<PAGE>
ANNUAL REPORT, December 31, 1997
NAVELLIER PERFORMANCE FUNDS
1 East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
- --------------------------------------------------------------------------------
February 20, 1998
Dear Shareholder:
For the year 1997 the Navellier Mid Cap Growth Portfolio was up 26.18% and
the Navellier Aggressive Growth Portfolio was up 9.77%. The Navellier Aggressive
Small Cap Portfolio was up 32.76% since inception ( the portfolio was started on
March 17, 1997). In 1997 the Russell 2000* was up 20.52% and the NASDAQ
Composite** was up 21.64%.
COMPARISON IN CHANGES IN THE VALUE OF
A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH
PORTFOLIO
AGGRESSIVE GROWTH RUSSELL 2000 NASDAQ COMPOSITE
<S> <C> <C> <C>
12/28/95 $10,000.00 $10,000.00 $10,000.00
1/31/96 $9,630.00 $9,981.33 $10,072.80
2/28/96 $10,620.00 $10,283.57 $10,455.46
3/29/96 $11,330.00 $10,468.40 $10,468.29
4/30/96 $13,020.00 $11,022.57 $11,315.33
5/31/96 $14,040.00 $11,452.04 $11,818.22
6/28/96 $13,050.00 $10,970.03 $11,263.06
7/31/96 $11,180.00 $10,000.95 $10,270.50
8/30/96 $11,850.00 $10,566.83 $10,849.42
9/30/96 $12,730.00 $10,962.75 $11,661.30
10/31/96 $12,150.00 $10,778.55 $11,609.88
11/29/96 $12,220.00 $11,207.08 $12,285.65
12/31/96 $12,250.00 $11,476.09 $12,270.63
1/31/97 $12,440.00 $11,692.57 $13,114.82
2/28/97 $10,880.00 $11,395.07 $12,441.43
3/31/97 $10,670.00 $10,841.54 $11,611.68
4/30/97 $10,530.00 $10,855.46 $11,982.93
5/30/97 $11,290.00 $12,050.51 $13,309.38
6/30/97 $12,040.00 $12,544.55 $13,706.20
7/31/97 $13,200.00 $13,117.70 $15,148.41
8/29/97 $13,280.00 $13,400.96 $15,086.73
9/30/97 $14,560.00 $14,362.76 $16,021.69
10/31/97 $14,010.00 $13,712.06 $15,146.51
11/28/97 $13,500.00 $13,606.36 $15,212.47
12/31/97 $13,450.00 $13,831.06 $14,925.44
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MID CAP GROWTH PORTFOLIO
MID CAP GROWTH RUSSELL 2000 NASDAQ COMPOSITE
<S> <C> <C> <C>
11/27/96 $10,000 $10,000 $10,000
12/31/96 $10,270 $10,240 $9,988
1/31/97 $10,460 $10,433 $10,675
2/28/97 $10,290 $10,168 $10,127
3/31/97 $9,980 $9,674 $9,451
4/30/97 $10,270 $9,686 $9,754
5/30/97 $10,830 $10,753 $10,833
6/30/97 $11,380 $11,193 $11,156
7/31/97 $12,500 $11,705 $12,330
8/29/97 $12,460 $11,958 $12,280
9/30/97 $13,380 $12,816 $13,041
10/31/97 $12,760 $12,235 $12,329
11/28/97 $12,770 $12,141 $12,382
12/31/97 $12,960 $12,341 $12,149
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AGGRESSIVE SMALL CAP
PORTFOLIO
AGGRESSIVE SMALL CAP RUSSELL 2000 NASDAQ COMPOSITE
<S> <C> <C> <C>
3/17/97 $10,000.00 $10,000.00 $10,000.00
3/31/97 $9,859.34 $9,585.58 $9,548.78
4/30/97 $9,872.12 $9,597.90 $9,854.08
5/30/97 $10,690.54 $10,654.50 $10,944.87
6/30/97 $11,432.23 $11,091.31 $11,271.19
7/31/97 $12,423.27 $11,598.06 $12,457.19
8/29/97 $12,679.03 $11,848.50 $12,406.46
9/30/97 $13,593.35 $12,698.88 $13,175.32
10/31/97 $13,433.50 $12,123.57 $12,455.62
11/28/97 $13,459.08 $12,030.11 $12,509.87
12/31/97 $13,273.66 $12,228.78 $12,273.83
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
AGGRESSIVE GROWTH AGGRESSIVE SMALL CAP
PORTFOLIO MID CAP GROWTH PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
One-Year 9.77% 26.18% n/a
Since Inception+ 15.99% 26.81% 32.76%
Value of a $10,000 Investment over Life of
Fund+
Fund $13,450 $12,960 $13,273
Russell 2000 $13,831 $12,341 $12,228
NASDAQ Composite $14,925 $12,149 $12,273
</TABLE>
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.
+ THE DATE OF INCEPTION FOR THE AGGRESSIVE GROWTH PORTFOLIO, MID CAP GROWTH
PORTFOLIO AND AGGRESSIVE SMALL CAP PORTFOLIO WAS DECEMBER 28, 1995, NOVEMBER
26, 1996 AND MARCH 17, 1997, RESPECTIVELY. TOTAL RETURNS FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
<PAGE>
Value strategies dramatically outperformed growth strategies in 1997 by the
largest margin in 19 years. For example, in 1997 the Russell 2000 Value Index
was up 31.78%, while the Russell 2000 Growth Index was only up 12.95%.
