<PAGE>
ANNUAL REPORT, December 31, 1996
NAVELLIER PERFORMANCE FUNDS
1 East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
- --------------------------------------------------------------------------------
February 1997
Dear Shareholder:
For the year 1996, the Navellier Aggressive Growth Portfolio ("the Fund")
returned 22.62%. This compares favorably to 14.76% for the Russell 2000*, 17.48%
for the Lipper Growth Funds Index** and the Nasdaq Composite*** which returned
22.71% over the same period. During the first six months of 1996, the Navellier
Aggressive Growth Portfolio gained 30.63%, compared to a 12.63% gain for the
Nasdaq Composite and a 9.70% gain for the Russell 2000. During the second half
of 1996 the Fund lost 6.13%, compared to a positive 8.95% return for the Nasdaq
Composite and a positive 4.61% return for the Russell 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NAVELLIER AGGRESSIVE GROWTH PORTFOLIO
<S> <C> <C> <C>
DATE Aggressive Growth Portfolio NASDAQ Composite Russell 2000
12/31/95 $10,000 $10,000 $10000
1/31/96 $9,540 $10,073 $9981
2/29/96 $10,600 $10,455 $10284
3/31/96 $11,330 $10,468 $10468
4/30/96 $12,900 $11,315 $11023
5/31/96 $14,040 $11,818 $11452
6/30/96 $13,050 $11,263 $10970
7/31/96 $11,190 $10,270 $10001
8/31/96 $11,850 $10,849 $10567
9/30/96 $12,760 $11,661 $10963
10/31/96 $12,540 $11,610 $10779
11/30/96 $12,220 $12,286 $11207
12/31/96 $12,160 $12,271 $11476
</TABLE>
The above chart indicates the return of $10,000 invested in the NAVELLIER
AGGRESSIVE GROWTH PORTFOLIO on December 29, 1995. As the chart shows by December
31, 1996, the value of the investment would have grown to $12,262, a 22.62%
increase. For comparison purposes, look at how the NASDAQ Composite and the
Russell 2000 performed over the same period. An investment of $10,000 in the
NASDAQ Composite over the same period would have grown to $12,271, a 22.71%
increase. Similarly, an investment of $10,000 in the Russell 2000 over the same
period would have grown to $11,476, a 14.76% increase.
The above charts and performance numbers assume reinvestment of all
distributions.
Please be aware that past performance is no indication of future performance.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
The Fund generally lagged behind the overall stock market during the last six
months of 1996 since primarily large capitalization stocks performed well during
the second half of the year. Although the Fund can buy large cap stocks, growth
stocks are generally found in the small cap arena. One of the startling
statistics for 1996 was highlighted in an article in the January 13, 1997 issue
of Fortune, which stated that the Nasdaq Composite, excluding the 100 largest
stocks, was actually up less than 3% in 1996. In other words, 1996 was
predominantly a large capitalization stock market rally, especially in the
second half of 1996. Virtually none of the largest 100 Nasdaq stocks were in the
Navellier Aggressive Growth Portfolio. Considering that the Nasdaq Composite was
up less than 3% in 1996 when the 100 largest stocks are excluded, we are quite
satisfied that the Fund had strong results in 1996.
The historical valuations of the stocks in the Navellier Aggressive Growth
Portfolio remain reasonable relative to the Dow Industrials and S&P 500. Wave
after wave of money flowing into index funds has benefited the S&P 500 and moved
it into the high range of its historical price/earnings ratio. At over 21 times
current earnings, the S&P 500 is very expensive, especially since the most
optimistic analysts call for only 14% to 15% earnings growth in fiscal 1997. The
average stock in the Navellier Aggressive Growth Portfolio continues to trade at
approximately 30 times earnings, but literally has over 15 times the historical
earnings growth of the S&P 500. Looking forward, the average stock in the Fund
should continue to have far greater earnings growth than the S&P 500. When the
current mania fueling index funds settles down and Wall Street starts rotating
into stocks that represent outstanding fundamental values, my favorite stocks in
the Fund should benefit tremendously. In my opinion, we are now on the verge of
a "stock picking" environment, where predominantly stocks with outstanding
fundamental characteristics, such as those in the Navellier Aggressive Growth
Portfolio, will benefit.
