<PAGE>
- --------------------------------------------------------------------------------
Registration No. 33-80195
811-9142
Filed May 26, 1998
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----
Pre-Effective Amendment No.
-----
Post-Effective Amendment No. 11 X
and/or -----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
-----
Amendment No. 10 X
-----
-------------------------------
THE NAVELLIER PERFORMANCE FUNDS
One East Liberty, Third Floor
Reno, Nevada 89501
1-800-887-8671
Agent for Service:
SAMUEL KORNHAUSER
155 Jackson Street, Suite 1807
San Francisco, California 94111
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to Rule 485 paragraph (b)(1)(vii)
--
x 60 days after filing pursuant to paragraph (a)(1)
-- on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
-- on (date) pursuant to paragraph (a)(2) of Rule 485
- --------------------------------------------------------------------------------
Registrant has declared that it has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Investment Company Act
Rule 24f-2 and that the Rule 24f-2 Notice for Registrant's fiscal year 1998 will
be filed on or before February 28, 1999.
Page 1 of pages sequentially numbered.
---
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
CONTENTS
This Registration Statement on Form N-1A consists of the following:
1. Facing Sheet
2. Contents
3. Cross-Reference Sheet
4. Part A - Prospectus for all shares of The Navellier Performance Funds
5. Part B - Statement of Additional Information for all shares of The
Navellier Performance Funds
6. Part C - Other Information
7. Signature Sheet
8. Exhibits
<PAGE>
CROSS-REFERENCE SHEET
PART A
------
FORM N-1A ITEM NUMBER PROSPECTUS CAPTION
- --------------------- ------------------
1. Cover Page Cover Page
2. Synopsis Summary of Fund Expenses
3. Condensed Financial Information Condensed Financial Information -
Financial Highlights
4. General Description of Registrant Investment Objectives and Policies,
General Information, Risk Considerations
5. Management of Registrant Management of the Fund
5A. Management's Discussion of Fund Financial Highlights; Performance
Performance
6. Capital Stock and Other Securities General Information
7. Purchases of Securities Management of the Fund
Being Offered
How to Buy Shares
Dividend Reinvestment
Distribution Fees
8. Redemption or Repurchase How to Redeem Shares
9. Legal Proceedings N/A
<PAGE>
PART B - STATEMENT OF ADDITIONAL INFORMATION
FORM N-1A ITEM NUMBER
- ---------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History N/A
13. Investment Objectives and Policies Investment Objective and Policies
Investment Restrictions
14. Management of the Fund Management
15. Control Persons and Principal Management
Holders of Securities
16. Investment Advisory Management of the Fund
and Other Services Management
Distribution Plan
Other Information
17. Brokerage Allocation and Portfolio Transactions
Other Practices Management of the Fund
18. Capital Stock and Other General Information
Securities
19. Purchase, Redemption and Pricing How to Buy Shares
of Securities Being Offered Net Asset Value
20. Tax Statutes Dividends, Distributions, and Taxes
21. Underwriters Management
Distribution Plan
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
<PAGE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
THE
NAVELLIER
PERFORMANCE
FUNDS
Prospectus
dated
May 26, 1998
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------
The Navellier Performance Funds (the "Fund") is an open-end management
investment company which offers its shares in a series of no load
non-diversified and diversified portfolios. The Fund is presently offering its
shares in eight Portfolios: The Navellier Aggressive Growth Portfolio
("Aggressive Growth")--a non-diversified open-end management company portfolio
(See p. 12); The Navellier Mid Cap Growth Portfolio ("Mid Cap Growth"), a
diversified open-end management company portfolio investing in mid cap growth
securities (See p. 13); The Navellier Aggressive Micro Cap Portfolio (formerly
named The Navellier Agressive Small Cap Portfolio) ("Aggressive Micro Cap"), a
diversified open-end management company portfolio investing in micro cap growth
securities (See p. 13); The Navellier Small Cap Value Portfolio ("Small Cap
Value"), a diversified, open-end management company portfolio investing in small
cap value securities (See p. 13); The Navellier Large Cap Growth Portfolio
("Large Cap Growth"), a non-diversified open-end management company portfolio
investing in large cap growth securities (See p. 14); The Navellier Large Cap
Value Portfolio ("Large Cap Value"), a diversified open-end management company
portfolio investing in large cap value securities (See p. 15); The Navellier
International Equity Portfolio ("International Equity"), a diversified open-end
management company portfolio investing in the securities of foreign issuers (See
p. 15) and The Navellier Agressive Small Cap Equity Portfolio ("Small Cap
Equity") a diversified open-end management company portfolio investing in small
cap growth securities (See p. 16). Additional non-diversified or diversified
portfolios may be added to the Fund in the future. There can be no assurance
that the Portfolios of the Fund will achieve their investment objectives.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing and should be read and
retained for future reference.
A Statement of Additional Information about the Fund has been filed with the
Securities and Exchange Commission and is available upon request and without
charge by calling or writing The Navellier Performance Funds c/o Navellier
Securities Corp., One East Liberty, Third Floor, Reno, Nevada 89501; Telephone:
1-800-887-8671. The Statement of Additional Information bears the same date as
this Prospectus and is incorporated by reference into this Prospectus in its
entirety.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
No dealer, salesman, or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Fund, its investment
adviser, or its distributor. This Prospectus does not constitute an offer to buy
any of the securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
DISTRIBUTOR AND SALES INFORMATION
NAVELLIER SECURITIES CORP.
ONE EAST LIBERTY, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
The date of this Prospectus is May 26, 1998
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------
<TABLE>
<S> <C>
Shareholder Transaction Expenses and Annual Fund
Operating Expenses____________________________________ 1
Financial Highlights____________________________________ 4
Summary_________________________________________________ 10
Investment Objectives and Policies______________________ 13
Special Investment Methods and Risks____________________ 19
Investment Restrictions_________________________________ 20
Risk Factors____________________________________________ 21
Management of the Fund__________________________________ 30
Expenses of the Fund____________________________________ 33
Reports and Information_________________________________ 35
Description of Shares___________________________________ 36
Dividends and Distributions_____________________________ 37
Taxes___________________________________________________ 38
Purchase and Pricing of Shares__________________________ 40
Redemption of Shares____________________________________ 44
Certain Services Provided to Shareholders_______________ 46
Additional Information__________________________________ 47
Assent to Trust Instrument______________________________ 47
</TABLE>
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES AND ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------
<TABLE>
<CAPTION>
Navellier Navellier Navellier* Navellier
Aggressive Mid Cap Aggressive Small Cap
Growth Growth Micro Cap Value
Portfolio Portfolio Portfolio Portfolio
---------- --------- ------------ ---------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES (1)
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)____________________________________________________________ 0% 0% 0% 0%
Maximum Sales Load Imposed on Reinvested Dividends__________________ None None None None
Redemption Fees_____________________________________________________ None None None None
Exchange Fee (3)____________________________________________________ 0-$5 0-$5 0-$5 0-$5
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees_____________________________________________________ 0.84% 0.84% 0.84% 0.84%
12b-1 Fees (2)______________________________________________________ 0.25% 0.25% 0.25% 0.25%
Other Expenses (after waivers) (1),(4)______________________________ 0.40% 0.40% 0.40% 0.40%
----- --------- ------------ ---------
TOTAL FUND OPERATING EXPENSES
(after waivers) (1),(5)_____________________________________________ 1.49% 1.49% 1.49% 1.49%
----- --------- ------------ ---------
----- --------- ------------ ---------
</TABLE>
<TABLE>
<CAPTION>
Navellier
Navellier Navellier Navellier Aggressive
Large Cap Large Cap International Small Cap
Growth Value Equity Equity
Portfolio Portfolio Portfolio Portfolio
----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES (1)
Maximum Sales Load Imposed on Purchases (as
a percentage of offering price)__________ 0% 0% 0% 0%
Maximum Sales Load Imposed on Reinvested
Dividends________________________________ None None None None
Redemption Fees____________________________ None None None None
Exchange Fee (3)___________________________ 0-$5 0-$5 0-$5 0-$5
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees____________________________ 0.84% 0.75% 1.00% 0.84%(6)
12b-1 Fees (2)_____________________________ 0.25% 0.25% 0.25% 0.25%(6)
Other Expenses (after waivers) (1),(4)_____ 0.40% 0.40% 0.50% 0.40%
----- ----- ----- -----
TOTAL FUND OPERATING EXPENSES
(after waivers) (1),(5)____________________ 1.49% 1.40% 1.75% 1.49%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
* Formerly named Navellier Agressive Small Cap Portfolio.
1
<PAGE>
- ------------------------------
(1) The above table of fees and other expenses is provided to assist you in
understanding the various potential costs and expenses that an investor in the
Fund may bear directly or indirectly. The Investment Advisor may, but is under
no obligation to, reimburse the Fund's expenses now or in the future. The
Navellier Small Cap Value Portfolio is a newly organized portfolio which has
been in existence since December 18 , 1997 and has no operating history. The
Navellier Large Cap Growth Portfolio is a newly organized portfolio which has
been in existence since December 18, 1997 and has no operating history. The
Navellier Large Cap Value Portfolio is a newly organized portfolio which has
been in existence since December 18, 1997 and has no operating history. The
Navellier International Equity Portfolio is a newly organized portfolio which
has been in existence since December 18, 1997 and has no operating history. The
Navellier Aggressive Small Cap Equity Portfolio is a newly organized portfolio
which has been in existence since December 18, 1997. The "other expense" portion
of the Shareholder Transaction Expenses and Annual Fund Operating Expenses
listed for The Navellier Small Cap Value Portfolio, The Navellier Large Cap
Growth Portfolio, The Navellier Large Cap Value Portfolio, The Navellier
International Equity Portfolio and The Navellier Aggressive Small Cap Equity
Portfolio are estimates because they have operating histories of less than one
year.
(2) The Aggressive Growth Portfolio, the Mid Cap Growth Portfolio, The Small
Cap Value Portfolio, the Large Cap Growth Portfolio, The Large Cap Value
Portfolio, the Aggressive Micro Cap Portfolio and the International Equity
Portfolio do not charge an initial sales load but do pay an annual 0.25% 12b-1
fee to the distributor or brokers who have signed a selling agreement with the
Fund. Investors may also be charged a transaction fee if they effect
transactions in fund shares through a broker or agent. Long-term shareholders in
the Fund may pay more than the economic equivalent of the maximum front-end
sales charge permitted by the National Association of Securities Dealers
("NASD").
(3) Shares of each of the portfolios may be exchanged for shares of each other
portfolio at net asset value without charge (up to five (5) exchanges per
account). There is a charge of $5 per exchange thereafter.
(4) Before the Investment Advisor waived reimbursement of costs advanced,
"Other Expenses" of the Aggressive Growth Portfolio were 0.65% of the
Portfolio's average net assets for the period January 1, 1997 through December
31, 1997. Before the Investment Advisor waived reimbursement of costs advanced,
"Other Expenses" of the Mid Cap Growth Portfolio were 1.77% of the Portfolio's
average net assets for the period January 1, 1997 through December 31, 1997. The
Investment Advisor estimates that for the period January 1, 1998 through
December 31, 1998 the "Other Expenses" before waiver will be 2.37% for the
Aggressive Micro Cap Portfolio; 2.16% for the Small Cap Value Portfolio; 2.16%
for the Large Cap Growth Portfolio; 2.25% for the Large Cap Value Portfolio;
2.00% for the International Equity Portfolio and 2.16% for the Aggressive Small
Cap Equity Portfolio.
The Investment Advisor has agreed to waive reimbursement of all operating
expenses advanced by it for the Aggressive Growth Portfolio, the Mid Cap Growth
Portfolio, the Aggressive Micro Cap Portfolio, The Small Cap Value Portfolio,
the Large Cap Growth Portfolio, The Large Cap Value Portfolio, the International
Equity Portfolio and the Agressive Small Cap Equity Portfolio in excess of the
total operating expense percentages as set forth in more detail in footnote 5
below.
(5) Before waiver of reimbursement of costs advanced, "Total Fund Operating
Expenses" of the Aggressive Growth Portfolio were 2.15% of average net assets
for the fiscal year ended December 31, 1997. Before waiver of reimbursement of
costs advanced, "Total Fund Operating Expenses" of the Mid Cap Growth Portfolio
for the fiscal year ended December 31, 1997 were 3.21% of average net assets.
Before waiver of reimbursement of costs advanced, "Total Fund Operating
Expenses" on an annualized basis from March 17, 1997 through December 31, 1997
were 3.27% for the Aggressive Micro Cap Portfolio (formerly named Aggressive
Small Cap Portfolio). The Small Cap Value Portfolio, The Large Cap Growth
Portfolio, The Large Cap Value Portfolio, The International Equity Portfolio and
the Aggressive Small Cap Equity Portfolio are newly organized portfolios with no
operating history and had no assets under management as of December 18, 1997.
The Investment Advisor estimates that before waiver the "Total Fund Operating
Expenses" for these portfolios for the fiscal year ended December 31, 1998 will
be 3.25%, 3.25%, 3.25% and 3.25% and 3.25% respectively. The Investment Advisor
has agreed to waive reimbursement of all operating expenses for the Aggressive
Growth Portfolio advanced by it in excess of a 1.49% operating expense ratio for
the fiscal year ended December 31, 1998. The Investment Advisor has agreed to
waive reimbursement of all operating expenses for the Mid Cap Growth Portfolio
advanced by it in excess of a 1.49% operating expense ratio for the fiscal year
ended December 31, 1998. The Investment Advisor has agreed to waive
reimbursement of all operating expenses for the Aggressive Micro Cap Portfolio
advanced by it in excess of a 1.49% operating expense ratio for the fiscal year
ended December 31, 1998. The Investment Advisor has agreed to waive
reimbursement of all operating expenses for The Small Cap Value Portfolio
advanced by it in excess of a 1.49% operating expense ratio for the fiscal year
ending December 31, 1998. The Investment Advisor has agreed to waive
reimbursement of all operating expenses for the Large Cap Growth Portfolio
advanced by it in excess of a 1.49% operating expense ratio for the fiscal year
ending December 31, 1998. The Investment Advisor has agreed to waive
reimbursement of all operating expenses for The Large Cap Value Portfolio
advanced by it in excess of a 1.40% operating expense ratio for the fiscal year
ending December 31, 1998. The Investment Advisor has agreed to waive
reimbursement of all operating expenses for the International Equity Portfolio
advanced by it in excess of a 1.75% operating expense ratio for the fiscal year
ending
2
<PAGE>
December 31, 1998. The Investment Adviser has agreed to waive reimbursement of
all operating expenses for the Agressive Small Cap Equity Portfolio advanced by
it in excess of a 1.49% operating expense ratio for the fiscal year ending
December 31, 1998.
(6) Navellier Management, Inc. has reduced its annual investment advisory fee
for the Navellier Aggressive Small Cap Equity Portfolio from 1.15% to 0.84% of
the aggregate net asset value of the Portfolio to cover the cost of the new
12b-1 fees for said Portfolio of the Performance Funds.
EXAMPLES: The following example indicates the direct and indirect expenses an
investor (maintaining an average annual investment of $1,000) could expect to
incur in a single year, three-year, five year and ten year period for the
applicable portfolio:
<TABLE>
<CAPTION>
Navellier Navellier Navellier Navellier
Aggressive Mid Cap Aggressive Small Cap
Growth Growth Micro Cap Value
Portfolio Portfolio Portfolio Portfolio
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
One-Year_____________________________________ $ 20 $ 20 $ 16 $ 20
Three-Year___________________________________ $ 63 $ 63 $ 49 $ 63
Five-Year____________________________________ $ 108 $ 108 * *
Ten-Year_____________________________________ $ 233 $ 233 * *
</TABLE>
<TABLE>
<CAPTION>
Navellier
Navellier Navellier Navellier Aggressive
Large Cap Large Cap International Small Cap
Growth Value Equity Equity
Portfolio Portfolio Portfolio Portfolio
------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
One-Year_____________________________________ $ 19 $ 15 $ 20 $ 16
Three-Year___________________________________ $ 60 $ 47 $ 63 $ 49
Five-Year____________________________________ * * * *
Ten-Year_____________________________________ * * * *
</TABLE>
The foregoing examples assume (a) that an investor maintains an average of
$1,000 invested in the Portfolio; (b) no sales load; (c) a 5% annual return; (d)
percentage amounts listed above for Annual Fund Operating Expenses remain
constant (for all periods shown above); (e) reinvestment of all dividends and
distributions; and (f) no exchanges between Portfolios.
THE EXAMPLES SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES OF EACH PORTFOLIO OF THE FUND MAY BE GREATER
OR LESS THAN THOSE SHOWN ABOVE.
* No estimates because the Portfolio had an operating history of less than 12
months.
FINANCIAL HIGHLIGHTS
- -------------------------------------------------
The following tables set forth the financial histories for the Aggressive
Growth Portfolio, the Mid Cap Growth Portfolio, and the Aggressive Micro Cap
Portfolio. There are no financial histories for The Small Cap Value Portfolio,
The Large Cap Growth Portfolio, The Large Cap Value Portfolio, The International
Equity Portfolio or the Aggressive Small Cap Equity Portfolio since they are
newly organized portfolios with no operating history prior to December 18, 1997.
The distribution of the Aggressive Growth Portfolio Shares commenced on December
28, 1995. The distribution of
3
<PAGE>
the Mid Cap Growth Portfolio Shares commenced on November 26, 1996. The
distribution of the Aggressive Micro Cap Portfolio commenced on March 17, 1997.
The distribution of The Small Cap Value Portfolio, The Large Cap Growth
Portfolio, The Large Cap Value Portfolio, The International Equity Portfolio and
the Aggressive Small Cap Equity Portfolio commenced operations shortly after the
December 18 , 1997 effective date of these portfolios.
There is a short financial history (from November 26, 1996 through December
31, 1996) for the Mid Cap Growth Portfolio. There is no financial history for
the Aggressive Micro Cap Portfolio for the period November 26, 1996--December
31, 1996 because there were no assets or expenses.
Deloitte & Touche LLP, the Fund's former independent auditor, audited the
financial information for the Aggressive Growth Portfolio for the period
December 28, 1995--December 31, 1995 and for the year ended December 31, 1996.
Tait, Weller & Baker, the Fund's current independent auditor, audited the
financial information for the Aggressive Growth Portfolio for the period January
1, 1997--December 31, 1997. Deloitte & Touche LLP also audited the financial
information for the Mid Cap Growth Portfolio for the period November 26,
1996--December 31, 1996. Tait, Weller & Baker audited the financial information
for the Mid Cap Growth Portfolio for the period January 1, 1997--December 31,
1997. The report for the Aggressive Growth Portfolio for the period January 1,
1997--December 31, 1997 is audited and is included in the Annual Report of the
Fund. The report for the Mid Cap Growth Portfolio for the period January 1,
1997--December 31, 1997 is also audited and is also included in the Annual
Report of the Fund. Those reports are available upon request and are
incorporated by reference into the Statement of Additional Information. The
report for the Aggressive Small Cap Portfolio (now named the Aggressive Micro
Cap Portfolio) for the period March 17, 1997--December 31, 1997 is audited and
is included in the Annual Report of the Fund.
4
<PAGE>
NAVELLIER AGGRESSIVE GROWTH PORTFOLIO
- -------------------------------------------------
<TABLE>
<CAPTION>
For the For the For the
Fiscal Fiscal Fiscal
Year Year Year
Ended Ended Ended
12/31/97 12/31/96 12/31/95*
(Audited) (Audited) (Audited)
--------- --------- ---------
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of Year $ 12.25 $ 9.99 $10.00
--------- --------- ---------
Income from Investment Operations:
Net Investment Income (Loss) (0.136) (0.12) 0.00
Net Realized and Unrealized Gains (Losses) on Securities 1.333 2.38 (0.01)
--------- --------- ---------
Total from Investment Operations 1.197 2.26 (0.01)
--------- --------- ---------
Distributions to Shareholders:
From Net Investment Income -- -- --
From Net Realized Capital Gains (0.157) -- --
--------- --------- ---------
Total Distributions to Shareholders (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(1) 9.77% 22.62% (0.10)%
Ratios to Average Net Assets:
Expenses After Reimbursement(2) 2.00% 2.00% 2.00%
Expenses Before Reimbursement(2) 2.15% 2.22% 27.25%
Net Investment Income (Loss)(2) (1.07)% (1.57)% 2.59%
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 Year (000's omitted) 7,657 7,774 30
Average Commission Rate Paid Per Share(3) $ 0.04 $ 0.04 --
</TABLE>
- ------------------------
* From Commencement of Operations December 28, 1995.