Obviously, because Navellier only had "growth" funds available for much of 1997,
our growth bias hurt our performance. Fundamentally, growth stocks are back at
the same levels they were in 1990, just before they exploded in 1991. Often, we
have found that whatever strategy "lagged" in the previous year, "leads" in the
next year.
This was a particularly strong year for large capitalization stocks as
evidenced by a return of 33.31% for the S&P 500. After flirting with small
capitalization stocks in the second and third quarters, the market once again
became a large capitalization dominated and value oriented market, continuing a
trend that has developed over the last 24 months. A few sobering facts from the
fourth quarter include, a flat Dow Jones, and a 2.5% gain for the S&P 500
compared to a -6.8% return for the NASDAQ and a -3.3% return for the Russell
2000. The growth vs. value comparison is even more telling as the Russell 2000
Growth Index lost 8.2% for the fourth quarter while the Russell 2000 Value Index
gained 1.7%. Technology stocks suffered through an extremely volatile year, with
strong second and third quarters sandwiched between dismal first and fourth
quarters. In December, a few technology stocks disappointed Wall Street with
poor quarterly earnings, so the analyst community immediately blamed the
Southeast Asian crisis as the primary reason that they had grossly overestimated
the latest quarterly earnings numbers. As a result, the analyst community
started to slash their 1998 earnings estimates on many leading technology
stocks. Then another bomb fell in December when both Oracle and 3M announced
that its earnings would be hindered by the Southeast Asian crisis. All of a
sudden, the Southeast Asian crisis was encompassing more than just technology
stocks, so the entire U.S. stock market sold off because the analyst community
rushed to aggressively cut earnings estimates on many leading companies. In 1997
the strongest performing stocks were found in the financial sectors as they
continued to benefit from an excellent interest rate environment. The falling
interest rate environment continues to be very supportive for higher stock
prices. The stock and bond markets compete for capital, so when interest rates
move lower, normally stock prices and price earnings ratios drift higher because
more money tends to flow into the stock market.
The financial community continues to marvel at the unprecedented third year
of more than 20% growth for the S&P 500. Many analysts were not surprised by the
terrific performance of the market this year given the favorable economic
conditions. With 3.7% real GDP growth and just 2% GDP-based inflation, we saw
the best overall economic performance in decades. Interest rates trended
downward throughout the year, unemployment fell to 4.7%, capital gains taxes
were cut and inflation was practically non-existent. Consumer confidence
remained strong all year as disposable income rose 3.7% and consequently
consumers spent 3.6% more than they did in 1996. Although payroll costs advanced
by 2.4%, corporate profits still managed to climb by 11%, due to significant
increases in productivity. The old news at this point is the Southeast Asian
crisis, which briefly halted the markets' relentless climb in 1997.
So far in 1998, one of the reasons that the stock market started to rally is
that finally some leading stocks, such as Disney, released better than expected
earnings and inspired a little confidence in the overall stock market. Investors
finally came to the realization that Southeast Asia will not cause the entire
U.S. economy to melt down. The stocks that have been most seriously impacted by
the Southeast Asian crisis, namely technology stocks, have also been rallying
strongly. However, the analyst community remains very wary about the earnings
prospects for many technology companies, so we expect that the recent rebound in
technology stocks is just a "dead-cat" bounce that will soon dissipate. Much of
the recent stock market strength has been isolated in a few key industry groups.
Although the breadth and power of the stock market has improved in recent weeks,
we are still expecting a very selective stock
2
<PAGE>
market, similar to the third quarter of 1997, where large capitalization stocks
take a breather and small-to-mid capitalization stocks lead. NASDAQ has been
stronger than the Dow Industrials and the S&P 500 so far in 1998, so this much
anticipated leadership change may have begun already. Our strategy remains
focused on uncovering stocks with better sales and earnings growth potential
than the overall stock market. We hope that by finding those companies that can
demonstrate consistent accelerating earnings growth, our growth funds will shine
in an increasingly selective market.
This year Navellier is proud to announce that we have broadened our
offerings by introducing four new portfolios. We are using a "value" approach to
quantitative analysis for our new Navellier Small Cap Value Portfolio and the
Navellier Large Cap Value Portfolio. We have also introduced our new Navellier
Large Cap Growth Portfolio which uses the more familiar Navellier methodology
but focuses on the larger cap sector of the market. With all three of these
portfolios we are seeking strong returns with reasonable risk levels by using
portfolio optimization and risk analysis programs in conjunction with our
proprietary computerized screening process. Additionally, the Navellier
International Equity Portfolio made its debut this year. We would like to
introduce to you a new member of the Navellier team, Ram Kolluri, who will be
responsible for management of the Navellier International Equity Portfolio. We
strongly encourage all of our clients to call us for more information on the new
portfolios and for help with the recommended allocations for all of our funds.
Please call our new Navellier Marketline for the latest fund prices and
weekly market commentary at (800) 730-9005 and look for our new website at
www.navellier.com.
Thank you for allowing us to manage some of your assets. We feel very
obligated to our shareholders and promise to make every effort to maintain our
high performance standards. As always, please feel free to contact us if you
have any questions or if we can help you in any way.
Sincerely,
<TABLE>
<S> <C>
[SIGNATURE] [SIGNATURE]
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
SALE.