We were proud to introduce the Navellier Mid Cap Growth Portfolio ("the
Portfolio") on November 27, 1996. The Portfolio returned 2.75% for the month of
December. This compares favorably to 2.40% for the Russell 2000*, a negative
1.89% for the Lipper Growth Funds Index** and a negative 0.12% for the Nasdaq
Composite*** over the same short period. We want to emphasize that although we
hope to have excellent returns for this Portfolio, such a short reporting period
says very little for future expectations for any investment.
The fundamentals for the stocks in the Navellier Mid Cap Growth Portfolio remain
very strong. The average stock in the Portfolio continues to trade at
approximately 22 times earnings, but has far more powerful earnings growth
potential than that of the S&P 500. We use the same techniques for the Navellier
Mid Cap Growth Portfolio as we have used for the highly successful Navellier
Aggressive Small Cap Equity Portfolio. The main difference between the two funds
is that we only purchase stocks with a market cap of between $1 and $5 billion
for the Navellier Mid Cap Growth Portfolio. The average cap size for the
companies we are buying for the Navellier Mid Cap Growth Portfolio is
approximately $2.2 billion. This makes the Portfolio an excellent opportunity
for our investors to diversify into a larger cap sector of the market.
On the large scale, economists are having a hard time predicting economic growth
because increasing productivity is hard to account for in their economic models.
Most economists are predicting 2% to 3% economic growth in 1997, which would be
a slowdown from the more than 4% growth experienced in the second half of 1996.
However, these economists are not factoring in continuing productivity gains
that have bolstered the U.S. economy, resulting in exceptionally high growth
without inflation. The implicit price deflator is an inflation indicator without
volatile food and energy prices. It is the most reliable indicator of inflation
and is now at its lowest point in decades. The recent 0.3% drop in wholesale
prices in
2
<PAGE>
January is further evidence that inflation is now deader than dead. The bond
market has celebrated this positive inflation news and as of this writing,
Treasury Bond yields are near the 6.5% level. The low inflation and low interest
rate environment sets a very positive tone for the stock market for the next
several months.
In 1996, the Navellier Aggressive Growth Portfolio performed quite well relative
to other growth funds. In fact, the Fund was our best performing mutual fund in
1996. Through its non-diversified charter, the Navellier Aggressive Growth
Portfolio can better concentrate on key stocks and key industry groups than the
diversified funds that we manage. As a result, the Navellier Aggressive Growth
Portfolio is designed to be our most aggressive growth fund. We were quite happy
with the short experience of our new Navellier Mid Cap Growth Portfolio. The new
Navellier Mid Cap Growth Portfolio should prove to have very strong upside
potential with less volatility than our other smaller cap funds.
I want to personally thank all shareholders in the Navellier Performance Funds
for selecting us to manage some of your assets. We feel very obligated to our
shareholders and plan to close the funds in the future to ensure our high
performance standard. Always feel free to contact us if you have any questions
or we can help you in any way.
Sincerely,
<TABLE>
<S> <C>
[/S/ LOUIS G. NAVELLIER] [/S/ ALAN ALPERS]
LOUIS G. NAVELLIER ALAN ALPERS
</TABLE>
THIS MATERIAL HAS BEEN PRECEDED BY A NAVELLIER PERFORMANCE FUNDS PROSPECTUS.
* THE RUSSELL 2000 INDEX IS AN UNMANAGED INDEX CONSISTING OF THE SMALLEST 2000
STOCKS IN THE RUSSELL 3000 INDEX. IT IS CONSIDERED REPRESENTATIVE OF THE
SMALL CAP MARKET IN GENERAL. IT IS NOT AN INVESTMENT PRODUCT AVAILABLE FOR
PURCHASE.
** THE LIPPER GROWTH FUND INDEX IS AN UNMANAGED NET ASSET VALUE WEIGHTED INDEX
OF 30 MUTUAL FUNDS THAT HAVE "GROWTH" INVESTMENT OBJECTIVES.
*** THE NASDAQ COMPOSITE IS AN UNMANAGED INDEX CONSISTING OF APPROXIMATELY 5,500
STOCKS. IT IS CONSIDERED REPRESENTATIVE OF THE STOCK MARKET AS A WHOLE. IT
IS NOT AN INVESTMENT PRODUCT AVAILABLE FOR PURCHASE.