(1) Total returns for periods of less than one year are not annualized.
(2) The Aggressive Growth Portfolio has only been in existence since December
28, 1995. During the three days it was in existence during 1995, it had
substantial start-up expenses in relation to the small amount of total initial
investments in the Portfolio during those first three days and therefore would
have had an operating expense ratio of 27.25% for that three day period if the
Investment Advisor had not agreed to waive reimbursement of operating expenses
which it had advanced during that period. The Investment Advisor was entitled to
reimbursement of costs advanced during that three day period but agreed to waive
reimbursement which resulted in an actual operating expense ratio for 1995 of
2%.
5
<PAGE>
During the twelve month period ended December 31, 1997, the Aggressive
Growth Portfolio had operating expenses of 2% after the Investment Advisor
agreed to waive reimbursement of $146,083 of expenses advanced. If the
Investment Advisor had not waived reimbursement of such amounts, the operating
expense ratio during that twelve month period would have been 2.15%.
(3) The average commission paid for securities purchased during the period
01/01/97 to 12/31/97 was $.0321 per share. Commissions are paid for listed
trades, soft dollar trades or trades on crossing networks (i.e. Instinet).
6
<PAGE>
NAVELLIER MID CAP GROWTH PORTFOLIO
- -------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Fiscal Year Ended Fiscal Year Ended
December 31, 1997 December 31, 1996*
(Audited) (Audited)
------------------ ------------------
<S> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of Period $ 10.27 $ 10.00
------- -------
Income from Investment Operations:
Net Investment Income (Loss) (0.061) 0.01
Net Realized and Unrealized Gains (Losses) on
Securities 2.75 0.27
------- -------
Total from Investment Operations 2.689 0.28
------- -------
Distributions to Shareholders:
From Net Investment Income -- (0.01)
From Net Realized Capital Gains (0.529) --
------- -------
Total Distributions to Shareholders (0.529) (0.01)
------- -------
Net Increase (Decrease) in Net Asset Value 2.16 0.27
------- -------
Net Asset Value--End of Period $ 12.43 $ 10.27
------- -------
------- -------
Total Investment Return(1) 26.18% 2.75%
Ratios to Average Net Assets:
Expenses After Reimbursement(2),(3) 2.00% 2.00%
Expenses Before Reimbursement(2),(3) 3.27% 113.02%
Net Investment Income (Loss)(2) (0.69)% 0.87%
Supplementary Data:
Portfolio Turnover Rate 163.2% --
Net Assets at End of Period (000's omitted) $ 8,373 $ 1,642
Number of Shares Outstanding at End of Period
(000's omitted) 673 160
Average Commission Rate Paid Per Share(4) $ 0.03 $ 0.03
</TABLE>
(1) Total returns for periods of less than one year are not annualized.
(2) Annualized.
(3) The Mid Cap Growth Portfolio has been in existence since November 26, 1996.
During the 37 days it was in existence during 1996, it had substantial start-up
expenses in relation to the small amount of total initial investments in the
Portfolio during those first 37 days and therefore would have had an operating
expense ratio of 113.02% for that 37 day period if the Investment Advisor had
not agreed to waive reimbursement of operating expenses which it had advanced
during that period. The Investment Advisor was entitled to reimbursement of
costs advanced during that 37 day period but agreed to waive reimbursement which
resulted in an actual operating expense ratio for 1996 of 2%.
- ------------------------
* From Commencement of Operations November 26, 1996.
7
<PAGE>
During the twelve month period ended December 31, 1997, the Mid Cap Growth
Portfolio had operating expenses of 2% after the Investment Advisor agreed to
waive reimbursement of $75,505 of expenses advanced. If the Investment Advisor
had not waived reimbursement of such amounts, the operating expense ratio during
that twelve month period would have been 3.27%.
(4) The average commission paid for securities purchased during the period
1/1/97 to 12/31/97 was $0.03 per share. Commissions are paid for listed trades,
soft dollar trades or trades on crossing networks (i.e. Instinet).
8
<PAGE>
NAVELLIER AGGRESSIVE MICRO CAP PORTFOLIO
- -------------------------------------------------
(FORMERLY NAMED NAVELLIER AGGRESSIVE SMALL CAP PORTFOLIO)
<TABLE>
<CAPTION>
For the
Period Ended
December 31,
1997**
-------------
<S> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of Period $ 15.64
-------------
Income from Investment Operations:
Net Investment Income (Loss) (0.053)
Net Realized and Unrealized Gains (Losses) on Securities 5.177
-------------
Total from Investment Operations 5.124
-------------
Distributions to Shareholders:
From Net Investment Income --
From Net Realized Capital Gains (0.364)
-------------
Total Distributions to Shareholders (0.364)
-------------
Net Increase (Decrease) in Net Asset Value 4.76
-------------
Net Asset Value--End of Period $ 20.40
-------------
-------------
Total Investment Return(1) 32.76%
Ratios to Average Net Assets:
Expenses After Reimbursement(2) 1.55%
Expenses before Reimbursement(2) 3.21%
Net Investment Income (Loss)(2) (0.54)%
Supplementary Data:
Portfolio Turnover Rate 86.1%
Net Assets at End of Period (000's omitted) $ 10,190
Number of Shares Outstanding at End of Period (000's omitted) 500
Average Commission Rate Paid Per Share $ 0.036
</TABLE>
(1) Total returns for periods of less than one year are not annualized.
(2) Annualized.
- ------------------------
** From Commencement of Operations March 17, 1997.
9
<PAGE>
SUMMARY
- -------------------------------------------------
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing and should be read and
retained for future reference. Each of the Portfolios of the Fund is designed
for long term investors and not as trading vehicles and are not intended to
present a complete investment program for the investor. An investment in any of
the Portfolios of the Fund involves certain speculative considerations; see
"Risk Factors". Each of the Portfolios employs an aggressive investment strategy
that has the potential for yielding high returns. However, share prices of each
of the Portfolios may also experience substantial fluctuations including
declines so that your shares may be worth less than when you originally
purchased them.
(See Investment Objectives and Policies pp. 12 for greater detail.)
A Statement of Additional Information about the Fund has been filed with the
Securities and Exchange Commission and is available upon request and without
charge by calling or writing The Navellier Performance Funds c/o Navellier
Securities Corp., One East Liberty, Third Floor, Reno, Nevada 89501; Telephone:
1-800-887-8671. The Statement of Additional Information bears the same date as
this Prospectus and is incorporated by reference into this Prospectus in its
entirety.
INVESTMENT ADVISOR
Navellier Management, Inc. (the "Investment Advisor") administers the assets
of each of the existing eight Portfolios of the Fund and has ultimate
responsibility for determining which securities will be selected as investments
for each of the existing Portfolios of the Fund. Louis Navellier, the President,
100% owner and CEO of the Investment Advisor, refined the Modern Portfolio
Theory investment strategy which is applied in managing the assets of each
Portfolio. Louis Navellier sets the strategies and guidelines for each Portfolio
and oversees each Portfolio Manager's activities. Robert Barnes is a Consultant
to Navellier Management, Inc. regarding investments of the Large Cap Growth
Portfolio. Global Value Investors, Inc. is the Sub-advisor to The Navellier
International Equity Portfolio and Ram Kolluri is the Portfolio Manager in
charge of the day-to-day investment activities of that portfolio subject to the
overall investment strategies and guidelines set by Louis Navellier. Louis
Navellier and Alan Alpers are the Portfolio Managers involved in the day-to-day
investment activities of the Aggressive Growth Portfolio, The Mid Cap Growth
Portfolio, The Aggressive Micro Cap Portfolio, The Small Cap Value Portfolio,
the Large Cap Growth Portfolio, the Large Cap Value Portfolio and the Aggressive
Small Cap Equity Portfolio. Alan Alpers has been an analyst and portfolio
manager for Navellier & Associates, Inc. since 1989 and is responsible along
with Mr. Navellier for day-to-day management of over $1.5 billion in individual
accounts for Navellier & Associates, Inc. The Investment Advisor receives an
annual advisory fee, equal to 0.84% of the average daily net asset value of
assets under management for the Aggressive Growth Portfolio, the Mid Cap Growth
Portfolio, the Aggressive Micro Cap Portfolio, the Small Cap Value Portfolio,
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the Aggressive Small Cap Equity Portfolio, and the Large Cap Growth Portfolio.
(The Investment Advisor pays Robert Barnes 0.11% of the average daily net asset
value of the Large Cap Growth Portfolio as a consulting fee which fee is paid
out of the 0.84% management fee paid to the Investment Advisor.) The Investment
Advisor receives an annual advisory fee of 1% of the average daily net asset
value of assets under management for the International Equity Portfolio. (The
Investment Advisor pays the Sub-advisor 0.50% of the average daily net asset
value of the International Equity Portfolio as a sub-advisory fee, which fee is
paid out of the 1.0% management fee paid to the Investment Advisor.) The
Investment Advisor receives an annual advisory fee of 0.75% of the average daily
net asset value of assets under management for the Large Cap Value Portfolio.
The advisory fee for each Portfolio is payable monthly, based upon a percentage
of that Portfolio's average daily net assets.
DISTRIBUTION OF SHARES
Navellier Securities Corp. (the "Distributor") acts as the sole underwriter
for the shares of each of the Portfolios of the Fund. The Distributor is a
corporation wholly owned by Louis Navellier, who also owns 100% of Navellier
Management, Inc., the Fund's Investment Advisor. The Distributor may sell shares
of each Portfolio of the Fund directly to investors or shares may be purchased
through a network of broker-dealers selected by the Distributor. The Distributor
will compensate these selected dealers for shareholder services by paying them
directly, or by allowing them to receive annually all or a portion of the 0.25%
annual 12b-1 fee paid on each of the Portfolios.
HOW TO INVEST
Shares of each Portfolio of the Fund are continuously offered for sale by
the Distributor and through selected broker-dealers. The daily purchase price
for each of the Portfolios is the net asset value next computed after receipt of
your order. Initial purchases must be at least $2,000 ($500 in the case of IRA
and other retirement plans or qualifying group plans) and subsequent investments
must be $100 or more.
RISK FACTORS
Investment in any Portfolio of the Fund involves special risks and there can
be no guarantee of profitability. Some of those risks are briefly described
here. Because the Aggressive Growth Portfolio and The Large Cap Growth Portfolio
are not diversified investment companies (as defined by the Investment Company
Act of 1940), there is potentially a greater risk of loss or fluctuation in
value of each of these portfolios.
Some of the small cap securities which the Portfolios may purchase may be
difficult to liquidate on short notice or, on occasion, only a portion of the
shares of a company in which the Investment Advisor intends to trade may be
available to be bought or sold by a Portfolio. There can be no assurance of
profitability or of what the percentage of any of the Portfolios' total annual
operating expenses will be. Investments, if any, particularly by The
International Equity Portfolio, in securities of foreign issuers may pose
greater risks. The Investment Advisor's investment style could result in above
average portfolio turnover which could result in higher brokerage expenses.
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As with any equity fund, the investments may decline, resulting in a loss of
value to the shareholder. (For more detail, see "Risk Factors".)
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INVESTMENT OBJECTIVES AND POLICIES
- -------------------------------------------------
INVESTMENT OBJECTIVE OF THE NAVELLIER AGGRESSIVE GROWTH PORTFOLIO
The investment objective of the Navellier Aggressive Growth Portfolio is to
achieve long term growth of capital primarily through investments in stocks of
companies with appreciation potential.
The Navellier Aggressive Growth Portfolio is a non-diversified Portfolio,
which means it may invest a larger than normal percentage of its total assets in
the equity (including convertible debt) securities of any one company or
companies which the Investment Advisor believes represents an opportunity for
significant capital appreciation. The Investment Advisor will not invest more
than 10% of the Portfolio's assets in the securities of any single company or
25% or more of the Portfolio's assets in securities issued by companies in any
one industry. Since the Investment Advisor can invest more of the Portfolio's
assets in the stock of a single company, this Portfolio should be considered to
offer greater potential for capital appreciation as well as greater risk of loss
due to the potential increased investment of assets in a single company. This
Portfolio, because of its non-diversification, also poses a greater potential
for volatility. This Portfolio should not be considered suitable for investors
seeking current income. This Portfolio may invest its assets in the securities
of a broad range of companies without restriction on their capitalization. Under
normal circumstances, the Aggressive Growth Portfolio will invest at least 65%
of its total assets in securities of companies. However, that projected minimum
percentage could be lowered during adverse market conditions or for defensive
purposes and is not a fundamental policy of the Portfolio. Securities of issuers
include, but are not limited to, common and preferred stock, and convertible
preferred stocks that are convertible into common stock. While this Portfolio
intends to operate as a non-diversified open end management investment company
for the purposes of the 1940 Act, it also intends to qualify as a regulated
investment company under the Internal Revenue Code ("Code"). As a
non-diversified investment company under the 1940 Act, the Fund may invest more
than 5% and up to 25% of its assets in the securities of any one issuer at the
time of purchase. However, for purposes of the Internal Revenue Code, as of the
last day of any fiscal quarter, this Portfolio may not have more than 25% of its
total assets invested in any one issuer, and, with respect to 50% of its total
assets, the Portfolio may not have more than 5% of its total assets invested in
any one issuer, nor may it own more than 10% of the outstanding voting
securities of any one issuer. These limitations do not apply to investments in
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities or the securities of investment companies that qualify as
regulated investment companies under the Code.
Investors in the Aggressive Growth Portfolio pay no initial sales charge
(load) but do pay an annual 0.25% fee ("12b-1 fee") which over a period of years
could result in higher overall expenses than payment of an initial sales load.
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INVESTMENT OBJECTIVE OF THE NAVELLIER MID CAP GROWTH PORTFOLIO
The Investment Objective of the Mid Cap Growth Portfolio is to achieve long-
term growth of capital primarily through investment in mid cap companies with
appreciation potential. The Mid Cap Growth Portfolio invests in equity
securities traded in all United States markets including dollar denominated
foreign securities traded in United States markets. It is a diversified
portfolio, meaning it limits its investment in the securities of any single
company (issuer) to a maximum of 5% of the Portfolio assets and further limits
its investments to less than 25% of the Portfolio's assets in any one industry
group. The Mid Cap Growth Portfolio seeks long term capital appreciation through
investments in securities of mid cap companies (companies with market
capitalization of between $1 Billion and $5 Billion) which the Investment
Advisor feels are undervalued in the marketplace. Investors in the Mid Cap
Growth Portfolio pay no initial sales charge (load) but do pay an annual 0.25%
fee ("12b-1 fee") which over a period of years could result in higher overall
expenses than payment of an initial sales load. Navellier Management, Inc. is
the Investment Advisor for the Mid Cap Growth Portfolio. Navellier Securities
Corp. is the principal distributor for the Mid Cap Growth Portfolio's shares.
This Portfolio should not be considered suitable for investors seeking current
income.
INVESTMENT OBJECTIVE OF THE NAVELLIER AGGRESSIVE MICRO CAP PORTFOLIO
The Investment Objective of the Navellier Aggressive Micro Cap Portfolio is
to achieve long-term growth of capital primarily through investment in companies
with appreciation potential. The Aggressive Micro Cap Portfolio invests in
equity securities traded in the United States securities markets of domestic
issuers and of foreign issuers. The sole objective of the Aggressive Micro Cap
Portfolio will be to seek to achieve long term growth of capital primarily
through investments in securities of micro cap companies (companies with market
capitalization of less than $300 Million) with appreciation potential. There can
be no assurance that the Portfolio will achieve its investment objectives. The
Portfolio's investment objectives may not be changed without shareholder
approval. This Portfolio should not be considered suitable for investors seeking
current income. Investors in this Portfolio pay no initial sales charge but do
pay an annual 0.25% fee ("12b-1 fee") which over a period of years could result
in higher overall expenses than payment of an initial sales charge.
INVESTMENT OBJECTIVE OF THE NAVELLIER SMALL CAP VALUE PORTFOLIO
The Investment Objective of the Small Cap Value Portfolio is to achieve
long-term growth of capital primarily through investment in small cap companies
which the Investment Advisor believes are undervalued and which the Investment
Advisor believes have appreciation potential. This Portfolio seeks to achieve
its investment objective by investing in equities of small cap issuers with
superior fundamentals, including but not limited to, high dividend yields, and
positive quarterly earnings changes and other value type screens. The Small Cap
Value Portfolio invests in equity securities traded in all United States markets
including dollar denominated foreign securities traded in United States markets.
It is a diversified portfolio, meaning it limits its investment in the
securities of any single company (issuer) to a maximum of 5% of
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the Portfolio assets and further limits its investments to less than 25% of the
Portfolio's assets in any one industry group. The Small Cap Value Portfolio
seeks long term capital appreciation through investments in securities of small
cap companies (companies with market capitalization of less than $1 Billion)
which the Investment Advisor feels are undervalued in the marketplace. Investors
in the Small Cap Value Portfolio pay no initial sales charge (load) but do pay
an annual 0.25% fee ("12b-1 fee") which over a period of years could result in
higher overall expenses than payment of an initial sales load. Navellier
Management, Inc. is the Investment Advisor for the Small Cap Value Portfolio.
Navellier Securities Corp. is the principal distributor for the Small Cap Value
Portfolio's shares. This Portfolio should not be considered suitable for
investors seeking current income.
INVESTMENT OBJECTIVE OF THE NAVELLIER LARGE CAP GROWTH PORTFOLIO
The investment objective of the Navellier Large Cap Growth Portfolio is to
achieve long term growth of capital primarily through investments in stocks of
companies with appreciation potential.
The Navellier Large Cap Growth Portfolio is a non-diversified Portfolio,
which means it may invest a larger than normal percentage of its total assets in
the equity (including convertible debt) securities of any one company or
companies which the Investment Advisor believes represents an opportunity for
significant capital appreciation. The Investment Advisor will not invest more
than 10% of the Portfolio's assets in the securities of any single company or
25% or more of the Portfolio's assets in securities issued by companies in any
one industry. Since the Investment Advisor can invest more of the Portfolio's
assets in the stock of a single company, this Portfolio should be considered to
offer greater potential for capital appreciation as well as greater risk of loss
due to the potential increased investment of assets in a single company. This
Portfolio, because of its non-diversification, also poses a greater potential
for volatility. This Portfolio should not be considered suitable for investors
seeking current income. This Portfolio may invest its assets in the securities
of a broad range of companies with market capitalization in excess of five
billion dollars. Under normal circumstances, this Portfolio will invest at least
65% of its total assets in securities of companies with market capitalizations
in excess of $5 Billion. However, that projected minimum percentage could be
lowered during adverse market conditions or for defensive purposes and is not a
fundamental policy of the Portfolio. Securities of issuers include, but are not
limited to, common and preferred stock, and convertible preferred stocks that
are convertible into common stock. While this Portfolio intends to operate as a
non-diversified open end management investment company for the purposes of the
1940 Act, it also intends to qualify as a regulated investment company under the
Internal Revenue Code ("Code"). As a non-diversified investment company under
the 1940 Act, this Portfolio may invest more than 5% and up to 25% of its assets
in the securities of any one issuer at the time of purchase. However, for
purposes of the Internal Revenue Code, as of the last day of any fiscal quarter,
this Portfolio may not have more than 25% of its total assets invested in any
one issuer, and, with respect to 50% of its total assets, this Portfolio may not
have more than 5% of its total assets invested in any one issuer, nor may it own
more than 10% of the outstanding voting
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<PAGE>
securities of any one issuer. These limitations do not apply to investments in
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities or the securities of investment companies that qualify as
regulated investment companies under the Code.
Investors in the Navellier Large Cap Growth Portfolio pay no initial sales
charge but do pay an annual 0.25% fee ("12b-1 fee") which over a period of years
could result in higher overall expenses than payment of an initial sales charge.
INVESTMENT OBJECTIVE OF THE NAVELLIER LARGE CAP VALUE PORTFOLIO
The investment objective of the Navellier Large Cap Value Portfolio is to
achieve a long-term increase in capital, primarily through investments in stocks
of large cap companies which the Investment Advisor believes are undervalued.
