commodities although
this is not a primary objective of the Acquiring Fund or of Portfolio but only
if such securities are small cap equity securities or constitute less than 35%
of the Acquiring Funds or Portfolio's total assets.
7. Invest in oil, gas, or other mineral exploration or development
programs, although both the Acquiring Fund and Portfolio may purchase securities
of issuers which engage in whole or in part of such activities, but only if such
securities are small cap equity securities or constitute less than 35% of
Acquiring Fund's or Portfolio's total assets.
8. Invest in or sell puts, calls, straddles, and any combination thereof.
9. Purchase securities of companies for the purpose of exercising
management or control.
10. Participate in a joint or joint and several trading account in
securities.
11. Purchase the securities of (i) other open-end investment companies, or
(ii) closed-end investment companies.
12. Issue senior securities or borrow money, except that Acquiring Fund
and Portfolio may (i) borrow money only from banks 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 Acquiring Fund or Portfolio, and (ii) borrow money only from
banks 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 Acquiring Fund or Portfolio with respect to which the
borrowing has been made. Neither Acquiring Fund or Portfolio may invest in
securities while the amount of its borrowing exceeds 5% of its total assets.
13. Pledge, mortgage, or hypothecate its assets to an extent greater than
10% of its total assets to secure borrowings made pursuant to the provisions of
Item 12 above.
PRINCIPAL RISK FACTORS
The principal risks associated with an investment in the Portfolio and an
investment in the Acquiring Fund are, except as noted, basically the same since
both the Portfolio and the Acquiring Fund have essentially the same investment
objectives and restrictions and both have the same investment advisor. The
principal risks for both the Portfolio and the Acquiring Fund are as follows:
LACK OF OPERATING HISTORY AND EXPERIENCE
The Acquiring Fund is a newly organized investment company portfolio of The
Navellier Performance Funds with no history of operations. Navellier
Management, Inc., (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.
The Investment Advisor is also the investment advisor to the Acquiring Fund and
has been managing the assets of The Navellier Performance Funds since December
28, 1995. 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 Acquiring Fund or of the Portfolio) had, before
June
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1993 ever registered, operated, or supervised the operations of investment
companies, 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 Acquiring Fund in the future. Samuel Kornhauser is the
legal counsel to both the Acquiring Fund and to Navellier Management, Inc., the
Acquiring Fund's investment advisor. The Independent Trustees of the Portfolio
terminated Mr. Kornhauser (over Mr. Navellier's objection) as counsel to the
Portfolio on April 26, 1996 claiming that he had a potential conflict of
interest as counsel to the Portfolio and to Navellier Management, Inc. Mr.
Kornhauser denied any such conflict, particularly in light of the fact that
decisions regarding Navellier Management, Inc.'s dealings with the Portfolio
were made by the vote of the Independent Trustees who were not represented by
Mr. Kornhauser. Louis Navellier, 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.
Louis Navellier, 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 sub-advisors, all of which firms employ the same basic
modern portfolio theories and select many of the same over-the-counter stocks
and other securities which the Investment Adviser intends to employ and invest
in while managing the portfolios of the Fund. Because many of the over-the-
counter and other securities which Investment Adviser intends to, or may, invest
in have a smaller number of shares available to trade than more conventional
companies, lack of shares available at any given time may result in the
Portfolio or the Acquiring 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
their performance. Since the Investment Adviser will be trading on behalf of
the Portfolio and the Acquiring Fund in some or all of the same securities at
the same time that Navellier & Associates, Inc., Navellier Fund Management, Inc.
and other Navellier controlled investment entities are trading, the potential
liquidity problem could be exacerbated. In the event the number of shares
available for purchase or sale in a security or securities is limited and
therefore the trade order cannot be fully executed at the time it is placed,
i.e., where the full trade orders of Navellier & Associates, Inc., Navellier
Fund Management, Inc. and other Navellier controlled investment entities and the
Acquiring Fund or Portfolio 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 Acquiring Fund or
Portfolio. For example, if Navellier & Associates, Inc. and Navellier Fund
Management, Inc. each place a $25,000 purchase order and Investment Adviser, on
behalf of the Acquiring Fund or Portfolio, 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
Acquiring Fund or Portfolio. As the assets of the Acquiring Fund or Portfolio
increase, the potential for shortages of buyers or sellers increases, which
could adversely affect the performance of the Acquiring Fund or Portfolio.
While the Investment Adviser generally does not anticipate liquidity problems
(i.e., the possibility that the Acquiring Fund or Portfolio cannot sell shares
of a company and therefore the value of those shares drops) unless the Acquiring
Fund or Portfolio has assets in excess of two billion dollars (although
liquidity problems could still occur when the Acquiring Fund or Portfolio has
assets of substantially less than two billion dollars), each investor is being
made aware of this potential risk in liquidity. These same liquidity risks
exist for the Portfolio.
An investment in shares of the Acquiring Fund involves certain speculative
considerations. There can be no assurance that any of the Acquiring Fund's
objectives will be achieved or that the value of the investment will increase.
An investment in shares of the Portfolio also involves the same risks.
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All securities in which the Acquiring Fund may invest are inherently subject to
market risk, and the market value of the Acquiring Fund's investments will
fluctuate. The Portfolio is subject to the same risks.
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.
While, to some extent, the risks to the Acquiring Fund of investing in foreign
securities may be limited, since it may not invest more than 25% of its net
asset value in such securities and since it may only invest in foreign
securities which are traded in the United States securities markets, the risks
nonetheless exist. The same risks apply to the Portfolio's investments in
foreign securities.
PORTFOLIO TURNOVER
The annual rate of portfolio turnover for the Acquiring Fund is unknown, since
it is newly formed and has no operating history and therefore, no actual
portfolio turnover rate presently exists. The Investment Adviser estimates that
the annual portfolio turnover rate will not exceed 200%. The Investment
Adviser, which is also the investment advisor to the Portfolio, will employ the
same investment style for the Acquiring Fund as it has employed in managing the
Portfolio, which had an annual portfolio turnover rate in 1996 of 136.9%.
However, these are NOT restrictions 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 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 performance. To the
extent that increased portfolio turnover results in sales at a profit of
securities held less than three months, the Acquiring Fund's ability to qualify
as a "regulated investment company" under the Internal Revenue Code may be
affected. The risks associated with portfolio turnover for Acquiring Fund are
essentially the same for the Portfolio.
Both the Portfolio and the Acquiring Fund are diversified investment companies
and as such, at least 75% of each of said portfolio's total assets must be
invested in cash, U.S. Government securities and other securities. Such
securities of any one issuer are limited, for the purposes of this calculation,
to an amount not greater than 5% of the value of each of the portfolio's total
assets and 10% of the outstanding voting securities of any one issuer.
THE PROPOSED TRANSACTIONS
AGREEMENT AND PLAN OF REORGANIZATION
The terms and conditions of the proposed merger, as contemplated by the
Reorganization, are set forth in the Plan. Significant provisions of the Plan,
with respect to the proposed Reorganization of the
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Portfolio into the Acquiring Fund, are summarized immediately below. This
summary, however, is qualified in its entirety by reference to the Plan, a form
of which is attached to this combined prospectus/proxy statement as Appendix A.
With respect to the proposed Reorganization, the Plan contemplates (i) the
Acquiring Fund, on the closing date of the Reorganization, acquiring all of the
assets of the Portfolio in exchange for Acquiring Fund Shares and the assumption
by the Acquiring Fund of all the liabilities of the Portfolio and (ii) the
constructive distribution of Acquiring Fund Shares to the Shareholders of the
Portfolio in exchange for the Portfolio Shares of such Shareholders, all as
provided for by the Plan.
The assets of the Portfolio to be acquired by the Acquiring Fund include all
property, including without limitation, all cash, securities, commodities and
futures interests and dividends or interest receivables which are owned by the
Portfolio and any deferred or prepaid expenses shown as an asset on the books of
the Portfolio on the closing date of the Reorganization. The Acquiring Fund
will assume from the Portfolio all liabilities, expenses, costs, charges and
reserves reflected on an unaudited statement of assets and liabilities of the
Portfolio. The Acquiring Fund also will deliver Acquiring Fund Shares to the
Portfolio, which Acquiring Fund Shares the Portfolio then shall distribute to
the Shareholders of Portfolio in exchange for such Shareholders' Portfolio
Shares. The exchange of the Portfolio's assets for the Acquiring Fund Shares is
anticipated to occur on April 28, 1997, or such later date as the parties may
agree (the "Closing Date").
The value of the Portfolio's assets to be acquired by, and the value of the
Portfolio's liabilities to be assumed by, the Acquiring Fund and the net asset
value of a share of the Acquiring Fund will be determined as of immediately
after the close of regular trading on the NYSE on the Closing Date, using the
valuation procedures set forth in the Acquiring Fund's then-current Prospectus
and Statement of Additional Information.
Upon the Closing Date, the Portfolio will liquidate and distribute pro rata to
its Shareholders of record (as evidenced by such Shareholders' Portfolio Shares)
the Acquiring Fund Shares received by the Portfolio in exchange for such
Shareholders' interests in the Portfolio. This liquidation and distribution
will be accomplished by opening accounts on the books of the Acquiring Fund in
the name of each shareholder of record in the Portfolio and by crediting thereon
the shares previously credited to the Portfolio account of the shareholder on
those books, as described above (see "Synopsis -- Continuation of Shareholder
Accounts; Share Certificates"). Each such Acquiring Fund shareholder account
shall represent the respective pro-rata number of the Acquiring Fund Shares due
to such Shareholder.
Accordingly, every Shareholder will own Acquiring Fund Shares immediately after
the Reorganization, the value of which Acquiring Fund Shares will be equal to
the value of his or her Portfolio Shares immediately prior to the
Reorganization. Moreover, because the Acquiring Fund Shares will be issued at
net asset value in exchange for the net assets transferred from the Portfolio,
the net asset value per share of the Acquiring Fund Shares received by Portfolio
Shareholders after the transfer of assets will be unchanged from the net asset
value of the Portfolio Shares at the Closing Date. Thus, the Reorganization
will not result in a dilution of any Shareholder account.
The consummation of the proposed transaction contemplated by the Reorganization
is subject to a number of conditions set forth in the Plan, some of which
conditions may be waived by the Series Fund Board or the Performance Funds
Board, or by an authorized officer of The Navellier Series Fund
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or The Navellier Performance Funds, as appropriate. Among the significant
conditions (which may not be waived) for the Reorganization are: (i) the
receipt by The Navellier Series Fund and The Navellier Performance Funds of an
opinion of counsel to The Navellier Performance Funds as to certain Federal
income tax aspects of the Reorganization (see "The Proposed Transactions --
Federal Income Tax Consequences"); and (ii) the approval of the Plan by the
affirmative vote of the holders of at least 67% of the shares present in person
or by proxy entitled to vote at the shareholders' meeting or a majority of the
Portfolio's outstanding voting shares, whichever is less. The Plan may be
terminated and the Reorganization abandoned at any time, before or after
approval by the Shareholders, prior to the applicable Closing Date or by mutual
consent of the Portfolio and the Acquiring Fund. In addition, the Plan may be
amended in any mutually-agreeable manner, except that no amendment may be made
to the Plan subsequent to the Meeting that would be materially detrimental to
the Shareholders.
The Investment Advisor to the Portfolio and to the Acquiring Fund (Navellier
Management, Inc.) contemplates that the Portfolio's assets at the date of the
transactions of the Reorganization will be invested in a manner consistent with
the investment objectives and policies of both the Portfolio and the Acquiring
Fund.
REASONS FOR THE PROPOSED TRANSACTIONS
Navellier Management, Inc. has indicated that it will not continue to serve as
Investment Advisor to Portfolio if it is not merged into the Acquiring Fund. As
described below in greater detail, the Navellier Group and the Performance Board
believe the Reorganization would benefit Shareholders of the Portfolio by
substantially reducing operating costs and expenses of the Portfolio by an
estimated $100,000 per year thereby promoting more efficient operations. The
proposed Reorganization was first recommended to the Series Fund Board by
Navellier Management, Inc., the investment adviser to the Portfolio and by Louis
Navellier, a Trustee of the Portfolio and one of the Portfolio Managers of the
Portfolio, at the April 26, 1996 meetings of the Board of Trustees of the
Portfolio because they felt that a merger of the Portfolio into the Acquiring
Fund would substantially reduce the annual operating expenses of the Portfolio
by eliminating or reducing the Portfolio's annual Independent Trustee's fees,
expenses, independent counsel's fees and liability insurance; by reducing
duplicative costs of printing, of separate prospectuses, annual and semi-annual
shareholder reports, quarterly reports and mailings for both the Portfolio and
the Acquiring Fund; by reducing the management fee charged by the Investment
Advisor; and that a merger would generally increase the efficiency of operations
and would not result in any change in the way the assets were managed, since the
Investment Advisor, Navellier Management, Inc., would remain the same and would
operate pursuant to the same investment objective and restrictions. For these
reasons, they felt that the Reorganization of the Portfolio into the Acquiring
Fund was in the best interests of the Shareholders of the Portfolio and that the
interests of the Shareholders of the Portfolio would not be diluted by the
Reorganization.
Louis Navellier, as a Trustee of the Portfolio and as President and sole owner
of Navellier Management, Inc. and the Investment Advisor to the Portfolio, also
indicated to the Board of Trustees that if a merger of the Portfolio into the
Acquiring Fund did not occur, that Navellier Management, Inc. would resign or
terminate its services as Investment Advisor to the Portfolio. The Board of
Trustees initially voted 3 to 2 against the proposed merger (with Louis
Navellier and Alan Alpers voting in favor of the proposed merger and the three
Independent Trustees voting against a proposed merger) but asked Mr. Navellier
and Navellier Management, Inc. to delay or reconsider terminating their services
pending the Independent Trustees' further review of the proposed merger.
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On May 10, 1996, at a meeting of the Portfolio's Board of Trustees, Mr.
Navellier and the Independent Trustees agreed to temporarily extend Navellier
Management, Inc.'s investment advisory agreement with the Portfolio through
November 15, 1996 and for the Independent Trustees to consider additional
information so that the Independent Trustees could further consider the possible
merits of the proposed merger. However, Mr. Navellier and the Independent
Trustees have not been able to agree on the scope of information to be provided.
As a result, at a November 11, 1996 meeting of the Trustees, the three
Independent Trustees voted to let the Portfolio shareholders decide whether to
merge into the Acquiring Fund and instructed Navellier Management, Inc., the
Investment Advisor, to prepare and file a proxy solicitation so that a
shareholder meeting of the Portfolio could be held to vote on the proposed
merger.
The Navellier Group recommend that the Shareholders of the Portfolio vote to
approve the Reorganization of the Portfolio based on a number of factors, first
and foremost of which is that the Reorganization should result in substantial
savings and be a means of combining similar investment companies with similar
investment objectives and policies and would permit the Shareholders of the
Portfolio to pursue substantially the same investment goals in a potentially
larger fund complex. The Navellier Group also believes that the Reorganization,
if effected, would enable the resulting larger fund complex, with its larger
asset base, to achieve enhanced distribution capability. It is also believed
that the anticipated reduction in costs should increase the performance of the
Portfolio.
The merger should permit the reduction or elimination of certain duplicative
costs and expenses presently incurred for services that are separately performed
for both the Portfolio and the Acquiring Fund. For example, the projected
$75,000 per annum in Independent Trustees fees and expenses expected to be paid
to the Independent Trustees of the Portfolio would be eliminated, as would the
$25,000 per year in liability insurance and the approximately $155,000 in
attorney's fees and costs of the outside independent counsel for the Independent
Trustees. Printing and mailing costs should be reduced as a result of a single
prospectus, annual report, and semi-annual report. As a general rule, economies
can be expected to be realized primarily with respect to fixed expenses, such as
costs of printing and fees for professional services. Expenses that are based
on the value of assets or the number of shareholder accounts, such as custody
and transfer agent fees, however, would be largely unaffected by the
Reorganization. Achievement of these goals, of course, cannot be assured.
The Navellier Group recommends the proposed Reorganization, and the transactions
contemplated thereby, to the Shareholders for the reasons set forth above as
well as on a number of other factors, including the following:
1. the continued availability of Navellier Management, Inc., as Investment
Advisor managing the assets of the Portfolio Shareholders which could be
lost if a merger is not approved;
2. the terms and conditions of the Reorganization and the fact that the
Reorganization would not result in dilution of Shareholder interests;
3. the fact that the investment objectives, policies and restrictions of the
Portfolio and the Acquiring Fund are essentially the same;
4. similar service features available to shareholders in the Portfolio and the
Acquiring Fund;
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5. the anticipated benefits to the Shareholders of the Portfolio of being part
of a family of funds; and
6. the tax-free nature and consequences of the Reorganization.
DESCRIPTION OF SECURITIES TO BE ISSUED
GENERAL. The Acquiring Fund Shares to be issued pursuant to the proposed
Reorganization represent shares of beneficial interest in The Navellier
Aggressive Small Cap Portfolio of The Navellier Performance Funds, which is a
diversified, open-end management investment company. The Navellier Performance
Funds is an unincorporated voluntary association organized under the laws of the
State of Delaware as a business trust, pursuant to The Navellier Performance
Funds' Declaration of Trust, dated October 17, 1995 (the "Declaration of
Trust"). The Declaration of Trust authorizes The Navellier Performance Funds to
issue an unlimited number of shares of beneficial interest in one or more
series. Currently, The Navellier Performance Funds has authorized three series:
the Navellier Aggressive Growth Portfolio, the Navellier Mid Cap Growth
Portfolio and the Navellier Aggressive Small Cap Portfolio (which is the
"Acquiring Fund"). Other series in The Navellier Performance Funds, however,
may be added in the future. Each Acquiring Fund Share represents an equal
proportionate interest with each other Acquiring Fund Share and each such
Acquiring Fund Share is entitled to equal voting, dividend, liquidation and
redemption rights. Acquiring Fund Shares entitle their holders to one vote per
full share held and to fractional votes for fractional shares held. The
Acquiring Fund Shares do not have cumulative voting rights, preemptive rights or
subscription rights and are fully paid, nonassessable, redeemable and freely
transferable.
Currently, each shareholder of the Acquiring Fund is permitted to inspect the
records, accounts and books of The Navellier Performance Funds for any
legitimate business purpose.
MEETINGS. As a Delaware business trust, The Navellier Performance Funds is not
required to hold an annual shareholders' meeting if the 1940 Act does not
require such a meeting. The Declaration of Trust provides that a special
meeting of The Navellier Performance Funds shareholders of any series of The
Navellier Performance Funds may be called by the Trustees of The Navellier
Performance Funds ("Trustees") and shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the outstanding shares of
The Navellier Performance Funds entitled to vote. The Navellier Performance
Funds will hold special shareholder meetings as required or deemed desirable by
the Performance Board for such purposes as electing Trustees, changing
fundamental policies or approving an investment advisory or shareholder services
agreement. Any Trustee may be removed from office with or without cause at any
time either by written instrument, signed by at least two-thirds (2/3) of the
number of Trustees prior to such removal, specifying the date upon which such
removal shall become effective, or by a vote of The Navellier Performance Funds
shareholders owning at least two-thirds (2/3) of the outstanding shares of The
Navellier Performance Funds. If requested by shareholders of at least 10% of
the outstanding shares of The Navellier Performance Funds, The Navellier
Performance Funds will call a shareholder meeting for the purpose of voting upon
the question of the removal of a Trustee and will assist in communications with
other Navellier Performance Funds shareholders as required by Section 16(c) of
the 1940 Act.
SHAREHOLDER LIABILITY. Beneficial owners of a Delaware business trust, such as
The Navellier Performance Funds, except to the extent otherwise provided in the
governing instrument of the business trust, are entitled to the same limitation
of personal liability extended to stockholders of
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private for-profit corporations. The Navellier Performance Funds's governing
instrument, the Trust Declaration, specifically disclaims shareholder liability
for acts or obligations of The Navellier Performance Funds and provides that The
Navellier Performance Funds' shareholders shall not be subject to any personal
liability for the acts or obligations of The Navellier Performance Funds. The
Trust Declaration further provides for indemnification, out of the property of
the series of The Navellier Performance Funds with respect to which such
shareholder's shares are issued, for all losses and expenses of any shareholder
held personally liable solely by reason of his or her being or having been a
shareholder of such series and not because of his or her acts or omissions or
for some other reason. Thus, the risk of a shareholder of The Navellier
Performance Funds incurring financial loss on account of shareholder liability
is considered remote since such liability is limited to circumstances in which a
disclaimer is inoperative and The Navellier Performance Funds would be unable to
meet its obligations.
LIABILITY OF TRUSTEES. Under the Declaration of Trust of The Navellier
Performance Funds, a Trustee will be held personally liable only for the
Trustee's own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of a Trustee.
Under said Declaration of Trust and separate indemnity agreements, trustees and
officers of The Navellier Performance Funds ("Trust Officers") will be
indemnified for the expenses of litigation against them unless it is determined
that the person did not act in good faith in the reasonable belief that the
person's action was in or not opposed to the best interest of The Navellier
Performance Funds or if the person's conduct is determined to constitute willful
misfeasance, bad faith, gross negligence or reckless disregard of that person's
duties. The Navellier Performance Funds also may advance money for these
expenses provided that the Trustee or the Trust Officer undertakes to repay The
Navellier Performance Funds if that person's conduct later is determined to
preclude indemnification. The Navellier Series Fund's Declaration of Trust and
separate indemnity agreements currently set forth comparable provisions.
The foregoing is only a summary of certain characteristics of (i) the shares of
beneficial interest of The Navellier Performance Funds to be issued pursuant to
the proposed Reorganization, (ii) the operations of The Navellier Performance
Funds' Declaration of Trust and By-Laws, and (iii) Delaware law. The foregoing
is not a complete description of the shares of beneficial interest of The
Navellier Performance Funds nor of the documents or laws cited. Shareholders
should refer to the provisions of Delaware law directly for a more thorough
description.
FEDERAL INCOME TAX CONSEQUENCES
The Navellier Series Fund and The Navellier Performance Funds will receive, as a
condition to the Reorganization, an opinion from Samuel Kornhauser, counsel to
The Navellier Performance Funds to the effect, for Federal income tax purposes
and with respect to the Reorganization, that:
1. the proposed Reorganization and the transactions contemplated
thereby, as described herein, will constitute a tax-free
"reorganization" within the meaning of Section 368(a)(1)(C) of
the Internal Revenue Code (the "Code");
2. no gain or loss generally will be recognized to the Portfolio
upon the transfer of all of the Portfolio's assets to the
Acquiring Fund in exchange solely for Acquiring Fund Shares and
the assumption by the Acquiring Fund of all the liabilities of
the Portfolio and the subsequent distribution of those Acquiring
Fund Shares to the Portfolio's Shareholders of record in
liquidation thereof;
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3. no gain or loss will be recognized to the Acquiring Fund upon the
receipt of those Portfolio assets in exchange solely for
Acquiring Fund Shares and the assumption by the Acquiring Fund of
those Portfolio liabilities;
4. the Acquiring Fund's basis for those Portfolio assets transferred
by the Portfolio to the Acquiring Fund will be the same as the
basis thereof in the Portfolio's hands immediately before the
Reorganization and the Acquiring Fund's holding period for those
assets will include the Portfolio's holding period therefor;
5. each Shareholder of record will recognize no gain or loss upon
the constructive exchange of all of his or her Portfolio Shares
solely for Acquiring Fund Shares pursuant to the Reorganization;
6. each Shareholder's basis for the Acquiring Fund Shares to be
received by the Shareholder pursuant to the Reorganization will
be the same as the Shareholder's basis in the Portfolio Shares to
be constructively surrendered in exchange therefor; and
7. each such Shareholder's holding period for those Acquiring Fund
Shares will include the period during which the Portfolio Shares
to be constructively surrendered in exchange for Acquiring Fund
Shares were held, provided the Portfolio Shares were held as
capital assets by that Shareholder on the date of the
Reorganization.
A revenue ruling of the Internal Revenue Service as to the Reorganization is not
expected to be obtained.
As of December 31, 1996, the Portfolio had a loss carryover of $1,910,202.00
and, as of December 31, 1996, the Acquiring Fund had no loss carryover.
THE FOREGOING IS INTENDED TO BE ONLY A SUMMARY OF THE PRINCIPAL FEDERAL INCOME
TAX CONSEQUENCES OF THE REORGANIZATION AND SHOULD NOT BE CONSIDERED TO BE TAX
ADVICE. THERE CAN BE NO ASSURANCE THAT THE INTERNAL REVENUE SERVICE WILL CONCUR
ON ALL OR ANY OF THE ISSUES DISCUSSED ABOVE. SHAREHOLDERS OF THE PORTFOLIO ARE
URGED TO CONSULT THEIR OWN TAX ADVISERS REGARDING THE FEDERAL, STATE AND LOCAL
TAX CONSEQUENCES WITH RESPECT TO THE FOREGOING MATTERS AND ANY OTHER
CONSIDERATIONS WHICH MAY BE APPLICABLE TO THE SHAREHOLDERS.
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PRO FORMA CAPITALIZATION AND RATIOS
The following tables show the capitalization of the Portfolio as of December 31,
1996 and the Acquiring Fund separately, as of February 28, 1997, and combined in
the aggregate on a pro forma basis, as of December 31, 1996, giving effect to
the Reorganization:
Acquiring Pro Forma
Portfolio Fund Combined
Net Assets: $190,034,513 $0 $190,034,513
Net Asset Value Per Share $17.79 $0 $10.00
Shares Outstanding 10,683,004 0 19,003,451
DISSOLUTION OF THE PORTFOLIOS
If the Plan is approved by the Shareholders of the Portfolio and the
Reorganization is completed, the Portfolio will be dissolved as soon as
practicable in accordance with the provisions of Delaware law and the Plan. See
"The Proposed Transactions -- Agreement and Plan of Reorganization".
NAVELLIER GROUP RECOMMENDATION
The Navellier Group has solicited this shareholder vote to approve the
Reorganization and recommends that the Portfolio Shareholders approve the
Reorganization. The Navellier Group, for the reasons mentioned herein (See
"Reasons For Proposed Transactions"), believes the Reorganization of the
Portfolio into the Acquiring Fund would result in substantial cost savings,
would be in the best interests of the Portfolio Shareholders and that their
interests would not be diluted.
The Navellier Group therefore recommends that the Shareholders of the Portfolio
vote FOR Proposal No. 1, the proposal to merge the Portfolio into the Acquiring
Fund and the transactions contemplated thereby.
With respect to the reorganization of the Portfolio into the Acquiring Fund, the
Independent Trustees of the Series Fund have taken the position that the
Portfolio Shareholders should decide at the Meeting whether to merge. In the
event that the Shareholders of the Portfolio do not approve the Reorganization
of the Portfolio into the Acquiring Fund contemplated thereunder, Navellier
Management, Inc. (the Investment Advisor to the Portfolio) has indicated that it
will not continue to act as investment advisor to the Portfolio.
REQUIRED VOTE
As described above, a quorum being present, the approval of the Plan by the
Shareholders of the Portfolio under Proposal 1 requires the affirmative vote of
at least 67% of the shares present in person or by proxy at a meeting in which a
quorum is present or more than 50% of the outstanding voting shares of the
Portfolio , whichever is less.
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ADDITIONAL INFORMATION ABOUT
THE ACQUIRING FUND AND
THE ACQUIRING FUND SHARES
Additional information about the Acquiring Fund is included in the current
Prospectus of The Navellier Performance Funds, dated November 26, 1996. A copy
of that prospectus has been filed with the Commission and is incorporated by
reference herein. A Shareholder of the Portfolio will receive with this
combined prospectus/proxy statement, a copy of the prospectus for The Navellier
Performance Funds. Further information about the Acquiring Fund is included in
the Statement of Additional Information for The Navellier Performance Funds,
dated November 26, 1996. The Statement of Additional Information has been filed
with the Commission and is incorporated by reference herein. Copies of that
Statement of Additional Information for The Navellier Performance Funds may be
obtained without charge by contacting Navellier Management, Inc. (which provides
administrative services to the Acquiring Fund) or by telephoning Navellier
Management, Inc. toll-free at
1-800-887-8671.
ADDITIONAL INFORMATION ABOUT
THE PORTFOLIO AND THE PORTFOLIO SHARES
Additional information about the Portfolio is included in the current Prospectus
of The Navellier Series Fund, dated April 29, 1996. A copy of this prospectus
has been filed with the Commission and is incorporated by reference herein. A
Shareholder will receive with this combined prospectus/proxy statement a copy of
the prospectus for The Navellier Series Fund. Further information about the
Portfolio is included in the Statement of Additional Information for The
Navellier Series Fund, dated April 29, 1996, which also has been filed with the
Commission and is incorporated by reference herein. A copy of this Statement of
Additional Information for The Navellier Series Fund may be obtained without
charge by contacting Navellier Management, Inc. (which provides administrative
services to the Portfolio), at One East Liberty Street, Third Floor, Reno,
Nevada 89501, or by telephoning Navellier Management, Inc. toll-free at 1-800-
887-8671.
MISCELLANEOUS
AVAILABLE INFORMATION
The Navellier Performance Funds is registered under the 1940 Act and is subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended, and the 1940 Act and, in accordance therewith, files reports, proxy
materials and other information with the Commission. The Navellier Series Fund
also is registered under the 1940 Act and is required to file reports under the
1940 Act. Such reports, proxy materials (unless it is preliminary proxy
material which has been filed confidentially) and other information can be
inspected at the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, DC 20549. Copies of such material can also be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC
20539, at prescribed rates.
24
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LEGAL MATTERS
Certain legal matters in connection with the issuance of the Acquiring Fund
Shares will be passed upon by Samuel Kornhauser, 155 Jackson Street, Suite 1807,
San Francisco, California 94111 ("Counsel"). Counsel also will render an
opinion as to certain Federal income tax consequences of the Reorganization.
FINANCIAL STATEMENTS AND EXPERTS
Both the audited financial statement of the Acquiring Fund included in the
Statement of Additional Information related to this combined prospectus/proxy
statement (the "SAI") and the audited financial statement of the Portfolio
included in the SAI have been audited by Deloitte & Touche, LLP, independent
accountants, for the periods indicated in the reports of independent accountants
thereon which appear in the SAI. Such financial statements are incorporated
herein by reference in reliance upon such reports of independent accountants
given on the authority of such firm as experts in accounting and auditing.
Copies of these financial statements, as included in the SAI, may be obtained
without charge by contacting Navellier Management, Inc., at One East Liberty
Street, Third Floor, Reno, Nevada 89501, or by telephoning Navellier Management,
Inc. toll-free at 1-800-887-8671.
OTHER BUSINESS
The Navellier Group knows of no business to be brought before the Meeting other
than the matters set forth in this combined prospectus/proxy statement. Should
any other matter requiring a vote of Shareholders arise, however, the Proxies
will vote thereon according to their best judgment in the interests of the
Portfolio and of the Shareholders.
By Louis G. Navellier and Navellier
Management, Inc.
Pursuant to Order of the Board of Trustees of
The
Navellier Series Fund
By _____________________________
Louis G. Navellier
One East Liberty Street, Third Floor
Reno, Nevada 89501
February 28, 1997
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<PAGE>
PROXY THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PROXY
PORTFOLIO
THE NAVELLIER SERIES FUND
One East Liberty Street, Third Floor
Reno, Nevada 89501
_____________
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS
April 25, 1997
THIS PROXY IS SOLICITED BY LOUIS NAVELLIER, and NAVELLIER MANAGEMENT, INC.
(the "NAVELLIER GROUP") for use at a special meeting of the shareholders of The
Navellier Aggressive Small Cap Equity Portfolio (the "Portfolio"), an investment
portfolio offered by The Navellier Series Fund (the "Series Fund") which meeting
will be held at 10:00 A.M., Pacific Time, on April 25, 1997, at the offices of
The Navellier Series Fund, One East Liberty Street, Third Floor, Reno Nevada
89501 (the "Meeting").
The undersigned shareholder of the Portfolio, revoking any and all previous
proxies heretofore given for shares of the Portfolio held by the undersigned
("Shares"), does hereby appoint Louis Navellier and Samuel Kornhauser, and each
and any of them, with full power of substitution to each to be the attorneys and
proxies of the undersigned (the "Proxies"), to attend the Meeting of the
shareholders of the Portfolio, and to represent and direct the voting interests
represented by the undersigned as of the record date for said Meeting for the
Proposals specified below.
This proxy, if properly executed, will be voted in the manner as directed
herein by the undersigned shareholder. Unless otherwise specified below in the
squares provided, the undersigned's vote will be cast "FOR" each Proposal. If
no direction is made for any Proposals, this proxy will be voted "FOR" any and
all such Proposals. In their discretion, the Proxies are authorized to transact
and vote upon such other matters and business as may come before the Meeting or
any adjournments thereof.
<PAGE>
Proposal 1 To approve or disapprove an Agreement and Plan of
Reorganization (the "Plan"), whereby The Navellier
Aggressive Small Cap Equity Portfolio would transfer all of
its assets to The Navellier Aggressive Small Cap Portfolio
(the "Acquiring Fund") of The Navellier Performance Funds in
exchange for shares of beneficial interest in the Acquiring
Fund that would then be distributed to the shareholders of
The Navellier Aggressive Small Cap Equity Portfolio. Also,
as part of the Plan, the Acquiring Fund would assume all the
liabilities of The Navellier Aggressive Small Cap Equity
Portfolio.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal 2 To transact such other business as property may come before
the Meeting or any adjournments thereof.
To avoid the expense of adjourning the Meeting to a subsequent date, please
return this proxy in the enclosed self-addressed, postage-paid envelope. THIS
PROXY IS SOLICITED ON BEHALF OF LOUIS NAVELLIER and NAVELLIER MANAGEMENT, INC.
(the Investment Advisor to The Navellier Series Fund), WHICH RECOMMEND A VOTE
FOR THE PROPOSAL.
Dated _______________, 1997
_________________________
Signature of Shareholder
_________________________
Signature of Shareholder
This proxy may be revoked by the shareholder(s) at any time
prior to the special meeting.
NOTE: Please sign exactly as your name appears hereon. If shares are
registered in more than one name, all registered shareholders should sign this
proxy; but if one shareholder signs, that signature binds the other shareholder.
When signing as an attorney, executor, administrator, agent, trustee, or
guardian, or custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name by an authorized person. If a
partnership, please sign in partnership name by an authorized person.
<PAGE>
APPENDIX A:
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this _____ day of _________, 1997, by and between THE NAVELLIER SERIES FUND (the
"Series Fund"), a Delaware business trust with its principal place of business
at One East Liberty Street, Third Floor, Reno, Nevada 89501, and THE NAVELLIER
PERFORMANCE FUNDS (the "Performance Funds"), a Delaware business trust with its
principal place of business at One East Liberty Street, Third Floor, Reno,
Nevada 89501.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), with respect to the
proposed reorganization of the NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
(the "Portfolio"), which portfolio is a series of the Series Fund, pursuant to
which the Portfolio will be merged into and become part of The Navellier
Aggressive Small Cap Portfolio (the "Acquiring Fund") of the Performance Funds
(the "Reorganization"). Specifically, this Agreement is intended to be and is
adopted for the purpose of providing for the Reorganization of the Portfolio
into the Acquiring Fund. The Reorganization will consist of the transfer of all
of the assets of the Portfolio to the Acquiring Fund in exchange solely for (i)
shares of beneficial interest in the Acquiring Fund (the "Acquiring Fund
Shares") and (ii) the assumption by the Acquiring Fund of all the liabilities of
the Portfolio and the distribution of the Acquiring Fund Shares to the
Shareholders of the Portfolio in complete liquidation of the Portfolio, as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Performance Funds and the Series Fund are both open-end,
registered investment companies of the management type and the Portfolio owns
securities which are assets of the character in which the Acquiring Fund is
permitted to invest;
WHEREAS, the Shareholders of the Series Fund have determined, with respect
to such Reorganization, that the exchange of all of the assets of the Portfolio
for Acquiring Fund shares and the assumption of all the liabilities of the
Portfolio by the Acquiring Fund is in the best interests of the Portfolio and
its Shareholders and that the interests of the existing Shareholders of the
Portfolio would not be diluted as a result of this transaction; and
WHEREAS, the purpose of the Reorganization is to combine the assets of the
Acquiring Fund with those of the Portfolio in an attempt to achieve greater
operating economies and to retain Navellier Management, Inc. as the investment
advisor to manage the assets of the Portfolio;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree, with
respect to the Reorganization, as follows:
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1. THE TRANSFER OF ASSETS OF THE PORTFOLIO TO THE ACQUIRING FUND IN EXCHANGE
FOR THE ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL THE LIABILITIES OF THE
PORTFOLIO, AND THE LIQUIDATION OF THE PORTFOLIO
1.1 For the Reorganization, the closing shall take place as provided for
in paragraph 3.1 ("Closing") and the provisions of paragraphs 1 through 8 of
this Agreement shall apply. At the Closing, the Portfolio agrees to transfer
all of its assets, as set forth in paragraph 1.2, to the Acquiring Fund, and the
Acquiring Fund agrees in exchange therefor: (1) to deliver to the Portfolio the
number of Acquiring Fund Shares, including fractional Acquiring Fund Shares,
determined by dividing the value of the Portfolio's net assets computed in the
manner and as of the time and date set forth in paragraph 2.1 by the net asset
value of one Acquiring Fund Share computed in the manner and as of the time and
date set forth in paragraph 2.2; and (ii) to assume all the liabilities of the
Portfolio, as set forth in paragraph 1.3.
1.2 The assets of the Portfolio to be acquired by the Acquiring Fund shall
consist of all property, including, without limitation, all cash, securities,
interests, and dividends or interest receivable which are owned by the Portfolio
and any deferred or prepaid expenses shown as assets on the books of the
Portfolio on the closing date provided in paragraph 3.1 (the "Closing Date")
1.3 The Portfolio will endeavor to discharge all of its known liabilities
and obligations prior to the Closing Date. The Acquiring Fund shall assume all
liabilities, expenses, costs, charges and reserves reflected on an unaudited
statement of assets and liabilities of the Portfolio prepared by the
administrator of the Acquiring Fund and the Portfolio, as of the Valuation Date
(as defined in paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from the prior audited period.
1.4 Immediately after the transfer of assets provided for in paragraph
1.1, the Portfolio will distribute pro rata to its Shareholders of record,
determined as of immediately after the close of business on the Closing Date
(the "Portfolio Shareholders"), the Acquiring Fund Shares received by the
Portfolio pursuant to paragraph 1.1 and will completely liquidate. Such
distribution and liquidation will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the Portfolio on the books
of the Acquiring Fund to the share records of the Acquiring Fund in the names of
the Portfolio Shareholders and representing the respective pro rata number of
the Acquiring Fund Shares due such Shareholders. All issued and outstanding
shares of the Portfolio will simultaneously be canceled on the books of the
Portfolio. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange. Ownership of Acquiring
Fund Shares will be shown on the books of the Acquiring Fund's transfer agent.
2. VALUATION
2.1 The value of the Portfolio's assets to be acquired by the Acquiring
Fund hereunder shall be the net asset value of such assets computed as of
immediately after the close of business of the New York Stock Exchange on the
Closing Date (such time and date being hereinafter called the "Valuation Date"),
using the valuation procedures for computing net asset value set forth in the
Portfolio's then-current prospectus or statement of additional information.
2.2 The net asset value of an Acquiring Fund Share shall be the net asset
value per share computed as of immediately after the close of business of the
New York Stock Exchange on the Valuation Date, using the valuation procedures
for computing net asset value set forth in the Performance Funds' then-current
prospectus or statement of additional information.
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<PAGE>
2.3 The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Portfolio's assets shall be
determined by dividing the value of the net assets of the Portfolio determined
using the same valuation procedures referred to in paragraph 2.1 by the net
asset value of an Acquiring Fund Share determined in accordance with paragraph
2.2.
2.4 All computations of value for the Performance Funds and the Acquiring
Fund shall be made by Rushmore Trust & Savings Bank, FSB; all computations of
value for the Series Fund and the Portfolio shall be made by Rushmore Trust &
Savings Bank, FSB.
3. CLOSING AND CLOSING DATE
3.1 The Closing for the Reorganization shall be April 28, 1997 or such
other date as the parties may agree to in writing. All acts taking place at the
Closing shall be deemed to take place simultaneously as of immediately after the
close of business on the Closing Date unless otherwise agreed to by the parties.
The close of business on the Closing Date shall be as of 4:00 p.m., New York
Time. The Closing shall be held at the offices of the Performance Funds, One
East Liberty Street, Third Floor, Reno, Nevada 89501, or at such other time
and/or place as the parties may agree.
3.2 Rushmore Trust & Savings Bank, FSB, Bethesda, Maryland, as custodian
for the Portfolio (the "Custodian"), shall deliver at the Closing a certificate
of an authorized officer stating that: (i) the Portfolio's portfolio securities,
cash, and any other assets shall have been delivered in proper form to the
Acquiring Fund within two business days prior to or on the Closing Date; and
(ii) all necessary taxes, including all applicable Federal and state stock
transfer stamps, if any, shall have been paid, or provision for payment shall
have been made, in conjunction with the delivery of the Portfolio's portfolio
securities.
