<PAGE>
As Filed With The Securities And Exchange Commission On June 9, 1997
File No. 333-22967
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 2
Post-Effective Amendment No.
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THE NAVELLIER PERFORMANCE FUNDS
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(Exact Name of Registrant as Specified in Charter)
One East Liberty Street, Third Floor, Reno, Nevada 89501
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(Address of Principal Executive Offices) (Zip Code)
(702) 785-2300
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(Registrant's Telephone Number, Including Area Code)
Mr. Louis G. Navellier
The Navellier Performance Funds
One East Liberty, Third Floor
Reno, Nevada 89501
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(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.
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
N-14 LOCATION IN
ITEM NO. REGISTRATION STATEMENT
-------- ----------------------
PART A. INFORMATION REQUIRED IN PROSPECTUS/PROXY STATEMENT
-----------------------------------------------------------
1. Beginning of Registration Cover Page; Cross Reference Sheet
Statement and Outside Front
Cover Page of Prospectus
2. Beginning and Outside Back Table of Contents
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 Company Synopsis; Comparison of Investment
Being Acquired Objectives and Policies; Principal Risk
Factors; Additional Information About the
Portfolio and the Portfolio Shares;
Current Prospectus of The MFS Aggressive
Small Cap Equity Portfolio
7. Voting Information Introduction and Voting Information;
Synopsis
8. Interest of Certain Persons Introduction and Voting Information; The
and Experts Proposed Transactions; Miscellaneous
9. Additional Information Not Applicable
Required for Reoffering by
Persons Deemed to be
Underwriters
<PAGE>
N-14 LOCATION IN
ITEM NO. REGISTRATION STATEMENT
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PART B: INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information About Current Statement of Additional
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)
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13. Additional Information About Current Statement of Additional
the Company Being Acquired Information of The Navellier Series 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
<PAGE>
THE PROPOSED MERGER HAS NOT BEEN APPROVED BY THE BOARD OF TRUSTEES AND IF NOT
APPROVED BY THE PRESENT OR FUTURE BOARD OF TRUSTEES THE MERGER WILL NOT TAKE
PLACE.
LOUIS G. NAVELLIER AND
NAVELLIER MANAGEMENT INC.
(FORMER INVESTMENT ADVISOR TO THE NAVELLIER SERIES FUND)
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
JUNE 9, 1997
TO THE SHAREHOLDERS OF
THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
RECENTLY RENAMED THE MFS AGGRESSIVE SMALL CAP EQUITY FUND
Dear Shareholder:
A special meeting of the shareholders of The Navellier Aggressive Small Cap
Equity Portfolio recently renamed the MFS Aggressive Small Cap Equity Fund (the
"Portfolio"), a series of The Navellier Series Fund recently renamed the MFS
Series Trust, will be held at 9:30 A.M., Eastern Standard Time, on June 13,1997,
or a date shortly thereafter, at the offices of Massachusetts Financial Services
Co. ("MFS") at 500 Boylston Street, Boston, MA 02116 (the "Meeting"). The
shareholders of the Portfolio (the "Shareholders") will vote on a proposed
Agreement and Plan of Reorganization (the "Plan"). Under the Plan, the formerly
named 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 the investment objectives, investment style and policies of the
Portfolio when it was managed by Navellier Management, Inc.
If the Plan is approved and implemented by the 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 a group of shareholders of the Portfolio who own more than 10% of the
shares of the Portfolio and Navellier Management, Inc. (the former Investment
Advisor to The Navellier Series Fund's Navellier Aggressive Small Cap Equity
Portfolio) are proposing a shareholder vote for a merger of the Portfolio into
the Acquiring Fund. I and Navellier Management, Inc. ("The Navellier Group") are
soliciting your proxy (vote) because we (the "Navellier Group") believe that the
proposed merger should benefit Shareholders by reducing portfolio operating
costs through the elimination or reduction of duplicate or excessive expenses
and reinstating Navellier Management, Inc. and its investment style as your
Investment Advisor. We believe that you invested in the Portfolio because of
Navellier's unique investment style (application of modern portfolio theory) and
that the independent Trustees did not act in your best interests when they
replaced Navellier Management, Inc. with another investment advisor,
Massachusetts Financial Services ("MFS") which uses a different investment style
and investment philosophy than the one you chose.
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 FOR approving the Plan.
WE STRONGLY URGE YOU TO REVIEW, COMPLETE, AND RETURN YOUR GOLD PROXY CARD 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-
<PAGE>
UP MAIL AND TELEPHONE SOLICITATION. LOUIS NAVELLIER AND NAVELLIER MANAGEMENT,
INC. ARE PAYING FOR THIS PROXY SOLICITATION AND WILL NOT SEEK REIMBURSEMENT FROM
THE FUND OR YOU. AFTER REVIEWING THE ENCLOSED MATERIALS, PLEASE EXERCISE YOUR
RIGHT TO VOTE TODAY AND VOTE FOR BY COMPLETING, DATING, AND SIGNING EACH PROXY
CARD YOU RECEIVE AND MAILING THE PROXY IN THE SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE TO MACKENZIE PARTNERS AT 156 FIFTH AVENUE, NEW YORK, NY 10010. IT IS
VERY IMPORTANT THAT YOU VOTE AND THAT YOUR VOTING INSTRUCTIONS BE RECEIVED NO
LATER THAN JUNE 13, 1997 OR A DATE SHORTLY THEREAFTER.
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
Navellier Management, Inc. at 1-800-887-8671.
Sincerely,
Louis G. Navellier
--------------------------------------
Shareholder, former Trustee of The
Navellier Aggressive Small Cap Equity
Portfolio of The Navellier Series Fund
and President of Navellier Management
Inc. (former Investment Advisor to The
Navellier Aggressive Small Cap Equity
Portfolio of The Navellier Series
Fund)
<PAGE>
THE PROPOSED MERGER HAS NOT BEEN APPROVED BY THE BOARD OF TRUSTEES AND IF NOT
APPROVED BY THE PRESENT OR FUTURE BOARD OF TRUSTEES THE MERGER WILL NOT TAKE
PLACE.
LOUIS G. NAVELLIER
AND
NAVELLIER MANAGEMENT, INC.