The Large Cap Value Portfolio invests in equity securities traded in all
United States markets, including dollar-denominated foreign securities traded in
the United States markets. It is a diversified portfolio, meaning it limits its
investment in the securities of any single company (issuer) to a maximum of 5%
of the Portfolio assets and further limits its investments to less than 25% of
the Portfolio's assets in any one industry group. The Large Cap Value Portfolio
seeks long term capital appreciation through investments in securities of large
cap companies (companies with market capitalization of over $5 Billion) which
the Investment Advisor feels are undervalued in the marketplace. Investors in
the Large Cap Value Portfolio pay no initial sales charge (load) but do pay an
annual 0.25% fee ("12b-1 fee") which over a period of years could result in
higher overall expenses than payment of an initial sales load. Navellier
Management, Inc. is the Investment Advisor for the Large Cap Value Portfolio.
Navellier Securities Corp. is the principal distributor for the Large Cap Value
Portfolio's shares. This Portfolio should not be considered suitable for
investors seeking current income.
INVESTMENT OBJECTIVE OF THE NAVELLIER INTERNATIONAL EQUITY PORTFOLIO
The Investment Objective of the Navellier International Equity Portfolio is
to achieve long-term growth of capital primarily through investment in the
securities of foreign companies which have growth opportunities and which can be
acquired at a reasonable price. The Navellier International Equity Portfolio
invests in equity securities of foreign issuers in developed and developing
markets (constituent members of the Morgan Stanley World Equity Index, the Dow
Jones World Equity Index, or the Financial Times/S&P Actuaries World Equity
Index, excluding the United States of America) and will invest at least 65% of
its total assets in securities of foreign companies and will invest in equity
securities of at least three (3) foreign countries. The sole objective of the
Navellier International Equity Portfolio will be to seek to achieve long term
growth of capital primarily through investments in securities of foreign
companies which the Sub-advisor believes have growth opportunities and which can
be acquired at a reasonable price. There can be no assurance that this Portfolio
will achieve its investment objectives. This Portfolio's investment objectives
may not be changed without shareholder approval. Navellier Securities Corp. is
the Distributor for
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this Portfolio's shares. This Portfolio should not be considered suitable for
investors seeking current income. Investors in this Portfolio pay no initial
sales charge but do pay an annual 0.25% 12b-1 fee which over a period of years
could result in higher overall expenses than payment of an initial sales charge.
Global Value Investors, Inc. is the Sub-advisor to this Portfolio and Ram
Kolluri is the Portfolio Manager.
INVESTMENT OBJECTIVE OF THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
The Investment Objective of the Navellier Aggressive Small Cap Equity
Portfolio is to achieve long-term growth of capital primarily through investment
in small cap companies with appreciation potential. The Aggressive Small Cap
Equity Portfolio invests in equity securities traded in the United States
securities markets of domestic issuers and of foreign issuers. The sole
objective of the Aggressive Small Cap Equity Portfolio will be to seek to
achieve long term growth of capital primarily through investments in securities
of small cap companies (companies with market capitalization of less than $1
Billion) with appreciation potential. There can be no assurance that the
Portfolio will achieve its investment objectives. The Portfolio's investment
objectives may not be changed without shareholder approval. This Portfolio
should not be considered suitable for investors seeking current income.
Investors in this Portfolio pay an annual 0.25% 12b-1 fee which over a period of
years could result in higher overall expenses than payment of an initial sales
charge.
OTHER INVESTMENTS
While under normal circumstances each of the Portfolios will invest at least
65% of its total assets in equity securities, each of the Portfolios may, for
temporary defensive purposes or to maintain cash or cash equivalents to meet
anticipated redemptions, also invest in debt securities and money market funds
if, in the opinion of the Investment Advisor, such investment will further the
cash needs or temporary defensive needs of the Portfolio. In addition, when the
Investment Advisor feels that market or other conditions warrant it, for
temporary defensive purposes, each Portfolio may retain cash or invest all or
any portion of its assets in cash equivalents, including money market mutual
funds. Under normal conditions, a Portfolio's holdings in such non-equity
securities should not exceed 35% of the total assets of the Portfolio. If a
Portfolio's assets, or a portion thereof, are retained in cash or money market
funds or money market mutual funds, such cash will, in all probability, be
deposited in interest-bearing or money market accounts or Rushmore's money
market mutual funds. Rushmore Trust & Savings, FSB is also the Fund's Transfer
Agent and Custodian. Cash deposits by the Fund in interest bearing instruments
issued by Rushmore Trust & Savings ("Transfer Agent") will only be deposited
with the Transfer Agent if its interest rates, terms, and security are equal to
or better than could be received by depositing such cash with another savings
institution. Money market investments have no FDIC protection and deposits in
Rushmore Trust & Savings accounts have only $100,000 protection.
It is anticipated that, for each of the Portfolios, all of their investments
in corporate debt securities (other than commercial paper) and preferred stocks
will be
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represented by debt securities and preferred stocks which have, at the time of
purchase, a rating within the four highest grades as determined by Moody's
Investors Service, Inc. (Aaa, Aa, A, Baa) or by Standard & Poor's Corporation
(AAA, AA, A, BBB; securities which are rated BBB/Baa have speculative
characteristics). Although investment-quality securities are subject to market
fluctuations, the risk of loss of income and principal is generally expected to
be less than with lower quality securities. In the event the rating of a debt
security or preferred stock in which the Portfolio has invested drops below
investment grade, the Portfolio will promptly dispose of such investment. When
interest rates go up, the market value of debt securities generally goes down
and long-term debt securities tend to be more volatile than short term debt
securities.
In determining the types of companies which will be suitable for investment
by the Aggressive Growth Portfolio, the Mid Cap Growth Portfolio, the Aggressive
Small Cap Portfolio, the Small Cap Value Portfolio, the Large Cap Growth
Portfolio, the Large Cap Value Portfolio, and the Aggressive Small Cap Equity
Portfolio, the Investment Advisor will screen over 9,000 stocks and will take
into account various factors and base its stock selection on its own model
portfolio theory concepts. Each Portfolio invests primarily in what the
Investment Advisor believes are undervalued common stocks believed to have
long-term appreciation potential. Stocks are selected on the basis of an
evaluation of factors such as earnings growth, expanding profit margins, market
dominance and/or factors that create the potential for market dominance, sales
growth, and other factors that indicate a company's potential for growth or
increased value. There are no limitations on the Aggressive Growth Portfolio or
the Large Cap Growth Portfolio as to the type, operating history, or dividend
paying record of companies or industries in which these two Portfolios may
invest; the principal criteria for investment is that the securities provide
opportunities for capital growth. The Mid Cap Growth Portfolio invests at least
65% of its total assets in equity securities of companies defined as Mid Cap
(companies with capitalization of between $1 Billion and $5 Billion). The
Aggressive Micro Cap Portfolio invests at least 65% of its total assets in
equity securities of companies defined as micro cap (companies with
capitalization of less than $300 Million.) The Small Cap Value Portfolio and the
Aggressive Small Cap Equity Portfolio invest at least 65% of their total assets
in equity securities of companies defined as small cap (companies with
capitalization of less than $1 Billion). The Large Cap Growth Portfolio and the
Large Cap Value Portfolio invest at least 65% of their total assets in equity
securities of companies defined as large cap (companies with capitalization over
$5 Billion). These Portfolios will invest up to 100% of their capital in equity
securities selected for their growth or value potential. The Investment Advisor
will typically (but not always) purchase common stocks of issuers which have
records of profitability and strong earnings momentum. When selecting such
stocks for investment by the Portfolios, the issuers may be lesser known
companies moving from a lower to a higher market share position within their
industry groups rather than the largest and best known companies in such groups.
The Investment Advisor, when investing for the Aggressive Growth Portfolio, the
Large Cap Growth Portfolio and the Large Cap Value Portfolio may also purchase
common stocks of well known, highly researched, large companies if the
Investment Advisor believes such common stocks offer opportunity for long-term
capital appreciation.
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SPECIAL INVESTMENT METHODS AND RISKS
- -------------------------------------------------
"SHORT SALES AGAINST THE BOX"
Any Portfolio of the Fund is permitted to make short sales if at the time of
the short sale the Portfolio owns or has the right to acquire a security equal
in kind and amount to the security being sold short, at no additional cost. This
investment technique is known as a "short sale against the box."
In a short sale, the seller does not immediately deliver the securities sold
and is said to have a short position in those securities until delivery occurs.
To make delivery to the purchaser, the executing broker borrows the securities
being sold short on behalf of the seller. While the short position is
maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal
Reserve. If the Fund engages in a short sale, the collateral account will be
maintained by the Fund's custodian. While the short sale is open, the Fund will
maintain, in a segregated custodial account, an amount of securities equal in
kind and amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities at no additional cost. These
securities would constitute the Fund's long position.
Any Portfolio may make a short sale against the box, when it believes that
the price of a security may decline, causing a decline in the value of a
security owned by the Portfolio (or a security convertible into or exchangeable
for such security), or when the Portfolio desires to sell the security it owns
at a current attractive price, but also wishes to defer recognition of gain or
loss for federal income tax purposes and for purposes of satisfying certain
tests applicable to regulated investment companies under the Internal Revenue
Code. In such a case, any future losses in the Portfolio's long position should
be reduced by a gain in the short position. The extent to which such gains or
losses are reduced would depend upon the amount of the security sold short
relative to the amount the Portfolio owns. There will be certain additional
transaction costs associated with short sales against the box, but the Portfolio
will endeavor to offset theses costs with income from the investment of the cash
proceeds of short sales.
INVESTMENT RESTRICTIONS
- -------------------------------------------------
The Aggressive Growth Portfolio and the Large Cap Growth Portfolio can each
invest up to 10% of its assets in securities of a single issuer and both of
these two portfolios can invest up to 25% of its assets in securities of
companies in a single industry. Each of the other Portfolios of the Fund can
each invest up to 5% of their assets in the securities of a single issuer and
each can invest up to 25% of its assets in the securities of companies of a
single industry. None of the Portfolios of the Fund may make investments in real
estate or commodities or commodity contracts, including futures contracts, but
may purchase securities of issuers which deal in real estate or commodities.
Each of the existing Portfolios of the Fund, except The International
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Equity Portfolio, are also prohibited from investing in or selling puts, calls,
straddles (or any combination thereof). Each of the existing Portfolios of the
Fund, except The International Equity Portfolio, are prohibited from investing
in derivatives. Each of the existing Portfolios may borrow money only from banks
for temporary or emergency (not leveraging) purposes provided that, after each
borrowing, there is an asset coverage in the borrowing Portfolio of at least
300%. Each of the Portfolios will not purchase securities if the amount of
borrowing by such Portfolio exceeds 5% of total assets of such Portfolio. In
order to secure any such borrowing, the borrowing Portfolio may pledge,
mortgage, or hypothecate up to 10% of the market value of the assets of the
Portfolio. Except for The International Equity Portfolio, the investment by any
of the other Portfolios of the Fund in securities, including American Depository
Receipts, of issuers or any governmental entity or political subdivision
thereof, located, incorporated or organized outside of the United States is
limited to 25% of the net asset value of the Portfolio, provided that no such
foreign securities may be purchased unless they are traded on United States
securities markets. The International Equity Portfolio may invest up to 100% of
its assets in foreign equity securities.
The Fund may not purchase for any Portfolio "restricted securities" (as
defined in Rule 144(a)(3) of the Securities Act of 1933) if, as a result of such
purchase, more than 10% of the net assets (taken at market value) of such
Portfolio would be invested in such securities nor will the Fund invest in
illiquid or unseasoned securities if as a result of such purchase more than 5%
of the net assets of such portfolio would be invested in either illiquid or
unseasoned securities. The Board of Trustees will determine whether these
securities are liquid and will monitor liquidity on an ongoing basis.
In addition to the investment restrictions described above, the investment
program of each Portfolio is subject to further restrictions which are described
in the Statement of Additional Information. The restrictions for each Portfolio
are fundamental and may not be changed without shareholder approval.
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RISK FACTORS
- -------------------------------------------------
LACK OF OPERATING HISTORY AND EXPERIENCE
The Aggressive Growth Portfolio went effective December 28, 1995 and has
over two years of operations. The Mid Cap Growth Portfolio and the Aggressive
Micro Cap Portfolio both went effective November 26, 1996 (however The
Aggressive Micro Cap Portfolio was not actively marketed to the public until
March 17, 1997). The Large Cap Growth, The Small Cap Value, The Large Cap Value,
The International Equity and the Aggressive Small Cap Equity Portfolios are all
newly organized investment company portfolios which went effective December 18,
1997. The Investment Advisor was organized on May 28, 1993. Although the
Investment Advisor sub-contracts a substantial portion of its responsibilities
for administrative services of the Fund's operations to various agents,
including the Transfer Agent and the Custodian, the Investment Advisor still has
overall responsibility for the administration of each of the Portfolios and
oversees the administrative services performed by others as well as servicing
customer's needs and, along with each Portfolio's Trustees, is responsible for
the selection of such agents and their oversight. The Investment Advisor also
has overall responsibility for the selection of securities for investment for
each of the Portfolios, although the Investment Advisor has a sub-advisory
arrangement with Global Value Investors, Inc. ("GVI") whereby Ram Kolluri, the
Portfolio Manager for GVI, is responsible for the day-to-day investments for The
International Equity Portfolio. The Investment Advisor also has a consulting
agreement with Robert Barnes, Ph.D, whereby Mr. Barnes provides analysis and
consults with the Investment Advisor regarding large cap equity securities as
possible investments for The Large Cap Growth Portfolio.
Louis Navellier, the owner of the Investment Advisor, is also the owner of
another investment advisory firm, Navellier & Associates Inc., which presently
manages over $1.5 billion in investor funds. Louis Navellier, the owner of the
Investment Advisor, is also the owner of another investment advisory firm,
Navellier Fund Management, Inc., and controls other investment advisory entities
which manage assets and/or act as sub-advisors, all of which firms employ the
same basic modern portfolio theories and select many of the same
over-the-counter stocks and other securities which the Investment Advisor
intends to employ and invest in while managing the Portfolios of the Fund.
Because many of the over-the-counter and other securities which Investment
Advisor intends to, or may, invest in have a smaller number of shares available
to trade than more conventional companies, lack of shares available at any given
time may result in one or more of the Portfolios of the Fund not being able to
purchase or sell all shares which Investment Advisor desires to trade at a given
time or period of time, thereby creating a potential liquidity problem which
could adversely affect the performance of the Fund portfolios. Since the
Investment Advisor will be trading on behalf of the various Portfolios of the
Fund in some or all of the same securities at the same time that Navellier &
Associates Inc., Navellier Fund Management, Inc., other Navellier controlled
investment entities are trading, the potential liquidity problem could be
exacerbated. In the event the number of shares available for purchase or sale in
a
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security or securities is limited and therefore the trade order cannot be fully
executed at the time it is placed, i.e., where the full trade orders of
Navellier & Associates Inc., Navellier Fund Management, Inc., and other
Navellier controlled investment entities and the Fund cannot be completed at the
time the order is made, Navellier & Associates, Inc., and the other Navellier
controlled investment entities and the Investment Advisor will allocate their
purchase or sale orders in proportion to the dollar value of the order made by
the other Navellier entities, and the dollar value of the order made by the
Fund. For example, if Navellier & Associates Inc., and Navellier Fund
Management, Inc., each place a $25,000 purchase order and Investment Advisor on
behalf of the Fund places a $50,000 purchase order for the same stock and only
$50,000 worth of stock is available for purchase, the order would be allocated
$12,500 each of the stock to Navellier & Associates Inc., and Navellier Fund
Management, Inc., and $25,000 of the stock to the Fund. As the assets of each
Portfolio of the Fund increase the potential for shortages of buyers or sellers
increases, which could adversely affect the performance of the various
Portfolios. While the Investment Advisor generally does not anticipate liquidity
problems (i.e., the possibility that the Portfolio cannot sell shares of a
company and therefore the value of those shares drops) unless the Fund has
assets in excess of two billion dollars (although liquidity problems could still
occur when the Fund has assets of substantially less than two billion dollars),
each investor is being made aware of this potential risk in liquidity and should
not invest in the Fund if he, she, or it is not willing to accept this
potentially adverse risk, and by investing, acknowledges that he, she or it is
aware of the risks.
An investment in shares of any Portfolio of the Fund involves certain
speculative considerations. There can be no assurance that any of the Portfolios
objectives will be achieved or that the value of the investment will increase.
An investment in shares of the Aggressive Growth Portfolio and/or the Large Cap
Growth Portfolio may also involve a higher degree of risk than an investment in
shares of a more traditional open-end diversified investment company because the
Aggressive Growth Portfolio and the Large Cap Growth Portfolio may each invest
up to 10% of its assets in the securities of any single issuer and up to 25% of
its assets in the securities of any single industry, thereby potentially
creating greater volatility or increasing the chance of losses. As
non-diversified investment Portfolios, the Aggressive Growth Portfolio and the
Large Cap Growth Portfolio may each be subject to greater fluctuation in the
total market value of such Portfolio, and economic, political or regulatory
developments may have a greater impact on the value of these Portfolios than
would be the case if these Portfolios were diversified among a greater number of
issuers. All Portfolios intend to
comply with the diversification and other requirements applicable to regulated
investment companies under the Internal Revenue Code.
As part of a pending proposal to merge the Aggressive Small Cap Equity
Portfolio of the Navellier Series Fund ("Series Portfolio") into the Aggressive
Small Cap Equity Portfolio of this Fund ("Performance Portfolio"), the
Performance Portfolio has agreed to accept all assets and to assume all valid
liabilities of the Series Portfolio. There are approximately $70 million in
assets being transferred to the Performance Portfolio. The former Trustees of
the Series Portfolio have made a demand to be indemnified for their attorneys
fees and costs in connection with a class action lawsuit filed against them by
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shareholders of the Series Portfolio. The Trustees of this Fund and the legal
counsel to this Fund do not believe the former Trustees have a valid claim.
However, if such claim is determined by a court to be valid, it would only be
paid out of the assets of the Performance Portfolio and not from the assets of
any other Portfolio of this Fund.
YEAR 2000 COMPLIANCE
Computer programs which were written using two digits (rather than four) to
define the applicable year may recognize a date using "00" as the year 1900
rather than the year 2000, a result commonly referred to as the "Year 2000"
problem. This could result in a system failure or miscalculations.
Navellier Management Inc. has made modifications to its computer programs to
correct the "Year 2000 Problem" and believes based on its evaluation to date
that it has corrected the "Year 2000 Problem" and believes that the Funds'
Transfer Agent, Rushmore Trust & Savings, FSB has also corrected the Year 2000
problem and that the "Year 2000 Problem" will not have a material impact on the
operations of the Fund.
All securities in which any of the Fund's Portfolios may invest are
inherently subject to market risk, and the market value of the Fund's
investments will fluctuate. From time to time the Fund may choose to close a
portfolio or portfolios to new investors.
INVESTING IN SECURITIES OF FOREIGN ISSUERS
Investments in foreign securities (those which are traded principally in
markets outside of the United States), particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issuers. These considerations include, among others,
changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information, the
difficulty of interpreting financial information prepared under laws applicable
to foreign securities markets, the impact of political, social, or diplomatic
developments, difficulties in invoking legal process abroad, and the difficulty
of assessing economic trends in foreign countries. Furthermore, issuers of
foreign securities are subject to different, and often less comprehensive,
accounting, reporting and disclosure requirements than domestic issuers. The
laws of some foreign countries may limit a Fund's ability to invest in
securities of certain issuers located in those countries. The securities of some
foreign issuers and securities traded principally in foreign securities markets
are less liquid and at times more volatile than securities of comparable U.S.
issuers and securities traded principally in U.S. securities markets. Foreign
brokerage commissions and other fees are also generally higher than those
charged in the United States. There are also special tax considerations which
apply to securities of foreign issuers and securities traded principally in
foreign securities markets.
The risks of investing in foreign securities may be intensified in the case
of investments in emerging markets or countries with limited or developing
capital
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markets. Prices of securities of companies in emerging markets can be
significantly more volatile than prices of securities of companies in the more
developed nations of the world, reflecting the greater uncertainties of
investing in less developed markets and economies. In particular, countries with
emerging markets may have relatively unstable governments, present the risk of
nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of property
rights than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries or dependent on
revenues from particular commodities or on international aid or development
assistance, may be highly vulnerable to changes in local or global trade
conditions, and may suffer from extreme and volatile debt burdens or inflation
rates. Local securities markets may trade a small number of securities and may
be unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of substantial holdings difficult or impossible at
times. Consequently, securities of issuers located in countries with emerging
markets may have limited marketability and may be subject to more abrupt or
erratic price movements. Also, such local markets typically offer less
regulatory protections for investors.