3.3 Rushmore Trust & Savings Bank, FSB (the "Transfer Agent"), on behalf
of the Acquiring Fund and the Portfolio, shall deliver at the Closing a
certificate of an authorized officer stating that their records contain the
names and addresses of the Portfolio Shareholders and the number and percentage
ownership of outstanding shares owned by each such shareholder immediately prior
to the Closing. The Acquiring Fund shall issue and deliver a confirmation
evidencing the Acquiring Fund Shares to be credited on the Closing Date to the
Secretary of the Portfolio or provide evidence satisfactory to the Portfolio
that such Acquiring Fund Shares have been credited to the Portfolio's account on
the books of the Acquiring Fund. At the Closing, each party shall deliver to
the other such bills of sales, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Series Fund, on its own and on behalf of the Portfolio, represents
and warrants to the Performance Funds and the Acquiring Fund as follows:
(a) The Series Fund is a business trust duly organized, validly
existing, and in good standing under the laws of the State of Delaware;
(b) The Series Fund is a registered investment company classified as
a management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission"), as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and the
registration of its shares, under the Securities Act of 1933, as amended (the
"1933 Act") are in full force and effect;
A-3
<PAGE>
(c) Neither the Series Fund nor the Portfolio is in, and the
execution, delivery and performance of this Agreement will not result in, a
material violation of the Series Fund's Declaration of Trust or By-Laws or of
any agreement, indenture, instrument, contract, lease or other undertaking to
which the Series Fund or the Portfolio is a party or by which either or both of
the Series Fund and the Portfolio are bound;
(d) Neither the Series Fund nor the Portfolio has any material
contracts or other commitments (other than this Agreement) which will be
terminated with liability to the Series Fund or the Portfolio prior to the
Closing Date;
(e) Except as otherwise disclosed in writing to and accepted by the
Performance Funds or the Acquiring Fund, no material litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or to their knowledge threatened against
the Series Fund or the Portfolio or any of their properties or assets which, if
adversely determined, would materially and adversely affect the Series Fund's or
the Portfolio's financial condition or the conduct of either the Series Fund's
or the Portfolio's business. Neither the Series Fund nor the Portfolio knows of
any facts which might form the basis for the institution of such proceedings and
neither the Series Fund nor the Portfolio is a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially and adversely affects the business or the ability of the Series
Fund or the Portfolio to consummate the transactions herein contemplated;
(f) The Statement of Assets and Liabilities of the Portfolio at
December 31, 1996 has been audited by Deloitte & Touche, independent
accountants, and is in accordance with generally accepted accounting principles
consistently applied, and such statement (a copy of which has been furnished to
the Performance Funds) fairly reflects the financial condition of the Portfolio
as of such date, and there are no known contingent liabilities of the Portfolio
as of such date not disclosed therein;
(g) Since December 31, 1996, there has not been any material adverse
change in the Portfolio's financial condition, assets, liabilities or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Portfolio of indebtedness maturing more than one year from the
date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Performance Funds. For the purposes of this subparagraph (g), a
decline in net asset value per share of the Portfolio, the discharge of
Portfolio liabilities, or the redemption of Portfolio shares by Portfolio
Shareholders shall not constitute a material adverse change;
(h) At the Closing Date, all material Federal and other tax returns
and reports of the Series Fund and the Portfolio required by law to have been
filed by such date or due after request for extension, if any, shall have been
filed and are or will be correct, and all Federal and other taxes shown as due
or required to be shown as due on said returns and reports shall have been paid
or provision shall have been made for the payment thereof, and to the best
knowledge of the Series Fund and the Portfolio, no such return is currently
under audit and no assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation, the Portfolio has met the
requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such;
(j) All issued and outstanding shares of the Portfolio are, and at
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by the Portfolio. All of the
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<PAGE>
issued and outstanding shares of the Portfolio will, at the time of closing, be
held by the persons and in the amounts set forth in the records of the Transfer
Agent, on behalf of the Portfolio as provided in paragraph 3.3. The Portfolio
does not have outstanding any options, warrants or other rights to subscribe for
or to purchase any of the Portfolio shares, nor is there outstanding any
security convertible into any of the Portfolio shares;
(k) At the Closing Date, the Portfolio will have good and marketable
title to the Portfolio's assets to be transferred to the Acquiring Fund pursuant
to paragraph 1.2 and full right, power and authority to sell, assign, transfer
and deliver such assets hereunder and, upon delivery and payment for such
assets, the Acquiring Fund will acquire good and marketable title thereto,
subject to any restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Fund;
(l) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Series Fund's Trustees and, subject to the approval of the
Portfolio Shareholders, this Agreement will constitute a valid and binding
obligation of the Series Fund and of the Portfolio, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
(m) The information to be furnished by the Series Fund and the
Portfolio for use in registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all material respects and
shall comply in all material respects with Federal securities and other laws and
regulations thereunder applicable thereto; and
(n) The proxy statement of the Series Fund (the "Proxy Statement") to
be included in the Registration Statement referred to in paragraph 5.6 (other
than information therein that relates to the Performance Funds and the Acquiring
Fund) will, on the effective date of the Registration Statement and on the
Closing Date, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading.
4.2 The Performance Funds, on its own behalf and on behalf of the
Acquiring Fund, represents and warrants to the Series Fund and the Portfolio as
follows:
(a) The Performance Funds is a business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Performance Funds is a registered investment company
classified as a management company of the open-end type, and its registration
with the Commission, as an investment company under the 1940 Act, and the
registration of its shares, under the 1933 Act, are in full force and effect;
(c) The current prospectus and statement of additional information of
the Performance Funds conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading;
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(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets;
(e) Neither the Performance Funds nor the Acquiring Fund is in, and
the execution, delivery and performance of this Agreement will not result in, a
material violation of the Performance Funds' Declaration of Trust or By-Laws or
of any agreement, indenture, instrument, contract, lease or other undertaking to
which the Performance Funds or the Acquiring Fund is a party or by which the
Performance Funds or the Acquiring Fund are bound;
(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or threatened against the Performance Funds or the Acquiring Fund or any of
their properties or assets, except as previously disclosed in writing to the
Series Fund. Neither the Performance Funds nor the Acquiring Fund knows of any
facts which might form the basis for the institution of such proceedings and
neither the Performance Funds nor the Acquiring Fund is a party to or subject to
the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects the business or the ability of the
Performance Funds or the Acquiring Fund to consummate the transactions
contemplated herein;
(g) The Statement of Assets and Liabilities of the Acquiring Fund at
December 31, 1996, audited by Deloitte & Touche, independent accountants, and a
copy of which has been furnished to the Series Fund, fairly and accurately
reflects the financial condition of the Acquiring Fund as of such date in
accordance with generally accepted accounting principles consistently applied;
(h) Since December 31, 1996, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred. For the purposes of this
subparagraph (h), a decline in net asset value per share of the Acquiring Fund
shares, the discharge of Acquiring Fund liabilities or the redemption of
Acquiring Fund shares by Acquiring Fund Shareholders, shall not constitute a
material adverse change;
(i) At the Closing Date all material Federal and other tax returns
and reports of the Performance Funds and the Acquiring Fund required by law to
have been filed by such date or due after request for extension, if any, shall
have been filed and are or will be correct, and all Federal and other taxes
shown as due or required to be shown as due on said returns and reports shall
have been paid or provision shall have been made for the payment thereof, and,
to the best knowledge of the Performance Funds and the Acquiring Fund, no such
return is currently under audit and no assessment has been asserted with respect
to such returns;
(j) For each taxable year of its operation, the Acquiring Fund has
met the requirements of Subchapter M of the Code for qualification as a
regulated investment company and has elected to be treated as such;
(k) All issued and outstanding Acquiring Fund Shares are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by the Acquiring Fund. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or to
purchase any Acquiring Fund Shares, nor is there outstanding any security
convertible into any Acquiring Fund Shares;
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(l) The execution, delivery and performance of this Agreement will
have been fully authorized prior to the Closing Date by all necessary action, if
any, on the part of the Trustees of the Performance Funds and this Agreement
will constitute a valid and binding obligation of the Acquiring Fund enforceable
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights, and to general equity principles;
(m) The Acquiring Fund Shares to be issued and delivered (transferred
on the Acquiring Fund's books) to the Portfolio for the account of the Portfolio
Shareholders, pursuant to the terms of this Agreement, will, at the Closing
Date, have been duly authorized and, when so issued and delivered, will be duly
and validly issued Acquiring Fund Shares, and will be fully paid and non-
assessable by the Acquiring Fund;
(n) The information to be furnished by the Acquiring Fund for use in
registration statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto;
(o) The Proxy Statement to be included in the Registration Statement
(only insofar as it relates to the Performance Funds and the Acquiring Fund)
will, on the effective date of the Registration Statement and on the Closing
Date, not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statement
therein, in light of the circumstances under which such statements were made,
not materially misleading; and
(p) The Performance Funds and the Acquiring Fund each agrees to use
all reasonable efforts to obtain the approvals and authorizations required by
the 1933 Act, the 1940 Act and such of the state blue sky or securities laws as
may be necessary in order to continue their operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND AND THE PORTFOLIO
The following covenants of the Acquiring Fund and the Portfolio, as
applicable, are made, respectively, by the Performance Funds and the Series
Fund:
5.1 The Acquiring Fund and the Portfolio each will operate its business in
the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions and any other distribution
that may be advisable.
5.2 The Portfolio will call a meeting of the Portfolio Shareholders to
consider and act upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.
5.3 The Portfolio covenants that the Acquiring Fund Shares to be issued
hereunder are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Reorganization
Agreement.
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5.4 The Portfolio will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the shares of the Portfolio.
5.5 Subject to the provisions of this Agreement, the Acquiring Fund and
the Portfolio will each take, or cause to be taken, all actions and do, or cause
to be done, all things reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
5.6 The Portfolio will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the "Prospectus")
which will include the Proxy Statement referred to in paragraph 4.1(n), all to
be included in a Registration Statement on Form N-14 of the Performance Funds
(the "Registration Statement"), in compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act, in
connection with the meeting of the Portfolio Shareholders to consider approval
of this Agreement and the transactions contemplated herein (the "Meeting").
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SERIES FUND AND THE PORTFOLIO
The obligations of the Series Fund and the Portfolio to consummate the
transactions provided for herein shall be subject, at their election, to the
performance by the Performance Funds and the Acquiring Fund of all the
obligations to be performed by the Performance Funds and the Acquiring Fund
hereunder on or before the Closing Date and, in addition thereto, to the
following further conditions:
6.1 All representations and warranties of the Performance Funds and the
Acquiring Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date; and
6.2 The Performance Funds shall have delivered to the Series Fund, on the
Closing Date, a certificate executed in the Performance Funds' name by the
Performance Funds' President and Treasurer, in a form reasonably satisfactory to
the Series Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Performance Funds and the Acquiring Fund
made in this Agreement are true and correct at and as of the Closing Date,
except as these representations and warranties may be affected by the
transactions contemplated by this Agreement and as to such other matters as the
Performance Funds shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PERFORMANCE FUNDS AND THE
ACQUIRING FUND
The obligations of the Performance Funds and the Acquiring Fund to complete
the transactions provided for herein shall be subject, at their election, to the
performance by the Series Fund and the Portfolio of all of the obligations to be
performed by the Series Fund and the Portfolio hereunder on or before the
Closing Date and, in addition thereto, to the following conditions:
7.1 All representations and warranties of the Series Fund and the
Portfolio contained in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as these representations and
warranties may be affected by the transactions contemplated by this Agreement,
as of the Closing Date, with the same force and effect as if made on and as of
the Closing Date;
A-8
<PAGE>
7.2 The Series Fund shall have delivered to the Performance Funds a
statement of the Portfolio's assets and liabilities, as of the Closing Date,
certified by the Treasurer of the Series Fund; and
7.3 The Series Fund shall have delivered to the Performance Fund, on the
Closing Date, a certificate executed in the Series Fund's name and the
Portfolio's name by the Series Fund's President and Treasurer, in form and
substance satisfactory to the Performance Funds and dated as of the Closing
Date, to the effect that the representations and warranties of the Series Fund
and the Portfolio, with respect to the Series Fund and the Portfolio made in
this Agreement are true are correct at and as of the Closing Date, except as
these representations and warranties may be affected by the transactions
contemplated by this Agreement and as to such other matters as the Performance
Funds shall reasonably request.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
PORTFOLIO
If any of the conditions set forth below do not exist on or before the
Closing Date, with respect to the Portfolio or the Acquiring Fund, then the
other party to this Agreement shall, at its option, not be required to
consummate the transactions contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of
beneficial interest of the Portfolio in accordance with the provisions of the
Series Fund's Declaration of Trust and By-Laws and copies of the resolutions
evidencing such approval shall have been delivered to the Performance Fund.
Notwithstanding anything herein to the contrary, neither the Performance Funds
or the Acquiring Fund nor the Series Fund or the Portfolio may waive the
conditions set forth in this paragraph 8.1;
8.2 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Performance Funds or the Series Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Performance Funds or the Acquiring Fund or the Series Fund or the Portfolio,
provided that either party hereto may, for itself, waive any of such conditions;
8.3 The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued; and
8.4 The parties shall have received the legal opinion of Samuel
Kornhauser, attorney at law, addressed to the Performance Funds and the Series
Fund, substantially to the effect that the transactions contemplated by this
Agreement shall constitute a tax-free reorganization for Federal income tax
purposes.
9. BROKERAGE FEES AND EXPENSES
9.1 The Performance Funds and the Series Fund each represents and warrants
to the other that there are no brokers or finders entitled to receive any
payments in connection with the transactions provided for herein.
A-9
<PAGE>
9.2 Navellier Management Inc. will bear the aggregate expenses and costs
of its solicitation of this Proxy Solicitation regarding the Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Performance Funds and the Series Fund agree that neither party has
made any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement, or in any document delivered pursuant hereto or in connection
herewith, shall survive the consummation of the transactions contemplated
hereunder.
11. TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
and abandoned by either party by resolution of the party's Board of Trustees and
resolution passed by the requisite number of Shareholders of that party at any
time prior to the Closing Date if circumstances should develop that make
proceeding with the Agreement inadvisable.
12. WAIVER
The Performance Funds and the Series Fund, by mutual consent of their
respective Board of Trustees, may waive any condition to their respective
obligations hereunder, except as provided herein.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the
Performance Funds and the Series Fund; provided, however, that following the
meeting of the Portfolio Shareholders called by the Portfolio pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the Acquiring Fund Shares
to be issued to the Portfolio Shareholders under this Agreement to the detriment
of such Shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Performance Funds at One
East Liberty Street, Third Floor, Reno, Nevada 89501 or to the Series Fund at
One East Liberty Street, Third Floor, Reno, Nevada 89501.
A-10
<PAGE>
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
15.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or to give any
person, firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
15.5 It is expressly agreed that the obligations of the Series Fund and the
Portfolio hereunder shall not be binding upon any of the Trustees, Shareholders,
nominees, officers, agents or employees of the Series Fund personally, but shall
bind only the corporate property of the Series Fund and the Portfolio, as
provided in the Declaration of Trust of the Series Fund. The execution and
delivery by such officers of the Series Fund shall not be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Series Fund and the
Portfolio as provided in the Declaration of Trust of the Series Fund.
15.6 It is expressly agreed that the obligations of the Performance Funds
and the Acquiring Fund hereunder shall not be binding upon any of the Trustees,
Shareholders, nominees, officers, agents or employees of the Performance Funds
personally, but shall bind only the trust property of the Performance Funds and
the Acquiring Fund, as provided in the Performance Funds' Declaration of Trust.
The execution and delivery by such officers of the Performance Funds shall not
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Performance Funds and the Acquiring Fund, as provided in the Performance
Funds' Declaration of Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President and attested by its Secretary.
Attest: THE NAVELLIER PERFORMANCE FUNDS
By: By:
------------------------------- ---------------------------------
Secretary President
Attest: THE NAVELLIER SERIES FUND
By: By:
------------------------------- ---------------------------------
Secretary President
A-11
<PAGE>
PART B
<PAGE>
PART B
THE NAVELLIER PERFORMANCE FUNDS
(The Navellier Aggresive Small Cap Portfolio)
STATEMENT OF ADDITIONAL INFORMATION
DATED MARCH 7, 1997
This Statement of Additional Information, which is not a prospectus, should
be read in conjunction with the Combined Prospectus/Proxy Statement of The
Navellier Performance Funds (the "Fund"), dated March 7, 1997 for the special
meeting (the "Meeting") of the shareholders of The Navellier Aggressive Small
Cap Equity Portfolio (the "Portfolio") of The Navellier Series Fund, a copy of
which Prospectus/Proxy Statement 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. This Statement
of Additional Information contains additional and more detailed information
about the operations and activities of The Navellier Aggressive Small Cap
Portfolio (the "Acquiring Fund") of the Fund and the operations and activities
of the Portfolio.
The combined Prospectus/Proxy Statement describes certain transactions
contemplated by the proposed merger of the Portfolio into the Acquiring Fund
(the "Reorganization") whereby the Acquiring Fund would acquire all of the
assets of the Portfolio in exchange solely for shares of beneficial interest in
the Acquiring Fund and the assumption by the Acquiring Fund of all of the
liabilities of the Portfolio.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PROSPECTUS OF THE NAVELLIER PERFORMANCE FUNDS DATED
NOVEMBER 26, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STATEMENT OF ADDITIONAL INFORMATION FOR THE NAVELLIER
PERFORMANCE FUNDS DATED NOVEMBER 26, 1996. . . . . . . . . . . . . . . . .
PROSPECTUS OF THE NAVELLIER SERIES FUND DATED APRIL 29, 1996 . . . . . . .
STATEMENT OF ADDITIONAL INFORMATION FOR THE NAVELLIER
SERIES FUND DATED APRIL 29, 1996 . . . . . . . . . . . . . . . . . . . . .
CURRENT AUDITED ANNUAL REPORT OF THE NAVELLIER
PERFORMANCE FUNDS AS OF DECEMBER 31, 1996. . . . . . . . . . . . . . . . .
CURRENT AUDITED ANNUAL REPORT OF THE NAVELLIER SERIES FUND
AS OF DECEMBER 31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . .
PRO FORMA FINANCIAL STATEMENT. . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
The Navellier Performance Funds (the "Fund") is an open-end management
investment company which offers its shares in a series of no load non-
diversified and diversified portfolios. The Fund is presently offering its
shares in three Portfolios: the Navellier Aggressive Growth Portfolio
("Aggressive Growth") - a non-diversified open-end management company portfolio
(See p. 7); the Navellier Mid Cap Growth Portfolio ("Mid Cap Growth"), a
diversified open-end management company portfolio investing in mid cap growth
securities (See p. 7); 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. 8). 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.
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.
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.
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 November 26, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
AND ANNUAL FUND OPERATING EXPENSES..... 1
SUMMARY..................................... 5
INVESTMENT OBJECTIVES AND POLICIES.......... 7
SPECIAL INVESTMENT METHODS AND RISKS........ 10
INVESTMENT RESTRICTIONS..................... 11
RISK FACTORS................................ 12
PERFORMANCE................................. 15
MANAGEMENT OF THE FUND...................... 17
EXPENSES OF THE FUND........................ 19
REPORTS AND INFORMATION..................... 21
DESCRIPTION OF SHARES....................... 22
DIVIDENDS AND DISTRIBUTIONS................. 23
TAXES....................................... 24
PURCHASE AND PRICING OF SHARES.............. 26
REDEMPTION OF SHARES........................ 29
CERTAIN SERVICES PROVIDED TO SHAREHOLDERS... 32
ADDITIONAL INFORMATION...................... 33
ASSENT TO TRUST INSTRUMENT.................. 34
</TABLE>
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES
AND ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
NAVELLIER NAVELLIER NAVELLIER
AGGRESSIVE MID CAP AGGRESSIVE
GROWTH GROWTH SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- -----------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES/1/
- - --------------------------------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............. 0% 0% 0%
Maximum Sales Load Imposed on
Reinvested Dividends........................... None None None
Redemption Fees.................................... None None None
Exchange Fee/3/.................................... 0-$5 0-$5 0-$5
ANNUAL FUND OPERATING EXPENSES
- - ------------------------------
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- - ---------------------------------------
Management Fees/4/................................. 1.25% 1.25% 1.15%
12b-1 Fees/2/...................................... 0.25% 0.25% None
Other Expenses/5/ (after waivers).................. 0.50% 0.50% 0.40%
---- ---- ----
Total Fund Operating Expenses/6/ (after waivers)... 2.00% 2.00% 1.55%
- - ----------------------- ==== ==== ====
</TABLE>
/1/ The above table of fees and other expenses is provided to assist you in
understanding the various potential costs and expenses that an investor in the
Fund may bear directly or indirectly since the Fund has an operating history of
less than one year. The Investment Adviser may, but is under no obligation to,
reimburse the Fund's expenses now or in the future. The Navellier Aggressive
Growth Portfolio has been in existence and has an operating history beginning
December 28, 1995. Neither the Navellier Mid Cap Growth Portfolio or the
Navellier Aggressive Small Cap Portfolio have any operating history.
/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 and distribution 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. Long-term shareholders in the Fund may pay more than
the economic equivalent of the maximum front-end sales charge permitted by the
National Association of Securities Dealers ("NASD"). 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 Mid Cap Growth and Aggressive Small Cap Portfolios have no
operating history, these 0.50% and 0.40% figures represent an estimate of other
expenses of the Portfolios respectively. Before the Investment Advisor waived
reimbursement of costs advanced, "Other Expenses" of the Aggressive Growth
Portfolio were 0.87% of the Portfolio's average net assets. The Investment
Advisor has agreed to waive reimbursement of all further operating expenses for
the Aggressive Growth Portfolio advanced by it in excess of a 2% operating
expense ratio for the fiscal year ended December 31, 1996.
/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. Before waiver of reimbursement of costs advanced, "Total
Fund Operating Expenses" of the Aggressive Growth Portfolio were 2.37% of
average net assets. The Investment Advisor has agreed to waive reimbursement of
all further operating expenses for the Aggressive Growth Portfolio advanced by
it in excess of a 2% operating expense ratio for the fiscal year ended December
31, 1996.
1
<PAGE>
EXAMPLES:
The following example indicates the direct and indirect expenses an investor
(maintaining an average annual investment of $1,000) could expect to incur in a
single year, and three-year period respectively:
<TABLE>
<CAPTION>
Navellier Navellier Navellier
Aggressive Mid Cap Aggressive
Growth Growth Small Cap
Portfolio Portfolio Portfolio
---------- --------- ----------
<S> <C> <C> <C>
One-Year............. $21 $21 $21
Three-Year........... $64 $64 $64
</TABLE>
The foregoing examples assume (a) that an investor maintains an average of
$1,000 invested in the Portfolio; (b) no sales load; (c) a 5% annual return; (d)
percentage amounts listed above for Annual Fund Operating Expenses remain
constant (for all periods shown above); (e) reinvestment of all dividends and
distributions; and (f) no exchanges between Portfolios.
THE 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.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth financial history for the Aggressive Growth
Portfolio. The distribution of Aggressive Growth Portfolio Shares commenced on
December 28, 1995.
There is no financial history for the Mid Cap Growth Portfolio or for the
Aggressive Small Cap Portfolio.
Deloitte & Touche LLP, the Fund's independent accountants, has audited the
information for the period December 28, 1995 - December 31, 1995. The financial
information for the period January 1, 1996 - June 30, 1996 is unaudited. The
report for the first six months of 1996 is included in the Semi-Annual Report of
the Fund. The report is available upon request and is incorporated by reference
into the Statement of Additional Information.
NAVELLIER AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------=
<TABLE>
<CAPTION>
Unaudited Audited
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/1/ 30.63% (0.10)%
</TABLE>
- - ---------------------
/1/ Total returns for periods of less than one year are not annualized.
3
<PAGE>
NAVELLIER AGGRESSIVE GROWTH PORTFOLIO (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited Audited
For the Six For the
Months Ended Period Ended
June 30, 1996 December 31, 1995*
------------- -----------------
<S> <C> <C>
Ratios to Average Net Assets:
Expenses After Reimbursement/2/,/3/ 2.00% 2.00%
Expenses Before Reimbursement/2/,/3/ 2.37% 27.25%
Net Investment Income (Loss)/2/ (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
Average Commission Rate Paid Per Share/4/ 4.2 cents ______
</TABLE>
- - ---------------------
* From Commencement of Operations December 28, 1995.
/2/ Annualized.
/3/ The Aggressive Growth Portfolio has only been in existence since December
28, 1995. During the three days it was in existence during 1995, it had
substantial start-up expenses in relation to the small amount of total initial
investments in the Portfolio during those first three days and therefore would
have had an operating expense ratio of 27.25% for that three day period if the
Investment Advisor had not agreed to waive reimbursement of operating expenses
which it had advanced during that period. The Investment Advisor was entitled
to reimbursement of costs advanced during that three day period but agreed to
waive reimbursement which resulted in an actual operating expense ratio for 1995
of 2%.
During the six month period ended June 30, 1996, the Aggressive Growth
Portfolio had operating expenses of 2% after the Investment Advisor agreed to
waive reimbursement of $49,577.00 of expenses advanced. If the Investment
Advisor had not waived reimbursement of such amounts, the operating expense
ratio during that six month period would have been 2.37%.
The Mid Cap Growth Portfolio is a newly created Portfolio which commenced
operations November 26, 1996 and therefore had no operating expenses and had no
waiver of expense reimbursement.
The Aggressive Small Cap Portfolio is a newly created Portfolio which
commenced operations November 26, 1996 and therefore had no operating expenses
and had no waiver of expense reimbursement.
/4/ The average commission paid for securities purchased during the period
01/01/96 to 06/30/96 was 4.2 cents per share. Commissions are paid for listed
trades, soft dollar trades or trades on crossing networks (i.e. Instinet).
4
<PAGE>
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 investment of the Portfolio's
assets in a single issuer. (See p. 7 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. 7 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. Alan Alpers has been an analyst
and portfolio manager for Navellier & Associates, Inc. since 1989 and has been
responsible along with Mr. Navellier for day-to-day management of over $100
million in individual accounts for Navellier & Associates, Inc. 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
5
<PAGE>
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 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 purchase 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. Some of those risks are briefly described
here. Because the Aggressive Growth Portfolio is allowed to invest up to 10% of
its assets in any single company and/or up to 25% of its total assets in any
single industry, there is potentially a greater risk of loss or fluctuation in
value of this portfolio. Some of the small cap securities which the Portfolios
may purchase may be difficult to liquidate on short notice or, on occasion, only
a portion of the shares of a company in which the Investment Advisor intends to
trade may be available to be bought or sold by a Portfolio. There can be no
assurance of profitability or of what the percentage of any of the Portfolios'
total annual operating expenses will be. Investments, if any, in securities of
foreign issuers may pose greater risks. The Investment Advisor's investment
style could result in above average portfolio turnover which could result in
higher brokerage expenses. As with any equity fund, the investments may decline,
resulting in a loss of value to the shareholder. (For more detail, see "Risk
Factors".)
6
<PAGE>
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 equity (including convertible debt) 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
25% or more of the Portfolio's assets in securities issued by companies in any
one industry. Since the Investment Adviser can invest more of the Portfolio's
assets in the stock of a single company, this Portfolio should be considered to
offer greater potential for capital appreciation as well as greater risk of loss
due to the potential increased investment of assets in a single company. This
Portfolio, because of its non-diversification, 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.
Investors in the Aggressive 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.
INVESTMENT OBJECTIVE OF THE NAVELLIER MID CAP GROWTH PORTFOLIO
The Investment Objective of the Mid Cap Growth Portfolio is to achieve
long-term growth of capital primarily through investment in mid cap companies
with appreciation
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potential. The Mid Cap Growth Portfolio invests in equity securities traded in
all United States markets including dollar denominated foreign securities traded
in 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 less than 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.
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 OBJECTIVE OF THE NAVELLIER AGGRESSIVE SMALL CAP PORTFOLIO
The Investment Objective of the Navellier Aggressive Small Cap
Portfolio is to achieve long-term growth of capital primarily through investment
in small cap companies with appreciation potential. The Aggressive Small Cap
Portfolio invests in equity 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. Investors in this Portfolio pay no sales
charge and no 12b-1 fee.
OTHER INVESTMENTS
Each of the Portfolios may, for temporary defensive purposes or to
maintain cash or cash equivalents to meet anticipated redemptions, also invest
in debt securities and money market funds if, in the opinion of the Investment
Adviser, such investment will further the cash needs or temporary defensive
needs of the Portfolio. In addition, when the Investment Adviser feels that
market or other conditions warrant it, 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. Money market investments have no
FDIC protection and deposits in Rushmore Trust & Savings accounts have only
$100,000 protection.
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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 by Standard &
Poor's Corporation (AAA, AA, A, BBB; securities which are rated BBB/Baa have
speculative characteristics). 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.
When interest rates go up, the market value of debt securities generally goes
down and long-term debt securities tend to be more volatile than short term debt
securities.
In determining the types of companies which will be suitable for investment
by the 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
Aggressive Growth Portfolio may invest; the principal criteria for investment is
that the securities provide opportunities for capital growth. The Mid Cap
Growth Portfolio will invest at least 65% of its total assets in equity
securities of companies defined as Mid Cap (companies with capitalization of
between $1 Billion and $5 Billion). The Aggressive Small Cap Portfolio will
invest at least 65% of its total assets in equity securities of companies
defined as small cap (companies with capitalization of less than $1 Billion).
The Portfolios will invest up to 100% of their 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 Portfolios, 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.
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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.
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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% The Aggressive Growth Portfolio, the Mid Cap Growth Portfolio and
the Aggressive Small Cap Portfolio will not purchase securities if the amount of
borrowing by any one of these three named Portfolios respectively exceeds 5% of
total assets of the Portfolio. 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. The Board of Trustees will determine whether these
securities are liquid and will monitor liquidity on an ongoing basis.
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.
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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 administration of each of the Portfolios and oversees the
administrative services performed by others as well as servicing customer's
needs and, along with each Portfolio's Trustees, is responsible for the
selection of such agents and their oversight. The Investment Advisor is also
responsible for the selection of securities for investment. 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
sub-advisors, 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
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<PAGE>
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 Fund. For
example, if Navellier & Associates Inc., and Navellier Fund 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 (i.e., the
possibility that the Portfolio cannot sell shares of a company and therefore the
value of those shares drops) 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 of any single
industry, thereby potentially creating greater volatility or increasing 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. All Portfolios
intend 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 Fund's
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.
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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 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 Portfolio turnover rate for the first six months of
operation for the Navellier Aggressive Growth portfolio was 33.2%. The
Investment Adviser estimates that the annual portfolio turnover rate will not
exceed 200%. The Investment Adviser estimates that the portfolio turnover rate
for the Mid Cap Growth Portfolio and for the Aggressive Small Cap Portfolio will
not exceed 300% per annum respectively. However, these are not restrictions 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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PERFORMANCE
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. Navellier Management, Inc., which is the Investment Advisor to
this Fund's Navellier Aggressive Small Cap Portfolio, is also the Investment
Advisor to the Navellier Aggressive Small Cap Equity Portfolio of the Navellier
Series Fund which charges a variable sales load. Both Portfolios have the same
investment objectives and restrictions and Navellier Management, Inc., intends
to manage both Portfolios in the same way (except that no "load" will be charged
to investors of this Fund's Aggressive Small Cap Portfolio). The Investment
Advisor's total return (average annual compounded rate of return) on investment
in the Navellier Series Fund's Aggressive Small Cap Equity Portfolio from
inception (April 1, 1994) through September 30, 1996 was 31.17% per annum. The
S&P 500 increased during this period by 22.77% per annum. The total return on
investment in the Navellier Series Fund's Aggressive Small Cap Equity Portfolio
from October 1, 1995 through September 30, 1996 was 19.37%. The S&P 500
increased during this period by 18.15%. (The total return percentages for the
Navellier Aggressive Small Cap Equity Portfolio represent the returns net of any
sales charge.)
Louis Navellier's wholly owned investment advisory firm, Navellier &
Associates, Inc., has also managed, on an individual basis, accounts for
individuals and institutions since 1987 employing a modern portfolio theory
style of stock analysis which uses substantially the same investment objectives,
policies and strategies that are employed by Navellier Management, Inc. for the
Aggressive Growth Portfolio and the Mid Cap Growth Portfolio.
The basic difference between the investment style used by Navellier &
Associates, Inc. and the style used for the Aggressive Growth Portfolio is that
the Aggressive Growth Portfolio can invest a greater percentage of assets (up to
10% of the Portfolio's assets) in the securities of a single company and that
the securities are intended to be held for at least three (3) months, whereas
investments for private accounts managed by Navellier & Associates, Inc. tend
not to have as great a percentage of assets invested in the securities of a
single company and can be held for less than three (3) months (although the
average holding period for securities is eight months).
The basic difference between the investment style used by Navellier &
Associates, Inc. and the style used by the Mid Cap Growth Portfolio is that
Navellier & Associates, Inc. is not restricted to investing in companies with
capitalization between $1 Billion and $5 Billion and is not required to hold
securities for at least three (3) months, whereas the Mid Cap Growth Portfolio
is so restricted in its investments and intends to hold all securities for at
least three (3) months. The basic investment style is a proprietary system of
computer based screens to anaylyze over 7,000 stocks in order to determine which
stocks to buy and sell (the "Navellier system"). Louis Navellier and his staff
at Navellier & Associates, Inc. have used the Navellier system since 1987 to
manage the private accounts under management.
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The following tables set forth composite performance data for Navellier &
Associates, Inc. for all private accounts under its management during the dates
indicated. The data is provided to illustrate the past performance of Navellier
& Associates, Inc. in managing the private accounts based on the Navellier
system, as measured against the S&P 500 Index.
<TABLE>
<CAPTION>
Navellier & Associates, Inc. S&P 500
Index
<S> <C> <C>
1987 . . . . . . . . . . . . . . . . . . 8.05 5.24
1988 . . . . . . . . . . . . . . . . . . 11.40 16.51
1989 . . . . . . . . . . . . . . . . . . 22.20 31.58
1990 . . . . . . . . . . . . . . . . . . 12.51 -3.15
1991 . . . . . . . . . . . . . . . . . . 66.43 30.50
1992 . . . . . . . . . . . . . . . . . . 3.12 7.61
1993 . . . . . . . . . . . . . . . . . . 16.83 10.09
1994 . . . . . . . . . . . . . . . . . . 1.53 1.31
1995 . . . . . . . . . . . . . . . . . . 43.80 37.89
1996 (Six months). . . . . . . . . . . . 14.81 10.10
<CAPTION>
Navellier & Associates, Inc. S&P 500
Index
<S> <C> <C>
One Year 34.03% 26.02%
Three Years 21.70 17.21
Five Years 19.80 15.74
Since Inception 25.55 19.69
</TABLE>
Performance information about the 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 total return of each
Portfolio.
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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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 the Custodian's
and Transfer Agent's activities and each Portfolio's compliance with its
reporting obligations. The Investment Adviser may contract (and pay for out of
its own resources including the administrative fee it receives) 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.
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For information regarding the Fund's expenses and the fees paid to the
Investment Adviser see "Expenses of the Fund".
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
(the Navellier Aggressive Growth Portfolio) 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). Louis Navellier is no
longer a control person of the Navellier Aggressive Growth Portfolio.
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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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 or expense reimbursement agreements 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 PLANS
The Aggressive Growth Portfolio Distribution Plan
-------------------------------------------------
The Aggressive Growth Portfolio 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 for expenses incurred 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. The 12b-1 fee
includes, in addition to promotional activities, amounts the Aggressive Growth
Portfolio may pay to Distributor or others as a service fee to reimburse such
parties for personal services provided to shareholders of the Aggressive Growth
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 Aggressive Growth
Portfolio. The Distributor can keep all of said 12b-1 fees it receives to the
extent it is
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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 Aggresive
Growth Portfolio'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 Aggressive Growth 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 the Aggressive Growth Portfolio.
The Mid Cap Growth Portfolio Distribution Plan
----------------------------------------------
The Mid Cap Growth Portfolio has adopted a Plan pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), whereby such Portfolio compensates Distributor
or others in the amount of 0.25% per annum of the average daily net assets of
the Mid Cap Growth Portfolio for expenses incurred and services rendered for the
promotion and distribution of the shares of such Mid Cap Growth 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 the Mid Cap Growth Portfolio Fund shares. Such payments are
made monthly. The 12b-1 fee includes, in addition to promotional activities,
amounts such Portfolio pays to Distributor or others as a service fee to
compensate 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 be
0.25% per year of the average daily net assets of the Mid Cap Growth 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 and distribution agreements entered into
between such service providers and Distributor or the Mid Cap Growth Portfolio
directly. The 12b-1 Plan for the Mid Cap Growth Portfolio also covers payments
by the Distributor and Investment Advisor 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 12b-1 Plan for the Mid Cap Growth Portfolio are included in
the maximum operating expenses which may be borne by the Mid Cap Growth
Portfolio. Payments under the 12b-1 Plan for the Mid Cap Growth Portfolio may
exceed actual expenses incurred by the Distributor, Investment Advisor or
others.
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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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.
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<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 when a shareholder's investment, as a
result of redemptions in the Fund, falls below the minimum investment required
by the Fund (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.
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<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 reduce the shareholder's percentage ownership
interest in the Fund (determined for this purpose using
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<PAGE>
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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<PAGE>
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 the transfer agent - Rushmore Trust & Savings, FSB - or through selected
securities dealers who have the responsibility to transmit orders promptly and
who may charge a processing fee.
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 be credited to an account as of the date the
Portfolio's net asset value is next determined after receipt of payment and a
properly completed account application. 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 returned. (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 (i.e., a completely filled out
application form) 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
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<PAGE>
dividends on the day following the date of purchase.
PURCHASES THROUGH SELECTED DEALERS
Shares purchased through Selected Dealers will be effected at the net asset
value next determined after the Selected Dealer receives the purchase order,
provided that the Selected Dealer transmits the order to the Transfer Agent and
the Transfer Agent accepts the order by 4:00 p.m. 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
ongoing 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.
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<PAGE>
Such wire should identify the name of the Portfolio, the account number,
the order number (if available), and your name.
TO INVEST BY AUTOMATIC MONTHLY INVESTMENT PLAN:
Shareholders may make automatic monthly purchases of 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.
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<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 (but will
be credited with dividends on the day such shares were purchased). 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.
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<PAGE>
If any account has more than one owner, the Transfer Agent may rely on the
instructions of any one owner. Each Portfolio of the Fund employs reasonable
procedures in an effort to confirm the authenticity of telephone instructions,
which may include giving some form of personal identification prior to acting on
the telephone instructions. If these procedures are not followed, the Fund and
the Transfer Agent may be responsible for any losses because of unauthorized or
fraudulent instructions. By requesting telephone redemption privileges, you
authorize the Transfer Agent to act upon any telephone instructions it believes
to be genuine, (1) to redeem shares from your account and (2) to mail or wire
transfer the redemption proceeds. You cannot redeem shares by telephone until
30 days after you have notified the Transfer Agent of any change of address.
Telephone redemption is not available for shares held in IRAs. Each
Portfolio may change, modify, or terminate its telephone redemption services at
any time upon 30 days' notice.
FURTHER REDEMPTION INFORMATION
Additional documentation (i.e., signature guarantee for redemptions in
excess of $1,000 or verification identification when redemption is by telephone)
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 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 (i.e., when the applicable exchange is closed
or trading has been restricted, etc.), the right of redemption may be suspended
or the redemption may be satisfied by distribution of portfolio securities
rather than cash if a proper election pursuant to Rule 18F-1 of the Investment
Company Act has been made by the Fund. 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.
30
<PAGE>
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 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.
31
<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 at the next determined net asset value.
32
<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.
33
<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.
34
<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) 955-4000
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 November 26, 1996
35
<PAGE>
<TABLE>
<CAPTION>
NAVELLIER NEW ACCOUNT APPLICATION For a retirement account application call 800-887-8671
PERFORMANCE =================================================================================
FUNDS
<S> <C>
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
- - ------------------------------- ====================================================================================
REGISTRATION 1. Individual
-----------------------------------------------------------------------
First Name Initial Last Name
[_] Individual
Use lines 1 & 3
2. Joint Tenant
[_] Joint Account with ---------------------------------------------------------------------
Rights of Survivor First Name Initial Last Name
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 4. Uniform Gift to Minor
Lines 4 & 5 ------------------------------------------------------------
Custodian's Name / State
OR
[_] Corporations, 5.
Partnerships, ---------------------------------------------------------------------------------
Trusts & Others Minor's Name Minor's Social Security No. Date of Birth
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
---------------------------------------------------------------------
- - ------------------------------- ====================================================================================
</TABLE>
<PAGE>
<TABLE>
- - ------------------------------
====================================================================================================
<S> <C>
INVESTMENT Portfolio Amount
--------- ------
Make check payable to: [_] Navellier Aggressive Growth Portfolio
The Navellier Performance $_____________
Funds [_] Navellier Mid Cap Growth Portfolio
$_____________
[_] Navellier Aggressive Small Cap Portfolio
$_____________
[_] 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 [_] Pay dividends and capital gains in cash. [_] Pay dividends, reinvest capital gains.
DISTRIBUTIONS
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.
- - ------------------------------
====================================================================================================
INVESTOR FINANCIAL Annual Income: $ Net Worth: $
& INVESTMENT INFO. --------------------------------- -------------------------------------
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 or
WITHDRAWAL [_] NO more. If this plan is elected, all distributions will be automatically reinvested. Minimum
PLAN withdrawal is $1,000.