(THE FORMER INVESTMENT ADVISOR TO THE NAVELLIER SERIES FUND)
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
------------------------
THE FORMERLY NAMED NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 13, 1997 OR A DATE SHORTLY THEREAFTER
To: The Shareholders of the formerly named Navellier Aggressive Small Cap Equity
Portfolio of
The Formerly Named Navellier Series Fund
You are hereby notified that a Special Meeting of the Shareholders of the
formerly named Navellier Aggressive Small Cap Equity Portfolio of the formerly
named Navellier Series Fund will be held at the offices of MFS at 500 Boylston
Street, Boston, MA 02116 on June 13, 1997 or a date shortly thereafter at 9:30
a.m. (Eastern Standard Time), for the purpose of considering and voting upon the
following matters:
PROPOSAL 1. With respect to the Portfolio:
To approve a proposed Agreement and Plan of Reorganization (the "Plan"),
whereby the formerly named 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 a
tax-free 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 (except liabilities attributable or related
to actions by the Trustees, their agents, associates and or confederates in
connection with the non-renewal of Navellier Management, Inc.'s investment
advisory contract) of the formerly named Navellier Aggressive Small Cap
Equity Portfolio.
PROPOSAL 2. With respect to the Portfolio:
Adjournment of the meeting to allow for additional solicitation of proxies
if necessary to establish a quorum or to obtain additional votes in favor of
the foregoing Proposal.
The transactions contemplated by the proposed Plan of Reorganization and
related matters are described in the attached Combined Prospectus/Proxy
Statement. A copy of the form of the proposed 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 April 16, 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 marked FOR in the enclosed self-addressed, postage-paid return
envelope.
Louis G. Navellier
--------------------------------------
Shareholder and former Trustee of the
formerly named Navellier Aggressive
Small Cap Equity Portfolio of the
formerly named Navellier Series Fund,
and President of Navellier Management,
Inc. (former Investment Advisor to the
formerly named Navellier Series Fund)
June 9, 1997
<PAGE>
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
PLEASE VOTE "FOR" PROPOSALS 1 AND 2 ON THE ENCLOSED GOLD 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 GOLD 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 former Trustee of the
formerly Named Navellier Aggressive
Small Cap Equity Portfolio of the
formerly named Navellier Series Fund,
and President of Navellier Management,
Inc. (former Investment Advisor to the
formerly named Navellier Aggressive
Small Cap Equity Portfolio)
<PAGE>
THE PROPOSED MERGER HAS NOT BEEN APPROVED BY THE BOARD OF TRUSTEES AND IF NOT
APPROVED BY THE PRESENT OR FUTURE BOARD OF TRUSTEES THE MERGER WILL NOT TAKE
PLACE.
PROXY SOLICITATION
BY
LOUIS G. NAVELLIER
AND
NAVELLIER MANAGEMENT, INC.
(THE FORMER INVESTMENT ADVISOR TO THE FORMERLY NAMED 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 former Investment Advisor to the formerly named Navellier Aggressive
Small Cap Equity Portfolio ("Portfolio") of the formerly named Navellier Series
Fund ("Fund"), for use at a special meeting of shareholders ("Shareholders") of
the "Portfolio" to be held at 9:30 a.m., Eastern Standard Time, on June 13,
1997, or a date shortly thereafter at the offices of MFS located at 500 Boylston
Street, Boston, MA 02116, and at any adjournment(s) thereof (the "Meeting"). The
Meeting is being held so that shareholders can vote on proposals made by Louis
Navellier and Navellier Management, Inc.:
PROPOSAL 1. With respect to the Portfolio:
To approve a proposed Agreement and Plan of Reorganization (the "Plan"),
whereby the formerly named 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 a
tax-free 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 (except liabilities attributable or related
to actions by the Trustees, their agents, associates and or confederates in
connection with the non-renewal of Navellier Management, Inc.'s investment
advisory contract) of the formerly named Navellier Aggressive Small Cap
Equity Portfolio.
PROPOSAL 2. Adjournment of the meeting to allow for additional solicitation
of proxies if necessary to establish a quorum or to obtain
additional votes in favor of the foregoing Proposal.
The Portfolio is a series investment company organized by Louis Navellier 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 Fund. Since only one portfolio currently exists, all shareholders of the
Fund are being solicited in connection with the Meeting.
The purpose of the Meeting is to consider a proposed Plan of Reorganization
(the "Plan"), which would effect a merger 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 former Investment Advisor). A
1
<PAGE>
group of shareholders owning more than 10% of the shares of the Portfolio who
would like to vote on the Plan have demanded a shareholder meeting to vote on
the proposal to merge the Portfolio into the Acquiring Fund. The Board of
Trustees of the Fund (the "Board") has not approved the proposed Plan. Pursuant
to the proposed Plan, all of the assets of the Portfolio would be acquired by
the Acquiring Fund (which has investment policies the same as those which the
Portfolio had when Navellier Management, Inc. was Investment Advisor to the
Portfolio), in a tax-free 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 (except liabilities attributable or
related to actions by the Trustees, their agents, associates and or confederates
in connection with the non-renewal of Navellier Management, Inc.'s investment
advisory contract). Specifically, it is proposed that the assets of the
Portfolio be transferred to the Acquiring Fund in a tax-free exchange for
Acquiring Fund Shares of value 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. In order to have a
merger, the Trustees must approve the proposed merger.
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 April 30, 1997 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 April 30, 1997 has been filed with the Securities and Exchange
Commission (the "Commission") and is incorporated by reference herein. Copies of
such Statement of Additional Information also may be obtained without charge by
contacting Navellier Management Inc. ("NMI") 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 May 1, 1997 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 June 9, 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 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.
------------------------
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 June 9, 1997.