While to some extent the risks to the Fund of investing in foreign
securities may be limited, since each Portfolio (except for The International
Equity Portfolio (which may be fully invested in such securities)) may not
invest more than 25% of its net asset value in such securities and each
Portfolio of the Fund (except for The International Equity Portfolio) may only
invest in foreign securities which are traded in the United States securities
markets, the risks nonetheless exist.
The Investment Advisor will use the same basic selection criteria for
investing in foreign securities as it uses in selecting domestic securities as
described in the Investment Objectives and Policies section of this Prospectus
and for the International Equity Portfolio, will use the criteria described in
the Investment Objectives and Policies for the International Equity Portfolio
described in this Prospectus.
FOREIGN EXCHANGE TRANSACTIONS. The International Equity Portfolio does not
intend to actively hedge the foreign currency risks that may be associated with
investments in securities denominated in foreign currencies. However, in order
to possibly better protect against severe swings in currency markets, the
International Equity Portfolio reserves the right to buy or sell foreign
currency contracts, that is, to agree to buy or sell a specified currency at a
specified price and future date. The International Equity Portfolio also
reserves the right to invest in currency futures contracts and related options
thereon for similar purposes. For example, if the Sub-advisor anticipates that
the value of the yen will rise relative to the dollar, it could purchase a
currency futures contract or a call option thereon or purchase a put option on
such futures contract as a hedge. In utilizing the hedging strategies, futures
contracts or related options will only be used to neutralize the foreign
currency exposure on existing securities in the portfolio on a covered basis,
and not for investment or speculative purposes in foreign currencies. The
International Equity Portfolio is not permitted to utilize leverage in either
purchasing or selling futures contracts, or call or put options on the futures
for the above mentioned hedging
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transactions. These practices, if utilized, may present risks different from or
in addition to the risks associated with investments in foreign currencies.
STOCK INDEX FUTURES. A stock index futures contract (an "Index Future") is
a contract to buy an integral number of units of the relevant index at a
specified future date at a price agreed upon when the contract is made. A unit
is the value at a given time of the relevant index. The only Portfolio which may
possibly use the Stock Index Futures is the International Equity Portfolio.
In connection with the International Equity Portfolio's investment in
foreign common stocks, it may invest in Index Futures while the Sub-advisor
seeks favorable terms from brokers to effect transactions in foreign common
stocks selected for purchase. The International Equity Portfolio may also invest
in Index Futures when the Sub-advisor believes that there are not enough
attractive foreign common stocks available to maintain the standards of
diversity and liquidity set for the International Equity Portfolio pending
investment in such stocks when they do become available. Through the use of
Index Futures, the International Equity Portfolio may maintain a portfolio with
diversified risk without incurring the substantial brokerage costs which may be
associated with investment in multiple issuers. This may permit the
International Equity Portfolio to avoid potential market and liquidity problems
(e.g., driving up or forcing down the price by quickly purchasing or selling
shares of a portfolio security) which may result from increases or decreases in
positions already held by the International Equity Portfolio. Certain provisions
of the Internal Revenue Code may limit this use of Index Futures. The
International Equity Portfolio may also invest in Index Futures in order to
hedge its equity positions.
In contrast to purchases of common stock, no price is paid or received by
the International Equity Portfolio upon the purchase of a futures contract. Upon
entering into a futures contract, the International Equity Portfolio will be
required to deposit with its custodian in a segregated account in the name of
the futures broker a specified amount of cash or securities. This is known as
initial margin. Variation margin will be paid to and received from the broker on
a daily basis as the contracts are marked to market. For example, when the
International Equity Portfolio has purchased an Index Future and the price of
the relevant Index has risen, that position will have increased in value and the
International Equity Portfolio will receive from the broker a variation margin
payment equal to that increase in value. Conversely, when the International
Equity Portfolio has purchased an Index Future and the price of the relevant
Index has declined, the position would be less valuable and the International
Equity Portfolio would be required to make a variation margin payment to the
broker.
The price of Index futures may not correlate perfectly with movement in the
underlying Index due to certain market distortions. First, all participants in
the futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort the normal
relationship between the Index and futures markets. Secondly, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market, and as a result, the
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futures market may attract more speculators than does the securities market.
Increased participation by speculators in the futures market may also cause
temporary price distortions. In addition, trading hours for Index Futures may
not correspond perfectly to hours of trading on foreign exchanges. This may
result in a disparity between the price of Index Futures and the value of the
underlying Index due to the lack of continuous arbitrage between the Index
Futures price and the value of the underlying Index.
FOREIGN CURRENCY TRANSACTIONS. The International Equity Portfolio does not
intend to actively hedge the foreign currency risks that may be associated with
investments in securities denominated in foreign currencies. However, to
possibly protect the investments in the International Equity Portfolio against
severe swings in currency markets, the International Equity Portfolio reserves
the right to buy or sell foreign currency contracts, that is, to agree to keep
or sell a specified currency at a specified price and future date. The
International Equity Portfolio will not engage in currency futures transactions
for leveraging purposes. A put option on a futures contract gives the
International Equity Portfolio the right to assume a short position in the
futures contract until the expiration of the option. A call option on a futures
contract gives the International Equity Portfolio the right to assume a long
position on the futures contract until the expiration of the option.
CURRENCY FORWARD CONTRACTS. A forward foreign currency exchange contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract as agreed by
the parties at a price set at the time of the contract. In the case of a
cancelable forward contract, the holder has the unilateral right to cancel the
contract at maturity by paying a specified fee. The contracts traded in the
interbank market are negotiated directly between currency traders (usually large
commercial banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades.
CURRENCY FUTURES TRANSACTIONS. A currency futures contract sale creates an
obligation by the seller to deliver the amount of currency called for in the
contract in a specified delivery month for a stated price. A currency futures
contract purchase creates an obligation by the purchaser to take delivery of the
underlying amount of currency in a specified delivery month at a stated price.
Futures contracts are traded only on commodity exchanges--known as "contract
markets"--approved for such trading by the Commodity Futures Trading Commission
("CFTC"), and must be executed through a futures commission merchant, or
brokerage firm, which is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or
acceptance, in most cases the contracts are closed out before the settlement
date without the making or taking of delivery. Closing out a futures contract
sale is effected by purchasing a futures contract for the same aggregate amount
of the specific type of financial instrument or commodity and the same delivery
date. If the price of the initial sale of the futures contract exceeds the price
of the offsetting purchase, the seller is paid the difference and realizes a
gain. Conversely, if the price of the offsetting purchase
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exceeds the price of the initial sale, the seller realizes a loss. Similarly,
the closing out of a futures contract purchase is effected by the purchaser
entering into a futures contract sale. If the offsetting sale price exceeds the
purchase price, the purchaser
realizes a gain and if the purchase price exceeds the offsetting sale price, he
realizes a loss.
The purchase or sale of a futures contract differs from the purchase or sale
of a security, in that no price or premium is paid or received. Instead, an
amount of cash or U.S. Treasury bills generally not exceeding 5% of the contract
amount must be deposited with the broker. This amount is known as initial
margin. Subsequent payments to and from the broker, known as variation margin,
are made on a daily basis as the price of the underlying futures contract
fluctuates making the long and short positions in the futures contract more or
less valuable, a process known as "marking to the market." At any time prior to
the settlement date of the futures contract, the position may be closed out by
taking an opposite position which will operate to terminate the position in the
futures contract. A final determination of variation margin is then made,
additional cash is required to be paid to or released by the broker, and the
purchaser realizes a loss or gain. In addition, a commission is paid on each
completed purchase and sale transaction.
Unlike a currency futures contract, which requires the parties to buy and
sell currency on a set date, an option on a futures contract entitles its holder
to decide on or before a future date whether to enter into such a contract. If
the holder decides not to enter into the contract, the premium paid for the
option is lost. Since the value of the option is fixed at the point of sale,
there are no daily payments of cash in the nature of "variation" on
"maintenance" margin payments to reflect the change in the value of the
underlying contract as there are by a purchaser or seller of a currency futures
contract.
The ability to establish and close out positions on options on futures will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop or be maintained.
The International Equity Portfolio may write (sell) only covered put and
call options on currency futures. This means that the International Equity
Portfolio will provide for its obligations upon exercise of the option by
segregating sufficient cash or short-term obligations or by holding an
offsetting position in the option or underlying currency future, or a
combination of the foregoing.
The International Equity Portfolio may not enter into currency futures
contracts or related options thereon if immediately thereafter the amount
committed to margin plus the amount paid for premiums for unexpired options on
currency futures contracts exceeds 5% of the market value of the International
Equity Portfolio's total assets.
LIMITATIONS ON THE USE OF CURRENCY FUTURES CONTRACTS. The International
Equity Portfolio's ability to engage in the currency futures transactions
described above will depend on the availability of liquid markets in such
instruments. Markets in currency
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futures are relatively new and still developing. It is impossible to predict the
amount of trading interest that may exist in various types of currency futures.
Therefore no assurance can be given that the International Equity Portfolio will
be able to utilize these instruments effectively for the purposes set forth
above. Furthermore, the International Equity Portfolio's ability to engage in
such transactions may be limited by tax considerations.
RISK FACTORS IN CURRENCY FUTURES TRANSACTIONS. Investment in currency
futures contracts involves risk. Some of that risk may be caused by an imperfect
correlation between movements in the price of the futures contract and the price
of the currency being hedged. The hedge will not be fully effective where there
is such imperfect correlation. To compensate for imperfect correlations, the
International Equity Portfolio may purchase or sell futures contracts in a
greater amount than the hedged currency if the volatility of the hedged currency
is historically greater than the volatility of the futures contract. Conversely,
the International Equity Portfolio may purchase or sell fewer contracts if the
volatility of the price of the hedged currency is historically less than that of
the futures contracts. The risk of imperfect correlation generally tends to
diminish as the maturity date of the futures contract approaches.
The successful use of transactions in futures and related options also
depends on the ability of the Sub-advisor to forecast correctly the direction
and extent of exchange rate and stock price movements within a given time frame.
It is impossible to forecast precisely what the market value of securities the
International Equity Portfolio anticipates buying will be at the expiration or
maturity of a currency forward or futures contract. Accordingly, in cases where
the International Equity Portfolio seeks to protect against an increase in value
of the currency in which the securities are denominated through a foreign
currency transaction, it may be necessary for the International Equity Portfolio
to purchase additional foreign currency on the spot market (and bear the expense
of such currency purchase) if the market value of the securities to be purchased
is less than the amount of foreign currency the International Equity Portfolio
contracted to purchase. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the portfolio
security or securities if the market value of such security or securities
exceeds the value of the securities purchased. When the International Equity
Portfolio purchases forward or futures contracts (or options thereon) to hedge
against a possible increase in the price of currency in which is denominated the
securities the International Equity Portfolio anticipates purchasing, it is
possible that the market may instead decline. If the International Equity
Portfolio does not then invest in such securities because of concern as to
possible further market decline or for other reasons, the International Equity
Portfolio may realize a loss on the forward or futures contract that is not
offset by a reduction in the price of the securities purchased. As a result, the
International Equity Portfolio's total return for such period may be less than
if it had not engaged in the forward or futures transaction.
Foreign currency transactions that are intended to hedge the value of
securities the International Equity Portfolio contemplates purchasing do not
eliminate fluctuations in the underlying prices of those securities. Rather,
such currency transactions
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simply establish a rate of exchange which can be used at some future point in
time. Additionally, although these techniques could possibly minimize the risk
of loss due to change in the value of the currency involved, they tend to limit
any potential gain that might result from the increase in the value of such
currency.
The amount of risk the International Equity Portfolio assumes when it
purchases an option on a currency futures contract is the premium paid for the
option plus related transaction costs. In addition to the correlation risks
discussed above, the purchase of an option also entails the risk that changes in
the value of the underlying futures contract will not be fully reflected in the
value of the option purchased.
The liquidity of a secondary market in a currency futures contract may be
adversely affected by "daily price fluctuation limits" established by commodity
exchanges which limit the amount of fluctuation in a futures contract price
during a single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the limit, thus
preventing the liquidation of open futures positions. Prices have in the past
exceeded the daily limit on a number of consecutive trading days.
The International Equity Portfolio's ability to engage in currency forward
and future transactions may be limited by tax considerations.
NET ASSET VALUE
The net asset value of each of the Portfolios is determined by adding the
values of all securities and other assets of that specific Portfolio,
subtracting liabilities, and dividing by the number of outstanding shares of
that Portfolio. (See "Purchase and Pricing of Shares--Valuation of Shares" and
the Statement of Additional Information.)
PORTFOLIO TURNOVER
The Portfolio turnover rate for The Navellier Aggressive Growth Portfolio
for the fiscal year ended December 31, 1997 was 247.3%. The annual rate of
portfolio turnover for the Mid Cap Growth Portfolio for the fiscal year ended
December 31, 1997 was 163.2%. The Portfolio turnover rate for the period March
17, 1997 through December 31, 1997 for the Aggressive Micro Cap Portfolio was
86.1%. The Portfolio turnover rate for the Navellier Large Cap Growth Portfolio,
for the Navellier Small Cap Value Portfolio, for the Navellier Large Cap Value
Portfolio, for the Navellier International Equity Portfolio and the Aggressive
Small Cap Equity Portfolio are unknown since each of these five portfolios are
newly organized Portfolios which only began operations on December 18, 1997. The
Investment Advisor estimates that the portfolio turnover rate for the Mid Cap
Growth Portfolio, the Aggressive Micro Cap Portfolio, the Large Cap Growth
Portfolio, the Small Cap Value Portfolio, the Large Cap Value Portfolio, the
International Equity Portfolio and the Aggressive Small Cap Equity Portfolio
will not exceed 300% per annum respectively. However, these are not restrictions
on the Investment Advisor and if in the Investment Advisor's judgment a higher
annual portfolio turnover rate is required in order to attempt to achieve a
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higher overall Portfolio performance, then the Investment Advisor is permitted
to do so. However, high portfolio turnover (100% or more) will result in
increased brokerage commissions, dealer mark-ups, and other transaction costs on
the sale of securities and on reinvestment in other securities and could
therefore adversely affect Portfolio performance. To the extent that increased
portfolio turnover results in sales at a profit of securities held less than
three months, the Fund's ability to qualify as a "regulated investment company"
under the Internal Revenue Code may be affected. (See the Statement of
Additional Information, "Taxes".)
SPECIAL RISK CONSIDERATIONS RELATING TO SECURITIES OF THE PORTFOLIO
For a description of certain other factors, including certain risk factors,
which investors should consider relating to the securities in which the
Portfolio will invest, see "Risk Factors".
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MANAGEMENT OF THE FUND
- -------------------------------------------------
THE BOARD OF TRUSTEES
The Fund's Board of Trustees directs the business and affairs of each
Portfolio of the Fund as well as supervises the Investment Advisor, Distributor,
Transfer Agent and Custodian, as described below.
THE INVESTMENT ADVISOR
Navellier Management, Inc. acts as the Investment Advisor to each of the
eight existing Portfolios of the Fund although it retains Global Value
Investors, Inc. as a Sub-advisor and Ram Kolluri as Portfolio Manager for the
day-to-day investments of the Navellier International Equity Portfolio.
Navellier Management, Inc. is the Investment Advisor to the Navellier Large Cap
Growth Portfolio and has a consulting agreement with Robert Barnes, Ph.D. for
analysis regarding large cap stocks. (See discussion below.) The Investment
Advisor is registered as an investment adviser under the Investment Advisors Act
of 1940. The Investment Advisor is responsible for selecting the securities
which will constitute the pool of securities which will be selected for
investment for each Portfolio except the International Equity Portfolio. The
selection of securities for the International Equity Portfolio is made by the
Sub-advisor Global Value Investors, Inc.'s Portfolio Manager, Ram Kolluri.
Pursuant to a separate Administrative Services Agreement, the Investment Advisor
provides each Portfolio of the Fund with certain administrative services,
including accounting and bookkeeping services and supervising the Custodian's
and Transfer Agent's activities and each Portfolio's compliance with its
reporting obligations. The Investment Advisor may contract (and pay for out of
its own resources including the administrative fee it receives) for the
performance of such services to the Custodian, Transfer Agent, or others, and
may retain all of its 0.25% administrative services fee or may share some or all
of its fee with such other person(s). The Investment Advisor also provides each
Portfolio of the Fund with a continuous investment program based on its
investment research and management with respect to all securities and
investments. The Investment Advisor will determine from time to time what
securities and other investments will be selected to be purchased, retained, or
sold by the various portfolios of the Fund, except that the Sub-advisor, Global
Value Investors, Inc.'s Portfolio Manager, Ram Kolluri, will determine what
securities and other investments will be selected for purchase, retention or
sale by the International Equity Portfolio.
The Investment Advisor is owned and controlled by its sole shareholder,
Louis G. Navellier (a 100% stockholder). Louis G. Navellier is an affiliated
person of the Fund and is also the sole owner of the Distributor, Navellier
Securities Corp. Louis Navellier is also the sole shareholder of Navellier &
Associates Inc. (See the Statement of Additional Information.) Navellier &
Associates, Inc. is registered as an investment adviser with the Securities and
Exchange Commission. Navellier Management, Inc. is also and has been since
January 1994, the investment adviser to The Navellier Series Fund, an open-end
diversified investment company. Louis Navellier is, and has
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been, in the business of rendering investment advisory services to significant
pools of capital since 1987.
SUB-ADVISOR
Global Value Investors, Inc. ("GVI") is the Sub-advisor to Navellier
Management, Inc. in the investment management of the Navellier International
Equity Portfolio. GVI is a New Jersey corporation of which Ram Kolluri is a
principal, President and Chief Investment Officer. Mr. Kolluri has been managing
investment portfolios since 1982. His investment approach to the International
Equity Portfolio may be described as "growth at a reasonable price." This is
carried out by purchasing securities that, in the opinion of the sub-advisor,
demonstrate the potential for improving sales and earnings, and selling at
reasonable prices (based upon traditional fundamental analyses) at the time of
purchase. However, no guarantee can be made that either the sales or the
earnings of the companies in the portfolio will actually be increasing during
the period following the purchase.
The sub-advisor utilizes the "Global Tactical Asset Allocation (GTAA)", a
quantitative methodology that is actively used by institutional investors in the
United States and abroad to manage pension and other investment portfolios in
fiduciary capacity. GTAA was developed by academicians and practitioners of the
modern portfolio theory (MPT) in the 1980s, as an advancement of the investment
management process. It seeks to detect relative under valuation in the global
equity and bond markets by carefully examining the macroeconomic factors that
impact each market in the local currency.
After several years of research and modeling, Mr. Kolluri developed a
proprietary algorithm that enables him to rank the countries by attractiveness
in terms of intrinsic value at the time of purchase or sale. He uses this
information to select countries as a starting point for individual stock
selections in the individual countries. Mr. Kolluri uses additional quantitative
screens to purchase stocks in each country that meet his "growth at a reasonable
price" criteria. The stocks are held until Mr. Kolluri believes there has been a
market recognition of value.
Mr. Kolluri is responsible for the day-to-day selection of the securities
for investment in the Navellier International Equity Portfolio. Mr. Kolluri
earned his B.S. in Mathematics from Andhra University in India and an MBA in
Finance from Pace University in New York, NY. He holds designations of a
Chartered Accountant from India and a Certified Financial Planner from the
College of Financial Planning, Denver, Colorado. Mr. Kolluri is a member of the
Alpha Group, a nationally recognized peer group of asset managers.
CONSULTANT
Robert Barnes, Ph.D., is a consultant to Navellier Management, Inc. in the
management of the Navellier Large Cap Growth Portfolio. Mr. Barnes has over 25
years experience as a trader and business analyst. He has authored twelve books
and
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many articles on quantitative trading methods. He has developed customized
computer programs for trading strategies and portfolio management. He is
qualified as a mathematician and statistician for modeling, forecasting and
simulating investment, government and other industry operations. He has acted as
liaison between programmers and traders for investment companies. He has
developed theories on price behavior, risk/reward statistics, derivatives,
arbitrage strategies, forecasting functions and forensic techniques. Mr. Barnes
earned his B.S. in mathematics with a minor in Economics at Rensselaer
Polytechnic Institute and his M.S. in mathematics at Lehigh University. He
taught price discovery modeling strategies and portfolio management at The New
School from 1981--1985.