Optional Amount of payment $
-------------------------
Payments made: [_] Monthly [_] Quarterly [_] Annually
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
------------------------------------------ -------------------------------------
State Zip Phone
---------------------------------- --------------- --------------------------------
If shares are being purchased Dealer Code Office Code Rep. Number
through a Service Agent, -------------------------- --------------------- ------------------
Agent should complete this Agent Name Agent Signature:
section. ------------------------------ ----------------------------------------
- - ------------------------------
====================================================================================================
</TABLE>
<PAGE>
<TABLE>
- - ------------------------------
===================================================================================================
<S> <C>
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
Confirmation of Account Trust & Savings, FSB, nor The Navellier Performance Funds shall be held liable by me/us for any
Establishment: Soon after loss, liability, cost, or expense for acting in accordance with this application, or any section
all essential items are thereof. I/We understand that all of the shareholder options described in this application are
received by the custodian, subject to the terms set forth in the Prospectus.
a confirmation statement(s)
showing account number(s), I/WE CERTIFY THAT WE HAVE FULL RIGHT, POWER, AUTHORITY, AND LEGAL CAPACITY TO PURCHASE AND REDEEM
amount received, shares SHARES AND AFFIRM THAT I/WE HAVE RECEIVED AND READ THE PROSPECTUS, AGREE TO ITS TERMS, AND HAVE NOT
purchased, and price paid RELIED ON OR MADE MY/OUR DECISION TO INVEST IN THE NAVELLIER PERFORMANCE FUNDS ON ANY WRITTEN OR
per share will be sent to ORAL INFORMATION OTHER THAN THE WRITTEN INFORMATION CONTAINED IN THE PROSPECTUS, REGISTRATION
the registered shareholder. STATEMENT AND STATEMENT OF ADDITIONAL INFORMATION. Under penalties of perjury, I/we certify (i)
that the number shown on this form is my/our correct Social Security Number or Taxpayer
Subsequent Payments: A new Identification Number and (ii) that (1) I/we are not subject to backup withholding either because
application need not be I/we have not been notified by the Internal Revenue Service that I/we are subject to backup
submitted with additional withholding as a result of a failure to report all interest or dividends, or (2) the IRS has
payments to an existing notified me/us that I am/we are no longer subject to backup withholding. If you have been notified
account if a current by the IRS that you are currently subject to backup withholding strike out phrase (2) above.
application is on file with
the custodian. Subsequent
purchases should be X X
identified by account ------------------------------------------------ ------------------------------------------------
number and account Signature as it appears on Line No. 1 Date Joint Signature (if applicable) Date
registration name.
</TABLE>
<PAGE>
PART B
THE NAVELLIER PERFORMANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 26, 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 November 26, 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
<TABLE>
<S> <C>
GENERAL INFORMATION AND HISTORY....................... 1
INVESTMENT OBJECTIVES AND POLICIES.................... 1
TRUSTEES AND OFFICERS OF THE FUND..................... 5
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES... 8
THE INVESTMENT ADVISER, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT........................ 9
BROKERAGE ALLOCATION AND OTHER PRACTICES.............. 14
CAPITAL STOCK AND OTHER SECURITIES.................... 16
PURCHASE, REDEMPTION, AND PRICING OF SHARES........... 17
TAXES................................................. 18
UNDERWRITERS.......................................... 21
CALCULATION OF PERFORMANCE DATA....................... 22
FINANCIAL STATEMENTS.................................. 23
APPENDIX.............................................. 24
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
The Fund is a business trust company (organized under the laws of the State
of Delaware on October 17, 1995) and has less than one year of operations as of
November 26, 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.
1
<PAGE>
Agencies of the United States government which issue or guarantee
obligations include, among others, export-import banks of the United States,
Farmers' Home Administration, Federal Housing Administration, Government
National Mortgage Association, Maritime Administration, Small Business
Administration, the Defense Security Assistance Agency of the Department of
Defense, and the Tennessee Valley Authority. Obligations of 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 (except the percentage
restrictions on borrowing and illiquid securities -- which percentage must be
complied with) 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.
2
<PAGE>
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.
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. As an operating policy, 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 company or 25% or more of any Portfolio's total
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.
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 port-
3
<PAGE>
folio securities or amount of net assets shall not be considered a violation of
the restrictions, except as to the 5%, 10% and 300% percentage restrictions on
borrowing specified in Restriction Number 8 above.
PORTFOLIO TURNOVER. Each Portfolio has a different expected annual
------------------
rate of portfolio turnover which is calculated by dividing the lesser of
purchases or sales of portfolio securities during the fiscal year by the monthly
average of the value of the Portfolio's securities (excluding from the
computation all securities, including options, with maturities at the time of
acquisition of one year or less). A high rate of portfolio turnover generally
involves correspondingly greater expenses to the Portfolio, including brokerage
commission expenses, dealer mark-ups, and other transaction costs on the sale of
securities, which must be borne directly by the Portfolio. Turnover rates may
vary greatly from year to year as 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 November 26, 1996, is provided with
respect to each trustee and officer of the Fund:
<TABLE>
<CAPTION>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS REGISTRANT AND ITS AFFILIATES DURING PAST FIVE YEARS
- - ------------------------ -------------------------------- ----------------------------------------------
<S> <C> <C>
Louis Navellier/1/ Trustee, President and Mr. Navellier is and has been the CEO and
One East Liberty Treasurer of The Navellier President of Navellier & Associates Inc., an
Third Floor Performance Funds. Mr. investment management company since
Reno, NV 89501 Navellier is also the CEO, 1988; CEO and President of Navellier
President, Secretary, and Management, Inc., an investment manage-
Treasurer of Navellier ment company since May 10, 1993; Trustee
Management, Inc., a of the Navellier Series Fund; CEO and
Delaware corporation which is President of Navellier International Manage-
the Investment Adviser to the ment, Inc., an investment management com-
Fund. Mr. Navellier is also pany, since May 10, 1993; CEO and
CEO, President, Secretary, President of Navellier Securities Corp. since
and Treasurer of Navellier May 10, 1993; Trustee of The Navellier
Securities Corp., the principal Series Fund; CEO and President of
underwriter of the Fund's Navellier Fund Management, Inc., an
shares. 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 Professor Langsen is Professor Emeritus of
The Langsen Group, Langsen is the President and a Financial Economics, School of Business,
Inc. of California shareholder of The Langsen California State University at Hayward
637 Silver Lake Dr. Group, Inc. of California, (1973-1992); Visiting Professor, Financial
Danville, CA 94526 which corporation provides Economics, University of California at
consulting services to Berkeley (1984-1987).
Navellier & Associates Inc.;
Barry Sander Trustee Currently the President and CEO of Ursa
695 Mistletoe Rd., #2 Major Inc., a stencil manufacturing firm and
Ashland, OR 97520 has been for the past eight years.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
Joel Rossman Trustee Currently President and CEO of Personal
Personal Stamp Stamp Exchange, Inc., a manufacturer,
Exchange, Inc. designer and distributor of rubber stamp
360 Sutton Place products. He has been President and CEO
Santa Rosa, CA of Personal Stamp Exchange for the past 10
95407 years.
Jacques Delacroix Trustee Professor of Business Administration, Leavy
University of School of Business, Santa Clara University
Santa Clara (1983-present).
Santa Clara, CA
- - ------------------------------------------------------------------------------------------------------------
</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.
<TABLE>
<CAPTION>
REMUNERATION TABLE
- - ------------------------------------------------------------------------
Name Capacity In Which Aggregate
Remuneration Received Remuneration /*/
From
Registrant and
Fund Complex
- - ------------------------------------------------------------------------
<S> <C> <C>
Louis G. Navellier Trustee, President, $ 0.00
Chief Executive Officer,
and Treasurer
- - ------------------------------------------------------------------------
Barry Sander Trustee $8,500.00/1/
- - ------------------------------------------------------------------------
Arnold Langsen Trustee $8,500.00/1/
- - ------------------------------------------------------------------------
Joel Rossman Trustee $8,500.00/1/
- - ------------------------------------------------------------------------
Jacques Delacroix Trustee $8,500.00/1/
- - ------------------------------------------------------------------------
</TABLE>
/*/ Based on projections for fiscal year 1996.
/1/ Includes $7,500 annual salary and reimbursement for estimated out-of-pocket
expenses per annum.
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). Louis Navellier now owns 1.8% of the Fund and is no longer a control
person of the Fund.
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:
Name Position
- - ---- --------
Louis G. Navellier Trustee, President, and Treasurer of The Navellier Series
Fund; Director, CEO, President, Secretary, and Treasurer of
Navellier Management, Inc.,; Director, President, CEO,
Secretary, and Treasurer of Navellier Securities Corp.; 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, One of
the Portfolio Manager's of the Aggressive Growth Portfolio,
The Mid Cap Portfolio, the Aggressive Small Cap Portfolio
and Aggressive Small Cap Equity Portfolio of the Navellier
Series Fund.
(iii) The management fee payable to the Investment Adviser under the terms
of the Investment Advisory Agreement (the "Advisory Agreement") between the
Investment Adviser and the Fund is payable monthly and is based upon 1.25% of
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.
9
<PAGE>
Expenses not expressly assumed by the Investment Adviser under the Advisory
Agreement are paid by the Fund. The Advisory Agreement lists examples of
expenses paid by the Fund for the account of the applicable Portfolio, the major
categories of which relate to taxes, fees to Trustees, legal, accounting, and
audit expenses, custodian and transfer agent expenses, certain printing and
registration costs, and non-recurring expenses, including litigation.
In the event that the annual operating expenses of any Portfolio, including
amounts payable to the Investment Adviser, paid or payable by such Portfolio for
any fiscal year, exceed the expense limitations applicable to the Portfolio
imposed by state securities laws or regulations thereunder, as such limitations
may be adjusted from time to time, the Investment Adviser shall reduce its
management fee to the extent of such excess and, if required, pursuant to any
such laws or regulations (unless otherwise waived), will reimburse the
applicable Portfolio for annual operating expenses in excess of any such expense
limitation. Presently, California has the most restrictive state expense
limitations applicable to the Fund. Generally, these limitations provide that
the Fund's aggregate annual expenses shall not normally exceed 2-1/2% of the
first $30 million of average net assets, 2% of the next $70 million of average
net assets, and 1-1/2% of the remaining average net assets of the Fund for any
fiscal year.
The Advisory Agreement provides that the Investment Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund or its investors except for losses (i) resulting from the willful
misfeasance, bad faith, or gross negligence on its part, (ii) resulting from
reckless disregard by it of its obligations and duties under the Advisory
Agreement, or (iii) a loss for which the Investment Adviser would not be
permitted to be indemnified under the Federal Securities laws.
(iv) Pursuant to an Administrative Services Agreement, the Investment
Adviser receives an annual fee of .25% of the value of the assets under
management and provides or is responsible for the provision of certain
administrative services to the Fund, including, among others, the preparation
and maintenance of certain books and records required to be maintained by the
Fund under the Investment Company Act of 1940. The Administrative Services
Agreement permits the Investment Adviser to contract out for all of its duties
thereunder; however, in the event of such contracting, the Investment Adviser
remains responsible for the performance of its obligations under the
Administrative Services Agreement. The Investment Adviser has entered into an
agreement with Rushmore Trust & 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. All of these contracted services are and will
be paid for by the Investment Advisor out of its fees or assets.
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 but does not reimburse Investment
Advisor (over the amount of
10
<PAGE>
0.25% annual Administrative Services Fee) to reimburse it for fees Investment
Advisor pays to others for administrative services. The agreement also allows
Investment Adviser to pay to its delegate part or all of such fees and
reimbursable expense payments incurred by it or its delegate.
The Investment Adviser Agreement permits the Investment Adviser to act as
investment adviser for any other person, firm, or corporation, and designates
the Investment Adviser as the owner of the name "Navellier" or any use or
derivation of the word Navellier. If the Investment Adviser shall no longer act
as investment adviser to the Fund, the right of the Fund to use the name
"Navellier" as part of its title may, solely at the Investment Adviser's option,
be withdrawn.
The Investment Adviser is advancing the Fund's organizational expenses
which were $126,000. 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 Plans
The Aggressive Growth Portfolio Distribution Plan
------------------------------------------------
The Aggressive Growth Portfolio 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 for expenses incurred 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. The 12b-1 fee
includes, in addition to promotional activities, amounts the Aggressive Growth
Portfolio may pay to Distributor or others as a service fee to reimburse such
parties for personal services provided to shareholders of the Aggressive Growth
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 Aggressive Growth
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 plans(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 Aggressive Growth Portfolio'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 Aggressive Growth 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 the Aggressive Growth Portfolio.
The Mid Cap Growth Portfolio Distribution Plan
----------------------------------------------
The Mid Cap Growth Portfolio has adopted a Plan pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), whereby such Portfolio compensates Distributor
or others in the amount of 0.25% per annum of the average daily net assets of
the Mid Cap Growth Portfolio for expenses incurred and services rendered for the
promotion and distribution of the shares of the Mid Cap Growth 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 the Mid Cap Growth Portfolio Fund shares. Such payments are made
monthly. The 12b-1 fee includes, in addition to promotional activities, amounts
such Portfolio pays to Distributor or others as a service fee to compensate 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 be 0.25% per year of the
average daily net assets of the Mid Cap Growth 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 and distribution agreements entered into between such service
providers and Distributor or the Mid Cap Growth Portfolio directly. The 12b-1
Plan for the Mid Cap Growth Portfolio also covers payments by the Distributor
and Investment Advisor 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 12b-1 Plan for the Mid Cap Growth Portfolio are included in the maximum
operating expenses which may be borne by the Mid Cap Growth Portfolio. Payments
under the 12b-1 Plan for the Mid Cap Growth Portfolio may exceed actual expenses
incurred by the Distributor investment Advisor or others.
The Distributor has accrued $33,542 in 12b-1 fees during the first 6 months
of 1996. Investors may also be charged a transaction fee if they effect
transactions in fund shares through a broker or agent.
11
<PAGE>
(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.
13
<PAGE>
The Board of Trustees of the Fund will periodically review the performance
of the Investment Adviser of its respective responsibilities in connection with
the placement of portfolio transactions on behalf of the Fund and review the
commissions paid by the Fund over representative periods of time to determine if
they are reasonable in relation to the benefits to the Fund.
The Board of Trustees will periodically review whether the recapture for
the benefit of the Fund of some portion of the brokerage commissions or similar
fees paid by the Fund on portfolio transactions is legally permissible and
advisable. At present, no recapture arrangements are in effect. The Board of
Trustees will review whether recapture opportunities are available and are
legally permissible, and, if so, will determine, in the exercise of their
business judgment, whether it would be advisable for the Fund to seek such
recapture.
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 series
affected by such matter. Rule 18f-2 further provides that a series shall be
deemed to be affected by a matter unless the interests of each series in the
matter are substantially identical or that the matter does not affect any
interest of such 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 (and if a proper election pursuant to Rule 18F-1 of the
Investment Company Act has been made by the Fund), redemption payments could be
made in securities valued at the value used in determining net asset value.
There generally will 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, i.e., obligations which have 60
days or less left to maturity, 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.
17
<PAGE>
Dividends paid out of the net capital gain of a Portfolio that are
designated as capital gain dividends by the Fund will be taxable to shareholders
as long-term capital gains regardless of how long the shareholders have held
their shares. Such dividends will not be eligible for the dividends-received
deduction. If shares of the Fund to which such capital gains dividends are
attributable are held by a shareholder for less than 31 days and there is a loss
on the sale or exchange of such shares, then the loss, to the extent of the
capital gain dividend or undistributed capital gain, is treated as a long-term
capital loss.
All distributions, whether received in shares or cash, must be reported by
each shareholder on his federal income tax return. Taxable dividends declared
in October, November, or December of any year and payable to shareholders of
record on a specified date in such a month will be deemed to have been paid by
the Fund and received by such shareholders on December 31 of the year if such
dividend is actually paid by the Fund during January of the following year.
Any dividends paid shortly after a purchase by an investor may have the
effect of reducing the per share net asset value of the investor's shares by the
per share amount of the dividends. Furthermore, such dividends, although in
effect a return of capital, are subject to federal income taxes. Therefore,
prior to purchasing shares of the Fund, the investor should carefully consider
the impact of dividends, including capital gains distributions, which are
expected to be or have been announced.
The redemption of all or part of the shares of a series held by any
shareholder will generally be treated as a sale or exchange unless the
redemption fails to substantially reduce the shareholder's percentage ownership
interest in the related Portfolio (determined for this purpose using certain
specific rules of constructive ownership). Any redemption that does not
substantially reduce a shareholder's percentage ownership interest in a
Portfolio may be treated as a dividend.
If a redemption is treated as a sale or exchange, the shareholder will
generally recognize gain or loss measured by the difference between the
redemption price and the basis 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.
18
<PAGE>
On or before January 31 of each year, the Fund will issue to each person
who was a shareholder at any time in the prior year a statement of the federal
income tax status of all distributions made to such shareholder.
Shareholders who fail to provide correct taxpayer identification numbers or
fail to certify as to no loss of exemption from backup withholding or otherwise
fail to comply with applicable requirements of the law relating to backup
withholding will be subject to backup withholding with respect to dividends at
the rate of 31% unless they are corporations or come within other exempt
categories. Any amounts paid as backup withholding will be creditable against
the federal income tax liabilities of the affected shareholders. All
shareholders should consult their own tax advisers with regard to the tax
consequences applicable to their respective investments in the Fund.
The foregoing discussion relates solely to United States federal income tax
laws as applicable to United States persons (that is, citizens and residents of
the United States and domestic corporations, partnerships, trusts, and estates).
Each shareholder who is not a United States person should consult his tax
adviser regarding the United States and non-United States tax consequences of
ownership of shares, including the possibility that distributions by the Fund
may be subject to a United States withholding tax at the rate of 30% (or at a
lower rate under an applicable United States income tax treaty).
Each Portfolio will be subject to a nondeductible excise tax for any year
equal to 4% of the "required distribution" for the year over the "distributed
amount" for the year. For this purpose, the term "required distribution" means,
with respect to any year, the sum of (a) 98% of the Portfolio's "ordinary
income" (that is, its taxable income determined by excluding its net capital
gain, if any, by disallowing the dividends-received and net operating loss
deductions, and by not taking into account any capital gain or loss), (b) 98% of
its net capital gain income (that is, the excess of capital gains over capital
losses) for the one-year period ending on December 31 of the year, and (c) the
"prior year shortfall" (that is, the excess, if any, of the "grossed-up required
distribution" for the prior year over the "distributed amount" for such year).
For this purpose, the term "grossed-up required distribution" means, with
respect to any year, the required distribution for the year (determined by
including 100% of the Portfolio's ordinary income and capital gain net income)
and the term "distributed amount" means, with respect to any year, the sum of
(a) the amount of dividends-paid or deemed paid during the year, (b) any amount
on which the Portfolio is 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 total return on the applicable Portfolio.
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.
The Navellier Aggressive Growth Portfolio had a total return of 30.63% for
the six months ending June 30, 1996. Since the Mid Cap Growth Portfolio and the
Aggressive Small Cap Portfolio are newly formed portfolios and therefore have no
history of operation, no performance figures for these portfolios are included.
Performance information for the Portfolios shall reflect only the
performance of a hypothetical investment in the Portfolios during the particular
time period on which the calculations are based. Performance information should
be considered in light of the investment objectives and policies,
characteristics and quality of the particular Portfolio, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future.
Each Portfolio may, from time to time, include in advertisements containing
total return the ranking of those performance figures relative to such figures
for groups of mutual funds categorized by Lipper Analytical Services, or other
services, as having the same investment objectives. The total return may also
be used to compare the performance of the Portfolio against certain widely
acknowledged outside standards or indices for stock and bond market performance.
The Standard & Poor's Composite Index of 500 stocks ("S&P 500") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of 500 stocks relative to the base period 1941-43. The S&P 500 is
composed almost entirely of common stocks of companies listed on the New York
Stock Exchange, although the common stocks of a few companies listed on the
American Stock Exchange or traded over-the-counter are included.
As summarized in the Prospectus under the heading "Performance and Yield," the
total return of each Portfolio may be quoted in advertisements and sales
literature.
21
<PAGE>
FINANCIAL STATEMENTS
Seed Audit and Independent Accountant's Report
June 30, 1996 Unaudited Financial Statement
22
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholder of
The Navellier Performance Funds
We have audited the statement of assets and liabilities of the Aggressive Growth
Portfolio of the Navellier Performance Funds (the Fund) as of December 28, 1995.
The financial statement is the responsibility of the Fund's management. Our
responsibility is to express an opinion on the financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities presents fairly, in all
material respects, the financial position of the Aggressive Growth Portfolio of
the Navellier Performance Funds as of December 28, 1995 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Washington, D.C.
December 29, 1995
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 28, 1995
<TABLE>
<CAPTION>
Navellier
Aggressive
Growth
Portfolio
----------
<S> <C>
ASSETS
Cash in Custodian Bank $100,000
Deferred Organizational Expenses 126,000
--------
Total Assets 226,000
--------
LIABILITIES
Accrued Organizational Expenses 126,000
--------
NET ASSETS $100,000
========
Shares Outstanding 10,000
========
Net Asset Value Per Share $10.00
========
</TABLE>
See Notes to Financial Statement.
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
NOTES TO FINANCIAL STATEMENT
DECEMBER 28, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
The Navellier Performance Funds (the "Fund") is registered with the Securities
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 and diversified portfolios. The Fund presently
consists of one portfolio, the Navellier Aggressive Growth Portfolio
("Portfolio"), a non-diversified open-end management portfolio. 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 assure that
the Fund's instruments 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 as of December 28,
1995 are being deferred and will be 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 organization 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.
<PAGE>
2. INVESTMENT ADVISORY AND DISTRIBUTOR AGREEMENTS
Investment advisory services are provided by Navellier Management, Inc.
("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.
Navellier Securities Corp. acts as the Fund's Distributor (the "Distributor")
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 Adviser.
3. TRANSFER AGENT AND CUSTODIAN
Rushmore Trust and Savings, FSB, ("Rushmore Trust"), provides transfer
agency, dividend disbursing and some 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 sale 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 such
Portfolio Fund 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.
<PAGE>
JUNE 30, 1996 FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
June 30, 1996 NAVELLIER AGGRESSIVE GROWTH PORTFOLIO
- - -----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS PORTFOLIO OF INVESTMENTS
- - ----------------------------------------------------------- -----------------------------------------------------------
Market Value Market Value
Shares (Note 1) Shares (Note 1)
- - ----------------------------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS COMMON STOCKS (CONTINUED)
ADVANCED MEDICAL DEVICES-5.27% DIVERSIFIED TECHNOLOGY-6.70%
167,300 BioSource International, Inc.* $ 1,510,936 53,000 Computer Horizons Corp.* $ 2,093,500
60,000 Hologic, Inc.* 2,655,000 65,500 Galileo Electro Optics Corp.* 1,572,000
----------- 15,500 Quintiles Transactional Corp.* 1,019,125
4,165,936 18,000 Zoitek Companies, Inc.* 616,500
----------- -----------
ADVERTISING AND MARKETING-1.48% 5,301,125
45,000 Ha-Lo Industries, Inc.* 1,170,000 -----------
----------- EDUCATION-5.28%
AEROSPACE AND DEFENSE-1.49% 30,000 Apollo Group, Inc.* 840,000
40,000 Oregon Metallurgical Corp.* 1,180,000 84,000 Childrens Comprehensive Services* 1,806,000
----------- 70,000 National Education Corp.* 997,500
AGRICULTURE-1.44% 30,000 Youth Services International, Inc.* 532,500
27,000 Delta and Pine Land Co. 1,140,750 -----------
----------- 4,176,000
AIRLINES-0.31% -----------
8,950 Comair Holdings, Inc. 241,650 ELECTRONICS-5.69%
----------- 125,000 LaBarge, Inc.* 1,148,438
APPAREL/FABRIC-2.70% 188,000 WPI Group, Inc.* 1,833,000
61,500 Ross Stores, Inc. 2,137,125 84,000 Zytec* 1,522,500
----------- -----------
BIOTECHNOLOGY-2.99% 4,503,938
136,000 Prime Medical Service, Inc.* 2,363,000 -----------
----------- ENGINEERING/DESIGN-0.21
CASINOS/GAMING-1.43% 15,000 IMP, Inc.* 168,750
75,000 Casino Data Systems* 1,134,375 -----------
----------- ENVIRONMENTAL CONTROL/WASTE
CHEMICALS-0.10% MANAGEMENT-1.65%
5,000 Ambar, Inc.* 79,750 28,000 USA Waste Services, Inc.* 839,500
----------- 22,500 Watsco, Inc. 472,500
COMPUTER HARDWARE-3.62% -----------
30,000 Iomega Corp.* 870,000 1,302,000
67,000 Meridian Data, Inc.* 599,063 -----------
91,500 Odetics, Inc.* 1,395,375 FINANCIAL SERVICES-7.82
----------- 21,000 Money Store, Inc. 464,625
2,864,438 150,000 PMT Services, Inc.* 4,293,750
----------- 10,000 Student Loan Marketing
COMPUTER SOFTWARE-3.76% Association 740,000
22,500 Brooktrout Technology, Inc.* 630,000 30,000 Total System Services, Inc. 686,250
22,400 HBO and Co. 1,517,600 -----------
10,000 Security Dynamics* 822,500 6,184,625
----------- -----------
2,970,100 HEALTHCARE-3.80%
----------- 42,450 ABR Information Services, Inc.* 2,133,112
COSMETICS/PERSONAL CARE-2.96% 10,000 Access Health, Inc.* 472,500
91,900 Natures Sunshine Products, Inc. 2,343,450 -----------
----------- 2,605,612
DATA COMMUNICATIONS/NETWORKING-2.77% -----------
10,300 Ascend Communications, Inc.* 579,375 HOME CONSTRUCTION-0.82%
40,000 Proxim, Inc.* 1,610,000 28,000 Cavalier Homes, Inc. 647,500
----------- -----------
2,189,375 HOME FURNISHINGS-0.77%
----------- 18,000 Bush Industries, Inc. 612,000
-----------
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
June 30, 1996 NAVELLIER AGGRESSIVE GROWTH PORTFOLIO
- - ----------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
- - ---------------------------------------------------------- ----------------------------------------------------------
Market Value Market Value
Shares (Note 1) Shares (Note 1)
- - ---------------------------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (continued) COMMON STOCKS (continued)
Industrial and Commercial Services - 0.70% TEMPORARY STAFFING -- 1.84%
15,000 Memtec Ltd. $ 551,250 53,500 AccuStaff, Inc. $ 1,457,875
------------ ------------
LODGING -- 0.62% TOYS -- 2.14%
7,000 HFS, Inc.* 490,000 60,000 Galoob Lewis Toys, Inc.* 1,605,000
------------ ------------
MEDICAL SUPPLIES -- 1.31% TOTAL COMMON STOCKS -- 92.18%
81,00 Orthologic Corp.* 1,032,750 (COST $70,909,920) 72,904,549
------------ ------------
OFFICE EQUIPMENT/SUPPLIES -- 3.24% MUTUAL FUNDS -- 7.82%
61,000 U.S. Office Products Co.* 2,562,000 6,188,662 Fund for Government Investors
------------ (Cost $6,188,662) 6,188,662
OIL AND GAS EXPLORATION -- 0.77% ------------
60,000 Marine Drilling Companies, Inc.* 607,500 TOTAL INVESTMENTS -- 100.00%
------------ (COST $77,098,582) $ 79,093,211
PHARMACCUTICALS -- 5.67% ============
50,000 Capstone Pharmacy Services, Inc.* 643,750
85,800 Jones Medical Industries, Inc. 2,852,850
50,000 PCT Services, Inc.* 987,500
------------
4,484,100
------------
PRINTING/PAPER PRODUCTS -- 0.71%
21,800 Day Runner, Inc.* 564,075
------------
PRISON MANAGEMENT -- 1.77%
20,000 Corrections Corp. of America* 1,400,000
------------
RETAILERS -- 0.99%
26,000 Orchard Supply Hardware
Stores Corp.* 783,250
------------
SAVINGS AND LOANS -- 1.13%
29,500 Imperial Credit Industries, Inc.* 892,375
------------
SEMICONDUCTORS AND RELATED -- 1.52%
29,500 Vitesse Semiconductor Corp. 1,200,000
------------
TELECOMMUNICATIONS -- 6.16%
179,800 ATC Communications, Inc.* 2,359,875
20,000 Aspect Telecommunications Corp.* 990,000
24,500 Pairgain Technologies, Inc.* 1,519,000
------------
4,868,875
------------
TELEPHONE SYSTEMS -- 1.05%
16,000 Cincinnati Bell, Inc. 834,000
------------
</TABLE>
* Non-income producing.
See Notes to Financial Statements.
<PAGE>
JUNE 30, 1996 FINANCIAL STATEMENTS
June 30, 1996 Navellier 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 Navellier 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
</TABLE>
<PAGE>
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
==========
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
Navellier 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
------------ -----------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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.
Navellier 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.
<PAGE>
- --------------------------------------------------------------------------------
*From Commencement of Operations December 28, 1995.
See Notes to Financial Statements.
June 30, 1996 Navellier Aggressive Growth Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
The Navellier 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 Navellier 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 Navellier 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.
<PAGE>
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 Navellier Aggressive Growth Portfolio
- --------------------------------------------------------------------------------
Navellier 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.
<PAGE>
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.
23
<PAGE>
THE NAVELLIER SERIES FUND
The Navellier Series Fund (the "Fund") is an open-end, diversified
management investment company which intends to offer its shares in a series of
funds. The Fund is presently offering its shares in the first Portfolio of the
series which is the Navellier Aggressive Small Cap Equity Portfolio.
Additional portfolios may be added to the Fund in the future. The Navellier
Aggressive Small Cap Equity Portfolio invests primarily in securities traded in
the United States' over-the-counter securities markets of domestic small cap
issuers and of foreign small cap issuers.
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. 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 Series Fund
c/o Navellier Securities Corp., Call Box 10012, Incline Village, Nevada 89450-
1012; Telephone: 1-800-887-8671. The Statement of Additional Information bears
the same date as this Prospectus and is incorporated by reference into this
Prospectus in its entirety.
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.
Call Box 10012
Incline Village, NV 89450-1012
1-800-887-8671
The date of this Prospectus is April 29, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
AND ANNUAL FUND OPERATING EXPENSES.......... 1
FUND HIGHLIGHTS............................. 4
THE FUND.................................... 7
INVESTMENT OBJECTIVES AND POLICIES.......... 8
SPECIAL INVESTMENT METHODS AND RISKS........ 10
INVESTMENT RESTRICTIONS..................... 11
RISK FACTORS................................ 12
PERFORMANCE AND YIELD....................... 14
MANAGEMENT OF THE FUND...................... 14
EXPENSES OF THE FUND........................ 16
REPORTS AND INFORMATION..................... 17
DESCRIPTION OF SHARES....................... 17
DIVIDENDS AND DISTRIBUTIONS................. 19
TAXES....................................... 20
PURCHASE AND PRICING OF SHARES.............. 21
REDEMPTION OF SHARES........................ 27
CERTAIN SERVICES PROVIDED TO SHAREHOLDERS... 29
ADDITIONAL INFORMATION...................... 29
ASSENT TO TRUST INSTRUMENT.................. 30
TERMS APPLICABLE TO LETTER OF INTENT........ 33
</TABLE>
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES
AND ANNUAL FUND OPERATING EXPENSES
NAVELLIER AGGRESSIVE
SMALL CAP EQUITY
PORTFOLIO
---------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
- - --------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)/2/ ............. 3%
Maximum Sales Load Imposed on Reinvested
Dividends .......................................... None
Redemption Fees ..................................... None
Exchange Fee/3/ ..................................... 0-$5
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- - ----------------------------------------------------------------------
Management Fees/4/ .................................. 1.25%
Other Expenses/5/ ................................... 0.50%
Total Fund Operating Expenses ....................... 1.75%/1/
=====
</TABLE>
/1/ The above table of fees and other expenses is provided to assist you
in understanding the various potential costs and expenses that an investor in
the Fund may bear directly or indirectly. The total Fund operating expenses are
net of expenses for which the Advisor has waived reimbursement. If the Advisor
had sought full reimbursement of all expenses paid by it, the Fund's total
operating expenses would have been 2.10%.
/2/ The sales load is reduced to 2-1/2% for purchases between $25,000 and
$49,999.99, 2% for purchases between $50,000 and $74,999.99, 1-1/2% for
purchases between $75,000 and $99,999.99, and 1% for purchases of $100,000 or
more. There is no sales load for purchases of $1 million or more, or for
Trustees of the Fund, the Investment Adviser, the Distributor, the Transfer
Agent, the Custodian, retirement or deferred compensation plans and trusts used
to fund such plans, or the employees of any of the above. There is no sales load
for brokers or their employees directly involved in selling the Fund's shares
and whose firm has executed a selling agreement with the Distributor. There is
no sales load on accounts as to which an investment advisor, financial planner,
agent, bank or broker-dealer that charges an account management or transaction
fee ("wrap accounts") receives a transaction fee as part of a "wrap fee"
account, provided the investment advisor, financial planner, agent, bank or
broker-dealer has an agreement with the Distributor; there is no sales load for
the spouse or child of any of the above. (See also Reduced Sales Charges, pp.
26-27.)
/3/ Shares of the Navellier Aggressive Small Cap Equity Portfolio may be
exchanged for shares of any other Fund Portfolio at net asset value without a
sales charge (up to five (5) exchanges per account). There is a charge of $5 per
exchange thereafter. There are presently no other Fund Portfolios.
1
<PAGE>
PER SHARE INCOME AND CAPITAL CHANGES
The following financial highlights, which has been audited by Deloitte &
Touche LLP, the Fund's independent auditors, shows the per share income and
capital changes for an outstanding share of the NAVELLIER AGGRESSIVE SMALL CAP
EQUITY PORTFOLIO for the fiscal year ended December 31, 1995. The information on
the table should be read in conjunction with the financial statement and related
notes which are included in the Fund's April 29, 1996 Statement of Additional
Information and in the annual report to shareholders dated December 31, 1995
which may be obtained without charge by contacting the Fund's distributor at the
number shown on the cover of this Prospectus:
- - -------------
/4/ Represents the advisory fee paid to Navellier Management, Inc. (See
"Expenses of the Fund--Compensation of the Investment Adviser").
/5/ This 0. 50% represents all other expenses of the Fund during the
Fund's 1995 fiscal year, set forth in the Fund's December 31, 1995 audited
financial statement after reduction of expenses by the Advisor's waiver of
-----
reimbursement of $187,305 of expenses paid by the Advisor for the fiscal year
1995. Without this waiver, these expenses would have been 2.10%.
The Adviser had an Agreement with the Fund in which the Adviser could
"temporarily" waive reimbursement of expenses advanced on behalf of the Fund.
That Agreement has been changed. The Adviser will no longer "temporarily" waive
expenses. It will either currently accrue the expenses or will currently notify
the Fund as to any waiver of expenses.
EXAMPLE:
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, three-year, five year and ten year period, respectively:
Navellier Aggressive Small Cap Equity Portfolio
-----------------------------------------------
One-Year ....... $46
Three-Year ..... $81
Five-Year ...... $129
Ten-Year ....... $238
The foregoing example assumes (a) that an investor maintains an average of
$1,000 invested in the Portfolio; (b) payment of the maximum 3% sales load, (c)
a 5% annual return; (d) percentage amounts listed above for Annual Fund
Operating Expenses remain constant (for all periods shown above); (e)
reinvestment of all dividends and distributions; and (f) no exchanges between
Portfolios.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR LESS THAN
THOSE SHOWN ABOVE.
2
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE
ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994/*/
--------------------- -----------------------
<S> <C> <C>
Per Share Operating Performance: $10.98 $10.00
------ ------
Net Asset Value -- Beginning of Period........................... (0.16) (0.08)
Net Investment Loss.............................................. 4.97 1.06
------ ------
Net Realized and Unrealized Gains on Securities.................. 4.81 0.98
Net Increase in Net Asset Value Resulting from Operations........
Distributions to Shareholders: -- --
From Net Investment Income..................................... (0.38) --
------ ------
From Net Realized Capital Gains................................ 4.43 0.98
------ ------
Net Increase in Net Asset Value.................................. $15.41 $10.98
Net Asset Value -- End of Period................................. ====== ======
Total Investment Return/1/......................................... 43.80% 9.80%
Ratios to Average Net Assets:
Expenses After Reimbursement (Note 2)/2/......................... 1.75% 1.68%
Expenses Before Reimbursement (Note 2)/2/........................ 2.10% 4.52%
Net Investment Loss.............................................. (1.15%) (0.81)%
Supplementary Data:
Portfolio Turnover Rate.......................................... 169.6% 139.9%
Number of Shares Outstanding at End of Period (000s omitted)..... 6,831 1,660
</TABLE>
___________________
/1/ Total returns do not include the maximum sales load. Total returns for
periods of less than one year are not annualized.
/2/ 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. During the year ended December 31, 1995,
the Adviser paid operating expenses of the Fund totaling $320,254. Under the
operating expense agreement, the Adviser requested, and the Fund reimbursed,
$132,949 of such expenses. The Adviser voluntarily agreed not to seek future
reimbursement of $187,305 of such 1995 expenses.
In addition, at December 31, 1995, the Adviser voluntarily agreed not to
seek future reimbursement of $81,221 of expenses for which reimbursement had
been temporarily waived at December 31, 1994. Accordingly, at December 31, 1995,
there were no prior expenses which could be reimbursed in the future under the
agreement.
- - ------------------------------------------------------------------------------
/*/ From Commencement of Operations January 3, 1994./
See Notes to Financial Statements.
3
<PAGE>
FUND HIGHLIGHTS
THE FUND
The Navellier Series Fund (the "Fund") is an open-end diversified management
investment company organized as a business trust under the laws of the State of
Delaware on May 28, 1993. The Fund is currently offering its shares in one
series (a "Portfolio") consisting of an aggressive small cap equity portfolio
(the "Navellier Aggressive Small Cap Equity Portfolio"). The Navellier
Aggressive Small Cap Equity Portfolio will be closed to new investors after
April 15, 1996. Existing shareholders and mutual fund wrap fee advisers,
financial advisers and planners will be able to continue to purchase additional
shares after April 15, 1996.
INVESTMENT OBJECTIVES
The Navellier Aggressive Small Cap Equity Portfolio invests in securities
traded in the United States securities markets of domestic issuers and of
foreign issuers. The sole objective of the Navellier Aggressive Small Cap
Equity Portfolio will be to seek to achieve long-term growth of capital
primarily through investments in stocks of small cap companies (companies with
market capitalization of less than one billion dollars) 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.
INVESTMENT ADVISER
Navellier Management, Inc. (the "Investment Adviser") administers the Fund's
assets and determines the pool of issuers whose securities will be selected as
investments for the Fund (the "Qualified Issuers"). Louis Navellier and Alan
Alpers are the persons primarily responsible for the day to day investment
activities of the Fund. Both have been associated with Navellier & Associates,
Inc. during the past five years. The Investment Adviser receives an annual fee,
equal to 1.25% of the value of assets under management for the Navellier
Aggressive Small Cap Equity Portfolio, and any other portfolio in the series of
Fund portfolios, payable monthly, based upon a percentage of that Portfolio's
average daily net assets. The advisory fees paid by the Navellier Aggressive
Small Cap Equity Portfolio to the Investment Adviser are higher than those paid
by most other investment companies. The Fund is paying this higher fee based on
its desire to retain Navellier Management, Inc.'s specific application of modern
portfolio theory and its method of analyzing small cap stocks and its investment
advisory services. The Fund has retained Navellier Management, Inc., to provide
the Fund with a continuous investment program for the Fund's Portfolio,
including 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 and purchased, retained, or
sold by the Fund. Navellier Management, Inc., also receives an annual
administrative fee of .25% of the value of assets under management.
4
<PAGE>
DISTRIBUTION OF SHARES
Navellier Securities Corp. (the "Distributor") acts as the sole underwriter
of the Fund's shares. It is a wholly owned corporation owned by Louis Navellier
who also owns Navellier Management, Inc., the Fund's Investment Adviser. (See
"Purchase and Pricing of Shares"). The Distributor may sell shares of the Fund
directly to investors or through a network of broker-dealers selected by
Distributor. The Distributor will compensate these selected dealers by paying
them directly or allowing them to receive directly from the investor some or all
of the sales charge paid by the Fund investors.
HOW TO INVEST
Shares of the Fund are continuously offered for sale by the Distributor and
are also available for purchase from the Distributor through selected broker-
dealers. The daily public offering price for shares is the net asset value per
share next computed after receipt of your order plus sales charge. As described
in the foregoing table (see page ___), the Portfolio has a sliding sales charge
beginning at 3% on initial investments of between $2,000 and $24,999.99. The
sales charge is incrementally reduced to 1% on purchases of $100,000 or more.
No sales charge is charged on investments of $1 million or more, or to Trustees
of the Fund, the Investment Adviser, the Distributor, the Transfer Agent, the
Custodian, a retirement plan or deferred compensation plan and trust to fund
such plan, or their employees; or to brokers directly involved in selling the
Fund's shares and whose firm has executed a selling agreement with the
Distributor, or their employees; or on purchases through accounts as to which an
investment advisor, financial planner, agent, banker or broker-dealer charges an
account management or transaction fee as part of a "wrap fee", provided the
investment advisor, financial planner, agent, bank or broker-dealer has an
agreement with Distributor; or the spouse or child of any of the above. (See
also Reduced Sales Charges, pp 26-27.) The sales charge is paid at the time of
the investor's purchase. 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. Investments in the Fund can be made directly
with the Distributor or through selected securities dealers (who have the
responsibility to transmit orders promptly and may charge a fee for the purchase
or redemption of Fund shares), or through the transfer agent Rushmore Trust and
Savings, FSB. (See "Purchase and Pricing of Shares"). Investors can also
invest in the Fund by automatically investing monthly in any Fund Portfolio, by
completing an application authorizing the transfer agent to transfer funds
automatically every month from the investor's checking account to the Fund for
purchase of Fund shares for the investor's account.