2
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COMBINED PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Introduction and Voting Information........................................................................ 4
Special Meeting; Voting of Proxies; Adjournment.......................................................... 4
Proxy Solicitation....................................................................................... 5
Revocation of Proxies.................................................................................... 5
No Dissenters' Rights of Appraisal....................................................................... 6
Additional Voting Information............................................................................ 6
Synopsis................................................................................................... 6
The Proposed Reorganization.............................................................................. 7
Investment Objectives and Policies....................................................................... 8
Operations of the Navellier Performance Funds and the Acquiring Fund following the Reorganization........ 8
Management Fees, Administrative Fees, and Other Operating Expenses....................................... 8
Purchases and Exchanges.................................................................................. 10
Redemption Procedures and Fees........................................................................... 10
Dividends and Distributions; Automatic Reinvestment...................................................... 10
Federal Tax Consequences of the Proposed Reorganization.................................................. 11
Costs and Expenses of the Reorganization................................................................. 11
Continuation of Shareholder Accounts; Share Certificates................................................. 11
Form of Organization of The Navellier Performance Funds.................................................. 11
Comparison of Investment Objectives and Policies........................................................... 12
Investment Objectives and Policies....................................................................... 12
Investment Objective of the Acquiring Fund............................................................... 12
Investment Objective of the Portfolio.................................................................... 12
Certain Investment Restrictions and Limitations.......................................................... 13
Principal Risk Factors..................................................................................... 15
The Proposed Transactions.................................................................................. 17
Proposed Agreement and Plan of Reorganization............................................................ 17
Reasons for the Proposed Transactions.................................................................... 18
Description of Securities to Be Issued................................................................... 20
Federal Income Tax Consequences.......................................................................... 21
Pro Forma Capitalization and Ratios...................................................................... 23
Dissolution of the Portfolios............................................................................ 23
Navellier Group Recommendation........................................................................... 23
Required Vote............................................................................................ 23
Additional Information About the Acquiring Fund and the Acquiring Fund Shares.............................. 23
Additional Information About the Portfolio and the Portfolio Shares........................................ 24
Miscellaneous.............................................................................................. 24
Available Information.................................................................................... 24
Legal Matters............................................................................................ 24
Financial Statements and Experts......................................................................... 24
Other Business............................................................................................. 25
Appendix A: Form of Agreement and Plan of Reorganization................................................... A-1
</TABLE>
3
<PAGE>
PART A
<PAGE>
THE PROPOSED MERGER HAS NOT BEEN APPROVED BY THE BOARD OF TRUSTEES AND IF NOT
APPROVED BY THE PRESENT OR FUTURE BOARD OF TRUSTEES THE MERGER WILL NOT TAKE
PLACE.
SOLICITATION BY LOUIS G. NAVELLIER
AND
NAVELLIER MANAGEMENT, INC.
(THE FORMER INVESTMENT ADVISOR TO THE NAVELLIER SERIES FUND)
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
------------------------
THE FORMERLY NAMED NAVELLIER SERIES FUND
(THE FORMERLY NAMED NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO)
------------------------
COMBINED PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JUNE 13, 1997 OR A DATE SHORTLY THEREAFTER
------------------------
INTRODUCTION AND VOTING INFORMATION
SPECIAL MEETING; VOTING OF PROXIES; ADJOURNMENT
This combined prospectus/proxy statement is being furnished to the
shareholders of the formerly named Navellier Series Fund's formerly named
Navellier Aggressive Small Cap Equity Portfolio ("Portfolio") in connection with
the solicitation by Louis G. Navellier and Navellier Management, Inc., the
former 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 June 13, 1997 or a date shortly thereafter at 9:30 a.m. Eastern
Standard Time at the offices of MFS located at 500 Boylston Street, Boston, MA
02116, and at any adjournment(s) thereof (the "Meeting"). The purpose of the
Meeting is to vote on the proposed tax-free 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 April
16, 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 one-third 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. A quorum being present, the approval at the Meeting by the
shareholders of the Portfolio for the proposed 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 if more than 50% of the
outstanding shares of the Portfolio are present in person or represented by
proxy 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
June 13, 1997, or a date shortly thereafter, then the persons named as attorneys
and
4
<PAGE>
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 one-third of the shares present in
person or by proxy. 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 GOLD 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 GOLD 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.
If a broker returns a "non-vote" proxy, indicating a lack of authority to
vote on the Plan, 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, facsimile and/or personal interview by representatives of
Mr. Navellier, Navellier Management, Inc., employees of Navellier Management,
Inc., the former Investment Advisor to the Portfolio, or their affiliates, and
by representatives of any independent proxy solicitation service retained for
the Meeting including MacKenzie Partners, Inc., a proxy solicitation firm. Mr.
Navellier has agreed to pay MacKenzie Partners a base fee of $15,000 plus a
bonus of $25,000 if the proposal herein is approved. 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.
Mr. Navellier, as sole owner of Navellier Management, Inc., has a financial
interest in the outcome of the vote because Navellier Management, Inc. would be
investment advisor to the merged Portfolio, for which it would receive
investment advisory fees and administrative services fees.
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.
REVOCATION OF PROXIES
You may revoke your proxy: (i) at any time prior to the proxy's exercise by
written notice to MFS at 500 Boylston Street, Boston, MA 02116 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.
5
<PAGE>
NO DISSENTERS' RIGHTS OF APPRAISAL
The purpose of the Meeting is to vote on the proposed tax-free
Reorganization of the Portfolio into the Acquiring Fund, as described below in
greater detail. The Portfolio is a separate series of the formerly named
Navellier Series Fund. The Declaration of Trust of the formerly named 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 proposed merger. Consequently, the shareholders will be
bound by the terms of the Plan, if the Plan is approved at the Meeting for the
Portfolio and approved by the current or future Board of Trustees. 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
5,269,046 Portfolio Shares. As of the Record Date Charles Schwab & Company, San
Francisco, California, The Fidelity Group and Smith Barney, each held for the
benefit of others more than 5% of the Portfolio. Trustees and officers of The
formerly named Navellier Series Fund own in the aggregate less than 1% 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 purpose:
PROPOSAL 1. With respect to the Portfolio:
To approve a proposed Agreement and proposed Plan of Reorganization (the
"Plan"), whereby The formerly named 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 a
tax-free exchange for shares of beneficial interest in the Acquiring Fund
that would then be distributed to the shareholders of The formerly named
Navellier Aggressive Small Cap Equity Portfolio. Also, as part of the Plan,
the Acquiring Fund would assume all the liabilities (except liabilities
attributable or related to actions by the Trustees, their agents, associates
and or confederates in connection with the non-renewal of Navellier
Management, Inc.'s investment advisory contract) of The formerly named
Navellier Aggressive Small Cap Equity Portfolio.
PROPOSAL 2. Adjournment of the meeting to allow for additional solicitation
of proxies if necessary to establish a quorum or to obtain
additional votes in favor of the foregoing Proposal.
As described below, if holders of more than 50% of the outstanding shares of
record are present in person or by proxy, the approval by the Portfolio of
Proposal 1 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 the
vote of more than 50% of the outstanding shares entitled to vote, whichever is
less.
A GROUP OF SHAREHOLDERS OWNING OVER 10% OF THE OUTSTANDING SHARES OF THE
FORMERLY NAMED NAVELLIER SERIES FUND REQUESTED THIS MEETING. MR. NAVELLIER AND
NAVELLIER MANAGEMENT, INC. ("THE NAVELLIER GROUP") RECOMMEND THAT THE PROPOSED
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 proposed Agreement and Plan of
Reorganization. Shareholders should read this entire combined prospectus/proxy
statement carefully.