3
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS
AEROSPACE AND DEFENSE -- 1.38%
40,000 Oregon Metallurgical Corp.* $ 1,290,000
-------------
BUSINESS/MANAGEMENT SERVICES -- 2.92%
100,000 FPA Medical Management,
Inc.* 2,237,500
34,293 Sitel Corp.* 484,389
-------------
2,721,889
-------------
CHEMICALS -- 0.80%
27,000 MacDermid, Inc. 742,500
-------------
COMPUTER HARDWARE -- 5.70%
70,000 ENCAD, Inc.* 2,887,500
50,000 QLogic Corp.* 1,287,500
20,000 Western Digital Corp.* 1,137,500
-------------
5,312,500
-------------
COMPUTER SOFTWARE -- 3.04%
20,500 Aspen Technology, Inc.* 1,645,125
30,000 Rational Software Corp.* 1,186,875
-------------
2,832,000
-------------
DATA COMMUNICATIONS/NETWORKING -- 3.32%
75,000 Davox Corp.* 3,093,750
-------------
DIVERSIFIED TECHNOLOGY -- 1.48%
38,000 Zoltek Companies, Inc.* 1,382,250
-------------
ELECTRONICS -- 3.11%
50,000 Inacom Corp.* 2,000,000
84,000 Zytec* 892,500
-------------
2,892,500
-------------
HEALTHCARE -- 2.62%
50,000 Safeskin Corp.* 2,437,500
-------------
HEAVY MACHINERY/CONSTRUCTION -- 3.76%
78,000 Smith International, Inc.* 3,500,250
-------------
HOME FURNISHINGS -- 1.07%
50,000 Stanley Furniture Co., Inc.* 993,750
-------------
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
INDUSTRIAL AND COMMERCIAL SERVICES -- 7.50%
100,000 DT Industries, Inc. $ 3,500,000
90,000 SPX Corp. 3,487,500
-------------
6,987,500
-------------
METALS -- 2.27%
35,000 Olympic Steel, Inc.* 888,125
35,000 Reliance Steel and Aluminum
Co. 1,225,000
-------------
2,113,125
-------------
NATURAL GAS -- 1.45%
46,800 North Carolina Natural Gas
Corp. 1,351,350
-------------
OIL -- 10.80%
22,000 Cliffs Drilling Co.* 1,391,500
140,000 Comstock Resources, Inc.* 1,820,000
39,000 Ensco International, Inc.* 1,891,500
30,000 KCS Energy, Inc. 1,072,500
130,000 Swift Energy Co.* 3,883,750
-------------
10,059,250
-------------
OIL AND GAS EXPLORATION -- 11.92%
110,300 Global Industries, Ltd.* 2,054,338
180,000 Marine Drilling Companies,
Inc.* 3,543,750
20,000 Seacor Holdings, Inc.* 1,260,000
120,000 UTI Energy Corp.* 4,245,000
-------------
11,103,088
-------------
PHARMACEUTICALS -- 10.04%
103,600 Herbalife International,
Inc. 3,379,950
60,800 Jones Medical Industries,
Inc. 2,226,800
85,000 Medicis Pharmaceutical
Corp.* 3,740,000
-------------
9,346,750
-------------
REAL ESTATE -- 1.99%
75,000 Fairfield Communities, Inc.* 1,856,250
-------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAILERS -- 17.24%
90,000 Eagle Hardware and Garden,
Inc.* $ 1,867,500
100,000 Equity Marketing, Inc.* 1,850,000
150,000 Finish Line, Inc.* 3,168,750
200,000 Paul Harris Stores, Inc.* 3,550,000
61,500 Ross Stores, Inc. 3,075,000
42,700 West Marine, Inc.* 1,206,275
62,500 Wet Seal, Inc.* 1,335,937
-------------
16,053,462
-------------
SEMICONDUCTORS AND RELATED -- 2.44%
50,000 Vitesse Semiconductor Corp.* 2,275,000