REDEMPTION OF SHARES
On any day the Fund and the stock exchanges are open for business the shares
will be redeemed at the next determined net asset value per share after receipt
of the redemption order. Redemption orders cannot be accepted after 4:00 p.m.
E.S.T.
If the investor requests payment of redemptions to a third party or to a
location other than his/her address of record listed on the account application,
the request must be in
5
<PAGE>
writing and the investor's signature must be guaranteed by a commercial bank or
stock exchange member firm.
The applicable Portfolio will redeem its shares in cash at a redemption price
equal to their net asset value as next computed following the receipt of a
request for redemption. Payment for the redemption price will be made within
seven days after the applicable Portfolio's receipt of the request for
redemption. For investments that have been made by check, payment on withdrawal
requests may be delayed only until such time as it is reasonably necessary to
assure that good payment has been collected for the purchase of such shares
which may be up to fifteen (15) days from purchase date. This delay is
necessary to assure the Fund that investments made by check are good funds. The
proceeds of the redemption will be forwarded promptly upon confirmation of
receipt of good funds.
The right of redemption may also be suspended, or the date of payment
postponed, (a) for any period during which the New York Stock Exchange is closed
(other than customary weekend or holiday closings); or (b) when trading on the
Exchange is restricted, or an emergency exists, as determined by the Securities
and Exchange Commission, so that disposal of the applicable Portfolio's
investments for determination of net asset value is not reasonably practical; or
(c) for such other periods as the Commission, by order, may permit for
protection of the Fund's investors.
RISK FACTORS
Investment in the Fund involves special considerations because neither the
Fund nor the Investment Adviser has a history of operations. The principals,
officers, legal counsel, and directors of the Investment Adviser (and such of
those persons who are also controlling persons of and legal counsel to the Fund)
have no prior experience in the registration or operation of an investment
company. However, Louis Navellier, the principal person involved in making
investment decisions, has been engaged in the business of rendering advisory
services to significant pools of capital since 1987. The number of securities
in which the Investment Adviser will have the discretion to invest on behalf of
the Portfolio will be limited due to the selection process employed by the
Investment Adviser with respect to those issuers deemed "Qualified Issuers."
While the Investment Adviser, who uses a modern portfolio theory and places
primary emphasis on selecting small cap stocks (companies with market
capitalization of less than one billion dollars) traded primarily on the over-
the-counter market, believes that those restrictions should not, in and of
themselves, cause the investment results of the Fund to differ from the results
obtainable by an investment company without such a restriction, there is
certainly the possibility that such restriction could adversely affect that
Portfolio's performance.
The owner of the Investment Adviser is also the owner of another investment
advisory firm, which presently manages over $850 million in investor funds and
is the owner of another investment advisory firm, Navellier International
Management, Inc., both of which employ the same basic modern portfolio theories
and select many of the same over-the-counter small cap stocks and other
securities which the Investment Adviser intends to employ and select in managing
the various Portfolios in the Fund. Because many of the over-the-
6
<PAGE>
counter and other securities which Investment Adviser intends to or may invest
in have a smaller number of shares or shareholders available to trade than more
conventional companies, lack of sellers or purchasers available at any given
time may result in the Fund not being able to purchase or sell all shares
Investment Adviser desires to trade at a given time or period of time, thereby
creating a potential liquidity problem which could adversely affect the
performance of the Fund. Since the Investment Adviser will be trading in some
or all of the same securities at the same time that Navellier & Associates
Incorporated and Navellier International Management, Inc., and other Navellier
controlled investment entities are trading, the potential liquidity problems
could be exacerbated. As the assets of the Fund increase the potential for
shortages of buyers or sellers increases, which could adversely affect the
Fund's performance. Each investor is being made aware of these potential risks
and should not invest in the Fund if he, she, or it is not willing to accept
these potentially adverse risks. (See also "Risk Factors" and "Management of
the Fund").
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.
While to some extent the risks to the Fund of investing in foreign securities
may be limited, since the Portfolio may not invest more than 25% of its total
net asset value in such securities and the Fund may only invest in foreign
securities which are traded in the United States securities markets, the risks
nonetheless exist.
THE FUND
The Navellier Series Fund is an open-end diversified management investment
company organized as a business trust under the laws of the State of Delaware on
May 28, 1993. The Fund is presently comprised of one segregated portfolio of
assets and is currently offering its shares in one series as a separate
Portfolio. This Portfolio is designated as the: Navellier Aggressive Small Cap
Equity Portfolio.
7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
THE INVESTMENT OBJECTIVE OF THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
IS TO ACHIEVE LONG-TERM GROWTH OF CAPITAL PRIMARILY THROUGH INVESTMENTS IN
STOCKS OF COMPANIES WITH APPRECIATION POTENTIAL.
The Navellier Aggressive Small Cap Equity Portfolio will close to new
investors on April 15, 1996. The Portfolio's current shareholders and certain
others may continue to add to an existing account or open new accounts. (See
"Purchase of Shares".) The Portfolio may resume sales to new investors at some
future date, but it has no present intention to do so.
The Navellier Aggressive Small Cap Equity Portfolio will invest
primarily in the common stock of small cap companies (companies with market
capitalization of less than one billion dollars) believed by the Investment
Adviser to have appreciation potential. This portfolio should not be considered
suitable for investors seeking current income. Since no one class or type of
security necessarily affords the greatest promise for capital appreciation at
all times, the Navellier Aggressive Small Cap Equity Portfolio may invest up to
35% of its assets in non-small cap securities of any issuer believed by the
Investment Adviser to offer potential for capital appreciation over both the
intermediate and long term. Under normal circumstances, the Navellier
Aggressive Small Cap Equity Portfolio will invest at least 65% of its total
assets in small cap equities. However, that projected minimum percentage could
be lowered during adverse market conditions. Equity securities include, but are
not limited to, common and preferred stock, and convertible preferred stocks
that are convertible into common stock.
The Navellier Aggressive Small Cap Equity Portfolio may also invest in
debt securities and money market instruments if, in the opinion of the
Investment Adviser, such investment will further the investment objective of the
Navellier Aggressive Small Cap Equity Portfolio. In addition, for temporary
defensive purposes, the Navellier Aggressive Small Cap Equity Portfolio may
retain cash or invest all or any portion of its assets in cash equivalents,
including money market funds. The Navellier Aggressive Small Cap Equity
Portfolio's holdings in such non-equity non-small cap securities will not exceed
35% of the total assets of the Portfolio. If the Fund's assets or a portion
thereof are retained in cash or money market funds, such cash will, in all
probability, be deposited in interest-bearing or money market accounts with
Rushmore Trust and Savings, FSB, which is also the Fund's Transfer Agent and
Custodian. Such cash will only be deposited with the Transfer Agent if its
interest rates, terms, and security are equal to or better than could be
received by depositing such cash with another savings institution.
It is anticipated that all of this Portfolio's investments in
corporate debt securities (other than commercial paper) and preferred stocks
will be represented by debt securities and preferred stocks which have, at the
time of purchase, a rating within the four highest grades as determined by
Moody's Investors Service, Inc. (Aaa, Aa, A, Baa) or the three highest grades
determined by Standard & Poor's Corporation (AAA, AA, A). When investing in
8
<PAGE>
debt securities, said debt securities will have a rating within at least one of
the four highest grades determined by Moody's Investors Service or the three
highest grades determined by Standard & Poor's Corporation. 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 Navellier Aggressive Small Cap Equity Portfolio, the
Investment Adviser will take into account various factors and base its security
selection on model portfolio theory concepts.
The Fund invests primarily in undervalued common stocks believed to
have long-term growth potential. Stocks are selected on the basis of an
evaluation of factors such as earnings growth, expanding profit margins, market
dominance and/or factors that create the potential for market dominance, sales
growth, and other factors that indicate a company's potential for growth.
There are no limitations on the type, operating history, or dividend
paying record of small capitalization companies or industries in which the Fund
may invest, the principal criteria for investment being that the securities
provide opportunities for capital growth. The Fund will invest up to 100% of
its capital in equity securities selected for their capital growth potential.
The Investment Adviser will typically (but not always) purchase common
stocks of issuers which have records of profitability and strong earnings
momentum. Such companies are likely to 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. Investment Adviser may,
however, purchase common stocks of well known, highly researched, large
companies if it believes such common stocks offer opportunity for long-term
capital growth. Investments in such large company stocks will not exceed 35% of
the Navellier Aggressive Small Cap Equity Portfolio's total assets.
Diversification is a consideration in selecting investments for the
Navellier Aggressive Small Cap Equity Portfolio which is a diversified Navellier
Series Fund Portfolio. However, greater emphasis will be placed upon selection
of securities believed to have good potential for appreciation rather than upon
wide diversification.
Statistics may be used to specify a Portfolio's volatility risk.
Measures of volatility or risk are generally used to compare a Portfolio's net
asset value or performance relative to a market index. One measure of
volatility is beta. Beta is the volatility of a Portfolio relative to the total
market as represented by the selected market index. A beta of more than 1.00
indicates a volatility greater than the market, and a beta of less than 1.00
indicates volatility less than the market. Sometimes beta may be calculated
relative to a different market index. Another measure of volatility or risk is
standard deviation. Standard deviation is used to measure variability of net
asset value or total return around an average, over a specified
9
<PAGE>
period of time. The premise is that greater volatility connotes greater risk
undertaken in achieving performance.
One measure of performance that adjusts for risk is alpha. Alpha is a
measure of the difference between a Portfolio's performance and a market index
portfolio with the same beta.
The owner of the Investment Adviser is also the owner of another
investment advisory firm, which presently manages over $850 million in investor
funds and employs the same basic modern portfolio theories and selects many of
the same over-the-counter small capitalization stocks and other securities which
the Investment Adviser intends to employ and select in managing the various
Portfolios in 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 or shareholders available to trade than more conventional
companies, lack of sellers or purchasers available at any given time may result
in the Fund not being able to purchase or sell all shares Investment Adviser
desires to trade at a given time or period of time, thereby creating a potential
liquidity problem which could adversely affect the performance of the Fund.
Each investor is being made aware of these potential risks and should not invest
in the Fund if he, she, or it is not willing to accept these potentially adverse
risks, and by investing acknowledges that he, she, or it is aware of the risk
and has invested with knowledge of the risk. (See Also "Risk Factors" and
"Management of the Fund".)
SPECIAL INVESTMENT METHODS AND RISKS
"SHORT SALES AGAINST THE BOX"
The Portfolio 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.
The Portfolio may make a short sale against the box, when it believes
that the price of a security may decline, causing a decline in the value of a
security owned by the Fund (or a security convertible into or exchangeable for
such security), or when the Fund desires to sell the security it owns at a
current attractive price, but also wishes to defer recognition of
10
<PAGE>
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 Fund'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 Fund owns. There will be certain additional
transaction costs associated with short sales against the box, but the Fund will
endeavor to offset theses costs with income from the investment of the cash
proceeds of short sales.
Short sales of securities, other than "short sales against the box,"
will not be permitted by the Portfolio.
INVESTMENT RESTRICTIONS
The Fund may not invest 25% or more of the total assets of the
Portfolio in any one industry. The Fund may not make investments in real estate
or commodities or commodity contracts, including futures contracts, but may
purchase securities of issuers which deal in real estate or commodities. The
Fund is also prohibited from investing in or selling puts, calls, straddles (or
any combination thereof). The Fund may borrow money only from banks for the
Portfolio only for temporary or emergency (not leveraging) purposes (provided
that, after each borrowing, there is an asset coverage of at least 300%). In
order to secure any such borrowing, the Fund 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 incorporated or organized, or any governmental entity or
political subdivision thereof, located outside of the United States is limited
to 25% of the net asset value of the Portfolio, provided that no such foreign
securities may be purchased unless they are traded in United States securities
markets.
The Fund may not purchase for any Portfolio "restricted securities"
(as defined in Rule 144(a)(3) of the Securities Act of 1933) if, as a result of
such purchase, more than 10% of the net assets (taken at market value) of such
Portfolio would be invested in such securities nor will the Fund invest in
illiquid or unseasoned securities if as a result of such purchase more than 5%
of the net assets of such portfolio would be invested in either illiquid or
unseasoned securities.
In addition to the investment restrictions described above, the
investment program of the Portfolio is subject to further restrictions which are
described in the Statement of Additional Information. The restrictions for the
Portfolio are fundamental and may not be changed without shareholder approval.
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RISK FACTORS
LACK OF OPERATING HISTORY AND EXPERIENCE
The Fund and the Investment Adviser are both newly organized and have
no history of operations. Although the Investment Adviser sub-contracts a
substantial portion of its responsibilities for managing the Fund's operations
to various agents, including the Transfer Agent, the Custodian, and accountant,
the Investment Adviser will still have overall responsibility for the selection
of securities for investment and, along with the Fund's Trustees, 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) have ever
registered, operated, or supervised the operations of investment companies in
the past, and there is no assurance that their past business experiences will
enable them to successfully manage the assets of the Fund in the future. The
owner of the Investment Adviser has been in the business of rendering advisory
services to significant pools of capital such as retirement plans and large
investors since 1987.
The owner of the Investment Adviser is also the owner of another
investment advisory firm, Navellier & Associates, Incorporated, which presently
manages over $850,000,000 in investor funds, and is also the owner of an
investment advisory firm, Navellier International Management, Inc., and controls
other investment entities all of which firms employ the same basic modern
portfolio theories and select many of the same over-the-counter stocks and other
securities which the Investment Adviser intends to employ in managing the
Portfolio in the Fund. Because many of the over-the-counter and other
securities which Investment Adviser intends to or may invest in have a smaller
number of shares available to trade than more conventional companies, lack of
shares available at any given time may result in the Fund not being able to
purchase or sell all shares Investment Adviser desires to trade at a given time
or period of time, thereby creating a potential liquidity problem which could
adversely affect the performance of the Fund. Since the Investment Adviser will
be trading on behalf of the Fund in some or all of the same securities at the
same time that Navellier & Associates, Incorporated, Navellier International
Management, Inc., and other Navellier controlled investment entities are
trading, the potential liquidity problem could be exacerbated. In the event the
number of shares available for purchase or sale in a security or securities is
limited and therefore the trade order cannot be fully executed at the time it is
placed, i.e., where the full trade orders of Navellier & Associates,
Incorporated, Navellier International Management, Inc., and other Navellier
controlled investment entities and the Fund cannot be completed at the time the
order is made, Navellier & Associates, Incorporated, 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
Navellier & Associates, Incorporated, Navellier International Management, Inc.
and the other Navellier controlled investment entities, and the dollar value of
the order made by the Investment Adviser. For example, if Navellier &
Associates, Incorporated, and Navellier International Management, Inc., each
place a $25,000 purchase order and Investment Adviser 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, Incorporated, and Navellier International Management, Inc., and
$25,000 of the
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stock to Investment Adviser. This potential allocation or liquidity situation
could adversely affect performance. As the assets of the Fund increase the
potential for shortages of buyers or sellers increases, which could adversely
affect the Fund's performance. While the Investment Adviser generally does not
anticipate liquidity problems unless the Fund has assets in excess of one
billion dollars (although liquidity problems could still occur when the Fund has
assets of substantially less than one 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.
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 on p. _____ herein.
While to some extent the risks to the Fund of investing in foreign
securities may be limited, since the Portfolio may not invest more than 25% of
its net asset value in such securities and the Fund may only invest in foreign
securities which are traded in the United States securities markets, the risks
nonetheless exist.
NET ASSET VALUE
The net asset value of the Navellier Aggressive Small Cap Equity
Portfolio is determined by adding the values of all securities and other assets
of the individual Portfolio, subtracting liabilities, and dividing by the number
of outstanding shares of the Portfolio. (See "Purchase and Pricing of Shares--
Valuation of Shares" and the Statement of Additional Information).
PORTFOLIO TURNOVER
The annual rate of portfolio turnover for the Navellier Aggressive
Small Cap Equity Portfolio during its first year was 139.9%. The Investment
Adviser does not intend to have a portfolio turnover rate in excess of 300% per
annum, 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
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qualify as a "regulated investment company" under the Internal Revenue Code may
be affected. (See the Statement of Additional Information, "Taxes").
SPECIAL RISK CONSIDERATIONS RELATING TO SECURITIES OF THE PORTFOLIO
For a description of certain other factors, including certain risk
factors, which investors should consider relating to the securities in which the
Portfolio will invest, see "Investment Objectives and Policies".
PERFORMANCE & YIELD
From time to time the Fund may include the performance history of the
Portfolio in advertisements, sales literature, or reports to current or
prospective shareholders. Performance information about the Portfolio is based
on its past performance only and is not an indication of future performance.
Performance history may be expressed as yield or as total return of the
Navellier Aggressive Small Cap Equity Portfolio.
The Navellier Aggressive Small Cap Equity Portfolio 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 the Navellier Aggressive Small Cap Equity
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 (after deduction of the maximum sales load) at the beginning of a
stated period to the ending redeemable value of the investment, after giving
effect to the reinvestment of all dividends and distributions and deductions of
expenses during the period.
For more information about calculation of the investment performance
of the Portfolio, see the Statement of Additional Information.
MANAGEMENT OF THE FUND
THE BOARD OF TRUSTEES
The Fund's Board of Trustees directs the business and affairs of the
Fund as well as supervises the Investment Adviser, Distributor, accountant,
Transfer Agent and Custodian, as described below.
THE INVESTMENT ADVISER
Navellier Management, Inc., acts as the Investment Adviser of the
Fund. The Investment Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940. The Investment Adviser is responsible for
selecting the securities which will
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constitute the pool of securities which will be selected for investment.
Pursuant to a separate Administrative Services Agreement, the Investment Adviser
provides the Fund with certain administrative services, including accounting and
bookkeeping services and supervising the Fund's compliance with its reporting
obligations. The Investment Adviser may contract for the performance of such
services to the Custodian, Transfer Agent, or others, and may share some or all
of its fee with such other person(s). The Investment Adviser also provides the
Fund with a continuous investment program for the Fund's Portfolio, including
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, Incorporated.
(See the Statement of Additional Information). Navellier & Associates,
Incorporated, 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, Incorporated, 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. The
Investment Adviser and its controlling person have not previously been engaged
in the rendering of investment advisory services for an investment company.
Investment Adviser, Navellier Management, Inc., is a newly-formed corporation.
Louis Navellier is and has been in the business of rendering investment advisory
services to significant pools of capital since 1987.
For information regarding the Fund's expenses and the fees paid to the
Investment Adviser see "Expenses of the Fund" on the following page.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On January 3, 1994, 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 an agreement dated May 15, 1993. Such
acquisition was made for an aggregate of $300,000 allocated 100% for the
Navellier Aggressive Small Cap Equity Portfolio (to purchase 30,000 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
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Association of Securities Dealers ("NASD"). The Distributor renders its
services to the Fund pursuant to a distribution agreement pursuant to which it
serves as the principal underwriter of the Fund's shares. The Distributor may
sell certain of the Fund's shares by direct placements. Through a network
established by the Distributor, the Fund's shares may also be sold through
selected broker-dealers. (For information regarding the Fund's expenses and the
fees it pays to the Distributor, see "Expenses of the Fund" following). Louis
G. Navellier, an affiliate of the Fund and the Investment Adviser, is an
officer, director, and sole shareholder of the Distributor.
THE CUSTODIAN AND THE TRANSFER AGENT
Rushmore Trust and Savings, FSB, 4922 Fairmont Avenue, Bethesda,
Maryland, 20814, telephone: (301) 657-1517 or (800) 621-7874, is custodian for
the Fund's securities and cash and Transfer Agent for the Fund shares. The
Distributor shall be responsible for the review of applications in order to
guarantee that all requisite and statistical information has been provided with
respect to the establishment of accounts.
EXPENSES OF THE FUND
GENERAL
The Portfolio is responsible for the payment of its own expenses.
These expenses are deducted from 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 and auditing fees; and 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 the Portfolio (including fidelity bond and other
insurance) are allocated to each Portfolio based upon their relative net assets.
The Fund and the Investment Adviser have executed a letter
acknowledging that since the inception of the Fund's operations, the Investment
Adviser has paid all of the operating expenses of the Fund and may seek
reimbursement from the Fund. Although the Investment Adviser is under no
obligation to continue to pay for the Fund's operating expenses, the Investment
Adviser may, but is not obligated to, continue to pay the Fund's operating
expenses without any immediate reimbursement from the Fund until further notice.
The Investment Adviser has reserved the right to seek reimbursement for past,
present, and future operating expenses of the Fund at any time upon notice to
the Fund that all such operating expenses of the Fund shall be required to be
reimbursed to the Investment Adviser, or paid directly by the Fund after the
date of such notice.
COMPENSATION OF THE INVESTMENT ADVISER
The Investment Adviser receives an annual 1.25% fee, payable monthly,
based upon the Portfolio's average daily net assets for the Navellier Aggressive
Small Cap Equity Portfolio and will receive the same 1.25% fee for management of
any other Fund Portfolio. The advisory fee paid by the Navellier Aggressive
Small Cap Equity Portfolio is higher than
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that paid by most other investment companies. The Investment Adviser also
receives a .25% annual fee and is reimbursed by the Fund for expenses incurred
by it in connection with the rendering of services under the Administrative
Services Agreement and for operating expenses advanced.
BROKERAGE COMMISSIONS
The Investment Adviser may select Navellier Securities Corp. or
selected broker-dealers to execute portfolio transactions for the Fund, provided
that the commissions, fees, or other remuneration received by such party in
exchange for executing such transactions are reasonable and fair compared to
those paid to other brokers in connection with comparable transactions. In
addition, when selecting broker-dealers for Fund portfolio transactions, the
Investment Adviser may consider the record of such broker-dealers with respect
to the sale of shares of the Fund. (See the Statement of Additional
Information).
REPORTS AND INFORMATION
The Fund will distribute to its shareholders semi-annual reports
containing unaudited financial statements and information pertaining to matters
of the Fund, including the Navellier Aggressive Small Cap Equity Portfolio. An
annual report containing financial statements together with the report of the
independent auditors of the Fund is distributed to shareholders each year.
Shareholder inquiries should be addressed to The Navellier Series Fund, at Call
Box 10012, Incline Village, Nevada 89450-1012; Tel: (800) 887-8671, or to the
Transfer Agent, Rushmore Trust and Savings FSB, 4922 Fairmont Avenue, Bethesda,
Maryland, 20814, Tel: (301) 657-1517 or (800) 621-7874.
DESCRIPTION OF SHARES
The Fund is a Delaware business trust organized on May 28, 1993. The
Declaration of Trust permits the Trustees to issue an unlimited number of shares
of beneficial interest. The Board of Trustees has the power to designate one or
more classes ("Portfolios") of shares of beneficial interest and to classify or
reclassify any unissued shares with respect to such classes. Presently the Fund
is offering shares of the Portfolio described above.
The shares of each Portfolio, when issued, are fully paid and non-
assessable, are redeemable at the option of the holder, are fully transferable,
and have no conversion or preemptive rights. Shares are also redeemable at the
option of the Fund under certain circumstances (see "Redemption of Shares").
Each share of a Portfolio is equal as to earnings, expenses, and assets of the
Portfolio and, in the event of liquidation of the Portfolio, is entitled to an
equal portion of all of the Portfolio's net assets. Shareholders of the Fund
are entitled to one vote for each full share held and fractional votes for
fractional 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
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<PAGE>
at their discretion, or upon demand by the holders of 10% or more of the
outstanding shares of any Portfolio for the purpose of electing or removing
Trustees.
All shares (including reinvested dividends and capital gain
distributions) are issued or redeemed in full or fractional shares rounded to
the third decimal place. No share certificates will be issued. Instead, an
account will be established for each shareholder and all shares purchased will
be held in book-entry form by the Fund.
DIVIDENDS AND DISTRIBUTIONS
All dividends and distributions with respect to the shares of any
Portfolio will be payable in shares at net asset value or, at the option of the
shareholder, in cash. Any shareholder who purchases shares of the Portfolio
prior to the close of business on the record date for a dividend or distribution
will be entitled to receive such dividend or distribution. Dividends and
distributions (whether received in shares or in cash) are treated either as
ordinary income or long-term capital gain for federal income tax purposes.
Between the record date and the cash payment date, the Portfolio retains the use
and benefits of such monies as would be paid as cash dividends.
The Navellier Aggressive Small Cap Equity 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. The Portfolio intends to comply with the
distribution requirements and thus does not expect to incur the four percent
(4%) nondeductible excise tax, although the imposition of such excise tax may
possibly occur.
Shareholders will have their dividends and/or capital gain
distributions reinvested in additional shares of the applicable Portfolio(s)
unless they elect in writing to receive such distributions in cash.
Shareholders whose shares are held in the name of a broker or nominee should
contact such broker or nominee to determine whether they want dividends
reinvested or distributed.
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,
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<PAGE>
the Transfer Agent will reinvest dividends after deduction of the amount
required to be withheld.
Experience may indicate that changes in the automatic reinvestment of
dividends are desirable. Accordingly, the Fund reserves the right to amend or
terminate this provision as applied to any dividend or distribution paid
subsequent to written notice of the change sent to shareholders at least 90 days
before the record date for such dividend or distribution.
TAXES
FEDERAL TAXES
Each Portfolio of the Fund is a separate taxpayer and intends to meet
the requirements of Subchapter M of the Internal Revenue Code of 1986 (relating
to regulated investment companies) with respect to diversification of assets,
sources of income, and distributions of taxable income and will elect to be
taxed as a regulated investment company for federal income tax purposes.
However, the Code contains a number of complex tests relating to
qualification which a Portfolio might not meet in any particular year. For
example, if a Portfolio derives 30% or more of its gross income from the sale of
securities held for less than three months, it may fail to qualify. If a
Portfolio did not so qualify, it would be treated for tax purposes as an
ordinary corporation and receive no tax deduction for payments made to
shareholders.
Because the Navellier Aggressive Small Cap Equity Portfolio intends to
distribute all of its net investment income and net realized capital gains at
least annually, it is not expected that 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 the 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 the 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).
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Any dividends paid shortly after a purchase by an investor may have
the effect of reducing the per share net asset value of the investor's shares by
the per share amount of dividends. Furthermore, such dividends, although in
effect a return of capital, are subject to federal income taxes. Therefore,
prior to purchasing shares of the Fund, the investor should carefully consider
the impact of dividends, including capital gains distributions, which are
expected to be or have been announced.
If the Fund redeems some or all of the shares held by any shareholder,
the transaction will generally be treated as a sale or exchange unless the
redemption fails to substantially reduce the shareholder's percentage ownership
interest in the Fund (determined for this purpose using certain specific rules
of constructive ownership). If a redemption of shares is not treated as a sale
or exchange, the amount paid for the shares will be treated as a dividend.
If a redemption is treated as a sale or exchange, the shareholder will
generally recognize gain or loss measured by the difference between the
redemption price and the basis of the shares. This gain or loss will generally
be treated as capital gain (long-term or short-term, depending upon the holding
period for the redeemed shares).
Shareholders will be subject to information reporting with respect to
dividends and redemptions, and may be subject to backup withholding with respect
to dividends at the rate of 31% unless (a) they are corporations or come within
other exempt categories or (b) they provide correct taxpayer identification
numbers, certify as to no loss of exemption from backup withholding, and
otherwise comply with applicable requirements of the law relating to backup
withholding. Any amounts paid as backup withholding will be creditable against
the federal income tax liabilities of the affected shareholders.
The Fund may pay taxes to foreign countries with respect to dividends
or interest it receives from foreign issuers or from domestic issuers that
derive a substantial amount of their revenues in foreign countries, or such
taxes may be withheld at the source by such issuers. The Fund will generally be
entitled to deduct such taxes in computing its taxable income.
STATE AND LOCAL TAXES
The Fund may be subject to state or local taxation in jurisdictions in
which it may be deemed to be doing business. Taxable income of the Fund and its
shareholders for state and 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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<PAGE>
PURCHASE AND PRICING OF SHARES
PURCHASE OF SHARES
The Fund's shares are sold to the general public on a continuous basis
through the Distributor and its network of broker-dealers and Transfer Agent.
The Navellier Aggressive Small Cap Equity Portfolio will close to new
investors on April 15, 1996. Shareholders of the Navellier Aggressive Small Cap
Equity Portfolio as of such closing date may continue to add to an account
through the reinvestment of dividends and cash distributions on any Navellier
Aggressive Small Cap Equity Portfolio shares owned, and through the purchase of
additional Navellier Aggressive Small Cap Equity Portfolio shares. Shareholders
of the Navellier Aggressive Small Cap Equity Portfolio as of the April 15, 1996
closing date may also open and add to additional Navellier Aggressive Small Cap
Equity Portfolio accounts that use the same social security number as the
account existing as of April 15, 1996, such as accounts where the shareholder is
the owner, a joint owner or a custodian for a minor child. Shares of the
Portfolio may continue to be purchased through mutual fund wrap fee advisers and
financial planners. Additionally, directors of the Portfolio and employees and
directors of the Portfolio's Manager may continue to open new Portfolio
accounts. The Portfolio may resume sales to new investors at some future date,
but it has no present intention to do so.
PURCHASE BY MAIL
Investments in the Fund can be made directly with the Fund or through
selected securities dealers, who have the responsibility to transmit orders
promptly and may charge a processing fee, or through the transfer agent Rushmore
Trust and Savings, FSB.
TO INVEST BY MAIL: Fill out an application designating which Portfolio you are
investing in and make a check payable to "The Navellier Series Fund." Mail the
check along with the application to:
The Navellier Series Fund
c/o Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
Purchases by check will normally be credited to an account within one
business day after receipt of payment. Foreign checks will not be accepted. Be
certain to specify which Portfolio or Portfolios you are investing in.
Purchase orders which do not specify the Portfolio in which an
investment is to be made will be invested in the Navellier Aggressive Small Cap
Equity 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. In the event that the New York Stock Exchange or
the national securities exchanges on which stocks are traded adopt different
trading hours on either a permanent or temporary basis, the Trustees
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of the Fund will reconsider the time at which net asset value is to be computed.
(See "Purchase and Pricing of Shares--Valuation of Shares").
PURCHASES THROUGH SELECTED DEALERS
Shares purchased through Selected Dealers will be effected at the net
asset value next determined after the Selected Dealer receives the purchase
order, provided that the Selected Dealer transmits the order to the Transfer
Agent and the Transfer Agent accepts the order by 4:00 p.m. E.S.T., the investor
must settle his or her entitlement to that day's net asset value with the
Selected Dealer.
Certain selected Dealers may effect transactions in shares of the
Portfolios on a "five day settlement" basis 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. The sales charge
applicable to the investor's purchase (See "Navellier Aggressive Small Cap
Equity Portfolio" following) is the same when purchased through a Selected
Dealer as when purchased directly through the Transfer Agent.
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 Series Fund
Account Number 0293 85770
AFTER INSTRUCTING YOUR BANK TO TRANSFER MONEY BY WIRE, YOU MUST
TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510 BETWEEN 8:30 A.M. AND
4:00 P.M. E.S.T. AND TELL US THE AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK
SENDING THE TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. IF THE
PURCHASE 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.
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TO INVEST BY AUTOMATIC MONTHLY INVESTMENT PLAN:
Shareholders may make automatic monthly purchases of the Fund's shares
by executing an automatic monthly withdrawl appplication authorizing his/her/its
bank to transfer money from his/her/its checking account to the Transfer Agent
for the automatic monthly purchase of shares of the Fund for the shareholder.
There is no charge by the Fund for this automatic monthly investment plan and
the shareholder can discontinue the service at any time.
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
The shares of the Navellier Aggressive Small Cap Equity 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, plus a maximum sales charge of
3% on a single purchase of between $2,000 and $24,999.99. The sales load is
reduced to 2-1/2% for purchases of between $25,000 and $49,999.99, 2% for
purchases of between of between $50,000 and $74,999.99, 1-1/2% for purchases of
between $75,000 and $99,999.99, and 1% for purchases of $100,000 or more. There
is no sales charge for purchases of $1 Million or more. The sales charge is
payable at the time shares are purchased and is deducted from the amount
credited to the investor's account. If an order for shares of the Navellier
Aggressive Small Cap Equity Portfolio is received by the Transfer Agent by 4
p.m. on any business day, such shares will be purchased at the net asset value
determined as of 4 p.m. on that day (plus the applicable sales charge).
Otherwise, such shares will be purchased at the net asset value determined as of
4 p.m on the next day (plus the applicable sales charge). 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 offering
price if the orders were received by the Distributor or broker or dealer from
its customer prior to such determination and were transmitted to and received by
the Transfer Agent prior to its close of business on that day (normally 4 p.m.
E.S.T.). Shares are entitled to receive any declared dividends on the day
following the date of purchase.
REDUCED SALES CHARGES
Abatement of Sales Charges for Transferred Accounts
Any investor who transfers all or any portion of his investment from
any other registered investment company which charges a sales load (other than
those which charge a deferred sales load) to the Navellier Aggressive Small Cap
Equity Portfolio will not be required to pay a sales charge on the amount
invested. The Fund Trustees, the Distributor, the Custodian, the Transfer
Agent, retirement or deferred compensation plans and trusts used to fund such
plans, and their employees; or brokers directly involved in selling the Fund's
shares and whose firm has executed a selling agreement with the Distributor or
the Investment Adviser or their employees or the spouse or child of any of the
above will not be required to pay any sales charge, nor will any investor who
purchases more than $1 million of the Fund's shares nor will any investor who
purchases through an account as to which an investment advisor, financial
planner, agent, bank or broker-dealer charges an account
23
<PAGE>
management or transaction fee ("wrap fee"), provided the investment advisor,
financial planner, agent, bank or broker-dealer has an Agreement with
Distributor.
Purchases may also be made at net asset value (no load) by Investment
Advisors or Financial Planners who place trades for their own accounts or the
accounts of their clients and who charge a management, consulting or other fee
for their services; and clients of such investment advisors or financial
planners who place trades for their own accounts if the accounts are linked to
the master account of such investment advisor or financial planner on the books
and records of the broker or agent; and by retirement and deferred compensation
plans and trusts used to fund those plans, including, but not limited to, those
defined in section 401(a), 403(b), or 457 of the Internal Revenue Code and
"rabbi trusts".
General Purchasing Information
The Fund has established a minimum initial investment of $2,000 ($500
in the case of IRA and other retirement plans or qualifying group plans) and
$100 for subsequent investments in any Portfolio. Orders for shares may be made
by mail by completing the Account Application included with this Prospectus and
mailing the completed application and the payment for shares to the Transfer
Agent. Documentation in addition to the information required by the Account
Application may be required when deemed appropriate by the Fund and/or the
Transfer Agent and the Account Application will not be deemed complete until
such additional information has been received.
Reduced Sales Charges
A reduction in the sales charge rate applicable to sales of Portfolio
shares may be obtained by volume discounts as described in the Prospectus. In
addition, members of qualified groups or persons purchasing shares for
retirement plans or individual retirement accounts (IRAs) may purchase shares of
the Fund at the same discounts charged on volume discount purchases. Also,
persons who transfer their investments from another investment company, to which
they paid a sales charge, will not be charged a sales charge.
Purchases of Fund shares are made at the public offering price next
determined after the Distributor or Transfer Agent receives payment, including
the applicable sales charge. To receive the group rate on their individual
purchase, group members must purchase shares through a single investment dealer
designated by the group. After the initial purchase, a member may send funds
for the purchase of shares directly to the Transfer Agent. Sales to members of
qualified groups are made at a reduced sales charge because such sales normally
involve less sales effort and sales-related expense than would usually be
associated with sales to individual investors. Also, it is believed that such
reduced sales charges will provide an incentive for increased investment in the
Fund by members of qualified groups which could benefit the Fund and its
shareholders by enabling the Fund to achieve certain economies of scale and
benefits of size more rapidly than would otherwise be the case.
As determined by the Distributor, qualified groups include the
employees of a corporation or a sole proprietorship, members, and employees of a
partnership or association (including, without limitation, members of tax-exempt
organizations enumerated under
24
<PAGE>
Sections 501(c)(3) and 501(c)(13) of the Internal Revenue Code of 1986, or other
organized groups of persons (the members of which may include other qualified
groups), provided that: (i) the group has at least 25 members, of which at least
10 members participate in the initial purchase; (ii) the group has been in
existence for at least six months; (iii) the group has some purpose in addition
to the purchase of investment company shares at a reduced sales charge; and (iv)
the group's sole organizational nexus or connection is not that the members are
credit card holders of a company, policy holders of an insurance company,
customers of a bank or a broker-dealer, clients of an investment adviser, or
security holders of a company.
Members of a qualified group include: (i) any group which meets the
requirements stated above and which is a constituent member of a qualified
group; (ii) any individual purchasing for his or her own account who is carried
on the records of the group or on the records of any constituent member of the
group as being a good standing employee, partner member, or person of like
status of the group or constituent member; or (iii) any fiduciary purchasing
shares for the account of a member of a qualified group or a member's
beneficiary, or participants in a qualified retirement plan, or contributors to
an individual retirement account (IRA). For example, a qualified group could
consist of a trade association which would have as its members individuals, sole
proprietors, partnerships, and corporations. The members of the group would
then consist of the individuals, the sole proprietors and their employees, the
members of the partnerships and their employees, as well as trustees of
employment benefit trusts acquiring Fund shares for the benefit of any of the
foregoing. The Fund reserves the right to revise the terms of, or to suspend or
discontinue, group sales charge discounts at any time.
LETTER OF INTENT
An investor may pay reduced sales charges by signing and fulfilling a
Letter of Intent which is on the Application Form. The Letter of Intent confirms
the investor's intention as to the total investment in shares of the Fund within
the following 13 consecutive months, and thereby the investor will become
eligible for the reduced sales charges applicable to the total amount to be
purchased. Purchases made within 90 days prior to the signing of the Letter of
Intent may be included in the total amount and will be valued on the effective
date of the Letter of Intent. The Letter of Intent will not be a binding
obligation on either the purchaser or the Fund. Purchases made under the Letter
of Intent are made at the sales charge applicable to the aggregate amount to be
invested in shares of the Fund under the Letter of Intent as if all the shares
were purchased in a single transaction. During the period of the Letter of
Intent, the Transfer Agent will hold shares representing 5% of the intended
purchase in escrow to provide payment of additional sales commissions that may
have to be paid if the Letter of Intent is reduced. If the total shares stated
in the Letter of Intent are not purchased, a price adjustment is made, depending
upon the actual amount invested within the period covered by the Letter of
Intent, by the redemption of sufficient shares held in escrow for the account of
the investor. Otherwise, shares held in escrow will be released upon completion
of the intended investment. A Letter of Intent can be amended: (a) during the
13-month period if the purchaser files an amended Letter of Intent with the same
expiration date as the original and (b) automatically after the end of the
period, if the total purchases credited to the Letter of Intent qualify for an
additional reduction in sales charge. For more
25
<PAGE>
information concerning the Letter of Intent, see the Application Form or contact
the Transfer Agent.
VALUATION OF SHARES
The net asset value of the shares of the Portfolio of the Fund is
determined once daily as of 4 p.m E.S.T., on days when the New York Stock
Exchange is open for trading. In the event that the New York Stock Exchange or
the national securities exchanges on which stocks are traded adopt different
trading hours on either a permanent or temporary basis, the Trustees of the Fund
will reconsider the time at which net asset value is to be computed. The net
asset value is determined by adding the values of all securities and other
assets of the Portfolio, subtracting liabilities, and dividing by the number of
outstanding shares of the Portfolio. The price at which a purchase is effected
is based on the next calculation of net asset value after the order is received.
In determining the value of the assets of the Navellier Aggressive
Small Cap Equity 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. Use of a pricing service has been approved by the Trustees of
the Fund. 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.
REDEMPTION OF SHARES
GENERAL
A shareholder may redeem shares of the 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 small cap stocks are open for business.
The Fund may change the following procedures at its discretion.
The shareholder will not be credited with dividends on those shares
being redeemed for the day on which the shares are redeemed by the Fund. A
check for the proceeds of redemption will normally be mailed within seven days
of receipt of any redemption request received by the Transfer Agent. If shares
to be redeemed were purchased by check, the Fund may delay transmittal of
redemption proceeds only until such times as it is reasonably assured that good
payment has been collected for the purchase of such shares, which may be up to
15 days from purchase date. Such delays can be avoided by wiring Federal Funds
in effecting share purchases.
If a shareholder wishes to redeem his or her entire shareholdings in
the 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
26
<PAGE>
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 Series Fund
c/o Rushmore Trust and Savings FSB
4922 Fairmont Avenue
Bethesda, MD 20814
The request for redemption should include the name of the Portfolio,
the account name and number, and should be signed by all registered owners of
the shares in the exact names in which they are registered. Each request should
specify the number or dollar amount of shares to be redeemed or that all shares
in the account are to be redeemed.
OPTION TO MAKE SYSTEMATIC WITHDRAWALS
The owner of $25,000 or more worth of the shares of the Portfolio may
provide for the payment from his account of any requested dollar amount (but not
less than $1,000) to him or his designated payee monthly, quarterly, or
annually. Shares will be redeemed on the last business day of each month.