6
<PAGE>
THE PROPOSED REORGANIZATION
Shareholders of the Portfolio will be asked at the Meeting to vote upon and
approve the proposed 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 formerly named 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 tax-free 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.
Approval by the present Trustees or newly elected Trustees of the Portfolio
would be required in order to merge the Portfolio into the Acquiring Fund.
THE NAVELLIER GROUP BELIEVES THE PROPOSED 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 Trustees. See "The Proposed
Transactions--Agreement and proposed Plan of Reorganization." Among the
significant conditions (which may not be waived) for the Reorganization 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 if a quorum of
shareholders is present or the holders of at least a majority of the outstanding
voting Shares of the Portfolio, whichever amount is less and (iii) approval of
the proposed merger by the present or newly elected Trustees of the Portfolio.
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 (except liabilities attributable or related to actions by the
Trustees, their agents, associates and or confederates in connection with the
non-renewal of Navellier Management, Inc.'s investment advisory contract). 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 June 23, 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.
The following sets forth the Portfolio and the corresponding Acquiring Fund:
<TABLE>
<CAPTION>
PORTFOLIO OF ACQUIRING FUND OF
THE MFS SERIES TRUST THE NAVELLIER PERFORMANCE FUNDS
- -------------------------------------------- --------------------------------------------
<S> <C>
The formerly named Navellier The Navellier Aggressive
Aggressive Small Cap Equity Portfolio Small Cap Portfolio
</TABLE>
For the reasons set forth below under "The Proposed Transactions--Reasons
for the Proposed Transactions", the Navellier Group, including Mr. Navellier and
the former Investment Advisor, 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 proposed Plan effecting the proposed Reorganization for
approval by the shareholders of the Portfolio at the Meeting and recommends a
vote FOR the proposed Plan.
7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
GENERAL. The Acquiring Fund and the Portfolio as it was originally
chartered and managed by Navellier Management, Inc. up to March 15, 1997 each
were chartered and managed the same, i.e. to invest in equities of small cap
issuers. When the independent trustees replaced Navellier Management, Inc. with
MFS on March 15, 1997, the investment style of the Portfolio changed. Navellier
Management, Inc. used a modern portfolio theory style of stock selection as does
the Acquiring Fund. The MFS investment advisor with which the independent
trustees replaced Navellier Management, Inc. does not use modern portfolio
theory to select stocks.
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
by employing a modern portfolio theory to select securities. While the
investment objectives remain the same, the stock selection process used to
achieve that investment objective for the Portfolio changed after March 15, 1997
when Navellier Management, Inc. was effectively terminated by the independent
trustees.
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. The Acquiring Fund has the same investment advisor (Navellier
Management, Inc.) which the Portfolio had prior to March 15, 1997 and employs
the same modern portfolio investment style which was used by the Portfolio prior
to March 15, 1997.
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 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. which was, prior to March 15,
1997, also the Investment Advisor to the Portfolio. Administrative services for
The Navellier Performance Funds are provided for by Navellier Management, Inc.
MANAGEMENT FEES, ADMINISTRATIVE FEES, AND OTHER OPERATING EXPENSES
MANAGEMENT FEES. Navellier Management, Inc., was, prior to March 15, 1997
(when it was replaced by MFS), investment advisor to the Portfolio pursuant to
an investment management agreement between
8
<PAGE>
the formerly named Navellier Series Fund and Navellier Management, Inc. (the
"Series Fund Management Contract"). Navellier Management, Inc. currently 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 paid Navellier Management, Inc. and
currently pays MFS 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
pays Navellier Management, Inc. an investment advisory fee at an annual rate of
1.15% of the aggregate average daily net asset value of the Acquiring Fund.
Before March 15, 1997, Navellier Management, Inc. complied with all
applicable state regulations which required it 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) were in excess of specific
applicable limitations. Due to recent federal legislation, there are no longer
any such state regulations.
ADMINISTRATIVE FEES AND OTHER OPERATING EXPENSES. Portfolio pays its own
operating costs. Pursuant to an Administrative Services Agreement, Portfolio
paid Navellier Management, Inc. 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. After March 15, 1997, the Portfolio has been paying MFS the same
0.25% administrative services annual fee. The Acquiring Fund has an
Administrative Services Agreement with Navellier Management, Inc. which has the
same terms as the Administrative Services Agreement between Portfolio and
Navellier Management, Inc. prior to March 15, 1997.
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
<TABLE>
<CAPTION>
PORTFOLIO ACQUIRING FUND COMBINED PRO FORMA
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Management Fees 1.25% 1.15% 1.15%
Administrative Fees 0.25% 0.25% 0.25%
Other Expenses 0.36% 0.15% 0.15%
(before waiver of (pro forma after waiver (pro forma after waiver
reimbursement by of reimbursement by of reimbursement by
investment advisor) investment advisor) investment advisor)
Total Fund Operating Expenses 1.86% 1.55% 1.55%
(before waiver of (pro forma after waiver (pro forma after waiver
reimbursement by of reimbursement by of reimbursement by
investment advisor)(1) investment advisor)(2) investment advisor)(3)
</TABLE>
- ------------------------
(1) Total operating expenses after waiver of reimbursements were 1.75% as a
result of the investment adviser waiving reimbursement of $195,636 of
expenses.
(2) Total operating expenses before waiver of reimbursement by the investment
advisor were 2.22% before $127,403 of waived expenses.
(3) This estimated 1.55% figure was arrived at based on an estimate that the
investment advisor would waive reimbursement of approximately $270,849 in
advanced expenses.
9
<PAGE>
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 are sold in a continuous offering and are offered to
the public, and may be purchased through securities dealers or directly from the
Acquiring Fund's underwriter, Navellier Securities Corp., at the net asset value
next computed after the receipt of a purchase order. 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. The Portfolio presently sells
Portfolio shares in a continuous offering to the public at the public offering
price which includes a sales charge of between 3% and 0% as set forth in the
current Prospectus for the Portfolio. The Acquiring Fund does not charge any
sales charge.
The Acquiring Fund currently offers an exchange privilege, including
telephone exchange privileges, which, subject to certain restrictions, permit
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 these exchange privileges also are
available only in states where the shares to be acquired may be legally sold. If
the proposed merger does not occur, Portfolio shareholders will not be able to
exchange their Portfolio shares for shares of any series of the Navellier
Performance Funds. Except for the foregoing, there would be no material
differences between the exchange privileges which shareholders of the Portfolio
currently have and the exchange privileges which such shareholders will have as
shareholders of the Acquiring Fund 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 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 ordinarily are made within seven days after receipt of a
redemption request in proper form and documentation. Shares of the Acquiring
Fund 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 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.