-------------
TECHNICAL SERVICES -- 1.34%
30,000 Technology Solutions Co.* 1,245,000
-------------
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 1.96%
60,000 Pairgain Technologies, Inc.* $ 1,826,250
-------------
VEHICLE PARTS AND EQUIPMENT -- 1.29%
60,000 Miller Industries, Inc.* 1,200,000
-------------
TOTAL COMMON STOCKS -- 99.44%
(COST $82,787,597) 92,615,914
-------------
MUTUAL FUNDS -- 0.56%
520,346 Fund for Government Investors
(Cost $520,346) 520,346
-------------
TOTAL INVESTMENTS -- 100.00%
(COST $83,307,943) $ 93,136,260
-------------
-------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
MID CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS
AGRICULTURAL -- 1.77%
1,500 Grupo Industrial Maseca (ADR) $ 28,687
------------
AIRLINES -- 1.44%
1,000 USAir Group, Inc.* 23,375
------------
APPAREL/FABRIC -- 2.54%
1,100 Jones Apparel Group, Inc.* 41,113
------------
AUTO/TRUCK MANUFACTURING -- 1.26%
300 Paccar, Inc. 20,400
------------
BANKING -- 7.43%
500 Commerce Bancshares, Inc. 23,125
500 Greenpoint Financial Corp. 23,625
600 Provident Bancorp, Inc. 20,400
500 Regions Financial Corp. 25,844
300 Star Banc Corp 27,562
------------
120,556
------------
BEVERAGES -- 1.73%
600 Panamerican Beverages, Inc. 28,125
------------
BUSINESS/MANAGEMENT SERVICES -- 1.70%
800 Robert Half International,
Inc.* 27,500
------------
CASINOS/GAMING -- 1.46%
1,300 International Game Technology 23,725
------------
CHEMICALS -- 1.50%
600 Cytec Industries, Inc.* 24,375
------------
COMPUTER HARDWARE -- 3.94%
700 Cognos, Inc.* 19,688
400 Gateway 2000, Inc.* 21,425
400 Western Digital Corp.* 22,750
------------
63,863
------------
CONTAINERS AND PACKAGING -- 1.98%
2,000 Jefferson Smurfit Corp.* 32,125
------------
COSMETICS/PERSONAL CARE -- 1.48%
500 Alberto Culver Co. 24,000
------------
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
DIVERSIFIED TECHNOLOGY -- 3.88%
1,200 BMC Industries, Inc. $ 37,800
400 Diebold, Inc. 25,150
------------
62,950
------------
ELECTRIC UTILITIES -- 1.29%
500 Portland General Corp. 21,000
------------
ELECTRONICS -- 1.60%
600 Hubbell, Inc. 25,950
------------
ENERGY -- 3.15%
2,200 NGC Corp. 51,150
------------
FINANCIAL SERVICES -- 2.90%
800 Alliance Capital Management,
LP 21,300
400 Finova Financial Trust 25,700
------------
47,000
------------
FOODS -- 2.99%
500 Interstate Bakeries Corp. 24,562
400 Vons Companies, Inc.* 23,950
------------
48,512
------------
HEALTHCARE -- 1.91%
700 Mallinckrodt, Inc. 30,887
------------
HEAVY MACHINERY -- 1.66%
600 Smith International, Inc.* 26,925
------------
HOUSEHOLD PRODUCTS -- 3.57%
1,100 Fort Howard Corp.* 30,456
800 US Industries, Inc.* 27,500
------------
57,956
------------
INDUSTRIAL AND COMMERCIAL
SERVICES -- 1.40%
400 Valspar Corp. 22,650
------------
INSURANCE -- 6.33%
400 Ace, Ltd. 24,050
400 Conseco, Inc. 25,500
</TABLE>
* NON-INCOME PRODUCING.