Unless otherwise instructed, the Transfer Agent will mail checks to the
shareholder at its address of record. A sufficient number of shares will be
redeemed to make the designated payment. This redemption option is not
available with respect to shares for which certificates are held by a
shareholder. Since a sales charge is imposed on investors, investors should not
purchase shares in the Fund while they are participating in the withdrawal plan.
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
27
<PAGE>
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.
CERTAIN SERVICES PROVIDED TO SHAREHOLDERS
STATEMENTS OF ACCOUNT
Statements of Account for the Navellier Aggressive Small Cap Equity
Portfolio and subsequent Portfolios (if any) will be sent to each shareholder at
least quarterly.
DIVIDEND ELECTION
A shareholder may elect to receive dividends in shares or in cash. If
no election is made, dividends will automatically be credited to a shareholder's
account in additional shares of the Portfolio to which such dividend relates.
EXCHANGE PRIVILEGES
Shares of the Navellier Aggressive Small Cap Equity Portfolio and
other subsequently opened Portfolios in this Navellier series of funds may be
exchanged for one another at net asset value. Exchanges among portfolios of the
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 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 the exchange is effectuated within 90 days of the acquisition of the
shares. (See "Taxes"). Shareholders wishing to make an exchange should contact
the Transfer Agent. Exchange requests in the form required by the Transfer Agent
and received by the Transfer Agent prior to 4 p.m. E.S.T. will be effected on
the next business day after such request is received.
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
28
<PAGE>
information which may be of interest to certain investors. This Prospectus and
the Statement of Additional Information do not contain all the information
included in the Registration Statement filed with the Securities and Exchange
Commission with respect to the securities being sold, certain portions of which
have been omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. The Registration Statement, including the exhibits filed
therewith, may be examined at the office of the Securities and Exchange
Commission in Washington, D.C.
Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and, in
each instance, reference is made to the Statement of Additional Information and
the copy of such contract or other document filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, each such
statement being qualified in all respects by such reference.
ASSENT TO TRUST INSTRUMENT
Every Shareholder, by virtue of having purchased a Share or Interest
shall become a Shareholder and shall be held to have expressly assented and
agreed to be bound by the terms hereof.
TERMS APPLICABLE TO LETTER OF INTENT
By indicating in the Letter of Intent Section of the Account Application that
the provisions of the Letter of Intent have been selected, the Investor agrees
as follows:
Each purchase of shares under the Letter of Intent will be made at the public
offering price which, at the time of such purchase, is applicable to a single
transaction of the dollar amount checked on the Account Application, as
described in the current Prospectus relating to such shares.
Out of the initial purchase (or subsequent purchases if necessary), 5% of the
total purchases required to complete the Letter of Intent will be held in escrow
in the form of shares (valued at the purchase price thereof) registered in the
investor's name. The Letter of Intent will terminate and the escrow will be
released when the total purchases made under the Letter of Intent, together with
the value on the date of the Letter of Intent of any shares of the named
Portfolios then owned by the investor, equal the aggregate amount checked on the
Account Application. All dividends and any capital gain distributions on the
escrowed shares will be paid to the investor or to the investor's order, but the
receipt of dividends and capital gain distributions in shares computed at net
asset value will not apply towards the completion of the Letter of Intent.
No commitment is made to purchase additional shares. If, within 13 months from
the date of the Letter of Intent, the investor's total purchases under the
Letter of Intent, together with the value on the date of the Letter of Intent of
any shares of the named Portfolios then owned by such investor, do not equal or
exceed the aggregate amount checked on the Account Application, the Investor
will remit to Rushmore Trust and Savings FSB, the difference in the sales
charge actually paid and the sales charge which the investor would have paid if
total
29
<PAGE>
purchases made under the Letter of Intent had been made at a single time. If,
within 20 days after written request by Rushmore Trust and Savings FSB, or the
appropriate dealer, the investor does not pay such difference in the sales
charge, such investor irrevocably constitutes and appoints Rushmore Trust and
Savings FSB, as his/her attorney to surrender for redemption any or all escrowed
shares, with full power of substitution in the premises, to be redeemed in order
to realize such difference.
For purposes of a Letter of Intent, a "single purchaser" means:
(i) an individual, or an individual, his spouse and their children under the age
of 21 purchasing for his or their own account (including an IRA account)
including his or their own trusts, commonly known as living trusts; or
(ii) a trustee or other fiduciary purchasing for a single trust estate or single
fiduciary account, although more than one beneficiary is involved; or
(iii) multiple trusts for the same employer, or
(iv) trust companies and bank trust departments placing orders with respect to
funds over which they exercise discretionary investment authority and which are
held in a fiduciary, agency, custodial, or similar capacity, provided all shares
are held of record in the name, or nominee name, of the trust company or bank.
Except as provided above, a "single purchaser" does not include a group of
individuals whose funds are combined, directly or indirectly, for the purchase
of redeemable securities of a registered investment company jointly or through a
trustee, agent, custodian, or other representative, nor shall it include a
trustee, agent, custodian, or other representative of such a group of
individuals.
30
<PAGE>
Investment Adviser
Navellier Management, Inc.
920 Incline Way, Building #1
Incline Village, NV 89450
(800) 887-8671
Distributor NAVELLIER SERIES FUND, INC.
Navellier Securities Corp.
920 Incline Way, Building #1
Incline Village, NV 89450
(800) 887-8671
Independent Auditors
Deloitte & Touche LLP
1900 M Street
Washington, D.C. 20036
(202) 955-6530
Transfer Agent and Custodian
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 621-7874
Counsel
Samuel Kornhauser
LAW OFFICES OF SAMUEL KORNHAUSER
155 Jackson Street, Suite 1807
San Francisco, CA 94111
(415) 981-6281
Sales Information
Navellier Securities Corp.
920 Incline Way, Building #1
Incline Village, NV 89450
(800) 887-8671
Shareholder Inquiries
Rushmore Trust and Savings FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 621-7874 April 29, 1996
31
<PAGE>
PART B
THE NAVELLIER SERIES FUND
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 29, 1996
This Statement of Additional Information, which is not a prospectus, should
be read in conjunction with the Prospectus of The Navellier Series Fund (the
"Fund"), dated April 29, 1996, a copy of which Prospectus may be obtained,
without charge, by contacting the Fund, at its mailing address c/o Navellier
Securities, Corp., Call Box 10012, Incline Village, NV 89450; Tel: 1-800-887-
8671.
TABLE OF CONTENTS
<TABLE>
<S> <C>
GENERAL INFORMATION AND HISTORY....................... 1
INVESTMENT OBJECTIVES AND POLICIES.................... 1
TRUSTEES AND OFFICERS OF THE FUND..................... 5
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES... 8
THE INVESTMENT ADVISER, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT.......................... 9
BROKERAGE ALLOCATION AND OTHER PRACTICES.............. 11
CAPITAL STOCK AND OTHER SECURITIES.................... 13
PURCHASE, REDEMPTION, AND PRICING OF SHARES........... 13
TAXES................................................. 17
UNDERWRITERS.......................................... 20
CALCULATION OF PERFORMANCE DATA....................... 20
REPORT OF INDEPENDENT ACCOUNTANTS..................... 22
FINANCIAL STATEMENT................................... 22
APPENDIX.............................................. 23
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
The Fund is a business trust company (organized under the laws of the State
of Delaware on May 28, 1993) and has no prior history.
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. Prior to being considered as a
permissible investment for any Portfolio, each issuer of the following
instruments will first have to be determined by the Investment Adviser to
qualify as a "Qualified Issuer" (as defined by the Prospectus).
CERTIFICATES OF DEPOSIT. Certificates of deposit are generally short-term,
-----------------------
interest-bearing, negotiable certificates issued by banks or savings and loan
associates 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
1
<PAGE>
Association, Maritime Administration, Small Business Administration, the Defense
Security Assistance 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 for any Portfolio securities of any issuer, other than
obligations issued or guaranteed as to principal and interest by the United
States government or its agencies or instrumentalities, if immediately
thereafter (i) more than 5% of such Portfolio's total assets (taken at market
value) would be invested in the securities of such issuer, or (ii) more than 10%
of the voting securities of any class of such issuer would be held by such
Portfolio or by all Portfolios of the Fund in the aggregate.
2. Concentrate the portfolio investments of any Portfolio in any one
industry. To comply with this restriction, no security may be purchased for a
Portfolio if such purchase would cause the value of the aggregate investment of
such Portfolio in any one industry to be 25% or more of that Portfolio's total
assets (taken at market value).
3. Purchase any securities or other property on margin, or engage in short
sales of securities (unless it owns, or by virtue of its ownership of other
securities has the right to obtain without payment of any additional
consideration securities equivalent in kind and amount to the securities sold);
provided, however, that the Fund may obtain short-term credit as may be
- - -------- -------
necessary for the clearance of purchases and sales of securities.
2
<PAGE>
4. 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.
5. 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.
6. 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 but only if such securities are small cap equity
securities or constitute less than 35% of the Navellier Aggressive Small Cap
Equity Portfolio's total assets.
7. 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 of such activities, but only if such securities are small cap equity
securities or constitute less than 35% of the Navellier Aggressive Small Cap
Equity Portfolio's total assets, although the Fund may purchase securities of
issuers which engage in whole or in part of such activities.
8. Invest in or sell puts, calls, straddles, and any combination thereof.
9. Purchase securities of companies for the purpose of exercising management
or control.
10. Participate in a joint or joint and several trading account in
securities.
11. Purchase the securities of (i) other open-end investment companies, or
(ii) closed-end investment companies.
12. 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.
13. 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 12 above.
3
<PAGE>
14. 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.
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 12 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 Fund, including brokerage commission
expenses, dealer mark-ups, and other transaction costs on the sale of
securities, which must be borne directly by the Portfolio. Turnover rates may
vary greatly from year to year as 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. The Portfolio turnover rate for the Navellier Aggressive Small Cap
Equity Portfolio during 1995 was 169.6%. The Fund will attempt to limit the
annual portfolio turnover rate to 300% or less, however this rate may be
exceeded if in the Investment Adviser's discretion securities are or should be
sold or purchased in order to attempt to increase the Portfolio's performance.
In Wisconsin an annual portfolio turnover rate of 300% or more is considered a
speculative activity and under Wisconsin statutes could involve relatively
greater risks or costs to the Fund.
4
<PAGE>
TRUSTEES AND OFFICERS OF THE FUND
The following information, as of April 24, 1996, is provided with respect to
each director and officer of the Fund:
<TABLE>
<CAPTION>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS REGISTRANT AND ITS AFFILIATES PAST FIVE YEARS
- - ---------------- -------------------------------- ----------------------------------
<S> <C> <C>
Louis Navellier/1/ Trustee, President and Mr. Navellier is and has been the
920 Incline Way Treasurer of The Navellier CEO and President of Navellier &
Building 1 Series Fund. Mr. Navellier is Associates Inc., an investment
Incline Village also the CEO, President, management company since 1988,
Nevada 89450 Secretary, and Treasurer of Navellier Management, Inc., an
Navellier Management Inc., a investment management company
Delaware corporation which is since May 10, 1993; Navellier
the Investment Adviser to the International Management, Inc.
Fund. Mr. Navellier is also since May 10, 1993; Navellier
CEO, President, Secretary, and International Management, Inc.
Treasurer of Navellier since May 10, 1993, and has been
Securities Corp., the principal publisher and editor of MPT Review
underwriter of the Fund's from August 1987 to the present
shares. and was publisher and editor of
the predecessor investment
advisory newsletter OTC Insight,
which he began in 1980 and wrote
through July 1987.
Alan Alpers/1/ Trustee, Portfolio Manager, and Mr. Alpers was a stockbroker with
920 Incline Way Secretary of The Navellier Shearson Lehman Brothers and was
Building 1 Series Fund, Investment employed by Navellier & Associates
Incline Village Advisor Representative for Inc. as an analyst and is now an
Nevada, 89450 Navellier & Associates, Inc. investment advisor representative
for that firm.
Donald A. Simon Independent Trustee Currently the Executive Vice
Air Ambulance, Inc. President and Director of Air
21893 Skywest Dr. Ambulance, Inc., an aeromedical
Hayward, CA 94941 transportation company, Mr. Simon
was formerly Chairman of KangaROOS
USA, Inc., a footwear importer;
Executive
</TABLE>
- --------------------------------------------------------------------------------
/1/ These persons are interested persons affiliated with the Investment Advisor.
5
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS REGISTRANT AND ITS AFFILIATES PAST FIVE YEARS
- - ---------------- -------------------------------- ----------------------------------
<S> <C> <C>
Vice President of Life Insurance
RX Corp., a commuter services
firm; and President of Air
Chaparral/Inland Empire Airlines,
a regional commuter airline. He
has over 35 years of experience in
the mutual fund, financial
planning, insurance, and corporate
areas of large and small
companies.
Lawrence Bianchi Independent Trustee Currently Chairman of the Board of
Codman Company Directors of The Codman Company,
211 Congress Street Inc., and a member of The American
Boston, MA 02210 Society of Real Estate
Consultants, Mr. Bianchi has been
in the Boston real estate market
for 28 years. He has been a
Commissioner for 16 years,
representing the Greater Boston
Real Estate Board on the Boston
Landmarks Commission, served 20
years on the Industrial
Development Financing Authority of
the City of Boston, and for the
past 11 years has been its
Chairman. He was President in
1989 of the New England Chapter of
The Society of Industrial and
Office Realtors. He is an
incorporator of both Massachusetts
General Hospital and University
Hospital and a Director of
Historic Boston, Inc., and the
Bostonian Society. Prior to its
sale in 1992 to the John Hancock
Insurance Company, Mr. Bianchi
served for 3-1/2 years as one of
four outside directors of the 750
million dollar Patriot Group of
three closed-end mutual funds
listed on the New York Stock
Exchange.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING
NAME AND ADDRESS REGISTRANT AND ITS AFFILIATES PAST FIVE YEARS
- - ---------------- -------------------------------- ----------------------------------
<S> <C> <C>
Kenneth Sletten Independent Trustee President of Rudolph & Sletten,
Rudolph & Sletten Inc., a prominent construction
989 E. Hillsdale company in California. He has
Foster City, CA been Chairman of the Board of
94404 Directors in the Santa Clara
District of the Associated
General Contractors (AGC), and is
a member of the Board of Directors
of their Building Division. He is
a lifetime member of the Northern
California Construction Institute
(NCCI), and a member of the
American Institute of Plant
Engineers (AIPE). He serves on
the boards of the Children's
Health Council and Menlo School
and College.
</TABLE>
7
<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 $10,000, if the Fund's net assets are $200 million or
less, and $20,000 if the Fund's net assets are over $200 million. 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 an attendance fee from the Fund of $500 per board meeting and for
attendance at any meeting of a committee of the board, as well as reimbursement
for actual expenses of such attendance.
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.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The Fund does not control and is not under common control of any person.
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 920 Incline Way, Building 1, Incline Village, Nevada 89450. The
Investment Adviser has no prior business history.
(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:
<TABLE>
<CAPTION>
Shares of Outstanding Stock Percentage of
Name of the Investment Adviser Outstanding Shares
- - ---- --------------------------- ------------------
<S> <C> <C>
Louis G. Navellier 1,000 100%
</TABLE>
(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.
Alan Alpers Trustee, Portfolio Manager, and Secretary 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 a
percentage of each Portfolio's average daily net assets, equal to 1.25% for
the Navellier Aggressive Small Cap Equity Portfolio and/or any subsequent
Portfolio. 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
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.
9
<PAGE>
In the event that the annual operating expenses of any Portfolio, including
amounts payable to the Investment Adviser, paid or payable by such Portfolio for
any fiscal year, exceed the expense limitations applicable to the Portfolio
imposed by state securities laws or regulations thereunder, as such limitations
may be adjusted from time to time, the Investment Adviser shall reduce its
management fee to the extent of such excess and, if required, pursuant to any
such laws or regulations (unless otherwise waived), will reimburse the
applicable Portfolio for annual operating expenses in excess of any such expense
limitation. Presently, California has the most restrictive state expense
limitations applicable to the Fund. Generally, these limitations provide that
the Fund's aggregate annual expenses shall not normally exceed 2-1/2% of the
first $30 million of average net assets, 2% of the next $70 million of average
net assets, and 1-1/2% of the remaining average net assets of the Fund for any
fiscal year.
The Advisory Agreement provides that the Investment Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund or its investors except for losses (i) resulting from the willful
misfeasance, bad faith, or gross negligence on its part, (ii) resulting from
reckless disregard by it of its obligations and duties under the Advisory
Agreement, or (iii) a loss for which the Investment Adviser would not be
permitted to be indemnified under the Federal Securities laws.
(iv) Pursuant to an Administrative Services Agreement, the Investment
Adviser receives an annual fee of .25% of the value of the assets under
management and provides or is responsible for the provision of certain
administrative services to the Fund, including, among others, the preparation
and maintenance of certain books and records required to be maintained by the
Fund under the Investment Company Act of 1940. The Administrative Services
Agreement permits the Investment Adviser to contract out for all of its duties
thereunder; however, in the event of such contracting, the Investment Adviser
remains responsible for the performance of its obligations under the
Administrative Services Agreement. The Investment Adviser has entered into an
agreement with Rushmore Trust and Savings, FSB, to perform, in addition to
custodian and transfer agent services, some or all administrative services.
In exchange for its services under the Administrative Services Agreement, the
Fund reimburses the Investment Adviser for certain expenses incurred by the
Investment Adviser in connection therewith. The agreement also allows
Investment Adviser to pay to its delegate part or all of such fees and
reimbursable expense payments incurred by it or its delegate.
The Investment Adviser Agreement permits the Investment Adviser to act as
investment adviser for any other person, firm, or corporation, and designates
the Investment Adviser as the owner of the name "Navellier" or any use or
derivation of the word Navellier. If the Investment Adviser shall no longer act
as investment adviser to the Fund, the right of the Fund to use the name
"Navellier" as part of its title may, solely at the Investment Adviser's option,
be withdrawn.
The Investment Adviser advanced the Fund's organizational expenses which have
been estimated to be $143,294. The Fund agreed to reimburse the Investment
Adviser for the organizational expenses it advances, without interest on a date
or dates to be chosen at the sole discretion of Navellier Management, Inc., at
any time after (i) the Fund has $20 million
10
<PAGE>
in total net assets or is breaking even or making a profit, which ever first
occurs. In the event that the total net assets of the Fund does not attain the
foregoing levels before the end of five years, the unreimbursed portion of such
expenses shall become fully payable at the end of the fifth year. No Portfolio
shall be responsible for the reimbursement of more than its proportionate share
of expenses.
(b) THE DISTRIBUTOR
---------------
The Fund's Distributor is Navellier Securities Corp., a Delaware Corporation
organized and incorporated on May 10, 1993. Navellier Securities Corp. is
registered as a broker-dealer with the Securities Exchange Commission and
National Association of Securities Dealers and the various states in which this
Fund's securities will be offered for sale and will be registered with such
agencies and governments before any Fund shares are sold. The Fund's shares
will be continuously distributed by Navellier Securities Corp. (the
"Distributor") located at 920 Incline Way, Building 1, Incline Village, Nevada,
89450, pursuant to a Distribution Agreement, dated May 15, 1993. 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 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.
For the year ended December 31, 1995, the Distributor received $731,298 from
sales loads earned on sales of the Fund's shares.
(c) THE CUSTODIAN AND TRANSFER AGENT
--------------------------------
Rushmore Trust and Savings, FSB, 4922 Fairmont Avenue, Bethesda, Maryland
20814, serves as the custodian of the Fund's portfolio securities and as the
Fund's transfer agent and, in those capacities, maintains certain accounting and
other records of the Fund and processes requests for the purchase or the
redemption of shares, maintains records of ownership for shareholders, and
performs certain other shareholder and administrative services on behalf of the
Fund.
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
11
<PAGE>
advisability of investing in, purchasing, or selling securities, and the
availability of securities; furnishing analysis and reports concerning issuers,
industries, economic facts and trends, portfolio strategy and the performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Brokerage and research
services provided by brokers to the Fund or to the Investment Adviser are
considered to be in addition to and not in lieu of services required to be
performed by the Investment Adviser under its contract with the Fund and may
benefit both the Fund and other clients of the Investment Adviser or customers
of or affiliates of the Investment Advisor. Conversely, brokerage and research
services provided by brokers to other clients of the Investment Adviser or its
affiliates may benefit the Fund.
If the securities in which a particular Portfolio of the Fund invests are
traded primarily in the over-the-counter market, where possible, the Fund will
deal directly with the dealers who make a market in the securities involved
unless better prices and execution are available elsewhere. Such dealers
usually act as principals for their own account. On occasion, securities may be
purchased directly from the issuer. Bonds and money market instruments are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Fund (involving both price paid or received and any net
commissions and other costs paid), the efficiency with which the transaction is
effected, the ability to effect the transaction at all where a large block is
involved, the availability of the broker to stand ready to execute possibly
difficult transactions in the future, and the financial strength and stability
of the broker. Such considerations are judgmental and are weighed by the
Investment Adviser in determining the overall reasonableness of brokerage
commissions paid by the Fund. Some portfolio transactions are subject to the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.,
and subject to obtaining best prices and executions, effected through dealers
who sell shares of the Fund.
The Board of Trustees of the Fund will periodically review the performance of
the Investment Adviser of its respective responsibilities in connection with the
placement of portfolio transactions on behalf of the Fund and review the
commissions paid by the Fund over representative periods of time to determine if
they are reasonable in relation to the benefits to the Fund.
The Board of Trustees will periodically review whether the recapture for the
benefit of the Fund of some portion of the brokerage commissions or similar fees
paid by the Fund on portfolio transactions is legally permissible and advisable.
At present, no recapture arrangements are in effect. The Board of Trustees will
review whether recapture opportunities are available and are legally
permissible, and, if so, will determine, in the exercise of their business
judgment, whether it would be advisable for the Fund to seek such recapture.
12
<PAGE>
CAPITAL STOCK AND OTHER SECURITIES
The rights and preferences attached to the shares of each Portfolio are
described in the Prospectus (see "Description of Shares"). The Investment
Company Act of 1940 requires that where more than one class or series of shares
exists, each class or series must be preferred over all other classes or series
in respect of assets specifically allocated to such class or series. Rule 18f-2
under the Act provides that any matter required to be submitted by the
provisions of the Investment Company Act or applicable state law, or otherwise,
to the holders of the outstanding voting securities of an investment company
such as the Fund shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each class or
series affected by such matter. Rule 18f-2 further provides that a class or
series shall be deemed to be affected by a matter unless the interests of each
class or series in the matter are substantially identical or that the matter
does not affect any interest of such class or series. However, the Rule exempts
the selection of independent public accountants, the approval of principal
distribution contracts, and the election of Trustees from the separate voting
requirements of the Rule.
PURCHASE, REDEMPTION, AND PRICING OF SHARES
REDUCED SALES CHARGES. A reduction in the sales charge rate applicable to
---------------------
sales of Portfolio shares may be obtained by volume discounts as described in
the Prospectus. In addition, members of qualified groups or persons purchasing
shares for retirement plans or individual retirement accounts (IRA's) may
purchase shares of the Fund at the same discounts charged on volume discount
purchases. Also, persons who transfer their investments from another investment
company, to which they paid a sales charge, will not be charged a sales charge.
Nor will the Fund Trustees, the Distributor, the Custodian, the Transfer Agent,
retirment or deferred compensation plans or trusts used to fund such plans or
the employees of any of the above, or investment advisors, financial planners,
agents, banks, or brokers directly involved in selling the Fund's shares and
whose firm has executed a selling agreement with the Distributor, or their
employees or the spouse or child of any of the above have to pay a sales charge.
Nor will investors who invest through an account as to which an investment
advisor, financial planner, agent, a bank or broker-dealer charges an account
management or transaction fee ("wrap fee"), provided the bank or broker-dealer
has a selling Agreement with Distributor, have to pay a sales charge.
Purchases may also be made at net asset value (no load) by Investment
Advisors or Financial Planners who place trades for their own accounts or the
accounts of their clients and who charge a management, consulting or other fee
for their services; and clients of such investment advisors or financial
planners who place trades for their own accounts if the accounts are linked to
the master account of such investment advisor or financial planner on the books
and records of the broker or agent; and by retirement and deferred compensation
plans and trusts used to fund those plans, including, but not limited to, those
defined in section 401(a), 403(b), or 457 of the Internal Revenue Code and
"rabbi trusts".
Purchases of Fund shares are made at the public offering price next
determined after the Distributor or Transfer Agent receives payment, including
the applicable sales charge. To receive the group rate on their individual
purchase, group members must purchase shares through a single investment dealer
designated by the group. After the initial purchase, a
13
<PAGE>
member may send funds for the purchase of shares directly to the Transfer Agent.
Sales to members of qualified groups are made at a reduced sales charge because
such sales normally involve less sales effort and sales-related expense than
would usually be associated with sales to individual investors. Also, it is
believed that such reduced sales charges will provide an incentive for increased
investment in the Fund by members of qualified groups which could benefit the
Fund and its shareholders by enabling the Fund to achieve certain economies of
scale and benefits of size more rapidly than would otherwise be the case.
As determined by the Distributor, qualified groups include the employees of a
corporation or a sole proprietorship, members, and employees of a partnership or
association (including, without limitation, members of tax-exempt organizations
enumerated under Sections 501(c)(3) and 501(c)(13) of the Internal Revenue Code
of 1986, or other organized groups of persons (the members of which may include
other qualified groups), provided that: (i) the group has at least 25 members,
of which at least 10 members participate in the initial purchase; (ii) the group
has been in existence for at least six months; (iii) the group has some purpose
in addition to the purchase of investment company shares at a reduced sales
charge; and (iv) the group's sole organizational nexus or connection is not that
the members are credit card holders of a company, policy holders of an insurance
company, customers of a bank or a broker-dealer, clients of an investment
adviser, or security holders of a company.
Members of a qualified group include: (i) any group which meets the
requirements stated above and which is a constituent member of a qualified
group; (ii) any individual purchasing for his or her own account who is carried
on the records of the group or on the records of any constituent member of the
group as being a good standing employee, partner member, or person of like
status of the group or constituent member; or (iii) any fiduciary purchasing
shares for the account of a member of a qualified group or a member's
beneficiary, or participants in a qualified retirement plan, or contributors to
an individual retirement account (IRA). For example, a qualified group could
consist of a trade association which would have as its members individuals, sole
proprietors, partnerships, and corporations. The members of the group would
then consist of the individuals, the sole proprietors and their employees, the
members of the partnerships and their employees, as well as trustees of
employment benefit trusts acquiring Fund shares for the benefit of any of the
foregoing. The Fund reserves the right to revise the terms of, or to suspend or
discontinue, group sales charge discounts at any time.
An investor who purchases shares in amounts of $25,000 or more shall be
charged a reduced sales charge in accordance with the breakpoints set forth at
page 1 of the Prospectus.
In addition, purchases of shares of the Fund by (i) Trustees, officers, and
full-time employees of the Fund, (ii) directors, officers, and full-time
employees of the Distributor or the Investment Adviser, (iii) selected dealers,
(iv) Trustees, officers, partners, and full-time employees of selected dealers
which are not individuals, and (v) the spouse or child of those individuals
included in (i) and (iv) will not be subject to any sales charge nor will
investors who invest through an account as to which a bank or broker-dealer
charges an account management fee, provided the bank or broker-dealer has a
selling agreement with Distributor, have to pay a sales charge. Any of the
persons listed in clauses (i)-(iv) above and their spouses can also purchase
shares for custodial or trust accounts for their minor children.
14
<PAGE>
LETTERS OF INTENT. Shares of one or more Portfolio may be purchased by a
-----------------
"single purchaser," within a period of 13 months, pursuant to a Letter of Intent
in the form provided by the Distributor. Such Letter of Intent shall state the
investor's intention to invest in such shares during such period in an amount
which, together with the value (at their maximum offering prices on the date of
the Letter of Intent) of the shares of one or more of the specified Portfolios
then owned by such investor, equals a specified dollar amount ($25,000 or more).
Each purchase of shares made pursuant to a Letter of Intent will be made at the
public offering price, as described in the then current Prospectus relating to
such shares, which at the time of purchase is applicable to a single transaction
of the dollar amount specified in the Letter of Intent. The term "single
purchaser" includes an individual, or an individual, his spouse and their
children under the age of 21 purchasing for his or their own account (including
an IRA account) including his or their own trust, commonly known as living
trusts; a trustee or other fiduciary purchasing for a single trust, estate, or
single fiduciary account, although more than one beneficiary is involved;
multiple trusts for the same employer; or trust companies and bank trust
departments placing orders with respect to funds over which they exercise
discretionary investment authority and which are held in a fiduciary, agency,
custodial, or similar capacity, provided all shares are held of record in the
name, or nominee name, of the trust company or bank.
An investor's Letter of Intent is not a binding commitment of the investor to
purchase or a binding obligation of the Fund or the Distributor to sell a
specified dollar amount of shares qualifying for a reduced sales charge.
Accordingly, out of his initial purchase (and subsequent purchases if
necessary), 5% of the dollar amount of purchases required to complete the
investor's investment is held in escrow in the form of shares (valued at the
purchase price thereof) registered in the investor's name until he completes his
investment, at which time escrowed shares are deposited to his account. If the
investor does not complete his investment and does not within 20 days after
written request by the Distributor or his dealer pay the difference between the
sales charge on the dollar amount specified in his Letter of Intent and the
sales charge on the dollar amount of actual purchases, the difference will be
realized through the redemption of an appropriate number of the escrowed shares
and any remaining escrowed shares will be deposited to the investor's account.
COMBINATION PURCHASE PRIVILEGE. Purchases, either singly or in any
------------------------------
combination, of shares of one or more Portfolios, if made at a single time by a
single purchaser, will be combined for the purpose of determining whether the
total dollar amount of such purchases entitles the purchaser to a reduced sales
charge on any of such purchases. Each purchase of shares will then be made at
the public offering price, as described in the then current Prospectus relating
to such shares, which at the time of such purchase is applicable to a single
transaction of the total dollar amount of all such purchases. The term "single
purchaser" includes an individual, or an individual, his spouse and their
children under the age of 21, purchasing for his or their own account (including
an IRA account), including his or their own trust, commonly known as living
trusts; a trustee or other fiduciary purchasing for a single trust, estate, or
single fiduciary account, although more than one beneficiary is involved;
multiple trusts for the same employer; or trust companies and bank trust
departments placing orders with respect to funds over which they exercise
discretionary investment authority and which are held in a fiduciary, agency,
custodial, or similar capacity, provided all shares are held of record in the
name, or nominee name, of the trust company or bank.
15
<PAGE>
RIGHTS OF ACCUMULATION. Purchases, either singly or in any combination, of
----------------------
shares of one or more Portfolios, if made at a single time by a "single
purchaser" (as defined above) who already owns shares of one or more Portfolios,
will be combined for the purpose of determining whether the dollar amount of
such purchases plus the current value (at their maximum offering prices) of
shares of one or more of the specified Portfolios then owned by such purchaser
equals a dollar amount of purchases entitling the purchaser to a reduced sales
charge on any of such purchases, provided that at the time of any such
purchases, the purchaser, either directly or through his broker or dealer,
furnishes the Distributor (in the case of an investment through a broker or
dealer) or its agent (in the case of a direct cash investment by mail to
Rushmore Trust and Savings FSB), with sufficient information as to account
registrations and account numbers to permit verification that one or more of his
purchases qualifies for a reduced sales charge.
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.
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO. In determining the value of
-----------------------------------------------
the assets of the Navellier Aggressive Small Cap Equity Portfolio, 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
16
<PAGE>
(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 the 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. Use of a pricing
service has been approved by the Board of Trustees. All other securities and
assets are valued at their fair value as determined in good faith by the Board
of Trustees, although the actual calculations may be made by persons acting
pursuant to the direction of the Board of Trustees.
TAXES
In the case of a "series fund" (that is, a regulated investment company
having more than one segregated portfolio of investments the beneficial
interests in which are owned by the holders of a separate series of stock), each
investment portfolio is treated as a separate corporation for federal income tax
purposes. The Fund will be deemed a series fund for this purpose and, thus,
each Portfolio will be deemed a separate corporation for such purpose.
Each Portfolio of the Fund intends to qualify as a regulated investment
company for federal income tax purposes. Such qualification requires, among
other things, that each Portfolio (a) make a timely election to be a regulated
investment company, (b) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities (including options and futures) or
foreign currencies, (c) derive less than 30% of its gross income from the sale
or other disposition within three months of purchase of (i) stock or securities,
(ii) options, futures, or forward contracts (other than options, futures, or
forward contracts on foreign currencies), or (iii) foreign currencies or
options, futures, or forward contracts on foreign currencies that are not
directly related to its principal business of investing in stocks or securities
(or options and futures with respect to stocks or securities), and (d) diversify
its holdings so that at the end of each fiscal quarter (i) 50% of the market
value of its assets is represented by cash, government securities, securities of
other regulated investment companies, and securities of one or more other
issuers (to the extent the value of the securities of any one such issuer owned
by the Portfolio does not exceed 5% of the value of its total assets and 10% of
the outstanding voting securities of such issuer) and (ii) not more than 25% of
the value of its assets is invested in the securities (other than government
securities and securities of other regulated investment companies) of any one
issuer. 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
17
<PAGE>
dividend is required to include the dividend in income on the later of the ex-
dividend date or the date of acquisition.
Dividends paid out of net investment income and net short-term capital gains
of a Portfolio will be taxable to shareholders as ordinary income regardless of
whether such distributions are reinvested in additional shares or paid in cash.
If a portion of a Portfolio's net investment income is derived from dividends
from domestic corporations, a corresponding portion of the dividends paid out of
such income may be eligible for the dividends-received deduction. Corporate
shareholders will be informed as to the portion, if any, of dividends received
by them which will qualify for the dividends-received deduction.
Dividends paid out of the net capital gain of a Portfolio that are designated
as capital gain dividends by the Fund will be taxable to shareholders as long-
term capital gains regardless of how long the shareholders have held their
shares. Such dividends will not be eligible for the dividends-received
deduction. Any losses recognized upon the sale or exchange of shares of a
series within six months from the date of their purchase will be treated as
long-term capital loss to the extent of any amounts treated as dividends paid or
deemed paid during such period out of the net long-term capital gain of the
related Portfolio.
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
18
<PAGE>
90 days of the acquisition of the original shares, however, the shareholder's
basis in the original shares will not include the sales charge 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 paid upon acquisition of the original shares
is not taken into account in determining the shareholder's gain or loss from the
disposition of the original shares, it is added to the basis of the newly
acquired shares.
On or before January 31 of each year, the Fund will issue to each person who
was a shareholder at any time in the prior year a statement of the federal
income tax status of all distributions made to such shareholder.
Shareholders who fail to provide correct taxpayer identification numbers or
fail to certify as to no loss of exemption from backup withholding or otherwise
fail to comply with applicable requirements of the law relating to backup
withholding will be subject to backup withholding with respect to dividends at
the rate of 20% 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 capital gain net 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.
19
<PAGE>
The individual Portfolios will not be subject to tax in Delaware for any year
in which they each qualify as a regulated investment company. They may,
however, be subject to such tax for any year in which they do not so qualify and
may be subject to tax in certain other states where they are deemed to be doing
business. Moreover, distributions may be subject to state and local taxes. In
those states which have income tax laws, the tax treatment of such Portfolios
and the tax treatment of shareholders with respect to distributions may be
different from the federal income tax treatment of such persons.
UNDERWRITERS
The Fund's shares will be continuously distributed through Navellier
Securities Corp. (the "Distributor") located at 920 Incline Way, Building No. 1,
Incline Village, Nevada 89450, pursuant to a distribution agreement dated May
15, 1993. The Distributor is a newly incorporated entity and has no prior
business history.
The Distributor acts as the sole principal underwriter of the Fund's shares.
Through a network established by the Distributor, the Fund's shares may also be
sold through selected investment brokers and dealers. For a description of the
Distributor's obligations to distribute the Fund's securities, see "The
Investment Adviser, Distributor, Custodian and Transfer Agent - Distributor."
CALCULATION OF PERFORMANCE DATA
Performance information for each Portfolio may appear in advertisements,
sales literature, or reports to shareholders or prospective shareholders.
Performance information in advertisements and sales literature may be expressed
as yield or total return on the Navellier Aggressive Small Cap Equity Portfolio.
Quotations of yield for the Navellier Aggressive Small Cap Equity 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:
YIELD = 2[[a-b+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
20
<PAGE>
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.
The manner in which total return will be calculated for public use is
described above. Since the Fund has been in operation for less than one (1)
year, a table summarizing the calculation of total return for each Portfolio has
not been included.
Performance information for the Portfolios shall reflect only the performance
of a hypothetical investment in the Portfolios during the particular time period
on which the calculations are based. Performance information should be
considered in light of the investment objectives and policies, characteristics
and quality of the particular Portfolio, and the market conditions during the
given time period, and should not be considered as a representation of what may
be achieved in the future.
Each Portfolio may, from time to time, include in advertisements containing
total return the ranking of those performance figures relative to such figures
for groups of mutual funds categorized by Lipper Analytical Services, or other
services, as having the same investment objectives. The total return may also
be used to compare the performance of the Portfolio against certain widely
acknowledged outside standards or indices for stock and bond market performance.
The Standard & Poor's Composite Index of 500 stocks ("S&P 500") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of 500 stocks relative to the base period 1941-43. The S&P 500 is
composed almost entirely of common stocks of companies listed on the New York
Stock Exchange, although the common stocks of a few companies listed on the
American Stock Exchange or traded over-the-counter are included.
As summarized in the Prospectus under the heading "Performance and Yield," the
total return of the Navellier Aggressive Small Cap Equity Portfolio may be
quoted in advertisements and sales literature.
/*/ The Portfolio's Total Return Calculation assumes the maximum sales load is
deducted from the initial $1,000 payment.
21
<PAGE>
REPORT OF INDEPENDENT AUDITORS
22
<PAGE>
December 31, 1995 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- - -------------------------------------------------------- --------------------------------------------------------
Market Value Market Value
Shares (Note 1) Shares (Note 1)
- - -------------------------------------------------------- --------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS COMMON STOCKS (continued)
ADVANCED MEDICAL DEVICES -- 3.32% DIAGNOSTIC EQUIPMENT -- 0.98%
36,500 Avecor Cardiovascular, Inc.* $ 647,875 47,000 Media Logic, Inc. $ 387,750
51,600 Cyberoptics Corp.* 2,051,100 88,500 Nanometrics, Inc. 652,688
84,000 Q-Med, Inc.* 808,500 -------------
------------- 1,040,438
3,507,475 -------------
-------------
ADVERTISING/MARKETING -- 1.88% DIVERSIFIED TECHNOLOGY -- 1.83%
65,000 Ha-Lo Industries, Inc.* 1,998,750 76,950 Zygo Corp.* 1,933,369
------------- -------------
AIRLINES -- 0.57% ELECTRONICS -- 6.44%
60,000 Atlantic Coast Airlines, Inc.* 615,000 56,000 Burr Brown Corp.* 1,428,000
------------- 217,700 Computer Products, Inc.* 2,503,550
BEVERAGES -- 1.31% 38,800 Keithley Instruments, Inc. 649,900
50,000 Robert Mondavi Corp.* 1,381,250 114,000 Semtech Corp.* 2,223,000
------------- -------------
BIOTECHNOLOGY -- 3.70% 6,804,450
60,000 Cephalon, Inc.* 2,445,000 -------------
108,000 Cyanotech Corp.* 1,296,000 ENGINEERING/DESIGN -- 2.23%
19,000 Prime Medical Service, Inc.* 171,000 300,000 IMP, Inc.* 2,362,500
------------- -------------
3,912,000 ENVIRONMENTAL CONTROL/
------------- WASTE MANAGEMENT -- 0.90%
CASINOS/GAMING -- 2.38% 55,000 TETRA Technologies, Inc. 955,025
108,000 Grand Casinos, Inc.* 2,511,000 -------------
-------------
COMPUTER HARDWARE -- 2.55% FINANCIAL -- 1.54%
58,047 Hadco Corp.* 1,632,573 100,000 Olympic Financial, LTD. 1,625,000
94,500 Jabil Circuit, Inc.* 1,063,125 -------------
-------------
2,695,698 FINANCIAL SERVICES -- 1.71%
------------- 51,000 Aames Financial Corp. 1,421,625
COMPUTER SOFTWARE -- 15.34% 40,000 American Physicians Service
101,000 PC Docs Group International* 1,805,375 Group* 385,000
70,500 McAffee Associates, Inc.* 3,093,188 -------------
78,000 Quality Systems, Inc.* 2,262,000 1,806,625
100,000 Quarterdeck Office Systems, -------------
Inc.* 2,750,000 FOOD -- 1.02%
137,000 Structural Dynamics Research 60,000 Manhattan Bagel Company, Inc.* 1,080,000
Corp.* 4,024,375 -------------
60,000 Veritas Software Corp.* 2,280,000 INSURANCE -- 0.44%
------------- 12,000 American Bankers Insurance
16,214,938 Group, Inc. 468,000
------------- -------------
CONSUMER NON-CYCLICAL -- 0.46% MEDIA -- 1.19%
10,000 Culbro Corp.* 491,250 60,000 National Media Corp.* 1,260,000
------------- -------------
COSMETICS/PERSONAL CARE -- 1.47%
60,000 Thermolase Corp.* 1,552,500 OIL -- 2.41%
------------- 76,500 Chesapeake Energy Corp.* 2,543,625
-------------
DATA COMMUNICATIONS/NETWORKING -- 7.56% PHARMACEUTICALS -- 4.08%
53,000 Ascend Communications, Inc.* 4,299,625 50,000 Interneuron Pharmaceuticals,
150,000 Gandalf Technologies, Inc.* 2,550,000 Inc.* 1,275,000
67,000 Microdyne Corp.* 1,139,000 113,000 Neurogen Corp.* 3,036,875
------------- -------------
7,988,625 4,311,875
------------- -------------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
December 31, 1995 Navellier Aggressive Small Cap Equity Portfolio
- - -------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------
Market Value
Shares (Note 1)
- - ----------------------------------------------------------------
<S> <C>
COMMON STOCKS (continued)
Recreation Products - 3.87%
165,000 Macgregor Sports & Fitness,
Inc.* $ 443,437
111,7000 Ride, Inc.* 3,644,212
------------
4,087,649
------------
Restaurants - 0.34%
20,000 Long Horn Steaks, Inc.* 355,000
------------
Savings and Loans - 1.80%
55,000 Coast Savings Financial, Inc.* 1,904,374
Semiconductors and Related - 5.35%
49,000 Advanced Semiconductors
Material Intl.* 2,413,250
48,000 Kennel Corp.* 1,146,000
89,000 Trident Microsystems, Inc.* 2,091,500
------------
5,650,750
------------
Telecommunications - 8.98%
91,500 California Amplifier, Inc.* 2,584,875
118,000 Computer Telephone Corp.* 1,593,000
50,000 NRP, Inc.* 300,000
72,000 Picturetel Corp.* 3,105,000
55,000 Wireless Telecom Group 921,250
50,000 Zoom Telephonic, Inc.* 987,500
------------
9,491,625
------------
<CAPTION>
- - ----------------------------------------------------------------
Market Value
Shares (Note 1)
- - ----------------------------------------------------------------
<S> <C>
COMMON STOCKS (continued)
Temp Staffing - 5.34%
75,000 AccuStaff, Inc.* $ 3,300,000
69,000 Employee Solutions, Inc.* 2,346,000
------------
5,646,000
------------
Transportation Equipment - 1.5%
73,000 Greenwich Air Services, Inc. 1,679,000
------------
Total Common Stocks - 92.58%
(Cost $79,462,554) 97,874,391
------------
MUTUAL FUNDS - 7.42%
Fund for Government Investors, Inc.