Mr. Barnes' investment approach is comprised of a two part trading style: 1)
selection and 2) timing of entry and exit of stock positions. He selects stocks
for trade by examining their growth rates in past trends, choosing those that
have exhibited superior performance in the past in order to maximize return for
the portfolio. He then uses a number of timing methods in order to enter and
exit positions for those chosen stocks. These timing methods are continuously
updated and optimized in order to maximize return and to reduce risk (by
variation of timing points and diversifying across many stocks) in the
portfolio.
For information regarding the Fund's expenses and the fees paid to the
Investment Advisor see "Expenses of the Fund".
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
There are no control persons of any of the Portfolios of the Fund except the
Aggressive Small Cap Equity Portfolio of which Louis Navellier is presently the
sole shareholder pending a proposed merger of the Aggressive Small Cap Equity
Portfolio of the Navellier Series Fund into the Aggressive Small Cap Equity
Portfolio of this Fund.
THE DISTRIBUTOR
Navellier Securities Corp., acts as the Fund's Distributor and is registered
as a broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers ("NASD"). The Distributor renders
its services to the Fund pursuant to a distribution agreement under which it
serves as the principal underwriter of the shares of each existing Portfolio of
the Fund. The Distributor may sell certain of the Fund's Portfolio shares by
direct placements. Through a network established by the Distributor, each of the
Fund's Portfolio shares may also be sold through selected broker-dealers. (For
information regarding the Fund's expenses and the fees it pays to the
Distributor, see "Expenses of the Fund" following.) Louis G. Navellier, an
affiliate of the Fund and the Investment Advisor, is an officer, director, and
sole shareholder of the Distributor.
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THE CUSTODIAN AND THE TRANSFER AGENT
Rushmore Trust & Savings, FSB, 4922 Fairmont Avenue, Bethesda, Maryland,
20814, telephone: (301) 657-1510 or (800) 622-1386, is Custodian for the Fund's
securities and cash and Transfer Agent for the Fund shares. The Distributor
shall be responsible for the review of applications in order to guarantee that
all requisite and statistical information has been provided with respect to the
establishment of accounts.
EXPENSES OF THE FUND
- -------------------------------------------------
GENERAL
Each Portfolio is responsible for the payment of its own expenses. These
expenses are deducted from that Portfolio's investment income before dividends
are paid. These expenses include, but are not limited to: fees paid to the
Investment Advisor (fees paid to the Sub-advisor and Consultant are paid by the
Investment Advisor from its fees and are NOT paid by the Fund or the applicable
Portfolio or by the shareholders), the Custodian and the Transfer Agent;
Trustees' fees; taxes; interest; brokerage commissions; organization expenses;
securities registration ("blue sky") fees; legal fees; auditing fees; printing
and other expenses which are not directly assumed by the Investment Advisor
under its investment advisory or expense reimbursement agreements with the Fund.
General expenses which are not associated directly with a specific Portfolio
(including fidelity bond and other insurance) are allocated to each Portfolio
based upon their relative net assets. The Investment Advisor may, but is not
obligated to, from time to time advance funds, or directly pay, for expenses of
the Fund and may seek reimbursement of or waive reimbursement of those advanced
expenses.
COMPENSATION OF THE INVESTMENT ADVISOR
The Investment Advisor presently receives an annual 0.84% fee for investment
management of The Aggressive Growth Portfolio, the Mid Cap Growth Portfolio, the
Aggressive Micro Cap Portfolio; the Small Cap Value Portfolio, the Large Cap
Growth Portfolio and the Aggressive Small Cap Equity Portfolio and receives an
annual 0.75% fee for investment management of the Large Cap Value Portfolio, and
an annual 1.00% fee for investment management of the International Equity
Portfolio. Each fee is payable monthly, based upon each Portfolio's average
daily net assets. The Investment Advisor also receives a 0.25% annual fee for
rendering administrative services to the Fund pursuant to an Administrative
Services Agreement and is entitled to reimbursement for operating expenses it
advances for the Fund.
DISTRIBUTION PLANS
THE AGGRESSIVE GROWTH PORTFOLIO DISTRIBUTION PLAN
The Aggressive Growth Portfolio has adopted a Plan pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), whereby it reimburses Distributor or others in
an amount up to 0.25% per annum of the average daily net assets of the
Aggressive Growth Portfolio for expenses incurred for the promotion and
distribution of the
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shares of such Portfolio of the Fund, including, but not limited to, the
printing of prospectuses, statements of additional information and reports used
for sales purposes, expenses (including personnel of Distributor) of preparation
of sales literature and related expenses, advertisements and other
distribution-related expenses, including a prorated portion of Distributor's
overhead expenses attributable to the distribution of such Portfolio Fund
shares. Such payments are made monthly. The 12b-1 fee includes, in addition to
promotional activities, amounts the Aggressive Growth Portfolio may pay to
Distributor or others as a service fee to reimburse such parties for personal
services provided to shareholders of the Aggressive Growth Portfolio and/or the
maintenance of shareholder accounts. The total amount of 12b-1 fees paid for
such personal services and promotional services shall not exceed 0.25% per year
of the average daily net assets of the Aggressive Growth Portfolio. The
Distributor can keep all of said 12b-1 fees it receives to the extent it is not
required to pay others for such services. Such Rule 12b-1 fees are made pursuant
to the distribution plan(s) and distribution agreements entered into between
such service providers and Distributor or the Fund directly. Payments in excess
of reimbursable expenses under the plan in any year must be refunded. The Rule
12b-1 expenses and fees in excess of 0.25% per year of the Aggressive Growth
Portfolio's average net assets that otherwise qualify for payment may not be
carried forward into successive annual periods. The Plan also covers payments by
certain parties to the extent such payments are deemed to be for the financing
of any activity primarily intended to result in the sale of shares issued by the
Aggressive Growth Portfolio within the context of Rule 12b-1. The payments under
the Plan are included in the maximum operating expenses which may be borne by
the Aggressive Growth Portfolio.
THE DISTRIBUTION PLANS FOR THE MID CAP GROWTH, THE AGGRESSIVE MICRO CAP, THE
SMALL CAP VALUE, THE LARGE CAP GROWTH, THE LARGE CAP VALUE, THE INTERNATIONAL
EQUITY AND THE AGGRESSIVE SMALL CAP EQUITY PORTFOLIOS
The Mid Cap Growth Portfolio, the Aggressive Micro Cap Portfolio, the Small
Cap Value Portfolio, the Large Cap Growth Portfolio, the Large Cap Value
Portfolio, the International Equity Portfolio and the Aggressive Small Cap
Equity Portfolio have each adopted a Plan pursuant to Rule 12b-1 under the 1940
Act (the "Plan"), whereby each Portfolio compensates Distributor or others in
the amount of 0.25% per annum of the average daily net assets of the applicable
Portfolio for expenses incurred and services rendered for the promotion and
distribution of the shares of that particular Portfolio of the Fund, including,
but not limited to, the printing of prospectuses, statements of additional
information and reports used for sales purposes, expenses (including personnel
of Distributor) of preparation of sales literature and related expenses,
advertisements and other distribution-related expenses, including a prorated
portion of Distributor's overhead expenses attributable to the distribution of
each particular portfolio's shares. Such payments are made monthly. Each 12b-1
fee includes, in addition to promotional activities, amounts each Portfolio pays
to Distributor or others as a service fee to compensate such parties for
personal services provided to shareholders of such Portfolio and/or the
maintenance of shareholder accounts. The total amount of 12b-1 fees paid for
such personal services and promotional services for each such portfolio shall be
0.25% per year of the average daily net assets of each
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Portfolio. The Distributor can keep all of said 12b-1 fees it receives to the
extent it is not required to pay others for such services. Such Rule 12b-1 fees
are made pursuant to the distribution plan and distribution agreements entered
into between such service providers and Distributor or each particular Portfolio
directly. The 12b-1 Plan for each of these Portfolios also covers payments by
the Distributor and Investment Advisor to the extent such payments are deemed to
be for the financing of any activity primarily intended to result in the sale of
shares issued by each such Portfolio within the context of Rule 12b-1. The
payments under the 12b-1 Plan for each of these Portfolios are included in the
maximum operating expenses which may be borne by each of these Portfolios.
Payments under the 12b-1 Plan for each of these Portfolios may exceed actual
expenses incurred by the Distributor, Investment Advisor or others.
BROKERAGE COMMISSIONS
The Investment Advisor may select selected broker-dealers to execute
portfolio transactions for the Portfolios of the Fund, provided that the
commissions, fees, or other remuneration received by such party in exchange for
executing such transactions are reasonable and fair compared to those paid to
other brokers in connection with comparable transactions. In addition, when
selecting broker-dealers for Fund portfolio transactions, the Investment Advisor
may consider the record of such broker-dealers with respect to the sale of
shares of the Fund. (See the Statement of Additional Information.)
REPORTS AND INFORMATION
- -------------------------------------------------
The Fund will distribute to the shareholders of each Portfolio semi-annual
reports containing unaudited financial statements and information pertaining to
matters of each Portfolio of the Fund. An annual report containing financial
statements for each Portfolio, together with the report of the independent
auditors for each Portfolio of the Fund is distributed to shareholders each
year. Shareholder inquiries should be addressed to The Navellier Performance
Funds, at One East Liberty, Third Floor, Reno, Nevada 89501; Tel: (800)
887-8671, or to the Transfer Agent, Rushmore Trust & Savings, FSB, 4922 Fairmont
Avenue, Bethesda, Maryland, 20814, Telephone: (301) 657-1510 or (800) 622-1386.
DESCRIPTION OF SHARES
- -------------------------------------------------
The Fund is a Delaware business trust organized on October 17, 1995. The
Declaration of Trust permits the Trustees to issue an unlimited number of shares
of beneficial interest. The Board of Trustees has the power to designate one or
more classes ("Portfolios") of shares of beneficial interest and to classify or
reclassify any unissued shares with respect to such classes. Presently the Fund
is offering shares of eight Portfolios--the Navellier Aggressive Growth
Portfolio, the Navellier Mid Cap Growth Portfolio, the Navellier Aggressive
Micro Cap Portfolio, the Navellier Small Cap Value Portfolio, the Navellier
Large Cap Growth Portfolio, the Navellier Large
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Cap Value Portfolio, the Navellier International Equity Portfolio and the
Aggressive Small Cap Equity Portfolio each of which is described above.
The shares of each Portfolio, when issued, are fully paid and
non-assessable, are redeemable at the option of the holder, are fully
transferable, and have no conversion or preemptive rights. Shares are also
redeemable at the option of each Portfolio of the Fund when a shareholder's
investment, as a result of redemptions in the Fund, falls below the minimum
investment required by the Fund (see "Redemption of Shares"). Each share of a
Portfolio is equal as to earnings, expenses, and assets of the Portfolio and, in
the event of liquidation of the Portfolio, is entitled to an equal portion of
all of the Portfolio's net assets. Shareholders of each Portfolio of the Fund
are entitled to one vote for each full share held and fractional votes for
fractional shares held, and will vote in the aggregate and not by Portfolio
except as otherwise required by law or when the Board of Trustees determines
that a matter to be voted upon affects only the interest of the shareholders of
a particular Portfolio. Voting rights are not cumulative, so that the holders of
more than 50% of the shares voting in any election of Trustees can, if they so
choose, elect all of the Trustees. While the Fund is not required, and does not
intend, to hold annual meetings of shareholders, such meetings may be called by
the Trustees at their discretion, or upon demand by the holders of 10% or more
of the outstanding shares of any Portfolio for the purpose of electing or
removing Trustees.
All shares (including reinvested dividends and capital gain distributions)
are issued or redeemed in full or fractional shares rounded to the second
decimal place. No share certificates will be issued. Instead, an account will be
established for each shareholder and all shares purchased will be held in
book-entry form by the Fund.
DIVIDENDS AND DISTRIBUTIONS
- -------------------------------------------------
All dividends and distributions with respect to the shares of any Portfolio
will be payable in shares at net asset value or, at the option of the
shareholder, in cash. Any shareholder who purchases shares of the Portfolio
prior to the close of business on the record date for a dividend or distribution
will be entitled to receive such dividend or distribution. Dividends and
distributions (whether received in shares or in cash) are treated either as
return of capital, ordinary income or long-term capital gain for federal income
tax purposes. Between the record date and the cash payment date, each Portfolio
retains the use and benefits of such monies as would be paid as cash dividends.
Each Portfolio will distribute all of its net investment income and net
realized capital gains, if any, annually in December.
If a cash payment is requested with respect to the Portfolio, a check will
be mailed to the shareholder. Unless otherwise instructed, the Transfer Agent
will mail checks or confirmations to the shareholder's address of record.
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<PAGE>
The federal income tax laws impose a four percent (4%) nondeductible excise
tax on each regulated investment company with respect to the amount, if any, by
which such company does not meet distribution requirements specified in the
federal income tax laws. Each Portfolio intends to comply with the distribution
requirements and thus does not expect to incur the four percent (4%)
nondeductible excise tax, although the imposition of such excise tax may
possibly occur.
Shareholders will have their dividends and/or capital gain distributions
reinvested in additional shares of the applicable Portfolio(s) unless they elect
in writing to receive such distributions in cash. Shareholders whose shares are
held in the name of a broker or nominee should contact such broker or nominee to
determine whether they want dividends reinvested or distributed.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions. (See "Taxes" following.)
In the case of foreign participants whose dividends are subject to U.S.
income tax withholding and in the case of any participants subject to 31%
federal backup withholding, the Transfer Agent will reinvest dividends after
deduction of the amount required to be withheld.
Experience may indicate that changes in the automatic reinvestment of
dividends are desirable. Accordingly, the Fund reserves the right to amend or
terminate this provision as applied to any dividend or distribution paid
subsequent to written notice of the change sent to shareholders at least 90 days
before the record date for such dividend or distribution.
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<PAGE>
TAXES
- -------------------------------------------------
FEDERAL TAXES
Each Portfolio of the Fund is a separate taxpayer and intends to meet the
requirements of Subchapter M of the Internal Revenue Code of 1986 (relating to
regulated investment companies) with respect to diversification of assets,
sources of income, and distributions of taxable income and will elect to be
taxed as a regulated investment company for federal income tax purposes.
However, the Code contains a number of complex tests relating to
qualification which a Portfolio might not meet in any particular year. If a
Portfolio did not so qualify, it would be treated for tax purposes as an
ordinary corporation and receive no tax deduction for payments made to
shareholders.
Because each Portfolio of the Fund intends to distribute all of its net
investment income and net realized capital gains at least annually, it is not
expected that any Portfolio of the Fund will be required to pay federal income
tax for any year throughout which it was a regulated investment company nor, for
this reason, is it expected that any Portfolio will be required to pay the 4%
federal excise tax imposed on regulated investment companies that fail to
satisfy certain minimum distribution requirements. However, the possibility of
federal or state income tax and/or imposition of the federal excise tax does
exist.
If a Portfolio pays a dividend in January of any year which was declared in
the last three months of the previous year and was payable to shareholders of
record on a specified date in such a month, the dividend will be treated as
having been paid and received in the previous year.
Dividends (other than capital gains dividends) will be taxable to
shareholders as ordinary income, whether received in shares or cash and will, in
the case of corporate shareholders, generally qualify for the dividends-received
deduction to the extent paid out of qualifying dividends received by the
Portfolio.
Capital gains dividends will ordinarily be taxable to shareholders as
long-term capital gain, regardless of how long they have held their shares. A
dividend is a capital gains dividend if it is so designated by the Portfolio and
is paid out of the Portfolio's net capital gain (that is, the excess of the
Portfolio's net long-term capital gain over its net short-term capital loss).
Any dividends paid shortly after a purchase by an investor may have the
effect of reducing the per share net asset value of the investor's shares by the
per share amount of dividends. Furthermore, such dividends, although in effect a
return of capital, are subject to federal income taxes. Therefore, prior to
purchasing shares of the Fund, the investor should carefully consider the impact
of dividends, including capital gains distributions, which are expected to be or
have been announced.
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If the Fund redeems some or all of the shares held by any shareholder, the
transaction will generally be treated as a sale or exchange unless the
redemption fails to substantially reduce the shareholder's percentage ownership
interest in the Fund (determined for this purpose using certain specific rules
of constructive ownership). If a redemption of shares is not treated as a sale
or exchange, the amount paid for the shares will be treated as a dividend.
If a redemption is treated as a sale or exchange, the shareholder will
generally recognize gain or loss measured by the difference between the
redemption price and the basis of the shares. This gain or loss will generally
be treated as capital gain (long-term or short-term, depending upon the holding
period for the redeemed shares).
Shareholders will be subject to information reporting with respect to
dividends and redemptions, and may be subject to backup withholding with respect
to dividends at the rate of 31% unless (a) they are corporations or come within
other exempt categories or (b) they provide correct taxpayer identification
numbers, certify as to no loss of exemption from backup withholding, and
otherwise comply with applicable requirements of the law relating to backup
withholding. Any amounts paid as backup withholding will be creditable against
the federal income tax liabilities of the affected shareholders.
The Fund may pay taxes to foreign countries with respect to dividends or
interest it receives from foreign issuers or from domestic issuers that derive a
substantial amount of their revenues in foreign countries, or such taxes may be
withheld at the source by such issuers. The Fund will generally be entitled to
deduct such taxes in computing its taxable income.
The International Equity Portfolio may be subject to foreign withholding
taxes on income and gains derived from foreign investments. Such taxes would
reduce the yield on such Portfolio's investments, but may be taken as either a
deduction or a credit by U.S. citizens and corporations.
Investment by the International Equity Portfolio in certain "passive foreign
investment companies" could subject that Portfolio to a U.S. federal income tax
or other charge on distributions received from, or on the sale of its investment
in, such a company. Such a tax cannot be eliminated by making distributions to
the International Equity Portfolio shareholders. If such Portfolio elects to
treat a passive foreign investment company as a "qualified electing fund,"
different rules will apply, although the International Equity Portfolio does not
intend to invest in "passive foreign investment companies" and therefore does
not expect to be in the position to make such elections.
To the extent that such investments are permissible investments for the
International Equity Portfolio, its transactions in options, futures contracts,
hedging transactions, forward contracts, straddles and foreign currencies will
be subject to special tax rules (including mark-to-market, straddle, wash sale
and short sale rules), the effect of which may be to accelerate income to the
International Equity Portfolio, defer losses to
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<PAGE>
such Portfolio, cause adjustments in the holding periods of such Portfolio's
securities and convert short-term capital losses into long-term capital losses.
These rules could therefore affect the amount, timing and character of
distributions to shareholders.
If more than 50% of the International Equity Portfolio's assets at fiscal
year-end are represented by debt and equity securities of foreign corporations,
it may elect to permit shareholders who are U.S. citizens or U.S. corporations
to claim a foreign tax credit or deduction (but not both) on their U.S. income
tax returns for their PRO RATA portion of qualified taxes paid by the Portfolio
to foreign countries. As a result, the amounts of foreign income taxes paid by
such Portfolio would be treated as additional income to shareholders of such
Portfolio for purposes of the foreign tax credit. Each such shareholder would
include in gross income from foreign sources its PRO RATA share of such taxes.
Certain limitations imposed by the Internal Revenue Code may prevent
shareholders from receiving a full foreign tax credit or deduction for their
allocable amount of such taxes.
STATE AND LOCAL TAXES
Each Portfolio of the Fund may be subject to state or local taxation in
jurisdictions in which it may be deemed to be doing business. Taxable income of
each Portfolio of the Fund and its shareholders for state and local purposes may
be different from taxable income calculated for federal income tax purposes.
The foregoing is a general summary of possible federal, state and foreign
tax consequences of investing in The Navellier Performance Funds to shareholders
who are U.S. citizens or U.S. corporations. Each prospective investor is advised
to consult his or her tax adviser for advice as to the federal, state, local and
foreign taxation which may be applicable to such investor in connection with an
investment in the Fund.
PURCHASE AND PRICING OF SHARES
- -------------------------------------------------
PURCHASE OF SHARES
The Fund's various portfolio shares are sold to the general public on a
continuous basis through the Distributor, the Transfer Agent and the
Distributor's network of broker-dealers.
PURCHASE BY MAIL
Investments in the Fund can be made directly to the Distributor or through
the transfer agent--Rushmore Trust & Savings, FSB--or through selected
securities dealers who have the responsibility to transmit orders promptly and
who may charge a processing fee.
TO INVEST BY MAIL: Fill out an application designating which Portfolio you are
investing in and make a check payable to "The Navellier Performance Funds." Mail
the check along with the application to:
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The Navellier Performance Funds
c/o Rushmore Trust & Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
Purchases by check will be credited to an account as of the date the
Portfolio's net asset value is next determined after receipt of payment and a
properly completed account application. Foreign checks will not be accepted. Be
certain to specify which Portfolio or Portfolios you are investing in.