ADR -- AMERICAN DEPOSITORY RECEIPT
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
MID CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
500 Mid Ocean, Ltd. $ 26,250
400 Progressive Corp. 26,950
------------
102,750
------------
NATURAL GAS -- 3.63%
700 Nicor, Inc. 25,025
2,200 Noram Energy Corp. 33,825
------------
58,850
------------
OFFICE EQUIPMENT/SUPPLIES -- 1.31%
600 Avery Dennison Corp. 21,225
------------
OIL -- 3.38%
600 Ensco International, Inc.* 29,100
700 Parker and Parsley Petroleum
Co. 25,725
------------
54,825
------------
OIL AND GAS EXPLORATION -- 6.29%
500 Camco International, Inc. 23,063
1,500 Global Marine, Inc.* 30,937
500 Louisiana Land and
Exploration 26,813
800 Reading and Bates Corp.* 21,200
------------
102,013
------------
POWER SUPPLY -- 1.51%
900 American Power Conversion
Corp.* 24,525
------------
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
COMMON STOCKS (CONTINUED)
RETAILERS -- 2.99%
400 Ross Stores, Inc. $ 20,000
600 TJX Companies, Inc. 28,425
------------
48,425
------------
TELECOMMUNICATIONS -- 3.65%
600 Andrew Corp.* 31,838
900 Pairgain Technologies, Inc.* 27,394
------------
59,232
------------
TOBACCO -- 1.58%
800 Universal Corp. 25,700
------------
UTILITIES -- 1.53%
600 National Fuel Gas Co. 24,750
------------
TOTAL COMMON STOCKS -- 84.78% (COST
$1,339,675) 1,375,119
------------
MUTUAL FUNDS -- 15.22%
246,952 Fund for Government Investors
(Cost $246,952) 246,952
------------
TOTAL INVESTMENTS -- 100.00%
(COST $1,586,627) $ 1,622,071
------------
------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
ASSETS
Securities at Value (Note 1, see portfolios for cost information).................. $ 93,136,260 $ 1,622,071
Receivable for Securities Sold..................................................... 1,904,357 --
Receivable for Shares Sold......................................................... 919,126 29,100
Interest Receivable................................................................ 15,266 29
Dividends Receivable............................................................... 7,921 1,330
Unamortized Organizational Costs (Note 1).......................................... 100,590 --
------------ -----------
Total Assets..................................................................... 96,083,520 1,652,530
------------ -----------
LIABILITIES
Payable for Shares Redeemed........................................................ 366,219 8,740
Payable for Securities Purchased................................................... 204,376 --
Investment Advisory Fee Payable (Note 2)........................................... 103,779 1,107
Administrative Fee Payable (Note 2)................................................ 20,756 221
Distribution Plan Fee Payable (Note 4)............................................. 20,756 221
Other Payables and Accrued Expenses................................................ 20,756 221
Organizational Expenses Payable to Adviser (Note 1)................................ 100,590 --
------------ -----------
Total Liabilities................................................................ 837,232 10,510
------------ -----------
NET ASSETS........................................................................... $ 95,246,288 $ 1,642,020
------------ -----------
------------ -----------
SHARES OUTSTANDING................................................................... 7,773,720 159,948
------------ -----------
------------ -----------
NET ASSET VALUE PER SHARE............................................................ $12.25 $10.27
------ -----------
------ -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------- -------------
FOR THE YEAR FOR THE
ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1996 1996*
------------- -------------
INVESTMENT INCOME
<S> <C> <C>
Interest (Note 1)..................................................... $ 187,721 $ 1,188
Dividends (Note 1).................................................... 67,395 1,354
------------- -------------
Total Investment Income............................................. 255,116 2,542
------------- -------------
EXPENSES
Investment Advisory Fee (Note 2)...................................... 739,162 1,107
Administrative Fee (Note 2)........................................... 147,832 221
Distribution Plan Fees (Note 4)....................................... 147,832 221
Transfer Agent and Custodian Fee (Note 3)............................. 123,286 785
Registration Fees..................................................... 36,699 22,694
Trustees' Fees (Note 2)............................................... 30,000 --
Organizational Expense (Note 1)....................................... 25,200 --
Shareholder Reports and Notices....................................... 21,997 --
Legal Fees............................................................ 15,179 75,000
Audit Fees............................................................ 4,250 --
Other Expenses........................................................ 18,625 --
------------- -------------
Total Expenses...................................................... 1,310,062 100,028
Less Expenses Reimbursed by Investment Adviser (Note 2)............. (127,403) (98,258)
------------- -------------
Net Expenses...................................................... 1,182,659 1,770
------------- -------------