10
<PAGE>
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 Fund or by 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 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 Funds) are
governed by this Declaration of Trust, by The Navellier Performance Funds'
By-Laws, and by Delaware Law, as applicable. The formerly named 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 formerly named
Navellier Series Fund and the Portfolio are governed by The Navellier Series
Fund
11
<PAGE>
Declaration of Trust dated May 28, 1993, and by Delaware law, as applicable.
Both The Navellier Performance Funds and The formerly named 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 were, prior to March 15, 1997, essentially the same.
Effective March 16, 1997, the independent trustees of Portfolio retained MFS as
investment advisor to the Portfolio. MFS does NOT apply the proprietary modern
portfolio theory investment style which Navellier Management, Inc. applied to
investments for the Portfolio prior to March 15, 1997 and which Navellier
Management, Inc. still applies in its investment advice for the Acquiring Fund.
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 Acquiring Fund is to achieve long-term
growth of capital primarily through investment in small cap companies with
appreciation potential. The Acquiring Fund invests in securities traded in the
United States securities markets of domestic issuers and of foreign issuers. The
sole 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 by applying the proprietary modern portfolio theory techniques of
Navellier Management, Inc. There can be no assurance that the Acquiring Fund
will achieve its investment objectives. The Acquiring Fund's investment
objectives may not be changed without shareholder approval. The Acquiring Fund
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 but, since March 15, 1997, when MFS was hired as
investment advisor to the Portfolio, the investment style (method of stock
selection) has changed. MFS does not use the modern portfolio theory style of
stock selection which Navellier Management, Inc. used for the Portfolio prior to
its replacement as investment advisor. The Portfolio's investment objective is
to achieve long-term growth of capital primarily through investment in small cap
companies with appreciation potential. The Portfolio invests in securities
traded in the United States securities markets of domestic issuers and of
foreign issuers. The sole 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 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 the Portfolio pay a
sales charge of between 3% and 0%. There is no 12b-1 fee.
12
<PAGE>
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 advisor, such investment will further their
cash needs or temporary defensive needs. In addition, when the investment
advisor 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 Acquiring 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 current Portfolio are substantially similar, however the Navellier
investment style for the Acquiring Fund is different than the MFS investment
style of the current Portfolio. 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.
13
<PAGE>
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.
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PRINCIPAL RISK FACTORS
The principal risks associated with an investment in the Portfolio since
March 15, 1997 and an investment in the Acquiring Fund are:
POSSIBLY NO INVESTMENT ADVISOR FOR THE PORTFOLIO AFTER JULY 12, 1997
On March 15, 1997 the independent Trustees allowed Navellier Management,
Inc.'s investment advisory contract with the Portfolio to expire so they could
hire MFS. However, MFS could only act as investment advisor for 120 days unless
the Portfolio's shareholders voted to retain MFS. The Portfolio shareholders did
not approve retaining MFS. Therefore, MFS cannot continue as investment advisor
after July 12, 1997. The Trustees may not be able to hire another investment
advisor for the Portfolio. Therefore, if the Portfolio is not merged into the
Acquiring Fund prior to July 12, 1997, the Portfolio could be without an
investment advisor.
LACK OF OPERATING HISTORY AND EXPERIENCE
The Acquiring Fund is a newly organized investment company portfolio of The
Navellier Performance Funds with a short history of operations. Navellier
Management, Inc. was organized on May 28, 1993 and managed the assets of The
formerly named Navellier Series Fund from January 3, 1994 (and the publicly
invested assets of The formerly named Navellier Series Fund since April 1, 1994)
to March 15, 1997.
Navellier Management, Inc. 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 Navellier Management, Inc. (including such of those persons who are also
controlling persons or legal counsel of the Acquiring Fund) had, before June
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 Advisor, 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 Navellier Management, Inc., 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 Navellier
Management, Inc. 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 Navellier Management, Inc.
intends to employ and invest in while managing the portfolios of the Acquiring
Fund. Because many of the over-the-counter and other securities which Navellier
Management, Inc. 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 Navellier Management, Inc. desires to trade
at a given time or period of time, thereby creating a potential liquidity
problem which could adversely affect their performance. Since Navellier
Management, Inc. 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
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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 Navellier Management, Inc. 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 Navellier Management,
Inc., 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 Navellier Management, Inc. 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.
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. Navellier Management, Inc.
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 significant operating history and therefore,
no annual portfolio turnover rate presently exists. Navellier Management, Inc.
estimates that the annual portfolio turnover rate will not exceed 200%.
Navellier Management, Inc., which was, up to March 16, 1997, also the investment
advisor to the Portfolio, will employ the same investment style for the
Acquiring Fund as it employed in managing the Portfolio, which had an annual
portfolio turnover rate in 1996 of 136.9%. However, these are NOT restrictions
on Navellier Management, Inc. and if, in Navellier Management Inc.'s judgment, a
higher annual portfolio turnover rate is required in order to attempt to achieve
a higher overall performance, then Navellier
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Management, Inc. 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
PROPOSED 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 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 (except
liabilities attributable or related to actions by the Trustees, their agents,
associates and or confederates in connection with the non-renewal of Navellier
Management, Inc.'s investment advisory contract) 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 (except liabilities attributable or
related to actions by the Trustees, their agents, associates and or confederates
in connection with the non-renewal of Navellier Management, Inc.'s investment
advisory contract), 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 June
23, 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 (except liabilities attributable or related to actions
by the Trustees, their agents, associates and or confederates in connection with
the non-renewal of Navellier Management, Inc.'s investment advisory contract) 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.