(Cost $7,842,413) 7,842,413
------------
Total Investments - 100.00%
(Cost $87,304,967) $105,716,804
============
</TABLE>
*Nonincome producing
See Notes to Finacial Statements
<PAGE>
December 31, 1995 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<S> <C>
ASSETS
Securities at Value (Note 1, see portfolio for cost information)....... $105,716,804
Cash in Custodian Bank................................................. 121,277
Receivable for Shares Purchased........................................ 1,859,629
Interest Receivable.................................................... 45,746
Dividends Receivable................................................... 3,300
Unamortized Organizational Costs (Note 1).............................. 26,171
------------
Total Assets........................................................... 107,772,927
------------
LIABILITIES
Distributions Payable.................................................. 143,365
Payable for Securities Purchased....................................... 1,797,419
Payable for Shares Redeemed............................................ 242,463
Commissions Payable.................................................... 115,151
Investment Advisory Fee Payable (Note 2)............................... 106,574
Administrative Fee Payable (Note 2).................................... 42,630
Organizational Expenses Payable to Adviser (Note 1).................... 26,171
------------
Total Liabilities...................................................... 2,473,773
------------
NET ASSETS............................................................. $105,299,154
============
Shares Outstanding..................................................... 6,831,185
============
Net Asset Value Per Share.............................................. $ 15.41
============
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
For the Year Ended
December 31, 1995 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest (Note 1).............................................. $ 227,654
Dividends (Note 1)............................................. 92,464
-----------
Total Investment Income........................................ 320,118
-----------
EXPENSES
Investment Advisory Fee (Note 2)............................... 664,744
Transfer Agent and Custodian Fee (Note 3)...................... 137,089
Administrative Fee (Note 2).................................... 132,949
Trustees' Fees................................................. 36,938
Registration Fees.............................................. 29,918
Insurance...................................................... 24,514
Audit Fees..................................................... 18,000
Printing....................................................... 17,557
Organizational Expense (Note 1)................................ 14,215
Other Expenses................................................. 42,023
-----------
Total Expenses................................................. $ 1,117,947
Less Expenses Reimbursed by Investment Adviser (Note 2)........ (187,305)
-----------
Net Expenses................................................... 930,642
-----------
NET INVESTMENT LOSS............................................ (610,524)
-----------
Net Realized Gain on Investments............................... 1,524,157
Net Change in Unrealized Appreciation of Investments........... 15,989,475
-----------
NET GAIN ON INVESTMENTS........................................ 17,513,632
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........... $16,903,108
===========
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year For the
Ended Period Ended
December 31, December 31,
1995 1994*
----------- -----------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss).............. $ (610,524) $ (38,577)
Net Realized Gain (Loss) on Investment
Transactions............................. 1,524,157 (788,364)
Net Change In Unrealized Appreciation
of Investments........................... 15,989,475 2,422,362
------------ -----------
Net Increase in Net Assets Resulting
from Operations.......................... 16,903,108 1,595,421
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income................ - -
From Net Realized Capital Gains........... (2,499,314) -
From Share Transactions (Note 5).......... 72,671,665 16,328,274
------------ -----------
Net Increase in Net Assets................ 87,075,459 17,923,695
Net Assets - Beginning of Period.......... 18,223,695 300,000
------------ -----------
Net Assets - End of Period................ $105,299,154 $18,223,695
============ ===========
</TABLE>
*From Commencement of Operations January 3, 1994.
See Notes to Financial Statements.
7
<PAGE>
Navellier Aggressive Small Cap Equity Portfolio
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Year For the
Ended Period Ended
December 31, 1995 December 31, 1994*
----------------- ------------------
<S> <C> <C>
Per Share Operating Performance:
Net Asset Value-Beginning of Period............................. $10.98 $10.00
------ ------
Net Investment Loss............................................. (0.16) (0.08)
Net Realized and Unrealized Gains on Securities................. 4.97 1.06
------ ------
Net Increase in Net Asset Value Resulting from Operations....... 4.81 0.98
Distributions to Shareholders:
From Net Investment Income.................................... - -
From Net Realized Capital Gains............................... (0.98) -
------ ------
Net Increase in Net Asset Value................................. 4.43 0.98
------ ------
Net Asset Value-End of Period................................... $15.41 $10.98
====== ======
Total Investment Return........................................... 43.80% 9.80%
Ratios to Average Net Assets:
Expenses After Reimbursement (Note 2)........................... 1.75% 1.68%
Expenses Before Reimbursement (Note 2).......................... 2.10% 4.52%
Net Investment Loss............................................. (1.15)% (0.81)%
Supplementary Data:
Portfolio Turnover Rate......................................... 169.6% 139.9%
Number of Shares Outstanding at End of Period (000's omitted)... 6,831 1,660
</TABLE>
- - ------------------------
* Total returns do not include the maximum sales load. Total returns for
periods of less than one year are not annualized.
* From Commencement of Operations January 3, 1994.
See Notes to Financial Statements.
8
<PAGE>
December 31, 1995
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Navellier Series Fund (the "Fund") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a diversified,
open-end investment company. The Fund consists of one portfolio, Navellier
Aggressive Small Cap Equity Portfolio (the "Portfolio"). Shares of the Fund are
purchased at the public offering price which includes a maximum sales charge of
up to 3.00% depending on the size of the purchase. 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 Portfolio's securities in good faith. The
Board of Trustees will periodically review this method of valuation and
recommend changes which may be necessary to assure that the Portfolio's
instruments 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 reinvested in additional shares unless shareholders request
payment in cash. Net capital gains, if any, are distributed annually.
(d) The Fund complies with the provisions of the Internal Revenue Code
applicable to regulated investment companies and distributes all net investment
income to its shareholders. Therefore, no Federal income tax provision is
required.
(e) Organizational expenses of the Fund totaling $143,294 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 unauthorized organization 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. During
the year ended December 31, 1995, the initial investor redeemed a portion of the
initial shares resulting in a prorata reduction of unamortized organization
expenses. At December 31, 1995, unamortized organization costs were $26,171.
2. Investment Advisory Fees and Other Transactions with Affiliates
Investment advisory services are provided by Navellier 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 for the Navellier Aggressive
Small Cap Equity Portfolio. The Adviser also receives a 0.25% annual fee 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. During the year ended December 31, 1995,
the Adviser paid operating expenses of the Fund totaling $320,354. Under the
operating expense agreement, the Adviser requested, and the Fund reimbursed,
$132,949 of such expenses. The Adviser voluntarily agreed not to seek future
reimbursement of $187,305 of such 1995 expenses.
In addition, at December 31, 1995, the Adviser voluntarily agreed not to
seek future reimbursement of $81,221 of expenses for which reimbursement had
been temporarily waived at December 31, 1994. Accordingly, at December 31,
1995, there were no prior expenses which could be reimbursed in the future under
the agreement.
9
<PAGE>
December 31, 1995
- --------------------------------------------------------------------------------
Navellier Securities Corp. acts as the Fund's Distributor and is registered
as a broker-dealer under the Securities and Exchange Act of 1934. The
Distributor, which is the principal underwriter of the Funds 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.
For the year ended December 31, 1995, the Distributor received $731,298
from sales loads earned on sales of the Fund's capital stock.
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. Securities Transactions
For the year ended December 31, 1995, purchases of securities were
$142,588,828 and sales of securities were $79,543,783. These totals exclude
short-term securities.
5. Share Transactions
On December 31, 1995, the Fund is authorized to issue an unlimited number
of shares of capital stock with no stated par value. Transactions in shares of
the Fund were as follows:
<TABLE>
<CAPTION>
Shares Dollars
------ -------
<S> <C> <C>
Shares Sold....................................... 9,128,613 $130,265,618
Shares Issued in Reinvestment of Dividends........ 152,845 2,355,336
--------- ------------
9,281,458 132,620,954
Shares Redeemed................................... (4,110,315) (59,949,289)
--------- ------------
Net Increase...................................... 5,171,143 $ 72,671,665
========= ============
</TABLE>
6. Net Unrealized Appreciation/Depreciation of Investments
As of December 31, 1995, net appreciation of investments for Federal income
tax purposes was $18,411,837 of which $22,002,047 related to appreciated
investments and $3,590,210 related to depreciated investments. At December 31,
1995, the cost of the Fund's securities for Federal income tax purposes was
$87,307,967.
7. Net Assets
At December 31, 1995, net assets consisted of the following:
<TABLE>
<S> <C>
Paid-in Capital........................................... $ 89,261,316
Net Unrealized Appreciation on Investments................ 18,411,837
Accumulated Realized Loss on Investments.................. (2,373,999)
- - ------------
NET ASSETS................................................ $105,299,154
============
</TABLE>
<PAGE>
December 31, 1995
- -------------------------------------------------------------------------------
8. Federal Income Tax
No provision is made for Federal Income taxes as it is the Fund's intention
to continue to qualify as a regulated investment company and to make requisite
distributions to the shareholders which will be sufficient to relieve it from
all or substantially all Federal Income and excise taxes.
Effective January 3, 1994, the Fund has adopted Statement of Position 93-2;
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies.
Adoption of this standard results in the reclassification to paid-in-capital of
permanent differences between tax and financial reporting of net investment
income and realized gains/(losses).
9. Subsequent Event
During 1995, the Fund invested its daily cash balance in Fund for Government
Investors, Inc. (FGI), a registered investment company. FGI invested only in
U.S. Government Securities. Due to an interpretation of the Fund's current
investment policy, as of January 22, 1996 the Fund will no longer invest in
other investment companies.
11
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
of Navellier Series Fund:
We have audited the statement of assets and liabilities, including the
portfolio of investments, of Navellier Aggressive Small Cap Equity Portfolio of
Navellier Series Fund (the "Fund") as of December 31, 1995, and the related
statement of operations for the year then ended and the statements of changes in
net assets and the financial highlights for the year ended December 31, 1995
and the period January 3, 1994 (commencement of operations) to December 31,
1994. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility it to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the net assets of Navellier Aggressive Small
Cap Equity Portfolio of Navellier Series Fund at December 31, 1995, the result
of its operations, the changes in its net assets, and the financial highlights
for the respective stated periods in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Washington, D.C.
February 16, 1996
<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.
33
<PAGE>
ANNUAL REPORT, December 31, 1996
NAVELLIER PERFORMANCE FUNDS
1 East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
- --------------------------------------------------------------------------------
February 1997
Dear Shareholder:
For the year 1996, the Navellier Aggressive Growth Portfolio ("the Fund")
returned 22.62%. This compares favorably to 14.76% for the Russell 2000*, 17.48%
for the Lipper Growth Funds Index** and the Nasdaq Composite*** which returned
22.71% over the same period. During the first six months of 1996, the Navellier
Aggressive Growth Portfolio gained 30.63%, compared to a 12.63% gain for the
Nasdaq Composite and a 9.70% gain for the Russell 2000. During the second half
of 1996 the Fund lost 6.13%, compared to a positive 8.95% return for the Nasdaq
Composite and a positive 4.61% return for the Russell 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NAVELLIER AGGRESSIVE GROWTH PORTFOLIO
<S> <C> <C> <C>
DATE Aggressive Growth Portfolio NASDAQ Composite Russell 2000
12/31/95 $10,000 $10,000 $10000
1/31/96 $9,540 $10,073 $9981
2/29/96 $10,600 $10,455 $10284
3/31/96 $11,330 $10,468 $10468
4/30/96 $12,900 $11,315 $11023
5/31/96 $14,040 $11,818 $11452
6/30/96 $13,050 $11,263 $10970
7/31/96 $11,190 $10,270 $10001
8/31/96 $11,850 $10,849 $10567
9/30/96 $12,760 $11,661 $10963
10/31/96 $12,540 $11,610 $10779
11/30/96 $12,220 $12,286 $11207
12/31/96 $12,160 $12,271 $11476
</TABLE>
The above chart indicates the return of $10,000 invested in the NAVELLIER
AGGRESSIVE GROWTH PORTFOLIO on December 29, 1995. As the chart shows by December
31, 1996, the value of the investment would have grown to $12,262, a 22.62%
increase. For comparison purposes, look at how the NASDAQ Composite and the
Russell 2000 performed over the same period. An investment of $10,000 in the
NASDAQ Composite over the same period would have grown to $12,271, a 22.71%
increase. Similarly, an investment of $10,000 in the Russell 2000 over the same
period would have grown to $11,476, a 14.76% increase.
The above charts and performance numbers assume reinvestment of all
distributions.
Please be aware that past performance is no indication of future performance.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
The Fund generally lagged behind the overall stock market during the last six
months of 1996 since primarily large capitalization stocks performed well during
the second half of the year. Although the Fund can buy large cap stocks, growth
stocks are generally found in the small cap arena. One of the startling
statistics for 1996 was highlighted in an article in the January 13, 1997 issue
of Fortune, which stated that the Nasdaq Composite, excluding the 100 largest
stocks, was actually up less than 3% in 1996. In other words, 1996 was
predominantly a large capitalization stock market rally, especially in the
second half of 1996. Virtually none of the largest 100 Nasdaq stocks were in the
Navellier Aggressive Growth Portfolio. Considering that the Nasdaq Composite was
up less than 3% in 1996 when the 100 largest stocks are excluded, we are quite
satisfied that the Fund had strong results in 1996.
The historical valuations of the stocks in the Navellier Aggressive Growth
Portfolio remain reasonable relative to the Dow Industrials and S&P 500. Wave
after wave of money flowing into index funds has benefited the S&P 500 and moved
it into the high range of its historical price/earnings ratio. At over 21 times
current earnings, the S&P 500 is very expensive, especially since the most
optimistic analysts call for only 14% to 15% earnings growth in fiscal 1997. The
average stock in the Navellier Aggressive Growth Portfolio continues to trade at
approximately 30 times earnings, but literally has over 15 times the historical
earnings growth of the S&P 500. Looking forward, the average stock in the Fund
should continue to have far greater earnings growth than the S&P 500. When the
current mania fueling index funds settles down and Wall Street starts rotating
into stocks that represent outstanding fundamental values, my favorite stocks in
the Fund should benefit tremendously. In my opinion, we are now on the verge of
a "stock picking" environment, where predominantly stocks with outstanding
fundamental characteristics, such as those in the Navellier Aggressive Growth
Portfolio, will benefit.
We were proud to introduce the Navellier Mid Cap Growth Portfolio ("the
Portfolio") on November 27, 1996. The Portfolio returned 2.75% for the month of
December. This compares favorably to 2.40% for the Russell 2000*, a negative
1.89% for the Lipper Growth Funds Index** and a negative 0.12% for the Nasdaq
Composite*** over the same short period. We want to emphasize that although we
hope to have excellent returns for this Portfolio, such a short reporting period
says very little for future expectations for any investment.
The fundamentals for the stocks in the Navellier Mid Cap Growth Portfolio remain
very strong. The average stock in the Portfolio continues to trade at
approximately 22 times earnings, but has far more powerful earnings growth
potential than that of the S&P 500. We use the same techniques for the Navellier
Mid Cap Growth Portfolio as we have used for the highly successful Navellier
Aggressive Small Cap Equity Portfolio. The main difference between the two funds
is that we only purchase stocks with a market cap of between $1 and $5 billion
for the Navellier Mid Cap Growth Portfolio. The average cap size for the
companies we are buying for the Navellier Mid Cap Growth Portfolio is
approximately $2.2 billion. This makes the Portfolio an excellent opportunity
for our investors to diversify into a larger cap sector of the market.
On the large scale, economists are having a hard time predicting economic growth
because increasing productivity is hard to account for in their economic models.
Most economists are predicting 2% to 3% economic growth in 1997, which would be
a slowdown from the more than 4% growth experienced in the second half of 1996.
However, these economists are not factoring in continuing productivity gains
that have bolstered the U.S. economy, resulting in exceptionally high growth
without inflation. The implicit price deflator is an inflation indicator without
volatile food and energy prices. It is the most reliable indicator of inflation
and is now at its lowest point in decades. The recent 0.3% drop in wholesale
prices in
2
<PAGE>
January is further evidence that inflation is now deader than dead. The bond
market has celebrated this positive inflation news and as of this writing,
Treasury Bond yields are near the 6.5% level. The low inflation and low interest
rate environment sets a very positive tone for the stock market for the next
several months.
In 1996, the Navellier Aggressive Growth Portfolio performed quite well relative
to other growth funds. In fact, the Fund was our best performing mutual fund in
1996. Through its non-diversified charter, the Navellier Aggressive Growth
Portfolio can better concentrate on key stocks and key industry groups than the
diversified funds that we manage. As a result, the Navellier Aggressive Growth
Portfolio is designed to be our most aggressive growth fund. We were quite happy
with the short experience of our new Navellier Mid Cap Growth Portfolio. The new
Navellier Mid Cap Growth Portfolio should prove to have very strong upside
potential with less volatility than our other smaller cap funds.
I want to personally thank all shareholders in the Navellier Performance Funds
for selecting us to manage some of your assets. We feel very obligated to our
shareholders and plan to close the funds in the future to ensure our high
performance standard. Always feel free to contact us if you have any questions
or we can help you in any way.
Sincerely,
<TABLE>
<S> <C>
[/S/ LOUIS G. NAVELLIER] [/S/ ALAN ALPERS]
LOUIS G. NAVELLIER ALAN ALPERS
</TABLE>
THIS MATERIAL HAS BEEN PRECEDED BY A NAVELLIER PERFORMANCE FUNDS PROSPECTUS.
* THE RUSSELL 2000 INDEX IS AN UNMANAGED INDEX CONSISTING OF THE SMALLEST 2000
STOCKS IN THE RUSSELL 3000 INDEX. IT IS CONSIDERED REPRESENTATIVE OF THE
SMALL CAP MARKET IN GENERAL. IT IS NOT AN INVESTMENT PRODUCT AVAILABLE FOR
PURCHASE.
** THE LIPPER GROWTH FUND INDEX IS AN UNMANAGED NET ASSET VALUE WEIGHTED INDEX
OF 30 MUTUAL FUNDS THAT HAVE "GROWTH" INVESTMENT OBJECTIVES.
*** THE NASDAQ COMPOSITE IS AN UNMANAGED INDEX CONSISTING OF APPROXIMATELY 5,500
STOCKS. IT IS CONSIDERED REPRESENTATIVE OF THE STOCK MARKET AS A WHOLE. IT
IS NOT AN INVESTMENT PRODUCT AVAILABLE FOR PURCHASE.
3
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- - ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- - ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS
AEROSPACE AND DEFENSE -- 1.38%
40,000 Oregon Metallurgical Corp.* $ 1,290,000
-------------
BUSINESS/MANAGEMENT SERVICES -- 2.92%
100,000 FPA Medical Management,
Inc.* 2,237,500
34,293 Sitel Corp.* 484,389
-------------
2,721,889
-------------
CHEMICALS -- 0.80%
27,000 MacDermid, Inc. 742,500
-------------
COMPUTER HARDWARE -- 5.70%
70,000 ENCAD, Inc.* 2,887,500
50,000 QLogic Corp.* 1,287,500
20,000 Western Digital Corp.* 1,137,500
-------------
5,312,500
-------------
COMPUTER SOFTWARE -- 3.04%
20,500 Aspen Technology, Inc.* 1,645,125
30,000 Rational Software Corp.* 1,186,875
-------------
2,832,000
-------------
DATA COMMUNICATIONS/NETWORKING -- 3.32%
75,000 Davox Corp.* 3,093,750
-------------
DIVERSIFIED TECHNOLOGY -- 1.48%
38,000 Zoltek Companies, Inc.* 1,382,250
-------------
ELECTRONICS -- 3.11%
50,000 Inacom Corp.* 2,000,000
84,000 Zytec* 892,500
-------------
2,892,500
-------------
HEALTHCARE -- 2.62%
50,000 Safeskin Corp.* 2,437,500
-------------
HEAVY MACHINERY/CONSTRUCTION -- 3.76%
78,000 Smith International, Inc.* 3,500,250
-------------
HOME FURNISHINGS -- 1.07%
50,000 Stanley Furniture Co., Inc.* 993,750
-------------
<CAPTION>
- - ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- - ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
INDUSTRIAL AND COMMERCIAL SERVICES -- 7.50%
100,000 DT Industries, Inc. $ 3,500,000
90,000 SPX Corp. 3,487,500
-------------
6,987,500
-------------
METALS -- 2.27%
35,000 Olympic Steel, Inc.* 888,125
35,000 Reliance Steel and Aluminum
Co. 1,225,000
-------------
2,113,125
-------------
NATURAL GAS -- 1.45%
46,800 North Carolina Natural Gas
Corp. 1,351,350
-------------
OIL -- 10.80%
22,000 Cliffs Drilling Co.* 1,391,500
140,000 Comstock Resources, Inc.* 1,820,000
39,000 Ensco International, Inc.* 1,891,500
30,000 KCS Energy, Inc. 1,072,500
130,000 Swift Energy Co.* 3,883,750
-------------
10,059,250
-------------
OIL AND GAS EXPLORATION -- 11.92%
110,300 Global Industries, Ltd.* 2,054,338
180,000 Marine Drilling Companies,
Inc.* 3,543,750
20,000 Seacor Holdings, Inc.* 1,260,000
120,000 UTI Energy Corp.* 4,245,000
-------------
11,103,088
-------------
PHARMACEUTICALS -- 10.04%
103,600 Herbalife International,
Inc. 3,379,950
60,800 Jones Medical Industries,
Inc. 2,226,800
85,000 Medicis Pharmaceutical
Corp.* 3,740,000
-------------
9,346,750
-------------
REAL ESTATE -- 1.99%
75,000 Fairfield Communities, Inc.* 1,856,250
-------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- - ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- - ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAILERS -- 17.24%
90,000 Eagle Hardware and Garden,
Inc.* $ 1,867,500
100,000 Equity Marketing, Inc.* 1,850,000
150,000 Finish Line, Inc.* 3,168,750
200,000 Paul Harris Stores, Inc.* 3,550,000
61,500 Ross Stores, Inc. 3,075,000
42,700 West Marine, Inc.* 1,206,275
62,500 Wet Seal, Inc.* 1,335,937
-------------
16,053,462
-------------
SEMICONDUCTORS AND RELATED -- 2.44%
50,000 Vitesse Semiconductor Corp.* 2,275,000
-------------
TECHNICAL SERVICES -- 1.34%
30,000 Technology Solutions Co.* 1,245,000
-------------
<CAPTION>
- - ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- - ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 1.96%
60,000 Pairgain Technologies, Inc.* $ 1,826,250
-------------
VEHICLE PARTS AND EQUIPMENT -- 1.29%
60,000 Miller Industries, Inc.* 1,200,000
-------------
TOTAL COMMON STOCKS -- 99.44%
(COST $82,787,597) 92,615,914
-------------
MUTUAL FUNDS -- 0.56%
520,346 Fund for Government Investors
(Cost $520,346) 520,346
-------------
TOTAL INVESTMENTS -- 100.00%
(COST $83,307,943) $ 93,136,260
-------------
-------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
MID CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- - ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- - ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS
AGRICULTURAL -- 1.77%
1,500 Grupo Industrial Maseca (ADR) $ 28,687
------------
AIRLINES -- 1.44%
1,000 USAir Group, Inc.* 23,375
------------
APPAREL/FABRIC -- 2.54%
1,100 Jones Apparel Group, Inc.* 41,113
------------
AUTO/TRUCK MANUFACTURING -- 1.26%
300 Paccar, Inc. 20,400
------------
BANKING -- 7.43%
500 Commerce Bancshares, Inc. 23,125
500 Greenpoint Financial Corp. 23,625
600 Provident Bancorp, Inc. 20,400
500 Regions Financial Corp. 25,844
300 Star Banc Corp 27,562
------------
120,556
------------
BEVERAGES -- 1.73%
600 Panamerican Beverages, Inc. 28,125
------------
BUSINESS/MANAGEMENT SERVICES -- 1.70%
800 Robert Half International,
Inc.* 27,500
------------
CASINOS/GAMING -- 1.46%
1,300 International Game Technology 23,725
------------
CHEMICALS -- 1.50%
600 Cytec Industries, Inc.* 24,375
------------
COMPUTER HARDWARE -- 3.94%
700 Cognos, Inc.* 19,688
400 Gateway 2000, Inc.* 21,425
400 Western Digital Corp.* 22,750
------------
63,863
------------
CONTAINERS AND PACKAGING -- 1.98%
2,000 Jefferson Smurfit Corp.* 32,125
------------
COSMETICS/PERSONAL CARE -- 1.48%
500 Alberto Culver Co. 24,000
------------
<CAPTION>
- - ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- - ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
DIVERSIFIED TECHNOLOGY -- 3.88%
1,200 BMC Industries, Inc. $ 37,800
400 Diebold, Inc. 25,150
------------
62,950
------------
ELECTRIC UTILITIES -- 1.29%
500 Portland General Corp. 21,000
------------
ELECTRONICS -- 1.60%
600 Hubbell, Inc. 25,950
------------
ENERGY -- 3.15%
2,200 NGC Corp. 51,150
------------
FINANCIAL SERVICES -- 2.90%
800 Alliance Capital Management,
LP 21,300
400 Finova Financial Trust 25,700
------------
47,000
------------
FOODS -- 2.99%
500 Interstate Bakeries Corp. 24,562
400 Vons Companies, Inc.* 23,950
------------
48,512
------------
HEALTHCARE -- 1.91%
700 Mallinckrodt, Inc. 30,887
------------
HEAVY MACHINERY -- 1.66%
600 Smith International, Inc.* 26,925
------------
HOUSEHOLD PRODUCTS -- 3.57%
1,100 Fort Howard Corp.* 30,456
800 US Industries, Inc.* 27,500
------------
57,956
------------
INDUSTRIAL AND COMMERCIAL
SERVICES -- 1.40%
400 Valspar Corp. 22,650
------------
INSURANCE -- 6.33%
400 Ace, Ltd. 24,050
400 Conseco, Inc. 25,500
</TABLE>
* NON-INCOME PRODUCING.
ADR -- AMERICAN DEPOSITORY RECEIPT
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MID CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- - ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- - ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
500 Mid Ocean, Ltd. $ 26,250
400 Progressive Corp. 26,950
------------
102,750
------------
NATURAL GAS -- 3.63%
700 Nicor, Inc. 25,025
2,200 Noram Energy Corp. 33,825
------------
58,850
------------
OFFICE EQUIPMENT/SUPPLIES -- 1.31%
600 Avery Dennison Corp. 21,225
------------
OIL -- 3.38%
600 Ensco International, Inc.* 29,100
700 Parker and Parsley Petroleum
Co. 25,725
------------
54,825
------------
OIL AND GAS EXPLORATION -- 6.29%
500 Camco International, Inc. 23,063
1,500 Global Marine, Inc.* 30,937
500 Louisiana Land and
Exploration 26,813
800 Reading and Bates Corp.* 21,200
------------
102,013
------------
POWER SUPPLY -- 1.51%
900 American Power Conversion
Corp.* 24,525
------------
- - ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- - ------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAILERS -- 2.99%
400 Ross Stores, Inc. $ 20,000
600 TJX Companies, Inc. 28,425
------------
48,425
------------
TELECOMMUNICATIONS -- 3.65%
600 Andrew Corp.* 31,838
900 Pairgain Technologies, Inc.* 27,394
------------
59,232
------------
TOBACCO -- 1.58%
800 Universal Corp. 25,700
------------
UTILITIES -- 1.53%
600 National Fuel Gas Co. 24,750
------------
TOTAL COMMON STOCKS -- 84.78% (COST
$1,339,675) 1,375,119
------------
MUTUAL FUNDS -- 15.22%
246,952 Fund for Government Investors
(Cost $246,952) 246,952
------------
TOTAL INVESTMENTS -- 100.00%
(COST $1,586,627) $ 1,622,071
------------
------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
ASSETS
Securities at Value (Note 1, see portfolios for cost information).................. $ 93,136,260 $ 1,622,071
Receivable for Securities Sold..................................................... 1,904,357 --
Receivable for Shares Sold......................................................... 919,126 29,100
Interest Receivable................................................................ 15,266 29
Dividends Receivable............................................................... 7,921 1,330
Unamortized Organizational Costs (Note 1).......................................... 100,590 --
------------ -----------
Total Assets..................................................................... 96,083,520 1,652,530
------------ -----------
LIABILITIES
Payable for Shares Redeemed........................................................ 366,219 8,740
Payable for Securities Purchased................................................... 204,376 --
Investment Advisory Fee Payable (Note 2)........................................... 103,779 1,107
Administrative Fee Payable (Note 2)................................................ 20,756 221
Distribution Plan Fee Payable (Note 4)............................................. 20,756 221
Other Payables and Accrued Expenses................................................ 20,756 221
Organizational Expenses Payable to Adviser (Note 1)................................ 100,590 --
------------ -----------
Total Liabilities................................................................ 837,232 10,510
------------ -----------
NET ASSETS........................................................................... $ 95,246,288 $ 1,642,020
------------ -----------
------------ -----------
SHARES OUTSTANDING................................................................... 7,773,720 159,948
------------ -----------
------------ -----------
NET ASSET VALUE PER SHARE............................................................ $12.25 $10.27
------ -----------
------ -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------- -------------
FOR THE YEAR FOR THE
ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1996 1996*
------------- -------------
INVESTMENT INCOME
<S> <C> <C>
Interest (Note 1)..................................................... $ 187,721 $ 1,188
Dividends (Note 1).................................................... 67,395 1,354
------------- -------------
Total Investment Income............................................. 255,116 2,542
------------- -------------
EXPENSES
Investment Advisory Fee (Note 2)...................................... 739,162 1,107
Administrative Fee (Note 2)........................................... 147,832 221
Distribution Plan Fees (Note 4)....................................... 147,832 221
Transfer Agent and Custodian Fee (Note 3)............................. 123,286 785
Registration Fees..................................................... 36,699 22,694
Trustees' Fees (Note 2)............................................... 30,000 --
Organizational Expense (Note 1)....................................... 25,200 --
Shareholder Reports and Notices....................................... 21,997 --
Legal Fees............................................................ 15,179 75,000
Audit Fees............................................................ 4,250 --
Other Expenses........................................................ 18,625 --
------------- -------------
Total Expenses...................................................... 1,310,062 100,028
Less Expenses Reimbursed by Investment Adviser (Note 2)............. (127,403) (98,258)
------------- -------------
Net Expenses...................................................... 1,182,659 1,770
------------- -------------
NET INVESTMENT INCOME (LOSS)............................................ (927,543) 772
------------- -------------
Net Realized Loss on Investment Transactions............................ (12,055,596) --
Net Change in Unrealized Appreciation of Investments.................... 9,828,401 35,444
------------- -------------
NET GAIN (LOSS) ON INVESTMENTS.......................................... (2,227,195) 35,444
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......... $ (3,154,738) $ 36,216
------------- -------------
------------- -------------
</TABLE>
*FROM COMMENCEMENT OF OPERATIONS NOVEMBER 26, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MID CAP
AGGRESSIVE GROWTH GROWTH
PORTFOLIO PORTFOLIO
-------------------------- ------------
FOR THE YEAR FOR THE FOR THE
ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995* 1996**
------------ ------------ ------------
FROM INVESTMENT ACTIVITIES
<S> <C> <C> <C>
Net Investment Income (Loss)............................. $ (927,543) $ 21 $ 772
Net Realized Loss on Investment Transactions............. (12,055,596) -- --
Net Change in Unrealized Appreciation (Depreciation) of
Investments............................................ 9,828,401 (84) 35,444
------------ ------------ ------------
Net Increase (Decrease) in Net Assets Resulting from
Operations........................................... (3,154,738) (63) 36,216
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income............................... -- -- (772)
From Net Realized Capital Gains.......................... -- -- --
------------ ------------ ------------
Total Distributions to Shareholders.................... -- -- (772)
------------ ------------ ------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares........................ 172,216,916 200,000 1,614,544
Reinvestment of Distributions............................ -- -- 772
Cost of Shares Redeemed.................................. (74,115,827) -- (8,740)
------------ ------------ ------------
Net Increase in Net Assets Resulting from Share
Transactions......................................... 98,101,089 200,000 1,606,576
------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS........................... 94,946,351 199,937 1,642,020
NET ASSETS -- Beginning of Year............................ 299,937 100,000 --
------------ ------------ ------------
NET ASSETS -- End of Year.................................. $95,246,288 $ 299,937 $1,642,020
------------ ------------ ------------
------------ ------------ ------------
SHARES
Sold..................................................... 13,842,072 20,020 160,724
Issued in Reinvestment of Distributions.................. -- -- 75
Redeemed................................................. (6,098,372) -- (851)
------------ ------------ ------------
Net Increase in Shares................................. 7,743,700 20,020 159,948
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
*FROM COMMENCEMENT OF OPERATIONS DECEMBER 28, 1995.
**FROM COMMENCEMENT OF OPERATIONS NOVEMBER 26, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH MID CAP GROWTH
PORTFOLIO PORTFOLIO
------------------------------- --------------
FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995* 1996**
------------ ------------ --------------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C>
Net Asset Value -- Beginning of Year...................... $9.99 $10.00 $10.00
------------ ------------ -------
Income from Investment Operations:
Net Investment Income (Loss)............................ (0.120) 0.002 0.005
Net Realized and Unrealized Gains (Losses) on
Securities............................................ 2.380 (0.008) 0.270
------------ ------------ -------
Total from Investment Operations...................... 2.260 (0.006) 0.275
------------ ------------ -------
Distributions to Shareholders:
From Net Investment Income.............................. -- -- (0.005)
From Net Realized Capital Gains......................... -- -- --
------------ ------------ -------
Total Distributions to Shareholders................... -- -- (0.005)
------------ ------------ -------
Net Increase (Decrease) in Net Asset Value................ 2.26 (0.01) 0.27
------------ ------------ -------
Net Asset Value -- End of Year............................ $12.25 $9.99 $10.27
------------ ------------ -------
------------ ------------ -------
TOTAL INVESTMENT RETURN..................................... 22.62% (0.10)%(A) 2.75%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)..................... 2.00% 2.00%(B) 2.00%(B)
Expenses Before Reimbursement (Note 2).................... 2.22% 27.25%(B) 113.02%(B)
Net Investment Income (Loss).............................. (1.57)% 2.59%(B) 0.87%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................................... 169.0% -- --
Net Assets at End of Year (000's omitted)................. $95,246 $300 $1,642
Number of Shares Outstanding at End of Year (000's
omitted)................................................ 7,774 30 160
Average Commission Rate Paid (C).......................... $0.0389 $0.0300
</TABLE>
- - --------------------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged. This amount may vary from period to period
and fund to fund depending on the mix of trades executed in various markets
where trading practices and commission rate structures may differ.
* FROM COMMENCEMENT OF OPERATIONS DECEMBER 28, 1995
**FROM COMMENCEMENT OF OPERATIONS NOVEMBER 26, 1996
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
The Navellier Performance Funds (the "Fund") is registered with the
Securities 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 and diversified portfolios. The Fund is
authorized to issue an unlimited number of shares of capital stock with no
stated par value. The Fund presently consists of three separate portfolios each
with its own investment objectives and policies. These financial statements
report on two of the three portfolios: Aggressive Growth Portfolio, a
non-diversified open-end management company portfolio, and Mid Cap Growth
Portfolio, a diversified open-end management company portfolio. The Aggressive
Small Cap Portfolio, has been inactive since November 26, 1996, the date of its
commencement of operations. The financial statements have been prepared in
conformity with generally accepted accounting principles which permit management
to make certain estimates 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 assure that the Fund's instruments
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 organization
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 December 31, 1996, unamortized organization costs were
$100,590.
2. Investment Advisory Fees and Other Transactions With Affiliates
Investment advisory services are provided by Navellier Management, Inc.
("Adviser"). Under an agreement with the Adviser, each portfolio of the Fund
pays a fee for such services 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
expense incurred on behalf of the Fund. During the year ended
12
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
December 31, 1996, the Adviser paid operating expenses of the Aggressive Growth
Portfolio totaling $275,236. Under the operating expense agreement, the Adviser
requested, and the Aggressive Growth Portfolio reimbursed, $147,833 of such
expenses. The Adviser voluntarily agreed not to seek future reimbursement of
$127,403 of such 1996 expenses. During the period November 26, 1996
(commencement of operations) to December 31, 1996, the Adviser voluntarily
waived reimbursement for substantially all the operating expenses which were
paid on behalf of the Mid Cap Growth Portfolio. Accordingly, at December 31,
1996, there were no prior expenses which could be reimbursed in the future under
the agreement.
Navellier Securities Corp. (the "Distributor") acts as the Fund's
Distributor 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.
The Fund pays each of its Trustees not affiliated with the Adviser $7,500
annually. For the year ended December 31, 1996, Trustees' fees totaled $30,000.
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 each 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 year ended December 31, 1996, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------- -----------
<S> <C> <C>
Purchases........................................................................... $ 187,396,704 $ 1,339,676
------------- -----------
Sales............................................................................... $ 92,784,752 $ --
------------- -----------
</TABLE>
13
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- - ------------------------------------------------------------------
6. Net Unrealized Appreciation/Depreciation of Investments
Unrealized appreciation (depreciation) as of December 31, 1996, based on the
cost for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
Gross Unrealized Appreciation........................................................ $ 13,557,766 $ 51,729
Gross Unrealized Depreciation........................................................ (3,791,976) (16,285)
------------ -----------
Net Unrealized Appreciation.......................................................... $ 9,765,790 $ 35,444
------------ -----------
------------ -----------
Cost of Investments for Federal Income Tax Purposes.................................. $ 83,370,470 $ 1,586,627
------------ -----------
------------ -----------
</TABLE>
7. Net Assets
At December 31, 1996, net assets consisted of the following:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------- -----------
<S> <C> <C>
Paid-in-Capital..................................................................... $ 97,473,567 $ 1,606,576
Undistributed Net Investment Income................................................. -- --
Accumulated Net Realized Loss on Investments........................................ (12,055,596) --
Net Unrealized Appreciation of Investments.......................................... 9,828,317 35,444
------------- -----------
NET ASSETS.......................................................................... $ 95,246,288 $ 1,642,020
------------- -----------
------------- -----------
</TABLE>
8. Federal Income Tax
Permanent differences between tax and financial reporting of net investment
income and realized gains/(losses) are reclassified to paid-in-capital. As of
December 31, 1996, net investment losses were reclassified to paid-in-capital as
follows:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------ ------------
<S> <C> <C>
Reduction of paid-in-capital........................................................ $ 927,543 --
</TABLE>
At December 31, 1996, for Federal income tax purposes, the following Funds
had capital loss carryovers which may be applied against future net taxable
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
EXPIRES DECEMBER 31, PORTFOLIO PORTFOLIO
- - ------------------------------------------------------------------------------------ ------------ ------------
<S> <C> <C>
2004................................................................................ $ 11,993,069 --
</TABLE>
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
of The Navellier Performance Funds:
We have audited the statements of assets and liabilities, including the
portfolios of investments of the Aggressive Growth and the Mid Cap Portfolios
(two of the portfolios) of The Navellier Performance Funds (the Fund) as of
December 31, 1996, the related statements of operations, changes in net assets,
and financial highlights for the periods presented. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Aggressive
Growth and Mid Cap Portfolios of The Navellier Performance Funds at December 31,
1996, the results of their operations, the changes in their net assets, and
financial highlights for the presented periods in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Washington, DC
January 31, 1997
15
<PAGE>
[LOGO]
NAVELLIER
Performance Funds
ANNUAL REPORT
December 31, 1996
Navellier Offices:
One East Liberty Third Floor
Reno, Nevada 89501
800-887-8671 P.S.T.