** 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 SALE.
3
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 92.1% OF TOTAL INVESTMENTS
AEROSPACE -- 5.5%
100,000 Kellstrom Industries, Inc.* $2,475,000
40,000 Thiokol Corp. 3,250,000
------------
5,725,000
------------
AGRICULTURAL CHEMICALS -- 3.2%
53,800 Alcide Corp.* 3,281,800
------------
AIR FREIGHT AND DELIVERY SERVICES -- 5.4%
90,000 Airborne Freight Corp. 5,591,250
------------
APPAREL -- 2.7%
30,000 Oshkosh B Gosh, Inc. 990,000
40,000 V.F. Corp. 1,837,500
------------
2,827,500
------------
AUTO PARTS: ORIGINAL EQUIPMENT
MANUFACTURER -- 3.0%
75,000 Smith (A.O.) Corp. 3,168,750
------------
AUTOMOTIVE AFTERMARKET -- 1.3%
20,000 SPX Corp. 1,380,000
------------
BANKS -- 5.9%
95,000 Bank of Commerce San Diego California 2,125,625
50,000 Charter Financial, Inc. 1,256,250
39,600 Northern Trust Corp. 2,762,100
------------
6,143,975
------------
COMPUTER SOFTWARE -- 4.6%
60,000 Compuware Corp.* 1,920,000
30,000 Keane, Inc.* 1,218,750
40,000 Micro Focus Group PLC* 1,615,000
------------
4,753,750
------------
CONSUMER APPLIANCES -- 2.6%
63,500 Sunbeam Corp. 2,674,937
------------
DIVERSIFIED MANUFACTURING -- 1.3%
20,000 Tredegar Industries, Inc. 1,317,500
------------
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
ELECTRONICS -- 4.0%
69,700 Cyberoptics Corp.* $1,585,675
101,000 Spire Corp.* 1,464,500
30,000 Tandy Corp. 1,156,875
------------
4,207,050
------------
ENVIRONMENTAL SERVICES -- 1.1%
50,000 Eastern Environmental Services, Inc.* 1,100,000
------------
FLUID CONTROLS -- 1.3%
30,000 Parker Hannifin Corp. 1,376,250
------------
FOOD AND VITAMIN SUPPLEMENTS -- 2.7%
40,000 General Nutrition Co., Inc.* 1,360,000
40,000 Interstate Bakeries Corp. 1,495,000
------------
2,855,000
------------
HEAVY MACHINERY -- 6.5%
40,000 PACCAR, Inc. 2,100,000
200,000 Terex Corp.* 4,700,000
------------
6,800,000
------------
INSURANCE -- 4.5%
30,000 ACE, Ltd. 2,895,000
50,000 Blanch E.W. Holdings, Inc. 1,721,875
------------
4,616,875
------------
INTEGRATED OIL COMPANIES -- 1.0%
25,000 Sun, Inc. 1,051,563
------------
MEDICAL SPECIALTIES -- 3.3%
50,000 Cooper Companies, Inc.* 2,043,750
50,000 Osteotech, Inc.* 1,362,500
------------
3,406,250
------------
NEWSPAPERS -- 4.3%
25,000 Central Newspapers, Inc. 1,848,438
41,600 Gannett, Inc. 2,571,400
------------
4,419,838
------------
OFFICE EQUIPMENT -- 4.2%
80,000 Herman Miller, Inc. 4,365,000
------------
</TABLE>
4
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997 (CONTINUED)
AGGRESSIVE GROWTH PORTFOLIO MID CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
OILFIELD SERVICES AND EQUIPMENT -- 12.0%
97,400 Core Laboratories* $ 1,759,287
100,000 National Oilwell, Inc.* 3,418,750
100,000 Patterson Energy, Inc.* 3,868,750
160,000 Varco International, Inc.* 3,430,000
------------
12,476,787
------------
PRINTING -- 2.9%
75,000 Mail-Well, Inc.* 3,037,500
------------
RAILROADS -- 1.1%
35,000 Kansas City Southern Industries, Inc. 1,111,250
------------
SAVINGS AND LOAN ASSOCIATIONS -- 2.9%
75,000 Somerset Savings Bank* 375,000
100,000 St. Paul Bancorp, Inc. 2,625,000
------------
3,000,000
------------
TELECOMMUNICATIONS EQUIPMENT -- 1.2%
40,000 Tekelec* 1,220,000
------------
TRUCKING -- 3.6%
55,000 Caliber Systems, Inc. 2,677,812
44,700 Landair Services, Inc.* 1,083,975
------------
3,761,787
------------
TOTAL COMMON STOCKS
(COST $85,520,207) 95,669,612
------------
MONEY MARKET FUNDS -- 7.9%
8,242,228 Fund for Government Investors
(Cost $8,242,228) 8,242,228
------------
TOTAL INVESTMENTS -- 100.0%
(COST $93,762,435) $103,911,840
------------
------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 94.4%
OF TOTAL INVESTMENTS
AEROSPACE -- 2.8%
2,900 Thiokol Corp. $235,625
------------
AIR FREIGHT AND DELIVERY SERVICES -- 2.6%
3,500 Airborne Freight Corp. 217,437
------------
AIRLINES -- 5.0%
3,500 Continental Airlines, Inc.* 168,437
4,000 US Airways Group, Inc. * 250,000
------------
418,437
------------
APPAREL -- 1.7%
4,000 Ross Stores, Inc. 145,500
------------
BANKS -- 11.1%
1,365 Commerce Bancshares, Inc. 92,479
500 First Empire State Corp. 232,500
2,400 First of America Bank Corp. 185,100
3,150 Old Kent Financial Corp. 124,819
2,900 Star Banc Corp. 166,388
2,000 Wilmington Trust Corp. 124,750
------------
926,036
------------
BUILDING MATERIALS -- 8.4%
8,000 Martin Marietta Materials,
Inc. 292,500
3,500 Southdown, Inc. 206,500
2,000 Vulcan Materials Co. 204,250
------------
703,250
------------
COMPUTER SOFTWARE 1.7%
4,400 Compuware Corp. * 140,800
------------
CONTAINERS AND PACKAGING -- 1.9%
4,200 Owens Illinois, Inc. * 159,338
------------
EDP SERVICES -- 1.8%
3,600 Keane, Inc. * 146,250
------------
</TABLE>
5
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997 (CONTINUED)
MID CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ELECTRIC UTILITIES -- 8.3%
7,000 Long Island Lighting Co. $ 210,875
7,400 New York State Electric &
Gas Corp. 262,700
5,200 Western Resources, Inc. 223,600
------------
697,175
------------
FLUID CONTROLS -- 1.4%