Purchase orders which do not specify the Portfolio in which an investment is
to be made will be returned. (See "Purchase and Pricing of Shares--General
Purchasing Information".) Net asset value per share is calculated once daily as
of 4 p.m. E.S.T. on each business day. (See "Purchase and Pricing of
Shares--Valuation of Shares".)
THE NAVELLIER PERFORMANCE FUNDS' PORTFOLIOS
The shares of each Portfolio are sold at their net asset value per share
next determined after an order in proper form (i.e., a completely filled out
application form) is received by the Transfer Agent.
If an order for shares of a Portfolio is received by the Transfer Agent by
4:00 p.m. on any business day, such shares will be purchased at the net asset
value determined as of 4:00 p.m. New York Time on that day. Otherwise, such
shares will be purchased at the net asset value determined as of 4:00 p.m New
York Time on the next business day. However, orders received by the Transfer
Agent from the Distributor or from dealers or brokers after the net asset value
is determined that day will receive such net asset value price if the orders
were received by the Distributor or broker or dealer from its customer prior to
such determination and were transmitted to and received by the Transfer Agent
prior to its close of business on that day (normally 4:00 p.m. New York Time).
Shares are entitled to receive any declared dividends on the day following the
date of purchase.
PURCHASES THROUGH SELECTED DEALERS
Shares purchased through Selected Dealers will be effected at the net asset
value next determined after the Selected Dealer receives the purchase order,
provided that the Selected Dealer transmits the order to the Transfer Agent and
the Transfer Agent accepts the order by 4:00 p.m. New York Time on the day of
determination. See "Valuation of Shares". If an investor's order is not
transmitted and accepted by 4:00 p.m. New York Time, the investor must settle
his or her entitlement to that day's net asset value with the Selected Dealer.
Investors may also purchase shares of the Fund by telephone through a Selected
Dealer by having the Selected Dealer telephone the Transfer Agent with the
purchase order. Investors may be charged a transaction fee if they effect
transactions in Fund shares through a broker or agent.
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Certain selected Dealers may effect transactions in shares of the Portfolios
through the National Securities Clearing Corporation's Fund/SERV system.
Purchases of shares through Selected Dealers not utilizing the National
Securities Clearing Corporation's Fund/SERV system will be effected when
received in proper form by the Transfer Agent, as described above, in the same
manner and subject to the same terms and conditions as are applicable to shares
purchased directly through the Transfer Agent. There is no sales load charged to
the investor on purchases of the Fund's Portfolios, whether purchased through a
Selected Dealer or directly through the Transfer Agent; there is however an
ongoing Rule 12b-1 fee applicable to all portfolios.
Shareholders who wish to transfer Fund shares from one broker-dealer to
another should contact the Fund at (800) 622-1386.
TO INVEST BY BANK WIRE: Request a wire transfer to:
Rushmore Federal Savings Bank
Bethesda, MD
Routing Number 0550 71084
For Account of The Navellier Performance Funds
Account Number 029 385770
AFTER INSTRUCTING YOUR BANK TO TRANSFER MONEY BY WIRE, YOU MUST TELEPHONE
THE FUND AT (800) 622-1386 OR (301) 657-1510 BETWEEN 8:30 A.M. AND 4:00 P.M. NEW
YORK TIME AND TELL US THE AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK
SENDING THE TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. IF THE
PURCHASE IS CANCELLED BECAUSE YOUR WIRE TRANSFER IS NOT RECEIVED, YOU MAY BE
LIABLE FOR ANY LOSS THE FUND MAY INCUR.
Such wire should identify the name of the Portfolio, the account number, the
order number (if available), and your name.
TO INVEST BY AUTOMATIC MONTHLY INVESTMENT PLAN:
Shareholders may make automatic monthly purchases of a Portfolio's shares by
executing an automatic monthly withdrawal application authorizing his/her/its
bank to transfer money from his/her/its checking account to the Transfer Agent
for the automatic monthly purchase of shares of the Portfolio for the
shareholder. There is no charge by the Portfolio for this automatic monthly
investment plan and the shareholder can discontinue the service at any time.
GENERAL PURCHASING INFORMATION
Each of the existing Portfolios of the Fund has established a minimum
initial investment of $2,000 ($500 in the case of IRA and other retirement plans
or qualifying
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group plans) and $100 for subsequent investments in any Portfolio. Orders for
shares may be made by mail by completing the Account Application included with
this Prospectus and mailing the completed application and the payment for shares
to the Transfer Agent. Documentation in addition to the information required by
the Account Application may be required when deemed appropriate by the Fund
and/or the Transfer Agent and the Account Application will not be deemed
complete until such additional information has been received. The Fund reserves
the right to not accept an applicant's proposed investment in any of the Fund's
shares.
VALUATION OF SHARES
The net asset value of the shares of each Portfolio of the Fund are
determined once daily as of 4 p.m. New York Time, on days when the New York
Stock Exchange is open for trading. In the event that the New York Stock
Exchange or the national securities exchanges on which Portfolio stocks are
traded adopt different trading hours on either a permanent or temporary basis,
the Trustees of the Fund will reconsider the time at which net asset value is to
be computed. The net asset value is determined by adding the values of all
securities and other assets of the Portfolio, subtracting liabilities, and
dividing by the number of outstanding shares of the Portfolio. The price at
which a purchase is effected is based on the next calculation of net asset value
after the order is received.
In determining the value of the assets of each Portfolio, the securities for
which market quotations are readily available are valued at market value. Debt
securities (other than short-term obligations) are normally valued on the basis
of valuations provided by a pricing service when such prices are believed to
reflect the fair value of such securities. All other securities and assets are
valued at their fair value as determined in good faith by the Trustees, although
the actual calculations may be made by persons acting pursuant to the direction
of the Trustees.
REDEMPTION OF SHARES
- -------------------------------------------------
GENERAL
A shareholder may redeem shares of each Portfolio at the net asset value
next determined after receipt of a notice of redemption in accordance with the
procedures set forth below and compliance with the further redemption
information and/or additional documentation requirements described in this
Section. As used in this Prospectus, the term "business day" refers to those
days on which stock exchanges trading stocks held by the Fund are open for
business. The Fund may change the following procedures at its discretion.
The shareholder will not be credited with dividends on those shares being
redeemed for the day on which the shares are redeemed by the Portfolio (but will
be credited with dividends on the day such shares were purchased). A check for
the proceeds of redemption will normally be mailed within seven days of receipt
of any redemption request received by the Transfer Agent. If shares to be
redeemed were
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purchased by check, the Fund may delay transmittal of redemption proceeds only
until such times as it is reasonably assured that good payment has been
collected for the purchase of such shares, which may be up to 15 days from
purchase date. Such delays can be avoided by wiring Federal Funds in effecting
share purchases.
If a shareholder wishes to redeem his or her entire shareholdings in a
Portfolio, he or she will receive, in addition to the net asset value of shares,
all declared but unpaid dividends thereon. The net asset value of the shares may
be more or less than a shareholder's cost depending on the market value of the
Portfolio securities at the time of the redemption.
REDEMPTION BY MAIL
A shareholder may redeem shares by mail on each day that the New York Stock
Exchange is open by submitting a written redemption request to:
The Navellier Performance Funds
c/o Rushmore Trust & Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
The request for redemption should include the name of the Portfolio, the
account name and number, and should be signed by all registered owners of the
shares in the exact names in which they are registered. Each request should
specify the number or dollar amount of shares to be redeemed or that all shares
in the account are to be redeemed.
44
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REDEMPTIONS BY TELEPHONE
If you have indicated on your Account Application that you wish to establish
telephone redemption privileges, you may redeem shares by calling the Transfer
Agent at 1-800-622-1386 by 4:00 p.m. New York Time on any day the New York Stock
Exchange is open for business.
If any account has more than one owner, the Transfer Agent may rely on the
instructions of any one owner. Each Portfolio of the Fund employs reasonable
procedures in an effort to confirm the authenticity of telephone instructions,
which may include giving some form of personal identification prior to acting on
the telephone instructions. If these procedures are not followed, the Fund and
the Transfer Agent may be responsible for any losses because of unauthorized or
fraudulent instructions. By requesting telephone redemption privileges, you
authorize the Transfer Agent to act upon any telephone instructions it believes
to be genuine, (1) to redeem shares from your account and (2) to mail or wire
transfer the redemption proceeds. You cannot redeem shares by telephone until 30
days after you have notified the Transfer Agent of any change of address.
Telephone redemption is not available for shares held in IRAs. Each
Portfolio may change, modify, or terminate its telephone redemption services at
any time upon 30 days' notice.
FURTHER REDEMPTION INFORMATION
Additional documentation (i.e., signature guarantee for redemptions in
excess of $1,000 or verification identification when redemption is by telephone)
regarding a redemption by any means may be required when deemed appropriate by
the Fund and / or the Transfer Agent, and the request for such redemption will
not be considered to have been received in proper form until such additional
documentation has been received. An investor should contact the Fund or the
Transfer Agent to inquire what, if any, additional documentation may be
required.
The Fund reserves the right to modify any of the methods of redemption upon
30 days' written notice to shareholders.
Due to the high cost of maintaining accounts of less than $2,000 ($500 for
IRA or other qualifying plan accounts), the Fund reserves the right to redeem
shares involuntarily in any such account at their then current net asset value.
Shareholders will first be notified and allowed 30 days to make additional share
purchases to bring their accounts to more than $2,000 ($500 for IRA or other
qualifying plan accounts). An account will not be redeemed involuntarily if the
balance falls below $2,000 ($500 for IRA or other qualifying plan accounts) by
virtue of fluctuations in net asset value rather than through investor
redemptions.
Under certain circumstances (i.e., when the applicable exchange is closed or
trading has been restricted, etc.), the right of redemption may be suspended or
the
45
<PAGE>
redemption may be satisfied by distribution of portfolio securities rather than
cash if a proper election pursuant to Rule 18F-1 of the Investment Company Act
has been made by the Fund. Information as to those matters is set forth in the
Statement of Additional Information.
Investors may redeem their shares and instruct the Fund or Transfer Agent,
in writing or by telephone, to either deposit the redemption proceeds in the
money market mutual fund--Fund for Government Investors, Inc.--a regulated
investment company custodied by Rushmore Trust & Savings, FSB, pending further
instructions as to the investor's desire to subsequently reinvest in the Fund or
the investor may direct some other disposition of said redemption proceeds.
OPTION TO MAKE SYSTEMATIC WITHDRAWALS
The owner of $25,000 or more worth of the shares of any Portfolio may
provide for the payment from his/her account of any requested dollar amount (but
not less than $1,000) to him/her or his/her designated payee monthly, quarterly,
or annually. Shares will be redeemed on the last business day of each month.
Unless otherwise instructed, the Transfer Agent will mail checks to the
shareholder at his/her address of record. A sufficient number of shares will be
redeemed to make the designated payment.
CERTAIN SERVICES PROVIDED TO SHAREHOLDERS
- -------------------------------------------------
STATEMENTS OF ACCOUNT
Statements of Account for each Portfolio will be sent to each shareholder at
least quarterly.
DIVIDEND ELECTION
A shareholder may elect to receive dividends in shares or in cash. If no
election is made, dividends will automatically be credited to a shareholder's
account in additional shares of the Portfolio to which such dividend relates.
EXCHANGE PRIVILEGES
Shares of each Portfolio in this Fund may be exchanged for one another at
net asset value. Exchanges among portfolios of the Fund may be made only in
those states where such exchanges may legally be made. The total value of shares
being exchanged must at least equal the minimum investment requirement of the
Portfolio into which they are being exchanged. Exchanges are made based on the
net asset value next determined of the shares involved in the exchange. Only one
exchange in any 30-day period is permitted. The Fund reserves the right to
restrict the frequency or otherwise modify, condition, terminate, or impose
charges upon the exchange, upon 60 days' prior written notice to shareholders.
Exchanges between Portfolios will be subject to a $5 exchange fee after five (5)
exchanges per year. There is a limit of ten (10) exchanges per year. Exchanges
will be effected by the redemption of shares of the Portfolio held and the
purchase of shares of the other Portfolio. For federal income tax purposes, any
46
<PAGE>
such exchange constitutes a sale upon which a gain or loss, if any, may be
realized, depending upon whether the value of the shares being exchanged is more
or less than the shareholder's adjusted cost basis. For this purpose, however, a
shareholder's cost basis may not include the sales charge, if any, if the
exchange is effectuated within 90 days of the acquisition of the shares.
Shareholders wishing to make an exchange should contact the Transfer Agent.
Exchange requests in the form required by the Transfer Agent and received by the
Transfer Agent prior to 4:00 p.m. New York Time will be effected at the next
determined net asset value.
ADDITIONAL INFORMATION
- -------------------------------------------------
The Statement of Additional Information, available upon request, without
charge from the Fund, provides a further discussion of certain sections of the
Prospectus and other information which may be of interest to certain investors.
This Prospectus and the Statement of Additional Information do not contain all
the information included in the Registration Statement filed with the Securities
and Exchange Commission with respect to the securities being sold, certain
portions of which have been omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. The Registration Statement, including the
exhibits filed therewith, may be examined at the office of the Securities and
Exchange Commission in Washington, D.C.
Statements contained in this Prospectus as to the contents of any contract
or other document referred to are not necessarily complete, and, in each
instance, reference is made to the Statement of Additional Information and the
copy of such contract or other document filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, each such statement being
qualified in all respects by such reference.
ASSENT TO TRUST INSTRUMENT
- -------------------------------------------------
Every Shareholder, by virtue of having purchased a Share or Interest shall
become a Shareholder and shall be held to have expressly assented and agreed to
be bound by the terms hereof.
47
<PAGE>
INVESTMENT ADVISER
Navellier Management, Inc.
One East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
DISTRIBUTOR
Navellier Securities Corp.
One East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
INDEPENDENT AUDITORS
Tait, Weller & Baker
Certified Public Accountants
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103
(215) 979-8800
TRANSFER AGENT AND CUSTODIAN
Rushmore Trust & Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 622-1386
COUNSEL
Samuel Kornhauser
Law Offices of Samuel Kornhauser
155 Jackson Street, Suite 1807
San Francisco, CA 94111
(415) 981-6281
SALES INFORMATION
Navellier Securities Corp.
One East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
SHAREHOLDER INQUIRIES
Rushmore Trust & Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 622-1386
THE NAVELLIER
PERFORMANCE FUNDS
MAY 26, 1998
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
NAVELLIER NEW ACCOUNT APPLICATION FOR A RETIREMENT ACCOUNT APPLICATION CALL 800-887-8671
PERFORMANCE -------------------------------------------------------------------------------------
FUNDS 800-887-8671
MAIL APPLICATION & CHECKS TO:
The Navellier Performance Funds
c/o Rushmore Trust & Savings
4922 Fairmont Ave.
Bethesda, MD 20814
800-622-1386
- --------------------------------------- -------------------------------------------------------------------------------------
REGISTRATION 1. Individual
-----------------------------------------------------------------------
/ / Individual First Name Initial Last Name
Use lines 1 & 3
/ / Joint Account with 2. Joint Tenant
Rights of Survivor ---------------------------------------------------------------------
Lines 1, 2 & 3 First Name Initial Last Name
Rights of survivor will be applied unless otherwise indicated
/ / Joint Account with
Tenancy in Common 3. Social Security No. Date of Birth
Lines 1, 2 & 3 ---------------------------------- -------------
S.S.# to be used for tax purposes
/ / Gift to Minor 4. Uniform Gift to Minor
Lines 4 & 5 ------------------------------------------------------------
OR Custodian's Name / State
/ / Corporations, 5.
Partnerships, ----------------------------------------------------------------------------------
Trusts & Others Minor's Name Minor's Social Security No. Date of Birth
Lines 6 & 7 6.
----------------------------------------------------------------------------------
Name of Corporation or Entity Tax ID Number
7. Registration Type: ___ Corporation ___ Partnership
___ Unincorporated Association ___ Trust - Date of Trust _______________
Please include a copy of the first and last pages of your trust agreement.
- --------------------------------------- -------------------------------------------------------------------------------------
MAILING ADDRESS Street or P.O. Box
------------------------------------------------------------------
COMPLETE IF DIFFERENT FROM City State Zip
ABOVE ADDRESS LABEL --------------------------------- ------------ -------------------
Telephone: Home Work
-------------------------------- -----------------------------
Your Residency: / / U.S. / / Resident Alien / / Non-Resident Alien
Specify Country
- --------------------------------------- ----------------------------------------------------------------------
<PAGE>
- --------------------------------------- -------------------------------------------------------------------------------------
Portfolio Amount
INVESTMENT --------- ------
MAKE CHECK PAYABLE TO: / / Navellier Aggressive Growth Portfolio $_____________
THE NAVELLIER PERFORMANCE / / Navellier Mid Cap Growth Portfolio $_____________
FUNDS / / Navellier Aggressive Micro Cap Portfolio $_____________
/ / Navellier Small Cap Value Portfolio $_____________
/ / Navellier Large Cap Growth Portfolio $_____________
/ / Navellier Large Cap Value Portfolio $_____________
/ / Navellier International Equity Portfolio $_____________
/ / Navellier Aggressive Small Cap Equity Portfolio $_____________
/ / By check $ / / By wire $
------------------ ------------------------------
From Account No.
--------------------------------------------------------------------
Minimum initial investment is $2,000 ($500 for IRAs, call 800-887-8671 for an IRA
application). Make checks payable to The Navellier Performance Funds. Call
800-622-1386 for wiring instructions or see the prospectus.
- --------------------------------------- -------------------------------------------------------------------------------------
DIVIDENDS / / Reinvest dividends and capital gains.
AND CAPITAL GAINS / / Reinvest dividends, pay capital gains.
DISTRIBUTIONS / / Pay dividends and capital gains in cash.
/ / Pay dividends, reinvest capital gains.
All dividends and capital gains distributions will be reinvested if no box is checked.
All distributions will be reinvested if a withdrawal plan is elected.
- --------------------------------------- -------------------------------------------------------------------------------------
INVESTOR FINANCIAL
& INVESTMENT INFO.
REQUIRED BY NASD Annual Income: $ Net Worth: $
------------------------- -------------------------
Investment Objective: / / Growth / / Value
- --------------------------------------- -------------------------------------------------------------------------------------
SHAREHOLDER Telephone/Expedited Redemption - PLEASE CHECK ALL THAT APPLY. These privileges are
PRIVILEGES subject to the terms set forth in the Prospectus.
/ / Yes, I would like to be able to redeem shares by telephone.
/ / Deposit redemption proceeds in the money market mutual fund, Fund for Government
Investors, Inc., custodied by Rushmore Trust & Savings, FSB.
/ / Wire redemption proceeds to:
Name of Bank
-------------------------------------- ----------------------------------------
Type of Account Account Number
/ / Mail a check to my address indicated above.
- --------------------------------------- -------------------------------------------------------------------------------------
SYSTEMATIC / / YES A Systematic Withdrawal Plan is available for accounts with an underlying share
WITHDRAWAL / / NO value of $25,000 or more.
PLAN If this plan is elected, all distributions will be automatically reinvested.
Minimum withdrawal is $1,000.