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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 total value of which Acquiring Fund Shares will be
equal to the total 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 total net asset value of the Acquiring Fund Shares received by Portfolio
Shareholders after the transfer of assets will be equal to the net asset value
of the Portfolio Shares at the Closing Date. Thus, the Reorganization will not
result in a dilution in value 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 formerly named Navellier Series
Fund 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 Portfolio and by the Acquiring Fund 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"); (ii) the approval of the Plan by the affirmative vote of the
holders of at least 67% of the Portfolio shares present in person or by proxy
entitled to vote at the Portfolio shareholders' meeting if a quorum is present
or a majority of the Portfolio's outstanding voting shares, whichever percentage
is less and (iii) approval of the Plan by the Portfolio's present or a newly
elected Board of Trustees. 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 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. was effectively terminated as Investment Advisor
to Portfolio by the Portfolio's independent trustees on March 13, 1997 when they
refused to renew Navellier's investment advisory agreement. As a result,
Portfolio shareholders who invested in Portolio because they wanted Navellier
Management, Inc.'s unique investment style no longer have it. If, however, the
proposed merger is approved by the shareholders and the current or future Board
of Trustees, the Portfolio shareholders will again have the same Navellier
Management, Inc., investment style, objectives and policies which they had in
the Portfolio prior to March 16, 1997 and can regain that Navellier Management,
Inc. investment style tax-free through the proposed merger. As described below
in greater detail, the Navellier Group and the Performance Fund's Board believe
the Reorganization would benefit Shareholders of the Portfolio by effectively
reinstating Navellier Management, Inc. as Investment Advisor to the Portolio's
shareholders by means of the proposed merger into the Acquiring Fund and would
further benefit Portfolio shareholders by substantially reducing existing
operating costs and expenses of the Portfolio by an estimated $100,000 per year
or more thereby promoting more efficient operations. The proposed Reorganization
was first recommended to the Series Fund Board by Navellier Management, Inc.,
the investment advisor to the
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Portfolio and by Louis Navellier, a then 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 Mr. Navellier felt that a proposed 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 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 proposed 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 objectives and restrictions. For these reasons, Mr.
Navellier 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.
The Navellier Group strongly recommends that the Shareholders of the
Portfolio vote FOR Proposal 1 (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 reacquiring Navellier
Management, Inc. as Investment Advisor with the same investment objectives,
policies and investment style and would permit the Shareholders of the Portfolio
to pursue the same investment goals. 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 through
the no load fund supermarkets. It is also believed that the anticipated
reduction in costs should increase the performance of the Portfolio.
The proposed 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 $55,000 in attorney's fees and costs of the outside 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 would be
lost if a proposed 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, Navellier investment
style and restrictions of the Portfolio and the Acquiring Fund would again
be essentially the same;
4. similar service features available to shareholders in the Portfolio and the
Acquiring Fund;
5. the anticipated benefits to the Shareholders of the Portfolio of being part
of the Navellier family of funds; and
6. the tax-free nature and consequences of the Reorganization.
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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 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.
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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 formerly named 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 (except liabilities attributable or related to actions
by the Trustees, their agents, associates and or confederates in connection
with the non-renewal of Navellier Management, Inc.'s investment advisory
contract) of the Portfolio and the subsequent distribution of those
Acquiring Fund Shares to the Portfolio's Shareholders of record in
liquidation thereof;
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 (except
liabilities attributable or related to actions by the Trustees, their
agents, associates and or confederates in connection with the non-renewal of
Navellier Management, Inc.'s investment advisory contract);
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
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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. None,
some or all of the Portfolio's loss carryover may be lost if the proposed merger
occurs, depending on future tax circumstances of the Portfolio.
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 ADVISORS 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:
<TABLE>
<CAPTION>
ACQUIRING PRO FORMA
PORTFOLIO FUND COMBINED
--------------- ------------- ------------
<S> <C> <C> <C>
Net Assets.............................. $ 190,034,513(4) $0 $190,034,513
Net Asset Value Per Share............... $17.79 $0 $17.79
Shares Outstanding...................... 10,683,004 0 10,683,004
</TABLE>
(4) The assets of the Portfolio are now approximately $75 million.
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 proposed Plan of Reorganization".
NAVELLIER GROUP RECOMMENDATION
The Navellier Group has solicited this shareholder vote to approve the
Reorganization and recommends that the Portfolio Shareholders vote FOR the
Reorganization on the enclosed GOLD proxy card. 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 the
reacquisition of Navellier Management, Inc. as Investment Advisor to Portfolio
shareholders and 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) and Proposal No. 2 (to
authorize adjournments of the shareholder meeting).
With respect to the reorganization of the Portfolio into the Acquiring Fund,
the independent Trustees of the Portfolio by their actions and statements since
March 13, 1997, have opposed the proposed merger. In the event that the
Shareholders of the Portfolio do not approve the proposed merger of the
Portfolio into the Acquiring Fund contemplated hereunder, Navellier Management,
Inc. would not be investment advisor of your assets.
REQUIRED VOTE
As described above, if 50% of the outstanding shares entitled to vote) is
present in person or by proxy, 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.
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 April 30, 1997. 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 April 30, 1997. The Statement of Additional Information has
23
<PAGE>
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 MFS Series Trust, dated May 1, 1997. A copy of that 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 MFS Series Trust. Further information about the Portfolio
is included in the Statement of Additional Information for the MFS Series Trust,
dated May 1, 1997, which also has been filed with the Commission and is
incorporated by reference herein. A copy of this Statement of Additional
Information for the MFS Series Trust 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.
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 formerly named
Navellier Series Fund also is registered under the 1940 Act and is required to
file reports under the 1940 Act. Such reports, proxy materials 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.
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 relied upon as
reports of independent accountants and were given by 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.
24
<PAGE>
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.
<TABLE>
<S> <C> <C>
By Louis G. Navellier and Navellier Management, Inc.
By -----------------------------------------
Louis G. Navellier
</TABLE>
One East Liberty Street, Third Floor
Reno, Nevada 89501
June 9, 1997
25
<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 formerly
named 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 formerly named 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 (except liabilities attributable or related to actions by
the Trustees, their agents, associates and or confederates in connection with
the non-renewal of Navellier Management, Inc.'s investment advisory contract) 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:
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 (EXCEPT
LIABILITIES ATTRIBUTABLE OR RELATED TO ACTIONS BY THE TRUSTEES, THEIR AGENTS,
ASSOCIATES AND OR CONFEDERATES IN CONNECTION WITH THE NON-RENEWAL OF
NAVELLIER MANAGEMENT, INC.'S INVESTMENT ADVISORY CONTRACT) 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
A-1
<PAGE>
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 (except
liabilities attributable or related to actions by the Trustees, their
agents, associates and or confederates in connection with the non-renewal of
Navellier Management, Inc.'s investment advisory contract) 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 (except liabilities attributable or related to
actions by the Trustees, their agents, associates and or confederates in
connection with the non-renewal of Navellier Management, Inc.'s investment
advisory contract), 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.
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.