2,550 Parker Hannifin Corp. 116,981
------------
FOOD AND VITAMIN SUPPLEMENTS -- 5.7%
7,000 General Nutrition Co., Inc.* 238,000
4,000 Interstate Bakeries Corp. 149,500
2,800 Smithfield Foods, Inc. * 92,400
------------
479,900
------------
HEAVY MACHINERY -- 1.2%
1,700 PACCAR, Inc. 89,250
------------
HOME FURNISHINGS -- 1.9%
4,100 Ethan Allan Interiors, Inc. 158,106
------------
INSURANCE -- 15.4%
2,000 ACE, Ltd. 193,000
3,300 Exel, Ltd. 209,138
3,000 Financial Security Assurance
Holding, Ltd. 144,750
3,000 Mercury General Corp. 165,750
2,000 Old Republic International
Corp. 74,375
3,600 Orion Capital Corp. 167,175
4,000 Torchmark Corp. 168,250
2,250 Transatlantic Holdings, Inc. 160,875
------------
1,283,313
------------
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
<C> <S> <C>
INVESTMENT BANKING &
BROKER SERVICES -- 5.0%
5,000 AG Edwards, Inc. $ 198,750
2,800 Donaldson, Lufkin & Jenrette 222,600
------------
421,350
------------
METAL FABRICATIONS -- 2.9%
2,100 EVI, Inc.* 108,675
3,800 Timken Co. 130,625
------------
239,300
------------
NEWSPAPERS -- 1.2%
200 Washington Post Co., Class B 97,300
------------
OILFIELD SERVICES AND EQUIPMENT -- 2.8%
1,500 BJ Service Co.* 107,906
2,000 Camco International, Inc. 127,375
------------
235,281
------------
OIL REFINING AND MARKETING -- 1.5%
4,000 Valero Energy Corp. 125,750
------------
SAVINGS AND LOAN ASSOCIATIONS -- 7.0%
3,000 Ahmanson (H.F.) and Co. 200,812
3,500 Coast Savings Financial,
Inc.* 239,969
2,000 Greenpoint Financial Corp. 145,125
------------
585,906
------------
SEMICONDUCTORS AND RELATED -- 3.1%
3,000 Dallas Semiconductor Corp. 122,250
3,500 Jabil Circuit, Inc. * 139,125
------------
261,375
------------
TOTAL COMMON STOCKS
(COST $6,639,334) 7,883,660
------------
MONEY MARKET FUNDS -- 5.6%
471,645 Fund for Government Investors
(Cost $471,645) 471,645
------------
TOTAL INVESTMENTS -- 100.00%
(COST $7,110,979) $ 8,355,305
------------
------------
</TABLE>
6
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997 (CONTINUED)
AGGRESSIVE SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 91.8% OF TOTAL INVESTMENTS
AEROSPACE -- 1.7%
5,000 Ducommun, Inc.* $174,688
-------------
APPAREL -- 2.0%
6,100 Oshkosh B Gosh, Inc. 201,300
-------------
BANKS -- 4.5%
4,500 First Oak Brook Bancshares,
Inc. 216,000
5,800 Independent Bank Corp. 106,575
2,000 Onbancorp, Inc. 141,000
-------------
463,575
-------------
BUILDING MATERIALS -- 5.8%
9,500 Centex Construction Products,
Inc. 286,187
6,000 Florida Rock Industries, Inc. 136,500
3,000 Southdown, Inc. 177,000
-------------
599,687
-------------
BUILDING PRODUCTS -- 1.1%
5,000 American Woodmark Corp. 110,000
-------------
CATALOG AND SPECIALTY DISTRIBUTION -- 3.1%
4,000 New England Business Service,
Inc. 135,000
12,000 DM Management Co.* 187,500
-------------
322,500
-------------
COMMERCIAL SERVICES -- 6.4%
4,000 Airborne Freight Corp. 248,500
4,300 Ambassadors International,
Inc.* 83,850
2,800 Computer Learning Centers,
Inc.* 171,500
2,000 Duff & Phelps Credit Rating
Co. 81,250
4,400 Market Facts, Inc.* 73,700
-------------
658,800
-------------
CONTAINERS AND PACKAGING -- 1.1%
5,000 BWAY Corp.* 114,375
-------------
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
CONTRACT DRILLING -- 2.7%
2,500 Cliffs Drilling Co.* $124,688
4,000 Patterson Energy, Inc.* 154,750
-------------
279,438
-------------
DIVERSIFIED MANUFACTURING -- 1.3%
2,000 Tredegar Industries, Inc. 131,750
-------------
EDP SERVICES & PERIPHERALS -- 2.4%
8,200 Genicom Corp.* 94,300
3,100 Systems & Computer
Technology* 153,837
-------------
248,137
-------------
ELECTRONICS -- 4.5%
3,200 C & D Technologies, Inc. 154,400
9,300 EFTC Corp.* 151,125
5,200 Encore Wire Corp.* 159,575
-------------
465,100
-------------
ENVIRONMENTAL SERVICES -- 1.0%
4,700 Eastern Environmental
Services, Inc* 103,400
-------------
FINANCE COMPANIES -- 1.2%
6,000 Pilgrim America Capital
Corp.* 122,250
-------------
FLUID CONTROLS -- 0.8%
5,200 ESSEF Corp.* 83,200
-------------
FOOD -- 4.1%
3,000 Suiza Foods Corp.* 178,687
12,500 Tasty Baking Co. 241,406
-------------
420,093
-------------
HEAVY MACHINERY AND CONSTRUCTION -- 6.9%
7,200 Gardner Denver Machinery,
Inc.* 182,250
8,000 Gehl Company* 168,000
9,500 Terex Corp.* 223,250
4,900 Wabash National Corp. 139,344
-------------
712,844
-------------
</TABLE>
7
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997 (CONTINUED)
AGGRESSIVE SMALL CAP PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HOMEBUILDING -- 4.4%
13,000 Engle Homes, Inc. $238,875
10,000 NVR, Inc.* 218,750
-------------
457,625
-------------
INSURANCE -- 4.7%
3,750 Allied Group, Inc. 107,344
2,500 Enhance Financial Services
Group 148,750
10,000 Hooper Holmes, Inc. 145,625
4,000 Presidential Life Corp. 81,000
-------------
482,719
-------------
MANUFACTURED HOUSING -- 0.8%
4,000 Modtech, Inc.* 78,000
-------------
MILITARY/GOVERNMENT/TECHNICAL -- 2.4%
10,000 Allied Research Corp.* 124,375
8,900 Applied Signal Technology,
Inc.* 122,375
-------------
246,750
-------------
OILFIELD SERVICES AND EQUIPMENT -- 1.1%