Custodian & Transfer Agent:
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
800-532-2268 E.S.T.
<PAGE>
NAVELLIER
SERIES FUND
------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1996
<PAGE>
ANNUAL REPORT, December 31, 1996
NAVELLIER SERIES FUND
1 East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
- --------------------------------------------------------------------------------
February 1997
Dear Shareholder:
For the year 1996, the Navellier Aggressive Small Cap Equity Portfolio ("the
Fund") returned 15.44% (11.98% after the maximum load). This compares favorably
to 14.76% for the Russell 2000*, 14.51% for the Lipper Small Company Index** and
not so favorably to the Nasdaq Composite*** which returned 22.71% over the same
period. The Fund's annualized return since public offering (April 1, 1994) is
26.21% (24.81% after the maximum load). The annualized returns for the Russell
2000 and the Nasdaq Composite over the same period were 14.30% and 22.22%,
respectively. During the first six months of 1996, the Navellier Aggressive
Small Cap Equity Portfolio gained 27.64% (23.79% after the maximum load),
compared to a 12.63% gain for the Nasdaq Composite and a 9.70% gain for the
Russell 2000. During the second half of 1996 the Fund lost 9.56% (12.27% after
the maximum load), compared to a 8.95% positive return for the Nasdaq Composite
and a 4.61% positive return for the Russell 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
<S> <C> <C> <C>
DATE Small Cap Portfolio NASDAQ Composite Russell 2000
3/31/1994 $10,000 $10,000 $10,000
4/30/1994 $9,889 $9,871 $10,059
5/31/1994 $9,667 $9,889 $9,929
6/30/1994 $9,213 $9,496 $9,571
7/31/1994 $9,384 $9,714 $9,721
8/31/1994 $9,768 $10,298 $10,249
9/30/1994 $10,030 $10,280 $10,202
10/31/1994 $10,494 $10,458 $10,158
11/30/1994 $10,555 $10,092 $9,729
12/31/1994 $10,616 $10,114 $9,972
1/31/1995 $10,484 $10,158 $9,832
2/28/1995 $10,989 $10,676 $10,219
3/31/1995 $11,372 $10,992 $10,387
4/30/1995 $11,726 $11,352 $10,602
5/31/1995 $12,089 $11,629 $10,764
6/30/1995 $14,541 $12,555 $11,297
7/31/1995 $15,409 $13,467 $11,938
8/31/1995 $15,257 $13,721 $12,161
9/30/1995 $14,884 $14,036 $12,363
10/31/1995 $15,691 $13,936 $11,800
11/30/1995 $16,034 $14,247 $12,291
12/31/1995 $14,521 $14,152 $12,585
1/31/1996 $15,188 $14,255 $12,562
2/29/1996 $16,118 $14,796 $12,942
3/31/1996 $18,248 $14,815 $13,175
4/30/1996 $20,460 $16,013 $13,872
5/31/1996 $21,257 $16,725 $14,413
6/30/1996 $19,509 $15,939 $13,806
7/31/1996 $17,938 $14,535 $12,587
8/31/1996 $18,062 $15,354 $13,299
9/30/1996 $19,923 $16,503 $13,797
10/31/1996 $18,537 $16,430 $13,565
11/30/1996 $18,662 $17,386 $14,105
12/31/1996 $18,196 $17,365 $14,443
</TABLE>
The above chart indicates the return of $10,000 invested in the NAVELLIER
AGGRESSIVE SMALL CAP EQUITY PORTFOLIO on April 1, 1994. As the chart shows by
December 31, 1996, the value of the investment would have grown to $18,393, a
83.93% increase. For comparison purposes, look at how the NASDAQ Composite and
the Russell 2000 performed over the same period. An investment of $10,000 in the
NASDAQ Composite over the same period would have grown to $17,365, a 73.65%
increase. Similarly an investment of $10,000 in the Russell 2000 over the same
period would have grown to $14,443, a 44.43% increase.
The above charts and performance numbers assume reinvestment of all
distributions.
Please be aware that past performance is no indication of future performance.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
The Fund generally lagged behind the overall stock market during the last six
months of 1996 since primarily large capitalization stocks performed well during
the second half of 1996. One of the startling statistics for 1996 was
highlighted in an article in the January 13, 1997 issue of FORTUNE, which stated
that the Nasdaq Composite, excluding the 100 largest stocks, was actually up
less than 3% in 1996. In other words, 1996 was predominantly a large
capitalization stock market rally, especially in the second half of the year.
Virtually none of the largest 100 Nasdaq stocks were in the Navellier Aggressive
Small Cap Equity Portfolio. Considering that the Nasdaq Composite was up less
than 3% in 1996 when the 100 largest stocks are excluded, we are quite satisfied
that the Fund had positive results in 1996.
The historical valuations of the stocks in the Navellier Aggressive Small Cap
Equity Portfolio remain very cheap relative to the Dow Industrials and S&P 500.
Wave after wave of money flowing into index funds has benefited the S&P 500 and
moved it into the high range of its historical price/earnings ratio. At over 21
times current earnings, the S&P 500 is very expensive, especially since the most
optimistic analysts call for only 14% to 15% earnings growth in fiscal 1997. The
median P/E for stocks in the Navellier Aggressive Small Cap Equity Portfolio is
17.5 and they literally have much more earnings growth than the S&P 500. Looking
forward, the average stock in the Fund should continue to have far greater
earnings growth than the S&P 500 despite similar price/earnings ratios. When the
current mania fueling index funds settles down and Wall Street starts rotating
into stocks that represent outstanding fundamental values, my favorite stocks in
the Fund should benefit tremendously. In my opinion, we are now on the verge of
a "stock picking" environment, where predominantly stocks with outstanding
fundamental characteristics, such as those in the Navellier Aggressive Small Cap
Equity Portfolio, will benefit.
On the large scale, economists are having a hard time predicting economic growth
because increasing productivity is hard to account for in their economic models.
Most economists are predicting 2% to 3% economic growth in 1997, which would be
a slowdown from the more than 4% growth experienced in the second half of 1996.
However, these economists are not factoring in continuing productivity gains
that have bolstered the U.S. economy, resulting in exceptionally high growth
without inflation. The implicit price deflator is an inflation indicator without
volatile food and energy prices. It is the most reliable indicator of inflation
and is now at its lowest point in decades. The recent 0.3% drop in wholesale
prices in January is further evidence that inflation is now deader than dead.
The bond market has celebrated this positive inflation news and as of this
writing, Treasury Bond yields are near the 6.5% level. The low inflation and low
interest rate environment sets a very positive tone for the stock market for the
next several months.
Long-term, the Navellier Aggressive Small Cap Equity Portfolio continues to
perform quite well relative to other small capitalization growth funds. We are
eagerly awaiting our three year Lipper and Morningstar Ratings and are confident
that we will receive an outstanding long-term rating. To ensure our high
performance standard, the Fund was closed to new investors on April 16, 1996.
Existing shareholders and fee-based financial advisors can continue to purchase
additional shares in the Fund. Existing shareholders will be receiving a proxy
to convert the Navellier Aggressive Small Cap Equity Portfolio to a pure no-load
fund. This conversion will allow us to cut management fees and save operating
expenses. After conversion, existing shareholders will be able to purchase new
shares with no load charged. We would appreciate it if you could mail back your
proxy votes as soon as possible.
2
<PAGE>
I want to personally thank all shareholders in the Navellier Aggressive Small
Cap Equity Portfolio for selecting us to manage some of your assets. We feel
very obligated to our shareholders and have already closed the Fund to ensure
our high performance standard. Always feel free to contact us if you have any
questions or we can help you in any way.
Sincerely,
[SIG]
LOUIS G. NAVELLIER
THIS MATERIAL HAS BEEN PRECEDED BY A NAVELLIER AGGRESSIVE SMALL CAP EQUITY
PORTFOLIO PROSPECTUS.
* THE RUSSELL 2000 INDEX IS AN UNMANAGED INDEX CONSISTING OF THE SMALLEST 2000
STOCKS IN THE RUSSELL 3000 INDEX. IT IS CONSIDERED REPRESENTATIVE OF THE
SMALL CAP MARKET IN GENERAL. IT IS NOT AN INVESTMENT PRODUCT AVAILABLE FOR
PURCHASE.
** THE LIPPER SMALL COMPANY INDEX IS AN UNMANAGED NET ASSET VALUE WEIGHTED
INDEX OF 30 MUTUAL FUNDS THAT INVEST PRIMARILY IN COMPANIES WITH SMALL
MARKET CAPITILIZATIONS.
*** THE NASDAQ COMPOSITE IS AN UNMANAGED INDEX CONSISTING OF APPROXIMATELY 5,500
STOCKS. IT IS CONSIDERED REPRESENTATIVE OF THE STOCK MARKET AS A WHOLE. IT
IS NOT AN INVESTMENT PRODUCT AVAILABLE FOR PURCHASE.
3
<PAGE>
DECEMBER 31, 1996 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- - ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- - -------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- - -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS
AEROSPACE AND DEFENSE -- 0.66%
40,000 Oregon Metallurgical Corp.* $ 1,290,000
--------------
AIRLINES -- 1.33%
174,200 Mesaba Holdings, Inc.* 2,591,225
--------------
ALUMINUM/METALS -- 1.62%
50,000 RMI Titanium Co.* 1,406,250
50,100 Reliance Steel and Aluminum
Co. 1,753,500
--------------
3,159,750
--------------
BANKS -- 1.68%
40,000 Andover Bancorp, Inc. 1,025,000
50,000 City National Corp. 1,081,250
40,000 RCSB Financial, Inc. 1,160,000
--------------
3,266,250
--------------
BASIC MATERIALS -- 0.76%
40,000 Lone Star Industries, Inc. 1,475,000
--------------
COMPUTER HARDWARE -- 4.92%
50,000 Centennial Technologies,
Inc.* 2,600,000
35,000 ENCAD, Inc.* 1,443,750
200,000 Iomega Corp.* 3,475,000
75,000 Tech Data Corp.* 2,053,125
--------------
9,571,875
--------------
COMPUTER SOFTWARE -- 8.14%
35,500 Acceler8 Tech Corp.* 694,469
140,000 Brooktrout Technology, Inc.* 3,920,000
50,000 Legato Systems, Inc.* 1,631,250
101,000 Rational Software Corp.* 3,995,813
47,000 Remedy Corp.* 2,526,250
65,000 Viasoft, Inc.* 3,071,250
--------------
15,839,032
--------------
DIVERSIFIED TECHNOLOGY -- 5.24%
60,000 Dyantech Corp.* 2,655,000
70,000 Engineered Support Systems,
Inc. 1,032,500
42,000 Lindsay Manfacturing Co. 1,963,500
125,200 Zoltek Companies, Inc.* 4,554,150
--------------
10,205,150
--------------
<CAPTION>
- - -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- - -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
EDUCATION -- 3.42%
159,525 Apollo Group, Inc.* $ 5,334,117
100,000 Childrens Comprehensive
Services* 1,312,500
--------------
6,646,617
--------------
ELECTRONICS -- 1.73%
37,800 Kuhlman Corp. 732,375
248,000 Zytec* 2,635,000
--------------
3,367,375
--------------
ENERGY -- 0.55%
40,000 Holly Corp. 1,070,000
--------------
FOOD -- 1.74%
70,000 Fresh America Corp.* 1,155,000
70,000 Riser Foods, Inc. 2,222,500
--------------
3,377,500
--------------
HEALTHCARE -- 0.76%
50,000 SONUS Pharmaceuticals, Inc.* 1,487,500
--------------
HEAVY MACHINERY/CONSTRUCTION -- 1.07%
60,800 Gardner Denver Machinery* 2,082,400
--------------
HOME FURNISHINGS -- 1.45%
30,000 Ethan Allen Interiors, Inc. 1,155,000
58,900 Stanley Furniture Company,
Inc.* 1,170,637
50,000 Winsloew Furniture, Inc.* 487,500
--------------
2,813,137
--------------
HOME CONSTRUCTION -- 0.58%
40,000 Palm Harbor Homes, Inc.* 1,120,000
--------------
INSURANCE -- 0.63%
20,000 Orion Capital Corp. 1,222,500
--------------
INDUSTRIAL AND COMMERCIAL
SERVICES -- 3.61%
44,200 Amerco, Inc.* 1,547,000
40,000 DT Industries, Inc. 1,400,000
75,000 Mail Well, Inc.* 1,228,125
122,000 Shaw Group, Inc.* 2,851,750
--------------
7,026,875
--------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
DECEMBER 31, 1996 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- - ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
- - -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- - -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURED HOUSING -- 1.46%
100,000 Coachmen Industries, Inc. $ 2,837,500
--------------
NATURAL GAS -- 1.16%
100,000 NUI Corp. 2,262,500
--------------
NONCLASSIFIABLE ESTABLISHMENT -- 1.17%
65,000 Oppenheimer Capital LP 2,275,000
--------------
OIL -- 4.10%
84,400 Cliffs Drilling Co.* 5,338,300
100,000 Comstock Resources, Inc.* 1,300,000
45,200 Swift Energy Co.* 1,350,350
--------------
7,988,650
--------------
OIL & GAS EXPLORATION -- 7.64%
50,000 American Oilfield Divers,
Inc.* 593,750
20,000 Cooper Cameron Corp.* 1,530,000
30,000 Flores & Rucks, Inc.* 1,597,500
135,000 Marine Drilling Companies,
Inc.* 2,657,812
100,000 Plains Resources, Inc.* 1,562,500
110,000 Seacor Holdings, Inc.* 6,930,000
--------------
14,871,562
--------------
PHARMACEUTICALS -- 7.23%
50,400 Cardinal Health, Inc. 2,935,800
100,000 Herbalife International,
Inc. 3,262,500
124,875 Jones Medical Industries,
Inc. 4,573,547
75,000 Medicis Pharmaceutical
Corp.* 3,300,000
--------------
14,071,847
--------------
REAL ESTATE -- 0.86%
68,000 Fairfield Communities, Inc.* 1,683,000
--------------
RETAILERS -- 13.24%
100,000 American Eagle Outfitters,
Inc.* 787,500
292,500 Claires Stores, Inc. 3,802,500
140,000 Eagle Hardware and Garden,
Inc.* 2,905,000
100,000 Equity Marketing, Inc.* 1,850,000
<CAPTION>
- - -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- - -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAILERS (CONTINUED)
100,000 Finish Line, Inc.* $ 2,112,500
100,000 Funco, Inc.* 837,500
60,000 Pacific Sunwear of
California* 1,545,000
164,500 Paul Harris Stores, Inc.* 2,919,875
93,000 Ross Stores, Inc. 4,650,000
104,000 Wet Seal, Inc.* 2,223,000
100,000 Tuesday Morning Corp.* 2,137,500
--------------
25,770,375
--------------
SAVINGS AND LOANS -- 3.37%
312,000 Imperial Credit Indusries,
Inc.* 6,552,000
--------------
SEMICONDUCTORS AND RELATED -- 1.56%
100,000 Chips and Technologies,
Inc.* 1,825,000
25,000 Radisys Corp.* 1,218,750
--------------
3,043,750
--------------
STEEL -- 1.12%
85,900 Olympic Steel, Inc.* 2,179,713
--------------
TECHNICAL SERVICES -- 0.52%
27,400 SBS Technologies, Inc.* 1,013,800
--------------
TELECOMMUNICATIONS -- 4.20%
120,600 ATC Communications, Inc.* 1,597,950
216,000 Pairgain Technologies, Inc.* 6,574,500
--------------
8,172,450
--------------
TEMPORARY STAFFING -- 4.56%
152,500 AccuStaff, Inc.* 3,221,562
276,000 Employee Solutions, Inc.* 5,658,000
--------------
8,879,562
--------------
VEHICLE PARTS AND EQUIPMENT -- 0.57%
44,500 Arvin Industries, Inc. 1,101,375
--------------
VITAMINS/HEALTH FOODS -- 1.40%
100,000 Rexall Sundown, Inc.* 2,718,750
--------------
TOTAL COMMON STOCKS -- 94.05%
(COST $146,155,936) 183,034,020
--------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
DECEMBER 31, 1996 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- - ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
- - -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- - -------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENTS -- 5.95%
With PaineWebber at 6.00%, dated
12/31/96, due 1/2/97, collateralized
by U.S. Treasury Bills, due 5/1/97
(Cost $11,578,000) $ 11,578,000
--------------
TOTAL INVESTMENTS -- 100.00%
(COST $157,733,936) $ 194,612,020
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
DECEMBER 31, 1996 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- - ------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<S> <C>
ASSETS
Securities at Value (Note 1, see portfolio for cost information)...................... $194,612,020
Cash in Custodian Bank................................................................ 18,324
Receivable for Securities Sold........................................................ 748,475
Receivable for Shares Sold............................................................ 157,806
Dividends Receivable.................................................................. 26,370
Interest Receivable................................................................... 1,930
Unamortized Organizational Costs (Note 1)............................................. 18,118
------------
Total Assets........................................................................ 195,583,043
------------
LIABILITIES
Payable for Securities Purchased...................................................... 4,444,194
Payable for Shares Redeemed........................................................... 738,267
Investment Advisory Fee Payable (Note 2).............................................. 204,806
Other Payables and Accrued Expenses................................................... 82,115
Administrative Fee Payable (Note 2)................................................... 40,961
Commissions Payable................................................................... 20,069
Organizational Expenses Payable to Adviser (Note 1)................................... 18,118
------------
Total Liabilities................................................................... 5,548,530
------------
NET ASSETS.............................................................................. $190,034,513
------------
------------
SHARES OUTSTANDING...................................................................... 10,683,004
------------
------------
NET ASSET VALUE PER SHARE............................................................... $17.79
------
------
MAXIMUM OFFERING PRICE PER SHARE (100/97.00 of $17.79).................................. $18.34
------
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
FOR THE YEAR ENDED
DECEMBER 31, 1996 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- - ------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest (Note 1)...................................................................... $ 603,796
Dividends (Note 1)..................................................................... 171,544
-----------
Total Investment Income.............................................................. 775,340
-----------
EXPENSES
Investment Advisory Fee (Note 2)....................................................... 2,323,690
Administrative Fee (Note 2)............................................................ 464,738
Transfer Agent and Custodian Fee (Note 3).............................................. 330,390
Registration Fees...................................................................... 108,309
Shareholder Reports and Notices........................................................ 62,983
Legal Fees............................................................................. 60,915
Trustees' Fees and Expenses (Note 2)................................................... 51,381
Audit Fees............................................................................. 19,600
Organizational Expense (Note 1)........................................................ 8,053
Other Expenses......................................................................... 18,743
-----------
Total Expenses....................................................................... 3,448,802
Less Expenses Reimbursed by Investment Adviser (Note 2).............................. (195,636)
-----------
Net Expenses....................................................................... 3,253,166
-----------
NET INVESTMENT LOSS...................................................................... (2,477,826)
-----------
Net Realized Gain on Investment Transactions............................................. 463,797
Net Change in Unrealized Appreciation of Investments..................................... 18,466,247
-----------
NET GAIN ON INVESTMENTS.................................................................. 18,930,044
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................... $16,452,218
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- - ------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
---------------------------
1996 1995
------------- ------------
FROM INVESTMENT ACTIVITIES
<S> <C> <C>
Net Investment Loss................................................... $ (2,477,826) $ (610,524)
Net Realized Gain on Investment Transactions.......................... 463,797 1,524,157
Net Change in Unrealized Appreciation of Investments.................. 18,466,247 15,989,475
------------- ------------
Net Increase in Net Assets Resulting from Operations................ 16,452,218 16,903,108
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income............................................ -- --
From Net Realized Capital Gains....................................... -- (2,499,314)
------------- ------------
Total Distributions to Shareholders................................. -- (2,499,314)
------------- ------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares..................................... 286,125,562 130,265,618
Reinvestment of Distributions......................................... -- 2,355,336
Cost of Shares Redeemed............................................... (217,842,421) (59,949,289)
------------- ------------
Net Increase in Net Assets Resulting from Share Transactions........ 68,283,141 72,671,665
------------- ------------
TOTAL INCREASE IN NET ASSETS........................................ 84,735,359 87,075,459
NET ASSETS -- Beginning of Year......................................... 105,299,154 18,223,695
------------- ------------
NET ASSETS -- End of Year............................................... $ 190,034,513 $105,299,154
------------- ------------
------------- ------------
SHARES
Sold.................................................................. 16,325,181 9,128,613
Issued in Reinvestment of Distributions............................... -- 152,845
Redeemed.............................................................. (12,473,362) (4,110,315)
------------- ------------
Net Increase in Shares.............................................. 3,851,819 5,171,143
------------- ------------
------------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- - ------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE
DECEMBER 31, PERIOD ENDED
-------------------- DECEMBER 31,
1996 1995 1994*
--------- --------- -------------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C>
Net Asset Value -- Beginning of Year............................ $ 15.41 $ 10.98 $ 10.00
--------- --------- -------------
Income from Investment Operations:
Net Investment Loss........................................... (0.23) (0.16) (0.08)
Net Realized and Unrealized Gains on Securities............... 2.61 4.97 1.06
--------- --------- -------------
Total from Investment Operations............................ 2.38 4.81 0.98
--------- --------- -------------
Distributions to Shareholders:
From Net Investment Income.................................... -- -- --
From Net Realized Capital Gains............................... -- (0.38) --
--------- --------- -------------
Total Distributions to Shareholders......................... -- (0.38) --
--------- --------- -------------
Net Increase in Net Asset Value................................. 2.38 4.43 0.98
--------- --------- -------------
Net Asset Value -- End of Year.................................. $ 17.79 $ 15.41 $ 10.98
--------- --------- -------------
--------- --------- -------------
TOTAL INVESTMENT RETURN(A)...................................... 15.44% 43.80% 9.80%
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)........................... 1.75% 1.75% 1.68%(B)
Expenses Before Reimbursement (Note 2).......................... 1.86% 2.10% 4.52%(B)
Net Investment Loss............................................. (1.33)% (1.15)% (0.81 )%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate......................................... 136.9% 169.6% 139.9%
Net Assets at End of Year (000's omitted)....................... $190,035 $105,299 $18,224
Number of Shares Outstanding at End of Year (000's omitted)..... 10,683 6,831 1,660
Average Commission Rate Paid(C)................................. $0.0424
- - ----------------
</TABLE>
(A) Total returns do not include the maximum sales load. Total returns for
periods of less than one year are not annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commissions are charged. This amount may vary
from period to period and fund to fund depending on the mix of trades
executed in various markets where trading practices and commission
rate structures may differ.
*FROM COMMENCEMENT OF OPERATIONS JANUARY 3, 1994.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
DECEMBER 31, 1996 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- - ------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Navellier Series Fund (the "Fund") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a diversified,
open-end investment company. The Fund consists of one portfolio, Navellier
Aggressive Small Cap Equity Portfolio (the "Portfolio"). Shares of the Fund are
purchased at the public offering price which includes a maximum sales charge of
up to 3.00% depending on the size of the purchase. The Fund is authorized to
issue an unlimited number of shares of capital stock with no stated par value.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain estimates
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 Portfolio's securities in good
faith. The Board of Trustees will periodically review this method of valuation
and recommend changes which may be necessary to assure that the Portfolio's
instruments 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 reinvested in additional shares unless shareholders request
payment in cash. Net capital gains, if any, are distributed annually.
(d) The Fund complies with the provisions of the Internal Revenue Code
applicable to regulated investment companies and distributes all net
investment income to its shareholders. Therefore, no Federal income tax
provision is required.
(e) Organizational expenses of the Fund totaling $143,294 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 organization
expenses. Such proration is calculated by dividing the number of initial
shares redeemed by the number of initial shares outstanding at the date of
redemption. At December 31, 1996, unamortized organization costs were $18,118.
2. Investment Advisory Fees and Other Transactions with Affiliates
Investment advisory services are provided by Navellier 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 for the Navellier Aggressive Small
Cap Equity Portfolio. The Adviser also receives a 0.25% annual fee 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 year ended December 31,
1996, the Adviser paid operating expenses of the Fund totaling $660,374. Under
the operating expense agreement, the Adviser requested, and the Fund reimbursed,
$464,738 of such expenses. The Adviser voluntarily agreed not to seek future
reimbursement of $195,636 of such 1996 expenses. Accordingly, at December 31,
1996, there were no prior expenses which could be reimbursed in the future under
the agreement.
11
<PAGE>
DECEMBER 31, 1996 NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- - ------------------------------------------------------------------
Navellier Securities Corp. (the "Distributor") acts as the Fund's
Distributor and is registered as a broker-dealer under the Securities and
Exchange Act of 1934. The Distributor, which is the principal underwriter of the
Funds 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.
For the year ended December 31, 1996, the Fund was advised that the
Distributor received $924,050 from sales loads earned on sales of the Fund's
capital stock.
The Fund pays each of its Trustees not affiliated with the Adviser a fee of
$10,000 annually plus specific amounts for attended board and committee
meetings. When the Fund exceeds $200,000,000 in total net assets, then the
Trustees' fee is raised to $20,000 annually. For the year ended December 31,
1996 Trustees' fees and expenses totaled $51,381.
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. Securities Transactions
For the year ended December 31, 1996, purchases of securities were
$302,971,553 and sales of securities were $236,741,968. These totals exclude
short-term securities.
5. Net Unrealized Appreciation/Depreciation of Investments
As of December 31, 1996, net appreciation of investments for Federal income
tax purposes was $36,878,084 of which $44,036,260 related to appreciated
investments and $7,158,176 related to depreciated investments. At December 31,
1996, the cost of the Fund's securities for Federal income tax purposes was
$157,733,936.
6. Net Assets
At December 31, 1996, net assets consisted of the following:
<TABLE>
<S> <C>
Paid-in-Capital....................................................................... $155,066,631
Undistributed Net Investment Income................................................... --
Accumulated Net Realized Loss on Investments.......................................... (1,910,202)
Net Unrealized Appreciation on Investments............................................ 36,878,084
------------
NET ASSETS............................................................................ $190,034,513
------------
------------
</TABLE>
7. Federal Income Tax
No provision is made for Federal income taxes as it is the Fund's intention
to continue to qualify as a regulated investment company and to make requisite
distributions to the shareholders which will be sufficient to relieve it from
all or substantially all Federal income and excise taxes.
Permanent differences between tax and financial reporting of net investment
income and realized gains/(losses) are reclassified to paid-in-capital. As of
December 31, 1996, net investment losses of $2,477,826 were reclassified to
paid-in-capital.
At December 31, 1996, for Federal income tax purposes, the Fund had capital
loss carryovers which may be applied against future net taxable realized gains
of each succeeding year until the earlier of its utilization or its expiration
as follows:
<TABLE>
<CAPTION>
EXPIRES DECEMBER 31,
- - -------------------------------------------------------------------------------------------------
<S> <C>
2004............................................................................................. $ 1,910,202
-------------
-------------
</TABLE>
12
<PAGE>
- - ------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
of the Navellier Series Fund:
We have audited the statement of assets and liabilities, of the Navellier
Aggressive Small Cap Equity Portfolio of the Navellier Series Fund (the Fund) as
of December 31, 1996, the related statement of operations for the year then
ended and of changes in net assets for the years ended December 31, 1996 and
1995, and the financial highlights for each of the two years in the period ended
December 31, 1996 and the period ended December 31, 1994. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Navellier Small
Cap Equity Portfolio of the Navellier Series Fund at December 31, 1996, the
results of its operations, the changes in its net assets, and the financial
highlights for the presented periods in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Washington, DC
January 31, 1997
13
<PAGE>
[LOGO]
NAVELLIER
Series Fund
ANNUAL REPORT
December 31, 1996
Navellier Offices:
One East Liberty Third Floor
Reno, Nevada 89501
800-887-8671 P.S.T.
Custodian & Transfer Agent:
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
800-622-1386 E.S.T.
<PAGE>
NAVELLIER PERFORMANCE AGGRESSIVE SMALL CAP PORTFOLIO
AND
NAVELLIER SERIES AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------------------ -----------------------------------------
Navellier Navellier
Navellier Series Navellier Series
Performance Aggressive Pro Forma Performance Aggressive Pro Forma
Aggressive Small Cap Combined Aggressive Small Cap Combined
Small Cap Equity Small Cap Equity
Portfolio Portfolio Portfolio Portfolio
(unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited)
----------- ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS
AEROSPACE AND DEFENSE - 0.66%
Oregon Metallurgical Corp.* - 40,000 40,000 $ - $ 1,290,000 $ 1,290,000
----------------------------------------
AIRLINES - 1.33%
Mesaba Holdings, Inc.* - 174,200 174,200 - 2,591,225 2,591,225
----------------------------------------
ALUMINUM/METALS - 1.62%
RMI Titanium Co.* - 50,000 50,000 - 1,406,250 1,406,250
Reliance Steel and Aluminum Co. - 50,100 50,100 - 1,753,500 1,753,500
----------------------------------------
- 3,159,750 3,159,750
----------------------------------------
BANKS - 1.68%
Andover Bancorp, Inc. - 40,000 40,000 - 1,025,000 1,025,000
City National Corp. - 50,000 50,000 - 1,081,250 1,081,250
RCSB Financial, Inc. - 40,000 40,000 - 1,160,000 1,160,000
----------------------------------------
- 3,266,250 3,266,250
----------------------------------------
BASIC MATERIALS - 0.76%
Lone Star Industries, Inc. - 40,000 40,000 - 1,475,000 1,475,000
----------------------------------------
COMPUTER HARDWARE - 4.92%
Centennial Technologies, Inc.* - 50,000 50,000 - 2,600,000 2,600,000
ENCAD, Inc.* - 35,000 35,000 - 1,443,750 1,443,750
Iomega Corp.* - 200,000 200,000 - 3,475,000 3,475,000
Tech Data Corp.* - 75,000 75,000 - 2,053,125 2,053,125
----------------------------------------
- 9,571,875 9,571,875
----------------------------------------
COMPUTER SOFTWARE - 8.14%
Acceler8 Tech Corp.* - 35,500 35,500 - 694,469 694,469
Brooktrout Technology, Inc.* - 140,000 140,000 - 3,920,000 3,920,000
Legato Systems, Inc.* - 50,000 50,000 - 1,631,250 1,631,250
Rational Software Corp.* - 101,000 101,000 - 3,995,813 3,995,813
Remedy Corp.* - 47,000 47,000 - 2,526,250 2,526,250
Viasoft, Inc.* - 65,000 65,000 - 3,071,250 3,071,250
----------------------------------------
- 15,839,032 15,839,032
----------------------------------------
DIVERSIFIED TECHNOLOGY - 5.24%
Dyantech Corp.* - 60,000 60,000 - 2,655,000 2,655,000
Engineered Support Systems, Inc. - 70,000 70,000 - 1,032,500 1,032,500
Lindsay Manfacturing Co. - 42,000 42,000 - 1,963,500 1,963,500
Zoltek Companies, Inc.* - 125,200 125,200 - 4,554,150 4,554,150
----------------------------------------
- 10,205,150 10,205,150
----------------------------------------
EDUCATION - 3.42%
Apollo Group, Inc.* - 159,525 159,525 - 5,334,117 5,334,117
Childrens Comprehensive Services* - 100,000 100,000 - 1,312,500 1,312,500
----------------------------------------
- 6,646,617 6,646,617
----------------------------------------
ELECTRONICS - 1.73%
Kuhlman Corp. - 37,800 37,800 - 732,375 732,375
Zytec* - 248,000 248,000 - 2,635,000 2,635,000
----------------------------------------
- 3,367,375 3,367,375
----------------------------------------
<PAGE>
NAVELLIER PERFORMANCE AGGRESSIVE SMALL CAP PORTFOLIO
AND
NAVELLIER SERIES AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
------------------------------------------ -----------------------------------------
Navellier Navellier
Navellier Series Navellier Series
Performance Aggressive Pro Forma Performance Aggressive Pro Forma
Aggressive Small Cap Combined Aggressive Small Cap Combined
Small Cap Equity Small Cap Equity
Portfolio Portfolio Portfolio Portfolio
(unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited)
----------- ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ENERGY - 0.55%
Holly Corp. - 40,000 40,000 - 1,070,000 1,070,000
----------------------------------------
FOOD - 1.74%
Fresh America Corp.* - 70,000 70,000 - 1,155,000 1,155,000
Riser Foods, Inc. - 70,000 70,000 - 2,222,500 2,222,500
----------------------------------------
- 3,377,500 3,377,500
----------------------------------------
HEALTHCARE - 0.76%
SONUS Pharmaceuticals, Inc.* - 50,000 50,000 - 1,487,500 1,487,500
----------------------------------------
HEAVY MACHINERY/CONSTRUCTION - 1.07%
Gardner Denver Machinery* - 60,800 60,800 - 2,082,400 2,082,400
----------------------------------------
HOME FURNISHINGS - 1.45%
Ethan Allen Interiors, Inc. - 30,000 30,000 - 1,155,000 1,155,000
Stanley Furniture Company, Inc.* - 58,900 58,900 - 1,170,637 1,170,637
Winsloew Furniture, Inc.* - 50,000 50,000 - 487,500 487,500
----------------------------------------
- 2,813,137 2,813,137
----------------------------------------
HOME CONSTRUCTION - 0.58%
Palm Harbor Homes, Inc.* - 40,000 40,000 - 1,120,000 1,120,000
----------------------------------------
INSURANCE - 0.63%
Orion Capital Corp. - 20,000 20,000 - 1,222,500 1,222,500
----------------------------------------
INDUSTRIAL AND COMMERCIAL SERVICES - 3.61%
Amerco, Inc.* - 44,200 44,200 - 1,547,000 1,547,000
DT Industries, Inc. - 40,000 40,000 - 1,400,000 1,400,000
Mail Well, Inc.* - 75,000 75,000 - 1,228,125 1,228,125
Shaw Group, Inc.* - 122,000 122,000 - 2,851,750 2,851,750
----------------------------------------
- 7,026,875 7,026,875
----------------------------------------
MANUFACTURED HOUSING - 1.46%
Coachmen Industries, Inc. - 100,000 100,000 - 2,837,500 2,837,500
----------------------------------------
NATURAL GAS - 1.16%
NUI Corp. - 100,000 100,000 - 2,262,500 2,262,500
----------------------------------------
NONCLASSIFIABLE ESTABLISHMENT - 1.17%
Oppenheimer Capital LP - 65,000 65,000 - 2,275,000 2,275,000
----------------------------------------
OIL - 4.10%
Cliffs Drilling Co.* - 84,400 84,400 - 5,338,300 5,338,300
Comstock Resources, Inc.* - 100,000 100,000 - 1,300,000 1,300,000
Swift Energy Co.* - 45,200 45,200 - 1,350,350 1,350,350
----------------------------------------
- 7,988,650 7,988,650
----------------------------------------
OIL & GAS EXPLORATION - 7.64%
American Oilfield Divers, Inc.* - 50,000 50,000 - 593,750 593,750
Cooper Cameron Corp.* - 20,000 20,000 - 1,530,000 1,530,000
Flores & Rucks, Inc.* - 30,000 30,000 - 1,597,500 1,597,500
<PAGE>
NAVELLIER PERFORMANCE AGGRESSIVE SMALL CAP PORTFOLIO
AND
NAVELLIER SERIES AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
------------------------------------------ -----------------------------------------
Navellier Navellier
Navellier Series Navellier Series
Performance Aggressive Pro Forma Performance Aggressive Pro Forma
Aggressive Small Cap Combined Aggressive Small Cap Combined
Small Cap Equity Small Cap Equity
Portfolio Portfolio Portfolio Portfolio
(unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited)
----------- ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Marine Drilling Companies, Inc.* - 135,000 135,000 - 2,657,812 2,657,812
Plains Resources, Inc.* - 100,000 100,000 - 1,562,500 1,562,500
Seacor Holdings, Inc.* - 110,000 110,000 - 6,930,000 6,930,000
----------------------------------------
- 14,871,562 14,871,562
----------------------------------------
PHARMACEUTICALS - 7.23%
Cardinal Health, Inc. - 50,400 50,400 - 2,935,800 2,935,800
Herbalife International, Inc. - 100,000 100,000 - 3,262,500 3,262,500
Jones Medical Industries, Inc. - 124,875 124,875 - 4,573,547 4,573,547
Medicis Pharmaceutical Corp.* - 75,000 75,000 - 3,300,000 3,300,000
----------------------------------------
- 14,071,847 14,071,847
----------------------------------------
REAL ESTATE - 0.86%
Fairfield Communities, Inc.* - 68,000 68,000 - 1,683,000 1,683,000
----------------------------------------
RETAILERS - 13.24%
American Eagle Outfitters, Inc.* - 100,000 100,000 - 787,500 787,500
Claires Stores, Inc. - 292,500 292,500 - 3,802,500 3,802,500
Eagle Hardware and Garden, Inc.* - 140,000 140,000 - 2,905,000 2,905,000
Equity Marketing, Inc.* - 100,000 100,000 - 1,850,000 1,850,000
Finish Line, Inc.* - 100,000 100,000 - 2,112,500 2,112,500
Funco, Inc.* - 100,000 100,000 - 837,500 837,500
Pacific Sunwear of California* - 60,000 60,000 - 1,545,000 1,545,000
Paul Harris Stores, Inc.* - 164,500 164,500 - 2,919,875 2,919,875
Ross Stores, Inc. - 93,000 93,000 - 4,650,000 4,650,000
Wet Seal, Inc.* - 104,000 104,000 - 2,223,000 2,223,000
Tuesday Morning Corp.* - 100,000 100,000 - 2,137,500 2,137,500
----------------------------------------
- 25,770,375 25,770,375
----------------------------------------
SAVINGS AND LOANS - 3.37%
Imperial Credit Indusries, Inc.* - 312,000 312,000 - 6,552,000 6,552,000
----------------------------------------
SEMICONDUCTORS AND RELATED - 1.56%
Chips and Technologies, Inc.* - 100,000 100,000 - 1,825,000 1,825,000
Radisys Corp.* - 25,000 25,000 - 1,218,750 1,218,750
----------------------------------------
- 3,043,750 3,043,750
----------------------------------------
STEEL - 1.12%
Olympic Steel, Inc.* - 85,900 85,900 - 2,179,713 2,179,713
----------------------------------------
TECHNICAL SERVICES - 0.52%
SBS Technologies, Inc.* - 27,400 27,400 - 1,013,800 1,013,800
----------------------------------------
TELECOMMUNICATIONS - 4.20%
ATC Communications, Inc.* - 120,600 120,600 - 1,597,950 1,597,950
Pairgain Technologies, Inc.* - 216,000 216,000 - 6,574,500 6,574,500
----------------------------------------
- 8,172,450 8,172,450
----------------------------------------
TEMPORARY STAFFING - 4.56%
AccuStaff, Inc.* - 152,500 152,500 - 3,221,562 3,221,562
Employee Solutions, Inc.* - 276,000 276,000 - 5,658,000 5,658,000
----------------------------------------
- 8,879,562 8,879,562
----------------------------------------
<PAGE>
NAVELLIER PERFORMANCE AGGRESSIVE SMALL CAP PORTFOLIO
AND
NAVELLIER SERIES AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
------------------------------------------ -----------------------------------------
Navellier Navellier
Navellier Series Navellier Series
Performance Aggressive Pro Forma Performance Aggressive Pro Forma
Aggressive Small Cap Combined Aggressive Small Cap Combined
Small Cap Equity Small Cap Equity
Portfolio Portfolio Portfolio Portfolio
(unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited)
----------- ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
VEHICLE PARTS AND EQUIPMENT - 0.57%
Arvin Industries, Inc. - 44,500 44,500 - 1,101,375 1,101,375
----------------------------------------
VITAMINS/HEALTH FOODS - 1.40%
Rexall Sundown, Inc.* - 100,000 100,000 - 2,718,750 2,718,750
----------------------------------------
TOTAL COMMON STOCKS - 94.05%
(COST $146,155,936) 183,034,020 183,034,020
---------------------------
REPURCHASE AGREEMENTS - 5.95%
With PaineWebber at 6.00%, dated 12/31/96,
due 1/2/97, collateralized by U.S. Treasury
Bills, due 5/1/97 (Cost $11,578,000 ) 11,578,000 11,578,000
---------------------------
TOTAL INVESTMENTS - MARKET - 100% $194,612,020 $194,612,020
---------------------------
---------------------------
TOTAL INVESTMENTS - COST $157,733,936 $157,733,936
---------------------------
---------------------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
<PAGE>
PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NAVELLIER
NAVELLIER SERIES
PERFORMANCE AGGRESSIVE
AGGRESSIVE SMALL CAP
SMALL CAP EQUITY PRO FORMA PRO FORMA
PORTFOLIO PORTFOLIO ADJUSTMENTS COMBINED
(UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Securities at Value (Cost $0 and $157,733,936) $ - $194,612,020 $ - $194,612,020
Cash in Custodian Bank - 18,324 - 18,324
Receivable for Securities Sold - 748,475 - 748,475
Receivable for Shares Sold - 157,806 - 157,806
Dividends Receivable - 26,370 - 26,370
Interest Receivable - 1,930 - 1,930
Unamortized Organizational Costs - 18,118 (18,118) -
---------- ------------ ---------- ------------
Total Assets - 195,583,043 (18,118) 195,564,925
---------- ------------ ---------- ------------
LIABILITIES
Payable for Securities Purchased - 4,444,194 - 4,444,194
Payable for Shares Redeemed - 738,267 - 738,267
Investment Advisory Fee Payable - 204,806 - 204,806
Commissions Payable - 20,069 - 20,069
Administrative Fee Payable - 40,961 - 40,961
Other Payables and Accrued Expenses - 82,115 - 82,115
Organizational Expenses Payable to Adviser - 18,118 (18,118) -
---------- ------------ ---------- ------------
Total Liabilities - 5,548,530 (18,118) 5,530,412
---------- ------------ ---------- ------------
NET ASSETS $ - $190,034,513 $ - $190,034,513
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
NET ASSETS CONSIST OF:
Capital Paid in on Shares of
Common Stock $ - $155,066,631 $ - $155,066,631
Net Investment Loss - - - -
Accumulated Net Realized Gain on Investments - (1,910,202) - (1,910,202)
Net Unrealized Appreciation on Investments - 36,878,084 - 36,878,084
---------- ------------ ---------- ------------
Total $ - $190,034,513 $ - $190,034,513
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
SHARES OUTSTANDING - 10,683,004 8,320,447 19,003,451
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
NET ASSET VALUE PER SHARE - $17.79 - $10.00
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
MAXIMUM OFFERING PRICE PER SHARE - $18.34 - $10.00
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
<PAGE>
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
NAVELLIER
NAVELLIER SERIES
PERFORMANCE AGGRESSIVE
AGGRESSIVE SMALL CAP
SMALL CAP EQUITY PRO FORMA PRO FORMA
PORTFOLIO PORTFOLIO ADJUSTMENTS COMBINED
(UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ - $ 603,796 $ - 603,796
Dividends - 171,544 - 171,544
---------- ----------- --------- -----------
Total Investment Income - 775,340 - 775,340
---------- ----------- --------- -----------
EXPENSES
Investment Advisory Fee - 2,323,690 (185,895) 2,137,795
Administrative Fee - 464,738 - 464,738
Transfer Agent and Custodian Fee - 330,390 (20,000) 310,390
Registration Fees - 108,309 - 108,309
Shareholder Reports and Notices - 62,983 (15,000) 47,983
Legal Fees - 60,915 (45,000) 15,915
Trustees' Fees and Expenses - 51,381 (28,800) 22,581
Audit Fees - 19,600 (10,000) 9,600
Organizational Expense - 8,053 18,118 26,171
Other Expenses - 18,743 (10,000) 8,743
---------- ----------- --------- -----------
Total Expenses - 3,448,802 (296,577) 3,152,225
Less Expenses Reimbursed by Investment Adviser - (195,636) (75,213) (270,849)
---------- ----------- --------- -----------
Net Expenses - 3,253,166 (371,790) 2,881,376
---------- ----------- --------- -----------
NET INVESTMENT LOSS - (2,477,826) 371,790 (2,106,036)
---------- ----------- --------- -----------
Net Realized Gain on Investment Transactions - 463,797 - 463,797
Net Change in Unrealized Appreciation of Investments - 18,466,247 - 18,466,247
---------- ----------- --------- -----------
NET GAIN ON INVESTMENTS - 18,930,044 - 18,930,044
---------- ----------- --------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ - $16,452,218 $ 371,790 $16,824,008
---------- ----------- --------- -----------
---------- ----------- --------- -----------
</TABLE>
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
<PAGE>
NAVELLIER PERFORMANCE AGGRESSIVE SMALL CAP PORTFOLIO
AND
NAVELLIER SERIES AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
Subject to approval of the Agreement and Plan of Reorganization (Agreement)
by the shareholders of The Navellier Aggressive Small Cap Equity Portfolio
(the Portfolio), a series of The Navellier Series Fund, the Navellier
Aggressive Small Cap Portfolio (the Acquiring Fund), a separate portfolio
of The Navellier Performance Funds would acquire substantially all of the
assets of the Portfolio in exchange for shares of the Acquiring Fund at the
net asset value of the Acquiring Fund as of the Valuation Date as defined
in the Agreement (the Reorganization). Shares of the Acquiring Fund would
then be distributed pro-rata to the shareholders of the Portfolio.