OPTIONAL
Amount of payment $
-------------------------
Payments made: / / Monthly / / Quarterly / / Annually
Payments to commence the 2nd business day of:
--------------------------
Month, Year
If checks are to be sent to another address or paid to someone other than the
registered owner shown on application, please provide the following:
Name:
--------------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------------
- --------------------------------------- -------------------------------------------------------------------------------------
<PAGE>
- --------------------------------------- -------------------------------------------------------------------------------------
BROKER Firm
INFORMATION --------------------------------------------------------------------------------
IF SHARES ARE BEING PURCHASED Mailing Address City
THROUGH A SERVICE AGENT, -------------------------------------------- ------------------
AGENT SHOULD COMPLETE THIS State Zip Phone
SECTION. --------------------------------------- --------------- -----------
Dealer Code Office Code Rep. Number
--------------------- -------------- -----------
Agent Name Agent Signature:
------------------------------- ------------------------
- --------------------------------------- -------------------------------------------------------------------------------------
SIGNATURES I/We authorize Rushmore Trust & Savings, FSB, as custodian and transfer agent for
& CERTIFICATION The Navellier Performance Funds, to honor any requests made in accordance with the
terms of this application, and I/we further affirm that, subject to any limitations
Confirmation of Account imposed by applicable law, neither Rushmore Trust & Savings, FSB, nor The Navellier
Establishment: Soon after all Performance Funds shall be held liable by me/us for any loss, liability, cost, or
essential items are received by the expense for acting in accordance with this application, or any section thereof. I/We
custodian, a confirmation statement(s) understand that all of the shareholder options described in this application are
showing account number(s), amount subject to the terms set forth in the Prospectus.
received, shares purchased, and price
paid per share will be sent to the I/WE CERTIFY THAT WE HAVE FULL RIGHT, POWER, AUTHORITY, AND LEGAL CAPACITY TO
registered shareholder. PURCHASE AND REDEEM SHARES AND AFFIRM THAT I/WE HAVE RECEIVED AND READ THE PROSPECTUS,
AGREE TO ITS TERMS, AND HAVE NOT RELIED ON OR MADE MY/OUR DECISION TO INVEST IN THE
Subsequent Payments: A new NAVELLIER PERFORMANCE FUNDS ON ANY WRITTEN OR ORAL INFORMATION OTHER THAN THE WRITTEN
application need not be submitted INFORMATION CONTAINED IN THE PROSPECTUS, REGISTRATION STATEMENT AND STATEMENT OF
with additional payments to an ADDITIONAL INFORMATION. Under penalties of perjury, I/we certify (i) that the number
existing account if a current applica- shown on this form is my/our correct Social Security Number or Taxpayer Identification
tion is on file with the custodian. Number and (ii) that (1) I/we are not subject to backup withholding either because
Subsequent purchases should be iden- I/we have not been notified by the Internal Revenue Service that I/we are subject to
tified by account number and account backup withholding as a result of a failure to report all interest or dividends, or
registration name. (2) the IRS has notified me/us that I am/we are no longer subject to backup
withholding. IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO
BACKUP WITHHOLDING STRIKE OUT PHRASE (2) ABOVE.
X
---------------------------------------------------------------
Signature as it appears on Line No. 1 Date
X
--------------------------------------------------------------
Joint Signature (if applicable) Date
</TABLE>
<PAGE>
PART B
THE NAVELLIER PERFORMANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 26, 1998
This Statement of Additional Information, which is not a prospectus, should
be read in conjunction with the Prospectus of The Navellier Performance Funds
(the "Fund"), dated May 26, 1998, a copy of which Prospectus may be
obtained, without charge, by contacting the Fund, at its mailing address c/o
Navellier Securities, Corp., One East Liberty, Third Floor, Reno, Nevada 89501;
Tel: 1-800-887-8671.
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY. . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . 1
TRUSTEES AND OFFICERS OF THE FUND. . . . . . . . . . . . . . . . . . . . 6
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . 9
THE INVESTMENT Advisor, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . .10
BROKERAGE ALLOCATION AND OTHER PRACTICES . . . . . . . . . . . . . . . .17
CAPITAL STOCK AND OTHER SECURITIES . . . . . . . . . . . . . . . . . . .19
PURCHASE, REDEMPTION, AND PRICING OF SHARES. . . . . . . . . . . . . . .20
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
UNDERWRITERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
CALCULATION OF PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . .26
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .28
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
<PAGE>
GENERAL INFORMATION AND HISTORY
The Fund is a business trust company organized under the laws of the State
of Delaware on October 17, 1995.
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT POLICIES. The investment objectives and policies of each
Portfolio are described in the "Investment Objectives and Policies" section of
the Prospectus. The following general policies supplement the information
contained in that section of the Prospectus.
CERTIFICATES OF DEPOSIT. Certificates of deposit are generally short-term,
interest-bearing, negotiable certificates issued by banks or savings and loan
associations against funds deposited in the issuing institution.
TIME DEPOSITS. Time deposits are deposits in a bank or other financial
institution for a specified period of time at a fixed interest rate for which a
negotiable certificate is not received.
BANKER'S ACCEPTANCES. A banker's acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer, or storage of
goods). The borrower, as well as the bank, is liable for payment, and the bank
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
secondary markets prior to maturity.
COMMERCIAL PAPER. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at the
time of issuance not exceeding nine months.
CORPORATE DEBT SECURITIES. Corporate debt securities with a remaining
maturity of less than one year tend to become liquid and can sometimes be traded
as money market securities.
UNITED STATES GOVERNMENT OBLIGATIONS. Securities issued or guaranteed as
to principal and interest by the United States government include a variety of
Treasury securities, which differ only in their interest rates, maturities, and
times of issuance. Treasury bills have a maturity of one year or less.
Treasury notes have maturities of one to seven years, and Treasury bonds
generally have a maturity of greater than five years.
1
<PAGE>
Agencies of the United States government which issue or guarantee
obligations include, among others, export-import banks of the United States,
Farmers' Home Administration, Federal Housing Administration, Government
National Mortgage Association, Maritime Administration, Small Business
Administration, the Defense Security Assistance Agency of the Department of
Defense, and the Tennessee Valley Authority. Obligations of instrumentalities
of the United States government include securities issued or guaranteed by,
among others, the Federal National Mortgage Associates, Federal Intermediate
Credit Banks, Banks for Cooperatives, and the United States Postal Service.
Some of the securities are supported by the full faith and credit of the United
States government; others are supported by the right of the issuer to borrow
from the Treasury, while still others are supported only by the credit of the
instrumentality.
STOCK INDEX FUTURES. A stock index futures contract (an "Index Future") is
a contract to buy an integral number of units of the relevant index at a
specified future date at a price agreed upon when the contract is made. A unit
is the value at a given time of the relevant index.
In connection with the International Equity Portfolio's investment in
securities or common stocks of foreign issuers, the International Equity
Portfolio may invest in Index Futures of foreign countries while the Sub-advisor
seeks favorable terms from brokers to effect transactions in common stocks
selected for purchase. The International Equity Portfolio may also invest in
Index Futures when the Sub-advisor believes that there are not enough attractive
common stocks available to maintain the standards of diversity and liquidity set
for the International Equity Portfolio pending investment in such stocks when
they do become available. Through the use of Index Futures, the International
Equity Portfolio may maintain a portfolio with diversified risk without
incurring the substantial brokerage costs which may be associated with
investment in multiple issuers. This may permit the International Equity
Portfolio to avoid potential market and liquidity problems (e.g., driving up or
forcing down the price by quickly purchasing or selling shares of a portfolio
security) which may result from increases or decreases in positions already held
by the International Equity Portfolio. Certain provisions of the Internal
Revenue Code may limit this use of Index Futures. The International Equity
Portfolio may also invest in Index Futures in order to hedge its equity
positions.
INVESTMENT RESTRICTIONS. The Fund's fundamental policies as they affect a
Portfolio cannot be changed without the approval of a vote of a majority of the
outstanding securities of such Portfolio. A proposed change in fundamental
policy or investment objective will be deemed to have been effectively acted
upon with respect to any Portfolio if a majority of the outstanding voting
securities of that Portfolio votes for the matter. Such a majority is defined
as the lesser of (a) 67% or more of the voting shares of the Fund present at a
meeting of shareholders of the Portfolio, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy or
(b) more than 50% of the outstanding shares of the Portfolio. For purposes of
the following restrictions (except the
2
<PAGE>
percentage restrictions on borrowing and illiquid securities -- which percentage
must be complied with) and those contained in the Prospectus: (i) all
percentage limitations apply immediately after a purchase or initial investment;
and (ii) any subsequent change in any applicable percentage resulting from
market fluctuations or other changes in the amount of total assets does not
require elimination of any security from the Portfolio.
The following investment restrictions are fundamental policies of the
Fund with respect to all Portfolios (unless otherwise specified below) and
may not be changed except as described above. The various Portfolios of the
Fund except as otherwise specified herein may not:
1. Purchase any securities on margin (except the International Equity
Portfolio which may invest in stock index futures and currency futures
transactions); PROVIDED, HOWEVER, that the Portfolios of the Fund may obtain
short-term credit as may be necessary for the clearance of purchases and
sales of securities. The International Equity Portfolio may also, as noted
in the Prospectus under the heading "Investing in Securities of Foreign
Issuers" purchase Stock Index Futures and currency futures contracts on a
limited basis.
2. Make cash loans, except that the Fund may purchase bonds, notes,
debentures, or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not.
3. Make securities loans, except that the Fund may make loans of the
portfolio securities of any Portfolio, provided that the market value of the
securities subject to any such loans does not exceed 33-1/3% of the value of the
total assets (taken at market value) of such Portfolio.
4. Make investments in real estate or commodities or commodity contracts,
including futures contracts, although the Fund may purchase securities of
issuers which deal in real estate or commodities although this is not a primary
objective of the Portfolio. The International Equity Portfolio may, as
necessary, invest in futures contracts including Stock Index Futures and
currency futures contracts.
5. Invest in oil, gas, or other mineral exploration or development
programs, although the Fund may purchase securities of issuers which engage in
whole or in part in such activities.
6. Purchase securities of companies for the purpose of exercising
management or control.
7. Participate in a joint or joint and several trading account in
securities.
8. Issue senior securities or borrow money, except that the Fund may
(i) borrow money only from banks for any Portfolio for temporary or emergency
(not leveraging)
3
<PAGE>
purposes, including the meeting of redemption requests, that might otherwise
require the untimely disposition of securities, provided that any such borrowing
does not exceed 10% of the value of the total assets (taken at market value) of
such Portfolio, and (ii) borrow money only from banks for any Portfolio for
investment purposes, provided that (a) after each such borrowing, when added to
any borrowing described in clause (i) of this paragraph, there is an asset
coverage of at least 300% as defined in the Investment Company Act of 1940, and
(b) is subject to an agreement by the lender that any recourse is limited to the
assets of that Portfolio with respect to which the borrowing has been made. As
an operating policy, no Portfolio may invest in portfolio securities while the
amount of borrowing of the Portfolio exceeds 5% of the total assets of such
Portfolio.
9. Pledge, mortgage, or hypothecate the assets of any Portfolio to an
extent greater than 10% of the total assets of such Portfolio to secure
borrowings made pursuant to the provisions of Item 8 above.
10. Purchase for any Portfolio "restricted securities" (as defined in
Rule 144(a)(3) of the Securities Act of 1933), if, as a result of such purchase,
more than 10% of the net assets (taken at market value) of such Portfolio would
then be invested in such securities nor will the Fund invest in illiquid or
unseasoned securities if as a result of such purchase more than 5% of the net
assets of such portfolio would be invested in either illiquid or unseasoned
securities.
11. Invest more than 10% of the Aggressive Growth Portfolio's or of the
Large Cap Growth Portfolio's assets in the securities of any single company or
25% or more of any portfolio's total assets in a single industry; invest more
than 5% of the assets of the Mid Cap Growth Portfolio, the Aggressive Micro Cap
Portfolio, the Small Cap Value Portfolio, the Large Cap Value Portfolio and the
International Equity Portfolio in securities of any single issuer.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values of portfolio securities or amount of net assets shall
not be considered a violation of the restrictions, except as to the 5%, 10% and
300% percentage restrictions on borrowing specified in Restriction Number 8
above.
PORTFOLIO TURNOVER. Each Portfolio has a different expected annual rate of
portfolio turnover which is calculated by dividing the lesser of purchases or
sales of portfolio securities during the fiscal year by the monthly average of
the value of the Portfolio's securities (excluding from the computation all
securities, including options, with maturities at the time of acquisition of one
year or less). A high rate of portfolio turnover generally involves
correspondingly greater expenses to the Portfolio, including brokerage
commission expenses, dealer mark-ups, and other transaction costs on the sale of
securities, which must be borne directly by the Portfolio. Turnover rates may
vary greatly from year to year as well as within a particular year and may also
be affected by cash requirements for redemptions of
4
<PAGE>
each Portfolio's shares and by requirements which enable the Fund to
receive certain favorable tax treatment. The portfolio turnover rate for the
Navellier Aggressive Growth Portfolio for the period January 1, 1997 through
December 31, 1997 was 247.3%. The portfolio turnover rate for the Navellier
Mid Cap Growth Portfolio for the period January 1, 1997 through December 31,
1997 was 163.2%. The portfolio turnover rate for the Navellier Aggressive
Micro Cap Portfolio (formerly named Navellier Aggressive Small Cap Portfolio)
for the period March 17, 1997 through December 31, 1997 was 86.1%. Because
the Navellier Aggressive Micro Cap Portfolio, the Navellier Small Cap Value
Portfolio, the Navellier Large Cap Growth Portfolio, the Navellier Large Cap
Value Portfolio, the Navellier International Equity Portfolio and the
Navellier Aggressive Small Cap Equity Portfolio are new fund portfolios which
have not been in operation for a year, no actual turnover rates can be given
at this time. The Fund will attempt to limit the annual portfolio turnover
rate of each Portfolio to 300% or less, however, this rate may be exceeded if
in the Investment Advisor's discretion securities are or should be sold or
purchased in order to attempt to increase the Portfolio's performance. In
Wisconsin an annual portfolio turnover rate of 300% or more is considered a
speculative activity and under Wisconsin statutes could involve relatively
greater risks or costs to the Fund.
5
<PAGE>
TRUSTEES AND OFFICERS OF THE FUND
The following information, as of October 31, 1997, is provided with respect
to each trustee and officer of the Fund:
<TABLE>
<CAPTION>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS REGISTRANT AND ITS AFFILIATES DURING PAST FIVE YEARS
- ---------------- ----------------------------- ----------------------
<S> <C> <C>
Louis Navellier(1) Trustee and President of The Mr. Navellier is and has been
One East Liberty Navellier Performance Funds. the CEO and President of Navellier
Third Floor Mr. Navellier is also the CEO, & Associates Inc., an investment
Reno, NV 89501 President, Secretary, and Treasurer management company since 1988;
of Navellier Management, Inc., a CEO and President of Navellier
Delaware corporation which is the Management, Inc., an investment
Investment Advisor to the Fund. management company since May 10,
Mr. Navellier is also CEO, President, 1993; CEO and President of Navellier
Secretary, and Treasurer of Navellier International Management, Inc.,
Securities Corp., the principal an investment management company,
underwriter of the Fund's shares. since May 10, 1993; CEO and President
of Navellier Securities Corp. since
May 10, 1993; CEO and President of
Navellier Fund Management, Inc., an
investment management company, since
November 30, 1995; and has been publisher
and editor of MPT Review from August 1987
to the present and was publisher and editor
of the predecessor investment advisory
newsletter OTC Insight, which he began in
1980 and wrote through July 1987.
Arnold Langsen(2) Trustee (however, Professor Langsen Professor Langsen is Professor Emeritus
The Langsen Group, Inc. is the President and a shareholder of of Financial Economics, School of
of California The Langsen Group, Inc. of California, Business, California State University
637 Silver Lake Dr. which corporation provides consulting at Hayward (1973-1992); Visiting
Danville, CA 94526 services to Navellier & Associates Professor, Financial Economics,
Inc.) University of California at Berkeley
(1984-1987).
Barry Sander Trustee Currently the President and CEO of Ursa
695 Mistletoe Rd., #2 Major Inc., a stencil manufacturing firm
Ashland, OR 97520 and has been for the past eight years.
Joel Rossman Trustee Currently retired as of March 15, 1998.
Personal Stamp Formerly he was President and CEO of
Exchange, Inc. Personal Stamp Exchange, Inc., a
360 Sutton Place manufacturer, designer and
Santa Rosa, CA distributor of rubber stamp products.
95407 He had been President and CEO of
Personal Stamp Exchange for the
preceding 10 years.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
Jacques Delacroix Trustee Professor of Business Administration,
University of Leavy School of Business, Santa Clara
Santa Clara University (1983-present)
Santa Clara, CA
Arjen Kuyper(1) Treasurer
</TABLE>
- ------------------------------
(1) This person is an interested person affiliated with the Investment Advisor.
(2) This person, although technically not an interested person affiliated with
the Investment Advisor, does own a company which provides consulting services to
Navellier & Associates Inc., a company owned by Louis Navellier.
7
<PAGE>
OFFICERS
The officers of the Fund are affiliated with the Investment Advisor and
receive no salary or fee from the Fund. The Fund's disinterested Trustees are
each compensated by the Fund with an annual fee, payable quarterly (calculated
at an annualized rate), of $7,500. The Trustees' fees may be adjusted according
to increased responsibilities if the Fund's assets exceed one billion dollars.
In addition, each disinterested Trustee receives reimbursement for actual
expenses of attendance at Board of Trustees meetings.
The Fund does not expect, in its current fiscal year, to pay aggregate
remuneration in excess of $60,000 for services in all capacities to any
(a) Trustee, (b) officer, (c) affiliated person of the Fund (other than the
Investment Advisor), (d) affiliated person of an affiliate or principal
underwriter of the Fund, or (e) all Trustees and officers of the Fund as a
group.
The Board of Trustees is permitted by the Fund's By-Laws to appoint an
advisory committee which shall be composed of persons who do not serve the Fund
in any other capacity and which shall have no power to dictate corporate
operations or to determine the investments of the Fund. The Fund currently has
no advisory committee.
- --------------------------------------------------------------------------------
REMUNERATION TABLE
- --------------------------------------------------------------------------------
Name Capacity In Which Aggregate
Remuneration Received Remuneration
From
Registrant and
Fund Complex
for the fiscal
year ended
December 31,
1997
- --------------------------------------------------------------------------------
Louis G. Navellier Trustee, President, $ 0.00
Chief Executive Officer,
and Treasurer
- --------------------------------------------------------------------------------
Barry Sander Trustee $ 7,500.00(1)
- --------------------------------------------------------------------------------
Arnold Langsen Trustee $ 0.00
- --------------------------------------------------------------------------------
Joel Rossman Trustee $ 7,500.00(1)
- --------------------------------------------------------------------------------
Jacques Delacroix Trustee $ 7,500.00(1)
- --------------------------------------------------------------------------------
(1) Includes $7,500 annual salary and any reimbursement for out-of-pocket
expenses. There were no out of pocket expense for fiscal 1997.
8
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Louis Navellier is not a control person of the Fund or
of any Portfolio, except The Aggressive Small Cap Equity Portfolio of which
he is presently the sole shareholder pending a possible merger of the
Navellier Aggressive Small Cap Equity Portfolio of The Navellier Series Fund
into The Navellier Aggressive Small Cap Equity Portfolio of this Fund.
9
<PAGE>
THE INVESTMENT ADVISOR, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT
(a) THE INVESTMENT ADVISOR
The offices of the Investment Advisor (Navellier Management,
Inc.) are located at One East Liberty, Third Floor, Reno, Nevada
89501. The Investment Advisor began operation in May 1993 and only
advises this Fund and The Navellier Series Fund.
(i) The following individuals own the enumerated shares of
outstanding stock of the Investment Advisor and, as a result,
maintain control over the Investment Advisor:
Shares of Outstanding Stock Percentage of
Name of the Investment Advisor Outstanding Shares
- ---- ------------------------- ------------------
Louis G. Navellier 1,000 100%
(ii) The following individuals are affiliated with the Fund,
the Investment Advisor, and the Distributor in the following
capacities:
Name Position
- ---- --------
Louis G. Navellier Trustee and President of The Navellier
Series Fund; Director, CEO, President,
Secretary, and Treasurer of Navellier
Management, Inc.,; Director, President,
CEO, Secretary, and Treasurer of
Navellier Securities Corp.; one of the
Portfolio Managers of the Aggressive
Growth Portfolio, the Mid Cap Growth
Portfolio, the Aggressive Micro Cap
Portfolio, the Large Cap Growth Portfolio,
the Large Cap Value Portfolio, the Small
Cap Value Portfolio and the Aggressive Small
Cap Equity Portfolio.
Alan Alpers One of the Portfolio Managers of
the Aggressive Growth Portfolio,
the Mid Cap Growth Portfolio,
the Aggressive Micro Cap Portfolio,
the Large Cap Growth Portfolio,
the Large Cap Value Portfolio, the Small
Cap Value Portfolio and the Aggressive Small
Cap Equity Portfolio.
Ram Kolluri Portfolio Manager for Global Value
Investors, Inc. - the Sub-advisor in
charge of the day-to-day investments of
the Navellier International Equity
Portfolio of The Navellier Performance
Funds.
Robert Barnes, Ph.D. Consultant to Navellier Management,
Inc., the Investment Advisor for the
Large Cap Growth Portfolio of The
Navellier Performance Funds.
Arjen Kuyper Treasurer of The Navellier Series Fund and
Treasurer of The Navellier Performance Funds.