2,400 Sante Fe Pacific Pipeline LP 109,800
-------------
PRECISION INSTRUMENTS -- 2.0%
5,500 MTS Systems Corp. 206,250
-------------
PRINTING -- 2.5%
3,000 Consolidated Graphics, Inc.* 139,875
3,000 Mail-Well, Inc.* 121,500
-------------
261,375
-------------
SAVINGS AND LOAN ASSOCIATIONS -- 11.1%
2,500 Affiliated Community Bancorp,
Inc. 94,375
4,500 CFSB Bancorp Inc. 118,125
600 Citfed Bancorp, Inc. 23,400
4,000 Columbia Banking System,
Inc.* 108,000
3,000 First Federal Capital 101,625
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
<C> <S> <C>
2,666 New York Bancorp, Inc. $ 105,807
3,000 Norwich Financial Corp. 99,000
11,800 PDS Financial Corp.* 79,650
7,800 St. Paul Bancorp, Inc. 204,750
6,200 TR Financial Corp. 206,150
-------------
1,140,882
-------------
SEMICONDUCTORS AND RELATED -- 4.3%
6,000 Advanced Energy Industries* 89,625
3,000 Dallas Semiconductor Corp. 122,250
4,000 Jabil Circuit, Inc.* 159,000
2,100 Orbotech LTD* 66,938
-------------
437,813
-------------
SERVICES: HEALTH INDUSTRY -- 0.5%
5,000 TLII Liquidating Corp. 49,687
-------------
SPECIALITY STEEL -- 1.1%
8,000 Universal Stainless & Alloy* 116,000
-------------
TELECOMMUNICATIONS EQUIPMENT -- 1.3%
7,000 Cognitronics Corp.* 134,313
-------------
TEXTILES -- 1.7%
15,300 Dyersburg Corp. 174,038
-------------
TRUCKING -- 1.7%
7,400 Landair Services, Inc.* 179,450
-------------
WHOLESALERS -- 1.6%
3,500 United Stationers, Inc.* 168,437
-------------
TOTAL COMMON STOCKS
(COST $8,423,911) 9,454,276
-------------
MONEY MARKET FUNDS -- 8.2%
845,812 Fund for Government
Investors
(Cost $845,812) 845,812
-------------
TOTAL INVESTMENTS -- 100.0%
(COST $9,269,723) $ 10,300,088
-------------
-------------
</TABLE>
- -------------------------------------
(*) NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP AGGRESSIVE
GROWTH GROWTH SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------- ------------
<S> <C> <C> <C>
ASSETS
Securities at Cost................................................ $ 93,762,435 $ 7,110,979 $ 9,269,723
------------- ----------- ------------
------------- ----------- ------------
Securities at Value (Note 1)...................................... $ 103,911,840 $ 8,355,305 $ 10,300,088
Receivable for Securities Sold.................................... 1,604,736 210,758 --
Receivable for Shares Sold........................................ 1,708,520 9,918 17,303
Interest Receivable............................................... 22,561 1,383 2,994
Dividends Receivable.............................................. 107,270 9,016 4,047
Unamortized Organizational Costs (Note 1)......................... 75,390 -- --
------------- ----------- ------------
Total Assets.................................................... 107,430,317 8,586,380 10,324,432
------------- ----------- ------------
LIABILITIES
Payable for Securities Purchased.................................. 4,443,293 194,758 --
Payable for Shares Redeemed....................................... 965,175 -- 116,048
Investment Advisory Fee Payable (Note 2).......................... 106,247 8,790 9,934
Distributions Payable............................................. 30,157 4,968 4,599
Administrative Fee Payable (Note 2)............................... 21,249 1,758 2,160
Distribution Plan Fee Payable (Note 4)............................ 21,249 1,758 --
Other Payables and Accrued Expenses............................... 21,249 1,758 1,296
Organizational Expenses Payable to Adviser (Note 1)............... 75,390 -- --
------------- ----------- ------------
Total Liabilities............................................... 5,684,009 213,790 134,037
------------- ----------- ------------
NET ASSETS.......................................................... $ 101,746,308 $ 8,372,590 $ 10,190,395
------------- ----------- ------------
------------- ----------- ------------
SHARES OUTSTANDING.................................................. 7,656,593 673,394 499,634
------------- ----------- ------------
------------- ----------- ------------
NET ASSET VALUE PER SHARE........................................... $13.29 $12.43 $20.40
------ ----------- ------
------ ----------- ------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP AGGRESSIVE
GROWTH GROWTH SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------
FOR THE
FOR THE YEAR PERIOD ENDED
MONTHS ENDED DECEMBER 31,
DECEMBER 31, 1997 1997*
---------------------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest (Note 1)................ $ 220,058 $ 19,278 $ 21,157
Dividends (Note 1)............... 688,752 58,689 28,280
------------- ------------ ------------
Total Investment Income........ 908,810 77,967 49,437
------------- ------------ ------------
EXPENSES
Investment Advisory Fee (Note
2)............................. 1,218,438 74,475 56,277
Administrative Fee (Note 2)...... 243,688 14,895 12,234
Distribution Plan Fees (Note
4)............................. 243,688 14,895 --
Transfer Agent and Custodian Fee
(Note 3)....................... 194,222 52,815 50,488