NET INVESTMENT INCOME (LOSS)............................................ (927,543) 772
------------- -------------
Net Realized Loss on Investment Transactions............................ (12,055,596) --
Net Change in Unrealized Appreciation of Investments.................... 9,828,401 35,444
------------- -------------
NET GAIN (LOSS) ON INVESTMENTS.......................................... (2,227,195) 35,444
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......... $ (3,154,738) $ 36,216
------------- -------------
------------- -------------
</TABLE>
*FROM COMMENCEMENT OF OPERATIONS NOVEMBER 26, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MID CAP
AGGRESSIVE GROWTH GROWTH
PORTFOLIO PORTFOLIO
-------------------------- ------------
FOR THE YEAR FOR THE FOR THE
ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995* 1996**
------------ ------------ ------------
FROM INVESTMENT ACTIVITIES
<S> <C> <C> <C>
Net Investment Income (Loss)............................. $ (927,543) $ 21 $ 772
Net Realized Loss on Investment Transactions............. (12,055,596) -- --
Net Change in Unrealized Appreciation (Depreciation) of
Investments............................................ 9,828,401 (84) 35,444
------------ ------------ ------------
Net Increase (Decrease) in Net Assets Resulting from
Operations........................................... (3,154,738) (63) 36,216
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income............................... -- -- (772)
From Net Realized Capital Gains.......................... -- -- --
------------ ------------ ------------
Total Distributions to Shareholders.................... -- -- (772)
------------ ------------ ------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares........................ 172,216,916 200,000 1,614,544
Reinvestment of Distributions............................ -- -- 772
Cost of Shares Redeemed.................................. (74,115,827) -- (8,740)
------------ ------------ ------------
Net Increase in Net Assets Resulting from Share
Transactions......................................... 98,101,089 200,000 1,606,576
------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS........................... 94,946,351 199,937 1,642,020
NET ASSETS -- Beginning of Year............................ 299,937 100,000 --
------------ ------------ ------------
NET ASSETS -- End of Year.................................. $95,246,288 $ 299,937 $1,642,020
------------ ------------ ------------
------------ ------------ ------------
SHARES
Sold..................................................... 13,842,072 20,020 160,724
Issued in Reinvestment of Distributions.................. -- -- 75
Redeemed................................................. (6,098,372) -- (851)
------------ ------------ ------------
Net Increase in Shares................................. 7,743,700 20,020 159,948
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
*FROM COMMENCEMENT OF OPERATIONS DECEMBER 28, 1995.
**FROM COMMENCEMENT OF OPERATIONS NOVEMBER 26, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH MID CAP GROWTH
PORTFOLIO PORTFOLIO
------------------------------- --------------
FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995* 1996**
------------ ------------ --------------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C>
Net Asset Value -- Beginning of Year...................... $9.99 $10.00 $10.00
------------ ------------ -------
Income from Investment Operations:
Net Investment Income (Loss)............................ (0.120) 0.002 0.005
Net Realized and Unrealized Gains (Losses) on
Securities............................................ 2.380 (0.008) 0.270
------------ ------------ -------
Total from Investment Operations...................... 2.260 (0.006) 0.275
------------ ------------ -------
Distributions to Shareholders:
From Net Investment Income.............................. -- -- (0.005)
From Net Realized Capital Gains......................... -- -- --
------------ ------------ -------
Total Distributions to Shareholders................... -- -- (0.005)
------------ ------------ -------
Net Increase (Decrease) in Net Asset Value................ 2.26 (0.01) 0.27
------------ ------------ -------
Net Asset Value -- End of Year............................ $12.25 $9.99 $10.27
------------ ------------ -------
------------ ------------ -------
TOTAL INVESTMENT RETURN..................................... 22.62% (0.10)%(A) 2.75%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)..................... 2.00% 2.00%(B) 2.00%(B)
Expenses Before Reimbursement (Note 2).................... 2.22% 27.25%(B) 113.02%(B)
Net Investment Income (Loss).............................. (1.57)% 2.59%(B) 0.87%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................................... 169.0% -- --
Net Assets at End of Year (000's omitted)................. $95,246 $300 $1,642
Number of Shares Outstanding at End of Year (000's
omitted)................................................ 7,774 30 160
Average Commission Rate Paid (C).......................... $0.0389 $0.0300
</TABLE>
- --------------------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged. This amount may vary from period to period
and fund to fund depending on the mix of trades executed in various markets
where trading practices and commission rate structures may differ.