The pro forma information is intended to provide the shareholders of the
Portfolio with information about the impact of the proposed merger by
showing how it might have affected historical financial statements if the
transaction had been consummated at an earlier time. The pro forma
combined Schedule of Investments and Statement of Assets and Liabilities
have been presented as if the proposed merger had taken place on December
31, 1996; the pro forma combined Statement of Operations for the year ended
December 31, 1996, has been presented as if the proposed merger had taken
place on January 1, 1996. This information is based upon historical
financial statement data giving effect to the pro forma adjustments
described below. The accounting policies of the Portfolio and the
Acquiring Fund are not materially different. The pro forma financial
statements should be read in conjunction with the separate financial
statements of the Portfolio and the Acquiring Fund incorporated by
reference into this Registration Statement on Form N-14.
2. PRO FORMA ADJUSTMENTS
A. The pro forma combined Statement of Assets and Liabilities reflects
the number of shares that will be outstanding after the conversion of
the Portfolio shares (the converted shares) into Acquiring Fund shares
as part of the Agreement. The converted shares are calculated by
dividing the total net assets of the Portfolio by the net asset value
per share of the Acquiring Fund. These converted shares are then
added to the shares outstanding in the Acquiring Fund to arrive at the
combined shares outstanding.
B. The pro forma combined Statement of Operations of the Portfolio and
the Acquiring Fund reflects the net decrease in Investment Advisory
Fee expense and other operating expenses and a net increase in Net
Investment Income resulting from the expected lower expense ratio of
the Acquiring Fund after the proposed merger. The Portfolio pays
Navellier Management, Inc., the fund's Investment Adviser, an advisory
fee at an annual rate of 1.25% of the average daily net assets of the
Portfolio. The Acquiring Fund will pay an advisory fee at an annual
rate of 1.15% of the average daily net assets of the Acquiring Fund.
Other operating expenses are estimated to be reduced as the merger
should permit the reduction or elimination of certain duplicative
costs and expenses presently incurred for services that are separately
performed for both the Portfolio and the Acquiring Fund.
<PAGE>
3. COSTS AND EXPENSES OF REORGANIZATION
Navellier Management, Inc., the investment adviser to both the Portfolio
and the Acquiring Fund, will bear all the costs and expenses related to the
Reorganization.
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
PART C. OTHER INFORMATION
ITEM 15. INDEMNIFICATION
The Navellier Performance Funds (the "Registrant" or the "Trust") is an
unincorporated voluntary association, organized under the laws of the State of
Delaware as a business trust, and is operated pursuant to its Declaration of
Trust, dated October 17, 1995 (the "Declaration of Trust"), its By-Laws, and the
laws of the State of Delaware, which permit the Registrant to indemnify its
trustees and officers under certain circumstances. Such indemnification,
however, is subject to the limitations imposed by the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of 1940, as amended
(the "1940 Act"). Pursuant to Delaware Code Ann. title 12 Section 3817, a
Delaware business trust may provide in its governing instrument for the
indemnification of its officers and trustees from and against any and all claims
and demands whatsoever. Article X, Section 10.02, of the Declaration of Trust
of the Registrant states that the Trust shall indemnify any present or former
trustee or officer to the fullest extent permitted by law against liability, and
all expenses reasonably incurred by him or her in connection with any claim,
action, suit, or proceeding in which he or she is involved by virtue of his or
her service as a trustee, officer, or both, and against any amount incurred in
settlement thereof. Indemnification will not be provided to a person adjudged
by a court or other adjudicatory body either to be liable to the Trust or its
shareholders by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of his or her duties (collectively, "disabling conduct"), or
not to have acted in good faith in the reasonable belief that his or her action
was in the best interest of the Trust. In the event of a settlement, no
indemnification may be provided unless there has been a determination, as
specified in the Declaration of Trust, that the officer or trustee did not
engage in disabling conduct.
Insofar as indemnification for liability arising under the 1933 Act may be
permitted to trustees, officers, and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the 1933 Act and,
therefore, is unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of the Registrant
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 Registrant 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 as to whether such indemnification by the
Registrant is against public policy as expressed in the 1993 Act and will be
governed by the final adjudication of such issue.
ITEM 16. EXHIBITS
(1) Declaration of Trust Registrant.(1)
(2) By-Laws of Registrant.(1)
(3) Voting Trust Agreement.(2)
(4) Agreement and Plan of Reorganization.(3)
- ---------------
(1) Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A previously filed December 8,
1995 (Registration Nos. 33-80195 and 811-9142).
(2) None.
(3) Filed herewith as Appendix A to Part A.
<PAGE>
(5) Specimen share certificate.(2)
(6) Form of Management Contract between Navellier Aggressive Small Cap
Portfolio of the Navellier Performance Funds and Navellier
Management, Inc.
(7) Form of Underwriting Agreement.(1)
(8) Bonus, Profit Sharing, or Pension Plans.(2)
(9) Form of Custody Agreement between Registrant and Rushmore Trust &
Savings, Bank F.S.B.(1)
(10) Form of Rule 12b-1 Distribution Plan.(1)(5)
(11) Opinion of Samuel Kornhauser regarding the legality of securities
being registered.(4)
(12) Opinion of Samuel Kornhauser regarding certain tax matters and
consequences to shareholders discussed in Part A.(4)
(13) Form of Administrative Services Agreement between Registrant and
Navellier Management, Inc.(1)
(14)(a) Consent of Deloitte & Touche, independent accountants for
Registrant.(4)
(14)(b) Consent of Deloitte & Touche, independent accountants for The
Navellier Series Fund.(4)
(14)(c) Consent of Samuel Kornhauser (see exhibit (11)).
(14)(d) Consent of Samuel Kornhauser (see exhibit (12)).
(15) Financial Statements Omitted Pursuant to Item 14(a)(1).(2)
(16) Powers of Attorney.(1)
(17) Rule 24f-2 Notice.(4)
ITEM 17 UNDERTAKINGS
(1) The Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of
this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) under the Securities
Act of 1933, as amended, the reoffering prospectus will contain the
information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(2) The Registrant agrees that every prospectus that is filed under
paragraph (1), above, will be filed as part of an amendment to this
Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment shall be deemed
to be a new registration statement for the securities offered therein,
and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
- ---------------
(5) Incorporated by reference from Post-effective Amendment No. 4 to
Registrant's Registration Statement on Form N-1A filed November 26, 1996.
(4) Filed herewith
C-2
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of Reno and
the State of Nevada, on the 28th day of February, 1997.
Registrant:
THE NAVELLIER PERFORMANCE FUNDS
BY:
Louis Navellier
Chairman of the Board
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURES TITLE DATE
- ---------- ----- ----
- ---------------------- Chairman of The February 28, 1997
Louis Navellier Board, President,
Treasurer, Trustee.
- ---------------------- Trustee February 28, 1997
Joel Rossman
- ---------------------- Trustee February 28, 1997
Barry Sander
- ---------------------- Trustee February 28, 1997
Jacques Delacroix
- ---------------------- Trustee February 28, 1997
Arnold Langsen
C-3
<PAGE>
EXHIBIT 6
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER AGGRESSIVE SMALL CAP PORTFOLIO
AGREEMENT made as of the 30th day of October, 1996, by and between The
Aggressive Small Cap Portfolio ("Portfolio") of THE NAVELLIER PERFORMANCE FUNDS,
a business trust organized under the laws of the State of Delaware (the "Fund"),
and NAVELLIER MANAGEMENT, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Aggressive
Small Cap Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the Portfolio as to the manner in which
voting rights, rights to consent to trust action, and any
1
<PAGE>
other rights pertaining to how the Portfolio's securities shall be exercised
("Portfolio Voting Rights"). The Portfolio has directed the Custodian, and
Custodian as agreed, to act in accordance with the instructions of the Adviser.
The Adviser shall at no time have custody of or physical control over the
investment account assets or securities, and the Adviser shall not be liable for
any act or omission of the Custodian. The Adviser shall maintain records
required under the Investment Advisers Act of 1940 ("Advisers Act") and shall
make them available to the Portfolio or its designees for review or inspection
upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of one and fifteen hundredths percent (1.15%) (the "Management
Fee") of the Portfolio's average daily net assets. Payment of the Adviser's
compensation for the preceding month shall be
2
<PAGE>
made as promptly as possible after the last day of each such month. The
compensation for the period from the effective date hereof to the next
succeeding last day of the month shall be prorated according to the proportion
which such period bears to the full month ending on such date, and provided
further that, upon any termination of this Agreement before the end of the
month, such compensation for the period from the end of the last month ending
prior to such termination shall be prorated according to the proportion which
such period bears to a full month, and shall be payable upon the date of
termination. If the annual operating expenses borne by the Fund relating to any
Portfolio, including amounts payable to the Adviser hereunder paid or payable by
such Portfolio for any fiscal year, exceed the applicable expense limitations
imposed by state securities laws or regulations thereunder (as same may be
adjusted from time to time), the Adviser will reduce its Management Fee to the
extent of such excess and if required, pursuant to any such laws or regulations
((unless otherwise waived), will reimburse the Portfolio for annual operating
expenses in excess of any such expense limitation up to the amount of the
Management Fee payable to it during that fiscal year with respect to the
Portfolio. The Adviser has the right, but not the obligation, to waive any
portion or all of its Management Fee, from time to time.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition, (c) by the
vote of a majority of the Trustees of the Portfolio who are not parties hereto
nor interested persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment,
3
<PAGE>
within the meaning of the Act, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier Aggressive Small Cap
Portfolio Fund" or any name derived from the name "Navellier" only for so long
as this Agreement or any extension, renewal, or amendment hereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to the business of the Adviser and for only so long as Navellier
Management, Inc., remains as Adviser to the Portfolio. At such time as such an
agreement shall no longer be in effect, or Adviser's services have terminated,
the Portfolio will (to the extent that it is lawfully able) cease to use such a
name or any other name connected with the Adviser or any organization which
shall have succeeded to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms
4
<PAGE>
"vote of a majority of the outstanding voting securities," "assignment,"
"affiliated person," and "interested person" shall have the respective meanings
specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER AGGRESSIVE SMALL
CAP PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By: ____________________________
Barry Sander, Trustee
By: ____________________________
Attest: Joel Rossman, Trustee
/s/ By: ____________________________
Arnold Langsen, Trustee
By: ____________________________
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By: ____________________________
Louis Navellier, President
Attest:
/s/
6
<PAGE>
EXHIBIT 11
OPINION AND CONSENT OF
LAW OFFICES OF SAMUEL KORNHAUSER
<PAGE>
LAW OFFICES
SAMUEL KORNHAUSER
155 Jackson Street, Suite 1807, San Francisco, CA 94111
(415) 981-6281; FAX (415) 981-7616
February 28, 1997
The Navellier Performance Funds
One East Liberty Street, Third Floor
Reno, Nevada 89501
Re: The Navellier Performance Funds
Registration Statement//Proxy Statement on Form N-14
----------------------------------------------------
Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933, as amended, of shares (the "Shares") of The Navellier
Aggressive Small Cap Portfolio ("Acquiring Fund") of the Navellier Performance
Funds (the "Performance Fund"), an open-end, diversified management investment
company whose Shares are the subject of a Registration Statement/Proxy Statement
on Form N-14.
In rendering my opinion, I have examined such documents, records, and
matters of law as I deemed necessary for purposes of this opinion, including the
Registration Statement/Proxy Statement on Form N-14, the Performance Fund's
Declaration of Trust, the Performance Fund's By-Laws, and the proceedings of the
Performance Fund's and the Navellier Series Fund's Boards of Trustees.
Based upon and subject to the foregoing, it is my opinion that the Shares
that will be issued by the Acquiring Fund, when sold will be legally issued,
fully paid and nonassessable.
My opinion is rendered solely in connection with the Registration
Statement/Proxy Statement on Form N-14 under which the Shares will be registered
and may not be relied upon for any other purposes without my written consent. I
hereby consent to the use of this opinion as an exhibit to such Registration
Statement/Proxy Statement on Form N-14 and to my being named under the "Legal
Matters" section therein.
By:
---------------------------------
Samuel Kornhauser
LAW OFFICES OF SAMUEL KORNHAUSER
<PAGE>
EXHIBIT 12
OPINION AND CONSENT OF
LAW OFFICES OF SAMUEL KORNHAUSER
<PAGE>
LAW OFFICES
SAMUEL KORNHAUSER
155 Jackson Street, Suite 1807, San Francisco, CA 94111
(415) 981-6281; FAX (415) 981-7616
SAMUEL KORNHAUSER
February 28, 1997
Board of Trustees
The Navellier Series Fund
One East Liberty Street, Third Floor
Reno, Nevada 89501
Board of Trustees
The Navellier Performance Funds
One East Liberty Street, Third Floor
Reno, Nevada 89501
Re: Federal Income Tax Consequences of Proposed Reorganization
----------------------------------------------------------
Gentlemen:
You have requested my opinion regarding the Federal income tax consequences
arising out of the reorganization, described herein, that is to be entered into,
whereby The Navellier Aggressive Small Cap Equity Portfolio (the "Portfolio") of
the Navellier Series Fund would be merged into the Navellier Aggressive Small
Cap Portfolio (the "Acquiring Fund") of the Navellier Performance Funds,
pursuant to the Agreement and Plan of Reorganization (the "Reorganization Plan")
proposed by Louis Navellier and Navellier Management, Inc., (the Navellier
Group") and approved by the Board of Trustees of The Navellier Performance Funds
(the "Performance Funds"). The Reorganization Plan provides that, pursuant to
the reorganization transaction, all of the assets of the Portfolio (the
"Portfolio Assets") are to be transferred into the Acquiring Fund, a portfolio
of The Navellier Performance Funds, solely in exchange for voting shares of
beneficial interest in the Acquiring Fund ("Acquiring Fund Shares") and the
assumption by the Acquiring Fund of all the liabilities of the Portfolio
(hereinafter referred to as the "Reorganization" or "merger"). Specifically,
the Reorganization Plan provides for the Reorganization of the Portfolio into
the Acquiring Fund.
<PAGE>
Board of Trustees
The Navellier Series Fund Page 2
The Navellier Performance Funds
In formulating my opinion, I have examined those documents and legal
authorities that I deemed appropriate for this purpose. These authorities
included various provisions of the Internal Revenue Code of 1986 as amended (the
"Code" or "I.R.C.") and the U.S. Treasury Income Tax Regulations promulgated
thereunder ("Treasury Regulations" or "Treas. Regs.), judicial decisions, and
administrative pronouncements by the Internal Revenue Service (the "Service")
and various tax treatises on the subject. In addition to the legal authorities
mentioned above, I also have reviewed various Performance Funds and Series Fund
corporate documents, including (1) the proposed Agreement and Plan of
Reorganization (the aforementioned "Reorganization Plan"); (2) The most recent
Amendments to Form N-1A of the Performance Funds and of the Series Fund; (3) the
Declaration of Trust of the Series Fund and Performance Funds; (4) the By-Laws
of the Series Fund and Performance Funds; and (5) the minutes of the November
11, 1996 meeting of the Series Fund Board; and (6) the Registration/Proxy
Statement on Form N-14 of the Performance Funds filed with the SEC.
My opinion set forth below assumes: (1) the accuracy of the statements and
facts concerning the Reorganization as set forth in this letter, the
Reorganization Plan, the respective Fund Documents reviewed, including the
business purposes for consummating the Reorganization as stated therein; and (2)
the accuracy of the assumptions described below under the heading "ASSUMPTIONS."
My opinion also assumes that the Reorganization will be consummated in the
manner contemplated by and in accordance with the terms and conditions set forth
in the Reorganization Plan and in the Registration Statement on Form N-14 of
the Navellier Performance Funds as filed with the Commission (the
"Reorganization Registration Statement").
<PAGE>
Board of Trustees
The Navellier Series Fund Page 3
The Navellier Performance Funds
This opinion is conditioned upon there being no change in the Code,
Treasury Regulations, judicial decisions, or administrative pronouncements by
the Service between the date hereof and the closing date of the Reorganization.
Based upon the facts and assumptions stated herein, and for the reasons set
forth below, it is my opinion that, for Federal income tax purposes, the
Reorganization will constitute a tax-free "reorganization" within the meaning of
Section 368(a)(1(C) of the Code. The consequences of this tax treatment of the
Reorganization is described more fully below under the heading "CONCLUSIONS."
FACTS
1. THE NAVELLIER PERFORMANCE FUNDS ("PERFORMANCE FUNDS") AND THE ACQUIRING FUND
The Performance Funds is an unincorporated voluntary association organized
under the laws of the State of Delaware as a business trust, pursuant to the
Declaration of Trust, and has operated as an investment company since its
organization. The Performance Funds is also registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end, non-
diversified management investment company. Accordingly, the Performance Funds
is also subject to the provisions of the 1940 Act and the rules and regulations
of the Commission thereunder. The operations of the Performance Funds are
further governed by the Declaration of Trust, the Performance Funds' By-Laws,
and by Delaware law, as applicable. The Performance Funds is authorized to
issue an unlimited number of shares of beneficial interest in one or more
series. Currently, the Performance Funds is composed of three separate series:
the Navellier Aggressive Growth Portfolio, the Navellier Mid Cap
<PAGE>
Board of Trustees
The Navellier Series Fund Page 4
The Navellier Performance Funds
Growth Portfolio and the Navellier Aggressive Small Cap Portfolio (the
"Acquiring Fund"). The Performance Funds is qualified to be taxed as a
regulated investment company (a "RIC") under the Code, has elected to be taxed
as a RIC for Federal income tax purposes under Section 851 of the Code
continually since the Performance Funds' organization. The Acquiring Fund
intends to qualify each year as a RIC under Section 851 of the Code, and further
intends to distribute all or substantially all of the Acquiring Fund's income so
that the Acquiring Fund and the shareholders of the Acquiring Fund will be taxed
in accordance with Section 851 of the Code.
2. THE REORGANIZATION
The Reorganization, as described above, is not tax-motivated, and has been
proposed and is being undertaken for a number of business and economic reasons,
as described in the Reorganization Plan and the Registration Statement and as
described in part hereinbelow. Pursuant to the Reorganization, the Portfolio
will transfer to the Acquiring Fund all of its existing Portfolio Assets and the
Acquiring Fund will assume all the liabilities of the Portfolio. The Acquiring
Fund will also deliver full and fractional Acquiring Fund Shares to the
Portfolio in an amount equal in value to the net asset value of the issued and
outstanding full and fractional shares of common stock in the Portfolio as of
the date of the Reorganization. The exact number of such Acquiring Fund Shares
to be transferred will be determined by using a net asset value exchange ratio.
With respect to the Reorganization, on the closing date of the
Reorganization, pursuant to the Reorganization Plan, the Acquiring Fund Shares
received by the Portfolio in the
<PAGE>
Board of Trustees
The Navellier Series Fund Page 5
The Navellier Performance Funds
transaction will be distributed pro rata to the shareholders (the
"Shareholders") of the Portfolio, the Portfolio will be liquidated, and all
Series Fund shares ("Portfolio Shares") will be canceled. It is assumed with
respect to the Reorganization that: (1) there is no existing agreement or
prearranged plan on the part of the Shareholders of the Portfolio to sell or
dispose of the Acquiring Fund Shares that the Shareholders of the Portfolio will
receive in the Reorganization (except pursuant to investment decisions which may
be made by such Shareholders in the ordinary course of investing in mutual
funds); (2) the Acquiring Fund will continue to use the Portfolio's historic
business assets received by the Acquiring Fund in the Acquiring Fund's
continuing business enterprises; and (3) there also is no plan or intention by
the Acquiring Fund to sell or dispose of the Portfolio Assets received in the
Reorganization (other than in the normal course of the Acquiring Fund's business
operations as a mutual fund).
The Reorganization, as described herein, must be approved at a special
meeting of the Shareholders of the Portfolio pursuant to such Reorganization
(the "Special Meeting") by at least 67% of the shares of common stock of the
Portfolio present in person or represented by proxy at the Special Meeting, or
more than 50% of the outstanding voting shares of the Portfolio, whichever is
less. The Navellier Series Fund's Declaration of Trust does not entitle
Shareholders of the Portfolio to appraisal rights (i.e., to demand the fair
value of their shares) in the event of a reorganization or merger.
Consequently, the Shareholders of the Portfolio will be bound by the terms of
the Reorganization Plan if such Reorganization Plan is approved at the Special
Meeting for the Portfolio. Any Shareholder, however, may redeem his, her or its
Portfolio Shares at net asset value prior to the closing date of the proposed
Reorganization of the Portfolio.
<PAGE>
Board of Trustees
The Navellier Series Fund Page 6
The Navellier Performance Funds
The Reorganization Plan provides that Navellier Management Inc. will bear
the aggregate costs of its solicitation of the Proxy for the Reorganization.
As described below, the investment policies of the Acquiring Fund (and
consequently, the risks of investing in such Acquiring Fund) are essentially the
same as those of the Portfolio.
3. INVESTMENT OBJECTIVES AND POLICIES
GENERAL. The Acquiring Fund and the Portfolio invest primarily in the
common stocks of small cap issuers. The Investment Adviser for the Portfolio
(Navellier Management, Inc.) is also the Investment Advisor for the Acquiring
Fund and uses the same modern portfolio theory style of investing for the
Acquiring Fund as it does for the Portfolio.
The investment objective of the Portfolio is the same as the investment
objective of the Acquiring Fund
ASSUMPTIONS
My opinion assumes the accuracy of the following assumptions in connection
with the proposed Reorganization (the "assumptions").
1. Immediately following the consummation of the Reorganization, every
Shareholder of the Portfolio will own full and fractional Acquiring
Fund Shares,
<PAGE>
Board of Trustees
The Navellier Series Fund Page 7
The Navellier Performance Funds
the value of which Acquiring Fund Shares will be approximately equal
to the value of such shareholder's full and fractional Portfolio
Shares immediately prior to the Reorganization, and every such
Shareholder of the Portfolio Reorganization will own such full and
fractional Acquiring Fund Shares solely by reason of the ownership by
the Shareholder of full and fractional Portfolio Shares immediately
prior to the Reorganization.
2. To the best knowledge of the management of the Series Fund, there is
no plan or intention on the part of the Shareholders of the Portfolio
to sell, to exchange, or otherwise to dispose of any of the Acquiring
Fund Shares received in the Reorganization, except pursuant to
investment decisions made in the ordinary course of investing in
mutual funds.
3. Immediately following the consummation of the Reorganization, the
Acquiring Fund will possess all of the assets and liabilities (except
for those assets of the Portfolio, if any , which have been used to
pay the reasonable expenses incurred by the Portfolio in connection
with the Series Fund Trustees contest, if any, of the Navellier Group
Proxy solicitation or contest of the Reorganization) possessed by the
Portfolio immediately prior to the Reorganization. The Portfolio will
make no redemptions or distributions (except for regular, normal
dividends declared and paid in order to ensure the Portfolio's
continued RIC qualification under Section 851 of the Code) in
anticipation of, or in connection with, the Reorganization.
<PAGE>
Board of Trustees
The Navellier Series Fund Page 8
The Navellier Performance Funds
4. The Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization, except such shares
as the Acquiring Fund will issue in the ordinary course of business as
an investment company which continuously offers its shares to the
public at net asset value.
5. The Acquiring Fund has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Reorganization, except as required
by Section 22(e) of the 1940 Act.
6. The Acquiring Fund has no plan or intention to sell or otherwise to
dispose of any of the Portfolio Assets acquired in the Reorganization,
except for dispositions made in the ordinary course of the Acquiring
Fund's business operations as an investment company.
7. All of the liabilities of the Portfolio that are to be assumed by the
Acquiring Fund and all of the liabilities, if any, to which the
transferred Portfolio Assets are subject were incurred by the
Portfolio in the ordinary course of the Portfolio's business and are
associated with the Portfolio Assets transferred in the
Reorganization.
8. Following the Reorganization, the Acquiring Fund will continue the
historic business of the Portfolio and will use a significant portion
of the Portfolio's historic business assets received by the Acquiring
Fund in the Reorganization in the Acquiring Fund's continuing business
enterprises.
<PAGE>
Board of Trustees
The Navellier Series Fund Page 9
The Navellier Performance Funds
9. The Portfolio will pay its expenses, if any, incurred in connection
with the Reorganization.
10. The Acquiring Fund does not own, directly or indirectly, nor has the
Acquiring Fund owned during the past five (5) years, directly or
indirectly, any stock of the Portfolio.
11. At the time of the Reorganization, the Portfolio will not have
outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire stock
in the Portfolio.
12. There is no intercorporate indebtedness existing between the Acquiring
Fund and the Portfolio that was issued, was acquired, or will be
settled at a discount.
13. The fair market value of the assets of the Portfolio which are
transferred to the Acquiring Fund will equal or exceed the sum of the
liabilities of the Portfolio which are assumed by the Acquiring Fund,
plus the amount of liabilities, if any, to which the transferred
assets of the Portfolio are subject.
14. The Portfolio is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
<PAGE>
Board of Trustees
The Navellier Series Fund Page 10
The Navellier Performance Funds
CONCLUSIONS
For the reasons set forth above, and based solely on the information and
the Assumptions set forth above, my opinion is that, for Federal income tax
purposes, the Reorganization will qualify for non-recognition treatment under
Code Section 368(a)(1)(C) of the Code. Accordingly, the following tax
consequences should result with respect the Reorganization:
1. The acquisition by the Acquiring Fund of all of the assets of the
Portfolio solely in exchange for the Acquiring Fund Shares received in
the Reorganization and the assumption of the accrued liabilities of
the Portfolio, followed by the distribution by the Portfolio to its
Shareholders of such Acquiring Fund Shares and any remaining assets of
the Portfolio, in complete liquidation, will constitute a
reorganization within the meaning of Section 368(a)(1)(C) of the Code.
2. The Portfolio and the Acquiring Fund each will be treated as "a party
to a reorganization" within the meaning of Code Section 368(b).
3. Pursuant to Sections 361(a) and 357(a) of the Code, no gain or loss
will be recognized by the Portfolio upon the transfer of substantially
all of the Portfolio Assets to the Acquiring Fund solely in exchange
for the Acquiring Fund Shares received in the Reorganization and the
assumption by the Acquiring Fund of all of the liabilities of the
Portfolio. In addition, pursuant to Section 361(C)(1) of
<PAGE>
Board of Trustees
The Navellier Series Fund Page 11
The Navellier Performance Funds
the Code, no gain or loss will be recognized by the Portfolio upon the
distribution by the Portfolio to the Shareholders of the Portfolio of
the Acquiring Fund Shares received in the Reorganization in exchange
for those Shareholders' Portfolio Shares pursuant to the
Reorganization Plan.
4. Pursuant to Section 362(b) of the Code, the tax basis of the Portfolio
Assets in the hands of the Acquiring Fund will be the same as the tax
basis of such assets in the hands of the Portfolio immediately prior
to the proposed Reorganization.
5. Pursuant to Section 1032(a) of the Code, no gain or loss will be
recognized to the Acquiring Fund upon the Acquiring Fund's receipt of
the Portfolio Assets pursuant to the Reorganization in exchange solely
for the Acquiring Fund Shares or upon the distribution of those
Acquiring Fund Shares to the Shareholders of the Portfolio in exchange
for those Shareholders' Portfolio Shares in the Portfolio.
6. Pursuant to Section 1223(2) of the Code, the holding period of the
Portfolio Assets to be received by the Acquiring Fund in the
Reorganization will include the holding period during which such
Portfolio Assets were held by the Portfolio immediately prior to the
Reorganization.
7. Pursuant to Section 354(a)(1) of the Code, no gain or loss will be
recognized to the Shareholders of the Portfolio pursuant to the
Reorganization upon the
<PAGE>
Board of Trustees
The Navellier Series Fund Page 12
The Navellier Performance Funds
receipt by those Shareholders of the full and fractional Acquiring
Fund Shares received solely in exchange for those Shareholders' full
and fractional Portfolio Shares.
8. Pursuant to Section 358(a)(1) of the Code, the tax basis of the full
and fractional Acquiring Fund shares to be received by the
Shareholders of the Portfolio pursuant to the Reorganization will be
the same as the tax basis of the full and fractional Portfolio Shares
surrendered by those Shareholders in the exchange.
9. Pursuant to Section 1223(1) of the Code, the holding period of the
full and fractional Acquiring Fund Shares to be received by the
Shareholders of the Portfolio, will include the holding period during
which the full and fractional Portfolio Shares surrendered by those
Shareholders in exchange therefor was held; provided, that those full
and fractional Portfolio Shares were held as capital assets in the
hands of those Shareholders on the date of the Reorganization.
10. Pursuant to Section 381(a) of the Code and Section 1.381(c)(2)-1 of
the Treasury Regulations, the Acquiring Fund will succeed to and take
into account the earnings and profits, or deficit in earnings and
profits, of the Portfolio as of the date of transfer. Any deficit in
earnings and profits of either the Portfolio or the Acquiring Fund
will be used only to offset the earnings and profits accumulated after
the date of the transfer.
<PAGE>
Board of Trustees
The Navellier Series Fund Page 13
The Navellier Performance Funds
* * * * *
As stated above, my opinion is based upon and subject to the facts,
assumptions, and reasons discussed herein. No opinion is expressed or implied
with respect to any entity's qualification as a RIC or with respect to any other
tax matters aside from the qualification of the Reorganization under Section
368(a)(1)(C) of the Code and the related tax consequences as set forth above.
My opinion is based upon my analysis of the current law, but neither the courts
or the Service are, in any way, bound by my analysis. I consent to the use of
this opinion as an exhibit to the Reorganization Registration Statement on Form
N-14 under which the Acquiring Fund Shares will be registered.
Sincerely,
LAW OFFICES OF SAMUEL KORNHAUSER
<PAGE>
EXHIBIT 14
CONSENT OF DELOITTE & TOUCHE, LLP
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Navellier Performance Funds:
We consent to the use in this Registration Statement on Form N-14 of our report
dated January 31, 1997, appearing in the Annual Report of The Navellier
Performance Funds for the year ended December 31, 1996, and to the reference to
us under the caption "Financial Statements and Experts" appearing the Combined
Prospectus/Proxy Statement, which is part of this Registration Statement. We
also consent to the reference to us under the caption "Financial Highlights"
included in the current Prospectus of the Navellier Performance Funds dated
November 26, 1996, which is part of such Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Washington, D.C.
March 6, 1997
<PAGE>
INDEPENDENT AUDITORS' CONSENT
Navellier Series Fund:
We consent to the use in this Registration Statement on Form N-14 of our report
dated January 31, 1997, appearing in the Annual Report of Navellier Series Fund
for the year ended December 31, 1996, and to the reference to us under the
caption "Financial Statements and Experts" appearing the Combined
Prospectus/Proxy Statement, which is part of this Registration Statement. We
also consent to the reference to us under the caption "Financial Highlights"
included in the current Prospectus of the Navellier Series Fund dated April 29,
1996, which is part of such Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Washington, D.C.
March 6, 1997
<PAGE>
EXHIBIT 17:
RULE 24f-2 NOTICE
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 24F-2
ANNUAL NOTICE OF SECURITIES SOLD
PURSUANT TO RULE 24f-2
READ INSTRUCTIONS AT END OF FORM BEFORE PREPARING FORM.
PLEASE PRINT OR TYPE.
______________________________________________________________________________
1. Name and address of issuer:
The Navellier Performance Funds
1 East Liberty
Third Floor
Reno, NV 89501-2110
______________________________________________________________________________
2. Name of each series or class of funds for which this notice is filed:
Navellier Aggresive Growth Portfolio
Navellier Mid Cap Growth Portfolio
Navellier Aggresive Small Cap Portfolio
______________________________________________________________________________
3. Investment Company Act File Number:
811-09142
Securities Act File Number: 33-80195
______________________________________________________________________________
4. Last day of fiscal year for which this notice is filed:
December 31, 1996
______________________________________________________________________________
5. Check box if this notice is being filed more than 180 days after the close
of the issuer's fiscal year for purposes of reporting securities sold
after the close of the fiscal year but before termination of the issuer's
24f-2 declaration:
/ /
______________________________________________________________________________
6. Date of termination of issuer's declaration under rule 24f-2(a)(1), if
applicable (see instruction A.6):
______________________________________________________________________________
7. Number and amount of securities of the same class or series which had been
registered under the Securities Act of 1933 other than pursuant to rule
24f-2 in a prior fiscal year, but which remained unsold at the beginning
of the fiscal year:
None
______________________________________________________________________________
8. Number and amount of securities registered during the fiscal year other
than pursuant to rule 24f-2:
None
______________________________________________________________________________
9. Number and aggregate sale price of securities sold during the fiscal
year:
Shares Sold: 14,002,871
Aggregate Sale Price: $173,832,232
_____________________________________________________________________________
<PAGE>
______________________________________________________________________________
10. Number and aggregate sale price of securities sold during the fiscal
year in reliance upon registration pursuant to rule 24f-2.
Shares Sold: 14,002,871
Aggregate Sale Price: $173,832,232
______________________________________________________________________________
11. Number and aggregate sale price of securities issued during the fiscal
year in connection with dividend reinvestment plans, if applicable (see
instruction B.7):
______________________________________________________________________________
12. Calculation of registration fee:
(i) Aggregate sale price of securities sold during $ 173,832,232
the fiscal year in reliance on rule 24f-2 ___________________
(from Item 10):
(ii) Aggregate price of shares issued in connection +
with dividend reinvestment plans (from Item 11, ___________________
if applicable):
(iii) Aggregate price of shares redeemed or repurchased - 74,324,567
during the fiscal year (if applicable): ___________________
(iv) Aggregate price of shares redeemed or repurchased +
and previously applied as a reduction to filing ___________________
fees pursuant to rule 24e-2 (if applicable):
(v) Net aggregate price of securities sold and issued $ 99,707,665
during the fiscal year in reliance on rule 24f-2 ___________________
line (i), plus line (ii), less line (iii), plus
line (iv) (if applicable):
(vi) Multiplier prescribed by Section 8(b) of the x 0.0003030303
Securities Act of 1933 or other applicable law or ___________________
regulation (see instruction C.8): $ 30,215.00
(vii) Fee due (line (i) or line (v) multiplied by ___________________
line (vi)):
INSTRUCTION: ISSUERS SHOULD COMPLETE LINES (ii), (iii), (iv), AND (v) ONLY IF
THE FORM IS BEING FILED WITHIN 60 DAYS AFTER THE CLOSE OF THE
ISSUER'S FISCAL YEAR. See Instruction C.3.
_______________________________________________________________________________
13. Check box if fees are being remitted to the Commission's lockbox
depository as described in Section 3a of the Commission's Rules of
Informal and Other Procedures (17 CFR 202.3a).
/ /
Date of mailing or wire transfer of filing fees to the Commission's
lockbox depository: February 27, 1997
_______________________________________________________________________________
SIGNATURES
This report has been signed below by the following persons on behalf of
the issuer and in the capacities and on the dates indicated.
By (Signature and Title)* /s/ Louis Navellier
-----------------------------------------------
President and Chairman of the Board of Trustees
-----------------------------------------------
Date 2/28/97
*Please print the name and title of the signing officer below the signature.
_______________________________________________________________________________
<PAGE>
LAW OFFICES
SAMUEL KORNHAUSER
155 JACKSON STREET, SUITE 1807, SAN FRANCISCO, CA 94111
(415) 981-6281; FAX (415) 981-7616
SAMUAL KORNHAUSER
February 20, 1997
VIA UPS NEXT DAY AIR
Louis G. Navellier
The Navellier Performance Funds
One East Liberty, Third Floor
Reno, Nevada 89501
Re: The Navellier Performance Funds
Securities Act of 1933 Reg. No. 33-80195
Investment Company Act of 1940 Reg. No. 811-9142
Mr. Navellier:
This opinion is furnished in connection with Rule 24f-2 of the Investment
Company Act of 1940. I understand that, pursuant to Rule 24f-2, The Navellier
Performance Funds (the "Fund") has registered an indefinite number of shares of
beneficial interest ("Shares") under the Securities Act of 1933. I further
understand that, pursuant to the provisions of Rule 24f-2, the Fund is filing
with the Securities and Exchange Commission the Notice attached hereto making
definite the registration of the Shares sold in reliance upon Rule 24f-2 during
the year ended December 31, 1996.
In rendering my opinion, I have examined such documents, records, and other
matters of law as I have deemed necessary for purposes of this opinion. I have
assumed, without independent investigation or verification, the genuineness of
all signatures of all parties, the authenticity of all documents submitted as
originals, the correctness of all copies, and the correctness of all facts set
forth in certificates delivered to me or written or oral statements made to me.
This opinion is issued as of the date hereof and is necessarily limited by laws
now in effect and facts and circumstances presently brought to my attention and
is subject to any change in law or facts reported or occurring subsequent to the
date hereof.
Based upon and subject to the foregoing, it is my opinion that the Shares, which
the Rule 24f-2 Notice attached hereto makes definite in number, were legally
issued, fully paid, and non-assessable.
<PAGE>
Tha Navellier Performance Funds
February 20, 1997
Page 2
My opinion is rendered solely in connection with the Rule 24f-2 Notice attached
hereto and may not be relied upon for any other purpose or by any other person,
firm, or entity without my written consent.
Sincerely,
Samuel Kornhauser
Attorney for
The Navellier Performance Funds
SK:sr
Enclosure