Registration Fees................ 64,450 21,705 27,146
Shareholder Reports and
Notices........................ 50,960 3,212 2,230
Organizational Expense (Note
1)............................. 25,200 -- --
Audit Fees....................... 22,638 2,862 --
Trustees' Fees................... 7,500 7,500 7,500
Other Expenses................... 24,800 2,306 1,284
------------- ------------ ------------
Total Expenses................. 2,095,584 194,665 157,159
Less Expenses Reimbursed by
Investment Adviser
(Note 2)..................... (146,083) (75,505) (81,307)
------------- ------------ ------------
Net Expenses................. 1,949,501 119,160 75,852
------------- ------------ ------------
NET INVESTMENT LOSS................ (1,040,691) (41,193) (26,415)
------------- ------------ ------------
Net Realized Gain on Investment
Transactions..................... 11,968,088 317,596 415,737
Net Change in Unrealized
Appreciation of Investments...... 321,088 1,208,882 1,030,365
------------- ------------ ------------
NET GAIN ON INVESTMENTS............ 12,289,176 1,526,478 1,446,102
------------- ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS........ $ 11,248,485 $ 1,485,285 $ 1,419,687
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
*FROM COMMENCEMENT OF OPERATIONS MARCH 17, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH
PORTFOLIO MID CAP
----------------------------- GROWTH AGGRESSIVE SMALL CAP
PORTFOLIO PORTFOLIO
--------------------------------- --------------------
FOR THE YEARS ENDED FOR THE YEAR FOR THE PERIOD FOR THE PERIOD
DECEMBER 31, ENDED ENDED ENDED
----------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996* 1997**
------------- ------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss).......... $ (1,040,691) $ (927,543) $ (41,193) $ 772 $ (26,415)
Net Realized Gain (Loss) on Investment
Transactions........................ 11,968,088 (12,055,596) 317,596 -- 415,737
Net Change in Unrealized Appreciation
of Investments...................... 321,088 9,828,401 1,208,882 35,444 1,030,365
------------- ------------- -------------- ---------------- --------------------
Net Increase (Decrease) in Net
Assets Resulting from
Operations........................ 11,248,485 (3,154,738) 1,485,285 36,216 1,419,687
------------- ------------- -------------- ---------------- --------------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income............ -- -- -- (772) --
From Net Realized Gain................ (1,178,202) -- (341,588) -- (180,781)
------------- ------------- -------------- ---------------- --------------------
Total Distributions to
Shareholders...................... (1,178,202) -- (341,588) (772) (180,781)
------------- ------------- -------------- ---------------- --------------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares..... 148,051,404 172,216,916 7,858,965 1,614,544 13,757,919
Reinvestment of Distributions......... 1,148,045 -- 336,620 772 176,182
Cost of Shares Redeemed............... (152,769,712) (74,115,827) (2,608,712) (8,740) (4,982,612)
------------- ------------- -------------- ---------------- --------------------
Net Increase (Decrease) in Net
Assets Resulting from Share
Transactions...................... (3,570,263) 98,101,089 5,586,873 1,606,576 8,951,489
------------- ------------- -------------- ---------------- --------------------
TOTAL INCREASE IN NET ASSETS........ 6,500,020 94,946,351 6,730,570 1,642,020 10,190,395
NET ASSETS -- Beginning of Period....... 95,246,288 299,937 1,642,020 -- --
------------- ------------- -------------- ---------------- --------------------
NET ASSETS -- End of Period............. $ 101,746,308 $ 95,246,288 $ 8,372,590 $1,642,020 $10,190,395
------------- ------------- -------------- ---------------- --------------------
------------- ------------- -------------- ---------------- --------------------
SHARES
Sold.................................. 11,764,667 13,842,072 711,277 160,724 741,820
Issued in Reinvestment of
Distributions....................... 86,384 -- 27,081 75 8,636
Redeemed.............................. (11,968,178) (6,098,372) (224,912) (851) (250,822)
------------- ------------- -------------- ---------------- --------------------
Net Increase (Decrease) in Shares... (117,127) 7,743,700 513,446 159,948 499,634
------------- ------------- -------------- ---------------- --------------------
------------- ------------- -------------- ---------------- --------------------
</TABLE>
*FROM COMMENCEMENT OF OPERATIONS NOVEMBER 26, 1996
**FROM COMMENCEMENT OF OPERATIONS MARCH 17, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH
PORTFOLIO
-------------------------------------
FOR THE YEARS FOR THE PERIOD
ENDED DECEMBER 31, ENDED
-------------------- DECEMBER 31,
1997 1996 1995*
--------- -------- --------------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C>
Net Asset Value -- Beginning of Period.................... $12.25 $9.99 $10.00
--------- -------- ------
Income from Investment Operations:
Net Investment Income (Loss)............................ (0.136) (0.120) 0.002