* FROM COMMENCEMENT OF OPERATIONS DECEMBER 28, 1995
**FROM COMMENCEMENT OF OPERATIONS NOVEMBER 26, 1996
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
The Navellier Performance Funds (the "Fund") is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, (the "Act") as an open-end investment company which offers its shares
in a series of no-load, non-diversified and diversified portfolios. The Fund is
authorized to issue an unlimited number of shares of capital stock with no
stated par value. The Fund presently consists of three separate portfolios each
with its own investment objectives and policies. These financial statements
report on two of the three portfolios: Aggressive Growth Portfolio, a
non-diversified open-end management company portfolio, and Mid Cap Growth
Portfolio, a diversified open-end management company portfolio. The Aggressive
Small Cap Portfolio, has been inactive since November 26, 1996, the date of its
commencement of operations. The financial statements have been prepared in
conformity with generally accepted accounting principles which permit management
to make certain estimates and assumptions at the date of the financial
statements. The following is a summary of significant accounting policies which
the Fund follows:
(a) Listed securities are valued at the last sales price of the New York
Stock Exchange and other major exchanges. Over-the-Counter securities are
valued at the last sales price. If market quotations are not readily
available, the Board of Trustees will value the Fund's securities in good
faith. The Trustees will periodically review this method of valuation and
recommend changes which may be necessary to assure that the Fund's instruments
are valued at fair value.
(b) Security transactions are recorded on the trade date (the date the
order to buy or sell is executed). Interest income is accrued on a daily
basis. Dividend income is recorded on the ex-dividend date. Realized gains and
losses from securities transactions are computed on an identified cost basis.
(c) Dividends from net investment income are declared and paid annually.
Dividends are re-invested in additional shares unless shareholders request
payment in cash. Net capital gains, if any, are distributed annually.
(d) The Fund intends to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies and will distribute all net
investment income to its shareholders. Therefore, no Federal income tax
provision is required.
(e) Organizational expenses of the Fund totaling $126,000 are being
deferred and amortized over 60 months beginning with the public offering of
shares. Any redemption by an initial investor during the amortization period
will be reduced by a prorata portion of any of the unamortized organization
expenses. Such proration is to be calculated by dividing the number of initial
shares redeemed by the number of initial shares outstanding at the date of
redemption. At December 31, 1996, unamortized organization costs were
$100,590.
2. Investment Advisory Fees and Other Transactions With Affiliates
Investment advisory services are provided by Navellier Management, Inc.
("Adviser"). Under an agreement with the Adviser, each portfolio of the Fund
pays a fee for such services at the annual rate of 1.25% of the daily net assets
of the portfolio. The Adviser also receives an annual fee equal to 0.25% of the
Fund's average daily net assets in connection with the rendering of services
under the administrative services agreement and is reimbursed by the Fund for
operating expenses incurred on behalf of the Fund. An officer and trustee of the
Fund is also an officer and director of the Adviser.
Under an agreement between the Fund and the Adviser related to payment of
operating expenses, the Adviser has reserved the right to seek reimbursement for
the past, present and future operating expenses of the Fund paid by the Adviser,
at any time upon notice to the Fund. At December 31, 1995, the Adviser
voluntarily agreed not to seek future reimbursement of all unreimbursed past
expense incurred on behalf of the Fund. During the year ended
12
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
December 31, 1996, the Adviser paid operating expenses of the Aggressive Growth
Portfolio totaling $275,236. Under the operating expense agreement, the Adviser
requested, and the Aggressive Growth Portfolio reimbursed, $147,833 of such
expenses. The Adviser voluntarily agreed not to seek future reimbursement of
$127,403 of such 1996 expenses. During the period November 26, 1996
(commencement of operations) to December 31, 1996, the Adviser voluntarily
waived reimbursement for substantially all the operating expenses which were
paid on behalf of the Mid Cap Growth Portfolio. Accordingly, at December 31,
1996, there were no prior expenses which could be reimbursed in the future under
the agreement.
Navellier Securities Corp. (the "Distributor") acts as the Fund's
Distributor and is registered as a broker-dealer under the Securities and
Exchange Act of 1934. The Distributor, which is the principal underwriter of the
Fund's shares, renders its services to the Fund pursuant to a distribution
agreement. An officer and trustee of the Fund is also an officer and director of
the Distributor.
The Fund pays each of its Trustees not affiliated with the Adviser $7,500
annually. For the year ended December 31, 1996, Trustees' fees totaled $30,000.