A-2
<PAGE>
3. CLOSING AND CLOSING DATE
3.1 The Closing for the Reorganization shall be June 23, 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;
(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
A-3
<PAGE>
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 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-4
<PAGE>
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;
(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
A-5
<PAGE>
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;
(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
A-6
<PAGE>
(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.
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
A-7
<PAGE>
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;
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
A-8
<PAGE>
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.
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-9
<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 FORMERLY NAMED NAVELLIER
SERIES FUND
BY: By:
------------------------- -------------------------
Secretary President
A-10
<PAGE>
THE PROPOSED MERGER HAS NOT BEEN APPROVED BY THE BOARD OF TRUSTEES AND IF NOT
APPROVED BY THE PRESENT OR FUTURE BOARD OF TRUSTEES
THE MERGER WILL NOT TAKE PLACE.
THE MFS AGGRESSIVE SMALL CAP EQUITY FUND
FORMERLY KNOWN AS
PROXY THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PROXY
PORTFOLIO
THE MFS SERIES TRUST
FORMERLY KNOWN AS
THE NAVELLIER SERIES FUND
One East Liberty Street, Third Floor
Reno, Nevada 89501
--------------------
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS
June 13, 1997 (or another date shortly thereafter)
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 MFS Aggressive Small Cap Equity Fund formerly known as The Navellier
Aggressive Small Cap Equity Portfolio (the "Portfolio"), an investment
portfolio offered by The MFS Series Trust formerly known as The Navellier
Series Fund (the "Series Fund") which meeting will be held at 9:30 a.m.,
Eastern Standard Time, on June 13, 1997 OR ANOTHER DATE SHORTLY THEREAFTER,
at the offices of Massachusetts Financial Services, Co., ("MFS"), 500 Boylston
Street, Boston, MA 02116 (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 to 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>
Please mark | |
your votes as | X |
indicated in | |
this example
Proposal 1 To approve a proposed Agreement and Plan of
Reorganization (the "Plan"), whereby The MFS Aggressive
Small Cap Equity Fund formerly known as 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 MFS Aggressive
Small Cap Equity Fund formerly known as The Navellier
Aggressive Small Cap Equity Portfolio. Also, as part of
the Plan, the Acquiring Fund would assume all the
liabilities (except liabilities attributable or related
to actions by the Trustees, and their agents, associates
and or confederates in connection with the non-renewal of
Navellier Management, Inc.'s investment advisory contract)
of The MFS Aggressive Small Cap Equity Fund formerly known
as The Navellier Aggressive Small Cap Equity Portfolio.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal 2 ADJOURNMENT of the meeting to allow for additional
solicitation of proxies if necessary to establish a
quorum or to obtain additional votes in favor of the
foregoing proposal.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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.
WHICH RECOMMEND A VOTE FOR PROPOSALS 1 and 2.
Dated _______________, 1997
------------------------ ----------------
Signature of Shareholder Number of shares
------------------------ ----------------
Signature of Shareholder Number of shares
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>
PART B
<PAGE>
PART B
THE NAVELLIER PERFORMANCE FUNDS
(THE NAVELLIER AGGRESSIVE SMALL CAP PORTFOLIO)
STATEMENT OF ADDITIONAL INFORMATION
DATED JUNE 9, 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 June 9, 1997 for the special
meeting (the "Meeting") of the shareholders of the formerly named Navellier
Aggressive Small Cap Equity Portfolio (the "Portfolio") of the formerly named
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
<TABLE>
<CAPTION>
PROSPECTUS OF THE NAVELLIER PERFORMANCE FUNDS DATED APRIL 30, 1997 (incorporated
herein by reference to the April 30, 1997 N-1A filing)...............................
<S> <C>
STATEMENT OF ADDITIONAL INFORMATION FOR THE NAVELLIER PERFORMANCE FUNDS DATED APRIL
30, 1997 (incorporated herein by reference to the April 30, 1997 N-1A filing)........
PROSPECTUS OF THE MFS SERIES TRUST DATED MAY 1, 1997 (incorporated herein by reference
to the June 5, 1997 pre-effective Amendment No. 1 to Form N-14.).....................
STATEMENT OF ADDITIONAL INFORMATION FOR THE MFS SERIES TRUST DATED MAY 1, 1997
(incorporated herein by reference to the June 5, 1997 pre-effective Amendment No. 1
to Form N-14.).......................................................................
CURRENT AUDITED ANNUAL REPORT OF THE NAVELLIER PERFORMANCE FUNDS AS OF DECEMBER 31,
1996 (incorporated herein by reference to the June 5, 1997 pre-effective Amendment
No. 1 to Form N-14.).................................................................
CURRENT AUDITED ANNUAL REPORT OF THE NAVELLIER SERIES FUND AS OF DECEMBER 31, 1996
(incorporated herein by reference to the April 30, 1997 N-1A filing.)................
Pro Forma Financial Statement.........................................................
</TABLE>
<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 PERFORMANCE AGGRESSIVE
AGGRESSIVE SMALL CAP AGGRESSIVE SMALL CAP
SMALL CAP EQUITY PRO FORMA SMALL CAP EQUITY PRO FORMA
PORTFOLIO PORTFOLIO COMBINED PORTFOLIO PORTFOLIO COMBINED
(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
--- ------------- -------------
</TABLE>
1
<PAGE>
NAVELLIER PERFORMANCE AGGRESSIVE SMALL CAP PORTFOLIO
AND
NAVELLIER SERIES AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------------------- ---------------------------------------------
NAVELLIER NAVELLIER
NAVELLIER SERIES NAVELLIER SERIES
PERFORMANCE AGGRESSIVE PERFORMANCE AGGRESSIVE
AGGRESSIVE SMALL CAP AGGRESSIVE SMALL CAP
SMALL CAP EQUITY PRO FORMA SMALL CAP EQUITY PRO FORMA
PORTFOLIO PORTFOLIO COMBINED PORTFOLIO PORTFOLIO COMBINED
(UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) (UNAUDITED)
--------------- ----------- ----------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
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
--- ------------- -------------
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
--- ------------- -------------
</TABLE>
2
<PAGE>
NAVELLIER PERFORMANCE AGGRESSIVE SMALL CAP PORTFOLIO
AND
NAVELLIER SERIES AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------------------- ---------------------------------------------
NAVELLIER NAVELLIER
NAVELLIER SERIES NAVELLIER SERIES
PERFORMANCE AGGRESSIVE PERFORMANCE AGGRESSIVE
AGGRESSIVE SMALL CAP AGGRESSIVE SMALL CAP
SMALL CAP EQUITY PRO FORMA SMALL CAP EQUITY PRO FORMA
PORTFOLIO PORTFOLIO COMBINED PORTFOLIO PORTFOLIO COMBINED
(UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) (UNAUDITED)
--------------- ----------- ----------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
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
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
--- ------------- -------------
</TABLE>
3
<PAGE>
NAVELLIER PERFORMANCE AGGRESSIVE SMALL CAP PORTFOLIO
AND
NAVELLIER SERIES AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------------------- ---------------------------------------------
NAVELLIER NAVELLIER
NAVELLIER SERIES NAVELLIER SERIES
PERFORMANCE AGGRESSIVE PERFORMANCE AGGRESSIVE
AGGRESSIVE SMALL CAP AGGRESSIVE SMALL CAP
SMALL CAP EQUITY PRO FORMA SMALL CAP EQUITY PRO FORMA
PORTFOLIO PORTFOLIO COMBINED PORTFOLIO PORTFOLIO COMBINED
(UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) (UNAUDITED)
--------------- ----------- ----------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
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
--- ------------- -------------
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.