Net Realized and Unrealized Gain (Loss) on
Investments........................................... 1.333 2.380(D) (0.012)
--------- -------- ------
Total from Investment Operations...................... 1.197 2.260 (0.010)
--------- -------- ------
Distributions to Shareholders:
From Net Realized Gain................................ (0.157) -- --
--------- -------- ------
Net Increase (Decrease) in Net Asset Value.............. 1.04 2.26 (0.01)
--------- -------- ------
Net Asset Value -- End of Period........................ $13.29 $12.25 $9.99
--------- -------- ------
--------- -------- ------
TOTAL INVESTMENT RETURN..................................... 9.77% 22.62% (0.10)%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)..................... 2.00% 2.00% 2.00%(B)
Expenses Before Reimbursement (Note 2).................... 2.15% 2.22% 27.25%(B)
Net Investment Income (Loss).............................. (1.07)% (1.57)% 2.59%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................................... 247.3% 169.0% --
Net Assets at End of Period (000's omitted)............... $101,746 $95,246 $300
Number of Shares Outstanding at End of Period (000's
omitted)................................................ 7,657 7,774 30
Average Commission Rate Paid (C).......................... $ 0.0367 $0.0389 --
</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.
(D) The per share amount does not coincide with the net realized and unrealized
loss for the year because of the timing of sales and redemptions of Fund
shares and the amounts of per share realized and unrealized gain and loss of
such time.
* FROM COMMENCEMENT OF OPERATIONS DECEMBER 28, 1995
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MID CAP GROWTH AGGRESSIVE SMALL CAP
PORTFOLIO PORTFOLIO
-------------------------------------- --------------------
FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996* 1997**
----------------- ------------------ --------------------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C>
Net Asset Value -- Beginning of Period.................... $ 10.27 $ 10.00 $ 15.64
------- ------- -------
Income from Investment Operations:
Net Investment Income (Loss)............................ (0.061) 0.005 (0.053)
Net Realized and Unrealized Gain on Investments......... 2.750 0.270 5.177
------- ------- -------
Total from Investment Operations...................... 2.689 0.275 5.124
------- ------- -------
Distributions to Shareholders:
From Net Investment Income.............................. -- (0.005) --
From Net Realized Gain.................................. (0.529) -- (0.364)
------- ------- -------
Total Distributions to Shareholders................... (0.529) (0.005) (0.364)
------- ------- -------
Net Increase in Net Asset Value........................... 2.16 0.27 4.76
------- ------- -------
Net Asset Value -- End of Period.......................... $12.43 $10.27 $20.40
------- ------- -------
------- ------- -------
TOTAL INVESTMENT RETURN..................................... 26.18% 2.75%(A) 32.76% (A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)..................... 2.00% 2.00%(B) 1.55%(B)
Expenses Before Reimbursement (Note 2).................... 3.27% 113.02%(B) 3.21%(B)
Net Investment Income (Loss).............................. (0.69)% 0.87%(B) (0.54)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................................... 163.2% -- 86.1%
Net Assets at End of Period (000's omitted)............... $ 8,373 $ 1,642 $10,190
Number of Shares Outstanding at End of Period (000's
omitted)................................................ 673 160 500
Average Commission Rate Paid.............................. $0.0321 $0.0300 $0.0363
</TABLE>
- -------------------------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
* FROM COMMENCEMENT OF OPERATIONS NOVEMBER 26, 1996
** FROM COMMENCEMENT OF OPERATIONS MARCH 17, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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 currently consists of seven separate portfolios each
with its own investment objectives and policies. These financial statements
report on three of the seven portfolios: the Aggressive Growth Portfolio, a
non-diversified open-end management company portfolio, the Mid Cap Growth
Portfolio, a diversified open-end management company portfolio, and the
Aggressive Small Cap Portfolio, a diversified open-end management company
portfolio. 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 gain and
loss on investment transactions are computed on an identified cost basis.
(c) Dividends from net investment income are declared and paid annually.
Dividends are reinvested in additional shares unless shareholders request
payment in cash. Net capital gain, if any, is 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 and net capital gains 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 of the Aggressive Growth Portfolio. 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, 1997,
unamortized organization costs were $75,390.