3. Transfer Agent and Custodian
Rushmore Trust and Savings, FSB ("Rushmore Trust"), provides transfer
agency, dividend disbursing and other shareholder services to the Fund. In
addition, Rushmore Trust serves as custodian of the Fund's assets. Fees paid to
Rushmore Trust are based upon a fee schedule approved by the Board of Trustees.
4. Distribution Plan
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act, whereby it reimburses the Distributor or others in an amount not
to exceed 0.25% per annum of the average daily net assets of each portfolio for
expenses incurred in the promotion and distribution of shares of the portfolio.
These expenses include, but are not limited to, the printing of prospectuses,
statements of additional information, and reports used for sales purposes,
expenses of preparation of sales literature and related expenses (including
Distributor personnel), advertisements and other distribution-related expenses,
including a prorated portion of the Distributor's overhead expenses attributable
to the distribution of shares. Such payments are made monthly. The 12b-1 fee
includes, in addition to promotional activities, the amount the Fund may pay to
the Distributor or others as a service fee to reimburse such parties for
personal services provided to shareholders of the Fund and/or the maintenance of
shareholder accounts. Such Rule 12b-1 fees are made pursuant to the Plan and
distribution agreements entered into between such service providers and the
Distributor or the Fund directly.
5. Securities Transactions
For the year ended December 31, 1996, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------- -----------
<S> <C> <C>
Purchases........................................................................... $ 187,396,704 $ 1,339,676
------------- -----------
Sales............................................................................... $ 92,784,752 $ --
------------- -----------
</TABLE>
13
<PAGE>
DECEMBER 31, 1996 THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
6. Net Unrealized Appreciation/Depreciation of Investments
Unrealized appreciation (depreciation) as of December 31, 1996, based on the
cost for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
Gross Unrealized Appreciation........................................................ $ 13,557,766 $ 51,729
Gross Unrealized Depreciation........................................................ (3,791,976) (16,285)
------------ -----------
Net Unrealized Appreciation.......................................................... $ 9,765,790 $ 35,444
------------ -----------
------------ -----------
Cost of Investments for Federal Income Tax Purposes.................................. $ 83,370,470 $ 1,586,627
------------ -----------
------------ -----------
</TABLE>
7. Net Assets
At December 31, 1996, net assets consisted of the following:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------- -----------
<S> <C> <C>
Paid-in-Capital..................................................................... $ 97,473,567 $ 1,606,576
Undistributed Net Investment Income................................................. -- --
Accumulated Net Realized Loss on Investments........................................ (12,055,596) --
Net Unrealized Appreciation of Investments.......................................... 9,828,317 35,444
------------- -----------
NET ASSETS.......................................................................... $ 95,246,288 $ 1,642,020
------------- -----------
------------- -----------
</TABLE>
8. Federal Income Tax
Permanent differences between tax and financial reporting of net investment
income and realized gains/(losses) are reclassified to paid-in-capital. As of
December 31, 1996, net investment losses were reclassified to paid-in-capital as
follows:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
PORTFOLIO PORTFOLIO
------------ ------------
<S> <C> <C>
Reduction of paid-in-capital........................................................ $ 927,543 --
</TABLE>
At December 31, 1996, for Federal income tax purposes, the following Funds
had capital loss carryovers which may be applied against future net taxable
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP
GROWTH GROWTH
EXPIRES DECEMBER 31, PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------ ------------ ------------
<S> <C> <C>
2004................................................................................ $ 11,993,069 --
</TABLE>
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
of The Navellier Performance Funds:
We have audited the statements of assets and liabilities, including the
portfolios of investments of the Aggressive Growth and the Mid Cap Portfolios
(two of the portfolios) of The Navellier Performance Funds (the Fund) as of
December 31, 1996, the related statements of operations, changes in net assets,
and financial highlights for the periods presented. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Aggressive
Growth and Mid Cap Portfolios of The Navellier Performance Funds at December 31,
1996, the results of their operations, the changes in their net assets, and
financial highlights for the presented periods in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Washington, DC
January 31, 1997
15
<PAGE>
[LOGO]
NAVELLIER
Performance Funds
ANNUAL REPORT
December 31, 1996
Navellier Offices:
One East Liberty Third Floor
Reno, Nevada 89501
800-887-8671 P.S.T.
Custodian & Transfer Agent:
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
800-532-2268 E.S.T.