4
<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)(4) --
----------- -------------- ----------- --------------
Total Assets............................... -- 195,583,043 (18,118)(4) 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)(4) --
----------- -------------- ----------- --------------
Total Liabilities.......................... -- 5,548,530 (18,118)(4) 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 (Loss) on Investments..... -- (1,910,202) -- (1,910,202)
Net Unrealized Appreciation on
Investments...................................... -- 36,878,084 -- 36,878,084
----------- -------------- ----------- --------------
Total...................................... $ -- $ 190,034,513(6) $ -- $ 190,034,513(6)
----------- -------------- ----------- --------------
----------- -------------- ----------- --------------
SHARES OUTSTANDING................................... -- 10,683,004 2A) 0(2A) 10,683,004(2A)
----------- -------------- ----------- --------------
----------- -------------- ----------- --------------
NET ASSET VALUE PER SHARE............................ -- $ 17.79 -- $ 17.79
----------- -------------- ----------- --------------
----------- -------------- ----------- --------------
MAXIMUM OFFERING PRICE PER SHARE..................... -- $ 18.34 -- $ 17.79(5)
----------- -------------- ----------- --------------
----------- -------------- ----------- --------------
</TABLE>
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
5
<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.
6
<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 proposed 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. As of December 31, 1996 the Acquiring Fund was essentially a
shell with few if any assets.
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 and by the wavier by the investment advisor of an
estimated $270,849 of expenses advanced by the investment advisor thereby
reducing the total operating expenses from
7
<PAGE>
NAVELLIER PERFORMANCE AGGRESSIVE SMALL CAP PORTFOLIO
AND
NAVELLIER SERIES AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
(UNAUDITED)
2. PRO FORMA ADJUSTMENTS (CONTINUED)
an estimated 1.86% to an estimated 1.55%. The $270,849 did not include
the waiver by Investment Advisor of the remaining $18,118 in unamortized
organizational costs.
3. COSTS AND EXPENSES OF REORGANIZATION
Navellier Management, Inc., the investment adviser to the Acquiring Fund,
will bear all the costs and expenses related to the Reorganization (including
costs of the N-14 filing, shareholder efforts to compel the shareholder meeting
on the Reorganization and Navellier's proxy solicitation efforts).
4. As a result of the Reorganization, the investment advisor will lose its
right to reimbursement of the remaining $18,118 in unamortized
organizational expenses.
5. The maximum offering price per share after the Reorganization would be equal
to the net asset value per share because no sales charge would be imposed on
the sale of shares after the Reorganization.
6. The asssets of the Portfolio are now approximately $75 million.
8
<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 proposed 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) Incorporated by reference to Registrant's N-14 filed March 7, 1997.
<PAGE>
(5) Specimen share certificate.(2)
(6) Form of Management Contract between the Navellier Aggressive Small Cap
Portfolio of The Navellier Performance Funds and Navellier Management,
Inc.(1)
(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.(6)
(14)(b) Consent of Deloitte & Touche, independent accountants for The formerly
named Navellier Series Fund.(6)
(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)(3)
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.
- -----------------------------
(4) Filed herewith
(5) Incorporated by reference from Post-effective Amendment No. 4 to
Registrant's Registration Statement on Form N-1A filed November 26,
1996.
(6) Incorporated by reference to Registratant's N-14 filing filed March 7,
1997. The consents are not being updated because there have been no
material changes in the financial statements since the filing of
Registrant's N-14 on March 7, 1997.
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 9th day of June, 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 June 9, 1997
Louis Navellier Board, President,
Treasurer, Trustee.
- ---------------------------- Trustee June 9, 1997
Joel Rossman
- ---------------------------- Trustee June 9, 1997
Barry Sander
- ---------------------------- Trustee June 9, 1997
Jacques Delacroix
- ---------------------------- Trustee June 9, 1997
Arnold Langsen
C-3
<PAGE>
EXHIBITS TO
PART C
<PAGE>
EXHIBIT 11
OPINION AND CONSENT OF
LAW OFFICES OF SAMUEL KORNHAUSER
<PAGE>
[LETTERHEAD]
June 5, 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>
[LETTERHEAD]
June 9, 1997
Board of Trustees
The Formerly Named 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 formerly named Navellier Aggressive Small Cap
Equity Portfolio (the "Portfolio") of the formerly named 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
pzortfolio 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 (except
liabilities attributable or related to actions by the Trustees, their agents,
associates and or confederates in connection with the non-renewal of
Navellier Management, Inc.'s investment advisory contract) 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 (except liabilities attributable or related to actions by the
Trustees, their agents, associates and or confederates in connection with the
non-renewal of Navellier Management, Inc.'s investment advisory contract) 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
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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 if
more than 50% of the shares entitled to vote are present in person or by
proxy, 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.
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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,
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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 and except
liabilities attributable or related to actions by the Trustees,
their agents, associates and or confederates in connection with the
non-renewal of Navellier Management, Inc.'s investment advisory
contract) 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.
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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
(except liabilities attributable or related to actions by the
Trustees, their agents, associates and or confederates in
connection with the non-renewal of Navellier Management, Inc.'s
investment advisory contract) by 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.
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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.
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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
(except liabilities attributable or related to actions by the
Trustees, their agents, associates and or confederates in
connection with the non-renewal of Navellier Management, Inc.'s
investment advisory contract) 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
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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
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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.
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* * * * *
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,
/s/ Samuel Kornhauser
LAW OFFICES OF SAMUEL KORNHAUSER