2. Investment Advisory Fees and Other Transactions With Affiliates
Investment advisory services are provided by Navellier Management, Inc. (the
"Adviser"). Under an agreement with the Adviser, the fund pays a fee at the
annual rate of 1.25% of the daily net assets of the Aggressive Growth Portfolio
and the Mid Cap Growth Portfolio, and 1.15% of the daily net assets of the
Aggressive Small Cap Portfolio. The Adviser receives an annual fee equal to
0.25% of the Funds 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
14
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
the Adviser, at any time upon notice to the Fund. At December 31, 1996, the
Adviser voluntarily agreed not to seek future reimbursement of all unreimbursed
past expenses incurred on behalf of the Fund. During the year ended December 31,
1997, the Adviser paid operating expenses of the Aggressive Growth Portfolio,
Mid Cap Growth Portfolio and Aggressive Small Cap Portfolio totaling $389,770,
$90,400 and $88,648 respectively. Under the operating expense agreement, the
Adviser requested, and the Aggressive Growth Portfolio, the Mid Cap Growth
Portfolio and the Aggressive Small Cap Portfolio reimbursed, $243,687, $14,895,
and $7,341, respectively, of such expenses.
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, 1997, Trustees' fees totaled $22,500.
3. Transfer Agent and Custodian
Rushmore Trust and Savings, FSB ("Rushmore Trust"), provides transfer
agency, dividend disbursing and other shareholder services to the Fund. In
addition, Rushmore Trust serves as custodian of the Fund's assets. Fees paid to
Rushmore Trust are based upon a fee schedule approved by the Board of Trustees.
4. Distribution Plan
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act, whereby it reimburses the Distributor or others in an amount not
to exceed 0.25% per annum of the average daily net assets of the Aggressive
Growth Portfolio and the Mid Cap Growth 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, 1997, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP AGGRESSIVE
GROWTH GROWTH SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------
<S> <C> <C> <C>
Purchases........................................................... $ 226,032,533 $ 13,883,860 $ 13,310,285
------------- ------------ ------------
------------- ------------ ------------
Sales............................................................... $ 235,268,011 $ 8,901,797 $ 5,302,112
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
15
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
6. Net Unrealized Appreciation/Depreciation of Investments
Unrealized appreciation as of December 31, 1997, based on the cost for
Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP AGGRESSIVE
GROWTH GROWTH SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- -----------
<S> <C> <C> <C>
Gross Unrealized Appreciation.......................................... $ 12,687,568 $ 1,292,836 $ 1,398,311
Gross Unrealized Depreciation.......................................... (2,995,674) (48,510) (367,946)
------------ ----------- -----------
Net Unrealized Appreciation............................................ $ 9,691,894 $ 1,244,326 $ 1,030,365
------------ ----------- -----------
------------ ----------- -----------
Cost of Investments for Federal Income Tax Purpose..................... $ 94,219,946 $ 7,110,979 $ 9,269,723
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
7. Net Assets
At December 31, 1997, net assets consisted of the following:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP AGGRESSIVE
GROWTH GROWTH SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------- ------------
<S> <C> <C> <C>
Paid-in-Capital...................................................... $ 92,862,613 $ 7,193,449 $ 8,951,488
Accumulated Net Realized Gain (Loss) on Investment Transactions...... (1,265,710) (65,185) 208,542
Net Unrealized Appreciation of Investments........................... 10,149,405 1,244,326 1,030,365
------------- ----------- ------------
NET ASSETS........................................................... $ 101,746,308 $ 8,372,590 $ 10,190,395
------------- ----------- ------------
------------- ----------- ------------
</TABLE>
8. Federal Income Tax
Permanent differences between tax and financial reporting of net investment
income and net realized gain/loss are reclassified to paid-in-capital. As of
December 31, 1997, net investment losses were reclassified to paid-in-capital
and accumulated net realized gain/loss on investment transactions as follows:
<TABLE>
<CAPTION>
AGGRESSIVE MID CAP AGGRESSIVE
GROWTH GROWTH SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------- -----------
<S> <C> <C> <C>
Reduction of paid-in-capital.............................................. $ 1,040,691 -- --
Reduction of accumulated net realized gain................................ -- $41,193 $26,415
</TABLE>
16
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
The Navellier Performance Funds
Reno, Nevada
We have audited the accompanying statement of assets and liabilities of
Navellier Aggressive Growth Portfolio, Navellier Mid Cap Growth Portfolio and
Navellier Aggressive Small Cap Portfolio, each a series of shares of the
Navellier Performance Funds including the portfolio of investments, as of
December 31, 1997, and the related statement of operations, the statement of
changes in net assets, and the financial highlights for the period then ended.
These financial statements 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. The financial statements and financial
highlights presented for the year ended December 31, 1996 and prior were audited
by other auditors whose report dated January 31, 1997, expressed an unqualified
opinion on those statements.
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 as of
December 31, 1997, 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 provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Navellier Aggressive Growth Portfolio, Navellier Mid Cap Growth Portfolio and
Navellier Aggressive Small Cap Portfolio as of December 31, 1997, the results of
its operations, the changes in its net assets, and the financial highlights for
the period then ended, in conformity with generally accepted accounting
principles.
[/S/ TAIT, WELLER AND BAKER]
Philadelphia, Pennsylvania
February 20, 1998
17
<PAGE>
[LOGO]
NAVELLIER
PERFORMANCE FUNDS
-------------------
AGGRESSIVE GROWTH PORTFOLIO
MID CAP GROWTH PORTFOLIO
AGGRESSIVE SMALL CAP PORTFOLIO
ANNUAL REPORT
DECEMBER 31, 1997
NAVELLIER OFFICES
OUR EAST LIBERTY THIRD FLOOR
RENO, NEVADA 89501
800-887-8671 P.S.T.
CUSTODIAN & TRANSFER AGENT
RUSHMORE TRUST AND SAVINGS, FSB
4922 FAIRMONT AVENUE
BETHESDA, MD 20814
800-622-1386 E.S.T.