10
<PAGE>
(iii) The management fees payable to the Investment Advisor under the
terms of the Investment Advisory Agreements (the "Advisory Agreements")
between the Investment Advisor and the Fund are payable monthly and are based
upon 0.84% of the average daily net assets of the Aggressive Growth
Portfolio, the Mid Cap Growth Portfolio, the Aggressive Micro Cap Portfolio,
the Small Cap Value Portfolio, the Large Cap Growth Portfolio and the
Aggressive Small Cap Equity Portfolio. The management fee payable to the
Investment Advisor under the terms of the Advisory Agreement applicable to
the Large Cap Value Portfolio is 0.75% of that Portfolio's average daily net
assets. The management fees payable to the Investment Advisor under the
terms of the Investment Advisory Agreement applicable to the International
Equity Portfolio is 1.0% of that Portfolio's average daily net assets. The
Investment Advisor has the right, but not the obligation, to waive any
portion or all of its management fee, from time to time.
The Investment Advisor pays Global Value Investors, Inc.
("Sub-advisor") an annual sub-advisory fee of 0.50% of the average
daily net assets of the International Equity Portfolio. Such
sub-advisory fee is paid by the Investment Advisor and is not paid by
the Fund or by the International Equity Portfolio. Since the
International Equity Portfolio is a newly organized portfolio, no
sub-advisory fees had been paid to Sub-advisor as of December 31, 1997.
The Investment Advisor also pays Robert Barnes a consulting fee
for consulting services and analysis of large cap securities in
connection with the Large Cap Growth Portfolio. Investment Advisor
pays Mr. Barnes an annual fee of 0.11% of the average daily net assets
of the Large Cap Growth Portfolio. Such consulting fee is paid by the
Investment Advisor and is not paid by the Fund or by the Large Cap
Growth Portfolio. Since the Large Cap Growth Portfolio is a newly
organized portfolio, no consulting fees had been paid to Mr. Barnes as
of December 31, 1997.
Navellier Management, Inc. was paid investment advisory fees for
the following Portfolios in the following amounts for the following
fiscal years:
Navellier Aggressive Growth Portfolio
-------------------------------------
1997 $1,218,438
---------
Navellier Mid Cap Growth Portfolio
----------------------------------
1997 $ 74,475
---------
Navellier Aggressive Micro Cap Portfolio
(Formerly named Navellier Aggressive
Small Cap Portfolio)
----------------------------------------
March 17, 1997 - December 31, 1997 $ 56,277
11
<PAGE>
Since the Small Cap Value Portfolio, the Large Cap Growth
Portfolio, the Large Cap Value Portfolio and the International Equity
Portfolio are newly organized portfolios, no investment advisory fees
have been paid to the Investment Advisor for these Portfolios as of
December 1, 1997.
The Investment Advisor has agreed to waive reimbursement of all
or a portion of the expenses advanced by it on behalf of the following
portfolios for the following years if total operating expenses exceed
the following amounts:
Portfolio Expense Limit Year(s)
--------- ------------- -------
Aggressive Growth Portfolio 1.49% 1998
Mid Cap Growth Portfolio 1.49% 1998
Aggressive Micro Cap Portfolio 1.49% 1998
Small Cap Value Portfolio 1.49% 1998
Large Cap Growth Portfolio 1.49% 1998
Large Cap Value Portfolio 1.40% 1998
International Equity Portfolio 1.75% 1998
Aggressive Small Cap Equity Portfolio 1.49% 1998
During the twelve month period ended December 31, 1997, the Investment
Advisor paid operating expenses of $389,770, $90,400 and $88,648 for the
Aggressive Growth Portfolio, the Mid Cap Growth Portfolio and the Aggressive
Micro Cap Portfolio, respectively. Under the terms of its operating expense
agreement, the Investment Advisor requested and received reimbursements of
$243,687, $14,895 and $7,341 from the Aggressive Growth Portfolio, Mid Cap
Growth Portfolio and the Aggressive Micro Cap Portfolio (formerly named
Aggressive Small Cap Portfolio), respectively.
Expenses not expressly assumed by the Investment Advisor under the Advisory
Agreement are paid by the Fund. The Advisory Agreements list examples of
expenses paid by the Fund for the account of the applicable Portfolio, the major
categories of which relate to taxes, fees to Trustees, legal, accounting, and
audit expenses, custodian and transfer agent expenses, certain printing and
registration costs, and non-recurring expenses, including litigation.
The Advisory Agreement provides that the Investment Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund or its investors except for losses (i) resulting from the willful
misfeasance, bad faith, or gross negligence on its part, (ii) resulting from
reckless disregard by it of its obligations and duties under the Advisory
Agreement, or (iii) a loss for which the Investment Advisor would not be
permitted to be indemnified under the Federal Securities laws.
12
<PAGE>
(iv) Pursuant to an Administrative Services Agreement, the Investment
Advisor receives an annual fee of .25% of the value of the assets under
management and provides or is responsible for the provision of certain
administrative services to the Fund, including, among others, the preparation
and maintenance of certain books and records required to be maintained by the
Fund under the Investment Company Act of 1940. The Administrative Services
Agreement permits the Investment Advisor to contract out for all of its duties
thereunder; however, in the event of such contracting, the Investment Advisor
remains responsible for the performance of its obligations under the
Administrative Services Agreement. The Investment Advisor has entered into an
agreement with Rushmore Trust & Savings, FSB, to perform, in addition to
custodian and transfer agent services, some or all administrative services and
may contract in the future with other persons or entities to perform some or all
of its administrative services. All of these contracted services are and will
be paid for by the Investment Advisor out of its fees or assets.
In exchange for its services under the Administrative Services Agreement,
the Fund reimburses the Investment Advisor for certain expenses incurred by the
Investment Advisor in connection therewith but does not reimburse Investment
Advisor (over the amount of 0.25% annual Administrative Services Fee) to
reimburse it for fees Investment Advisor pays to others for administrative
services. The agreement also allows Investment Advisor to pay to its delegate
part or all of such fees and reimbursable expense payments incurred by it or its
delegate.
The Investment Advisory Agreements permit the Investment Advisor to act as
investment adviser for any other person, firm, or corporation, and designates
the Investment Advisor as the owner of the name "Navellier" or any use or
derivation of the word Navellier. If the Investment Advisor shall no longer act
as investment adviser to the Fund, the right of the Fund to use the name
"Navellier" as part of its title may, solely at the Investment Advisor's option,
be withdrawn.
The Investment Advisor advanced the Fund's organizational expenses which
were $126,000. The Fund has agreed to reimburse the Investment Advisor for the
organizational and other expenses it advances, without interest, on a date or
dates to be chosen at the sole discretion of Navellier Management, Inc., or the
Investment Advisor can elect to waive reimbursement of some or all of such
advances. No Portfolio shall be responsible for the reimbursement of more than
its proportionate share of expenses.
(b) THE DISTRIBUTOR
The Fund's Distributor is Navellier Securities Corp., a Delaware
Corporation organized and incorporated on May 10, 1993. Navellier Securities
Corp. is registered as a broker-dealer with the Securities Exchange Commission
and National Association of Securities Dealers and the various states in which
this Fund's securities will be offered for sale by Distributor and will be
registered with such agencies and governments before any Fund shares are sold by
it. The Fund's shares will be continuously distributed by Navellier
13
<PAGE>
Securities Corp. (the "Distributor") located at One East Liberty, Third Floor,
Reno, Nevada 89501, pursuant to a Distribution Agreement, dated October 17,
1995. The Distribution Agreement obligates the Distributor to pay certain
expenses in connection with the offering of the shares of the Fund. The
Distributor is responsible for any payments made to its registered
representatives as well as the cost in excess of the 12b-1 fee (discussed below
under "Distribution Plan") of printing and mailing Prospectuses to potential
investors and of any advertising incurred by it in connection with the
distribution of shares of the Fund.
DISTRIBUTION PLANS
THE AGGRESSIVE GROWTH PORTFOLIO DISTRIBUTION PLAN
The Aggressive Growth Portfolio has adopted a Plan pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), whereby it reimburses Distributor or others in
an amount up to 0.25% per annum of the average daily net assets of the
Aggressive Growth Portfolio for expenses incurred for the promotion and
distribution of the shares of such Portfolio of the Fund, including, but not
limited to, the printing of prospectuses, statements of additional information
and reports used for sales purposes, expenses (including personnel of
Distributor) of preparation of sales literature and related expenses,
advertisements and other distribution-related expenses, including a prorated
portion of Distributor's overhead expenses attributable to the distribution of
such Portfolio Fund shares. Such payments are made monthly. The 12b-1 fee
includes, in addition to promotional activities, amounts the Aggressive Growth
Portfolio may pay to Distributor or others as a service fee to reimburse such
parties for personal services provided to shareholders of the Aggressive Growth
Portfolio and/or the maintenance of shareholder accounts. The total amount of
12b-1 fees paid for such personal services and promotional services shall not
exceed 0.25% per year of the average daily net assets of the Aggressive Growth
Portfolio. The Distributor can keep all of said 12b-1 fees it receives to the
extent it is not required to pay others for such services. Such Rule 12b-1 fees
are made pursuant to the distribution plan(s) and distribution agreements
entered into between such service providers and Distributor or the Fund
directly. Payments in excess of reimbursable expenses under the plan in any
year must be refunded. The Rule 12b-1 expenses and fees in excess of 0.25% per
year of the Aggressive Growth Portfolio's average net assets that otherwise
qualify for payment may not be carried forward into successive annual periods.
The Plan also covers payments by certain parties to the extent such payments are
deemed to be for the financing of any activity primarily intended to result in
the sale of shares issued by the Aggressive Growth Portfolio within the context
of Rule 12b-1. The Distributor was paid $243,688 in 12b-1 fees during the
twelve month period ended December 31, 1997. The payments under the Plan are
included in the maximum operating expenses which may be borne by the Aggressive
Growth Portfolio.
Navellier Securities Corp. ("NSC") was paid $243,688 in 12b-1 fees during
fiscal 1997 and spent $53,233 for advertising, $10,444 for printing,
$6,363 for mailing (including mailing of prospectuses to other than current
shareholders), $0 to underwriters, $19,665 to compensate dealers, $58,583 to
compensate NSC sales and other personnel, $718 for interest and $94,682 in
other expenses during fiscal 1997.
14
<PAGE>
Louis Navellier, the sole owner of Navellier Management, Inc. and the sole
owner of Navellier Securities Corp., received a direct financial interest in the
operation of the 12b-1 Plan.
The Distribution Plans for The Mid Cap Growth Portfolio, the Aggressive
Micro Cap Portfolio, the Small Cap Value Portfolio, the Large Cap Growth
Portfolio, the Large Cap Value Portfolio, the International Equity
Portfolio and the Aggressive Small Cap Equity Portfolio
--------------------------------------------------------------------------
The Mid Cap Growth Portfolio, the Aggressive Micro Cap Portfolio, the
Small Cap Value Portfolio, the Large Cap Growth Portfolio, the Large Cap
Value Portfolio, the International Equity and the Aggressive Cap Equity
Portfolio Portfolio have each adopted a Plan pursuant to Rule 12b-1 under the
1940 Act (the "Plan"), whereby each such Portfolio compensates Distributor or
others in the amount of 0.25% per annum of the average daily net assets of
each such Portfolio for expenses incurred and services rendered for the
promotion and distribution of the shares of each such Portfolio of the Fund,
including, but not limited to, the printing of prospectuses, statements of
additional information and reports used for sales purposes, expenses
(including personnel of Distributor) of preparation of sales literature and
related expenses, advertisements and other distribution-related expenses,
including a prorated portion of Distributor's overhead expenses attributable
to the distribution of each such Portfolio's Fund shares. Such payments are
made monthly. Each 12b-1 fee includes, in addition to promotional
activities, amounts that each such Portfolio pays to Distributor or others as
a service fee to compensate such parties for personal services provided to
shareholders of such Portfolio and/or the maintenance of shareholder
accounts. The total amount of 12b-1 fees paid for such personal services and
promotional services shall be 0.25% per year of the average daily net assets
of each such Portfolio. The Distributor can keep all of said 12b-1 fees it
receives to the extent it is not required to pay others for such services.
Such Rule 12b-1 fees are made pursuant to the distribution plan and
distribution agreements entered into between such service providers and
Distributor or each of the Portfolios directly. Each 12b-1 Plan for each
such Portfolio also covers payments by the Distributor and Investment Advisor
to the extent such payments are deemed to be for the financing of any
activity primarily intended to result in the sale of shares issued by each
such Portfolio within the context of Rule 12b-1. The payments under each
such 12b-1 Plan for each Portfolio are included in the maximum operating
expenses which may be borne by each such Portfolio. Payments under each such
12b-1 Plan for each such Portfolio may exceed actual expenses incurred by the
Distributor, Investment Advisor or others.
The Distributor was paid $14,895 in 12b-1 fees during the twelve month
period ended December 31, 1997 for services in connection with the Mid Cap
Growth Portfolio and spent $6,878 for advertising, $638 for printing,
$389 for mailing (including mailing of prospectuses to other than current
shareholders), $0 to underwriters, $1,202 to compensate dealers, $0
to compensate NSC sales and other personnel, $0 for interest and $5,788
in other expenses during fiscal 1997. No 12b-1 fees were paid by the
Aggressive Micro Cap Portfolio, the Aggressive Small Cap Equity Portfolio, or
the International Equity Portfolio during fiscal 1997. The Small Cap Value
Portfolio, the Large Cap Growth Portfolio and the Large Cap Value Portfolio
each paid $6 in 12b-1 fees during fiscal 1997. Investors may also be charged
a transaction fee if they effect transactions in fund shares through a broker
or agent. Louis Navellier has a direct financial interest in the operation
of each of these 12b-1 Plans.
15
<PAGE>
(c) THE CUSTODIAN AND TRANSFER AGENT
Rushmore Trust & Savings, FSB, 4922 Fairmont Avenue, Bethesda, Maryland
20814, serves as the custodian of the Fund's portfolio securities and as the
Fund's transfer agent and, in those capacities, maintains certain accounting and
other records of the Fund and processes requests for the purchase or the
redemption of shares, maintains records of ownership for shareholders, and
performs certain other shareholder and administrative services on behalf of the
Fund.
(d) LEGAL COUNSEL
The Law Offices of Samuel Kornhauser is legal counsel to the Fund, to the
Investment Advisor and to the Distributor.
16
<PAGE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
In effecting portfolio transactions for the Fund, the Investment Advisor
adheres to the Fund's policy of seeking best execution and price, determined as
described below, except to the extent it is permitted to pay higher brokerage
commissions for "brokerage and research services," as defined herein. The
Investment Advisor may cause the Fund to pay a broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission which another broker or dealer would have charged for effecting the
transaction if the Investment Advisor determines in good faith that such amount
of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer or that any offset of direct
expenses of a Portfolio yields the best net price. As provided in Section 28(e)
of the Securities Exchange Act of 1934, "brokerage and research services"
include giving advice as to the value of securities, the advisability of
investing in, purchasing, or selling securities, and the availability of
securities; furnishing analysis and reports concerning issuers, industries,
economic facts and trends, portfolio strategy and the performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Brokerage and research services
provided by brokers to the Fund or to the Investment Advisor are considered to
be in addition to and not in lieu of services required to be performed by the
Investment Advisor under its contract with the Fund and may benefit both the
Fund and other clients of the Investment Advisor or customers of or affiliates
of the Investment Advisor. Conversely, brokerage and research services provided
by brokers to other clients of the Investment Advisor or its affiliates may
benefit the Fund.
If the securities in which a particular Portfolio of the Fund invests are
traded primarily in the over-the-counter market, where possible, the Fund will
deal directly with the dealers who make a market in the securities involved
unless better prices and execution are available elsewhere. Such dealers
usually act as principals for their own account. On occasion, securities may be
purchased directly from the issuer. Bonds and money market instruments are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Fund (involving both price paid or received and any net
commissions and other costs paid), the efficiency with which the transaction is
effected, the ability to effect the transaction at all where a large block is
involved, the availability of the broker to stand ready to execute possibly
difficult transactions in the future, and the financial strength and stability
of the broker. Such considerations are judgmental and are weighed by the
Investment Advisor in determining the overall reasonableness of brokerage
commissions paid by the Fund. Some portfolio transactions are subject to the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.,
and subject to obtaining best prices and executions, effected through dealers
who sell shares of the Fund.
17
<PAGE>
The Board of Trustees of the Fund will periodically review the performance
of the Investment Advisor of its respective responsibilities in connection with
the placement of portfolio transactions on behalf of the Fund and review the
commissions paid by the Fund over representative periods of time to determine if
they are reasonable in relation to the benefits to the Fund.
The Board of Trustees will periodically review whether the recapture for
the benefit of the Fund of some portion of the brokerage commissions or similar
fees paid by the Fund on portfolio transactions is legally permissible and
advisable. At present, no recapture arrangements are in effect. The Board of
Trustees will review whether recapture opportunities are available and are
legally permissible, and, if so, will determine, in the exercise of their
business judgment, whether it would be advisable for the Fund to seek such
recapture.
18
<PAGE>
CAPITAL STOCK AND OTHER SECURITIES
The rights and preferences attached to the shares of each Portfolio are
described in the Prospectus. (See "Description of Shares".) The Investment
Company Act of 1940 requires that where more than one class or series of shares
exists, each class or series must be preferred over all other classes or series
in respect of assets specifically allocated to such class or series. Rule 18f-2
under the Act provides that any matter required to be submitted by the
provisions of the Investment Company Act or applicable state law, or otherwise,
to the holders of the outstanding voting securities of an investment company
such as the Fund shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each series
affected by such matter. Rule 18f-2 further provides that a series shall be
deemed to be affected by a matter unless the interests of each series in the
matter are substantially identical or that the matter does not affect any
interest of such series. However, the Rule exempts the selection of independent
public accountants, the approval of principal distribution contracts, and the
election of Trustees from the separate voting requirements of the Rule.
19
<PAGE>
PURCHASE, REDEMPTION, AND PRICING OF SHARES
REDEMPTION OF SHARES. The Prospectus, under "Redemption of Shares"
describes the requirements and methods available for effecting redemption. The
Fund may suspend the right of redemption or delay payment more than seven days
(a) during any period when the New York Stock Exchange or any other applicable
exchange, is closed (other than a customary weekend and holiday closing),
(b) when trading on the New York Stock Exchange, or any other applicable
exchange, is restricted, or an emergency exists as determined by the Securities
and Exchange Commission ("SEC") or the Fund so that disposal of the Fund's
investments or a fair determination of the net asset values of the Portfolios is
not reasonably practicable, or (c) for such other periods as the SEC by order
may permit for protection of the Portfolio's shareholders.
The Fund normally redeems shares for cash. However, the Board of Trustees
can determine that conditions exist making cash payments undesirable. If they
should so determine (and if a proper election pursuant to Rule 18F-1 of the
Investment Company Act has been made by the Fund), redemption payments could be
made in securities valued at the value used in determining net asset value.
There generally will be brokerage and other costs incurred by the redeeming
shareholder in selling such securities.
DETERMINATION OF NET ASSET VALUE. As described in the Prospectus under
"Purchase and Pricing of Shares - Valuation of Shares," the net asset value of
shares of each Portfolio of the Fund is determined once daily as of 4 p.m. New
York time on each day during which the New York Stock Exchange, or other
applicable exchange, is open for trading. The New York Stock Exchange is
scheduled to be closed for trading on the following days: New Year's Day,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. The Board of Trustees of the Exchange
reserves the right to change this schedule. In the event that the New York
Stock Exchange or the national securities exchanges on which small cap equities
are traded adopt different trading hours on either a permanent or temporary
basis, the Board of Trustees of the Fund will reconsider the time at which net
asset value is to be computed.
VALUATION OF ASSETS. In determining the value of the assets of any
Portfolio of the Fund, the securities for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price, or, if no sales are reported - as is the case with
many securities traded over-the-counter - the last reported bid price. Debt
securities (other than short-term obligations, i.e., obligations which have 60
days or less left to maturity, which are valued on the basis of amortized cost)
are normally valued on the basis of valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities.
Prices provided by a pricing service may be determined without exclusive
reliance on quoted prices and take into account appropriate factors such as
institution-size trading in similar groups of securities, yield, quality of
issue, trading characteristics, and other market data. All other securities and
assets are valued at their fair value as determined in good faith by the Board
of Trustees, although the actual calculations may be made by persons acting
pursuant to the direction of the Board of Trustees.
20
<PAGE>
TAXES
In the case of a "series fund" (that is, a regulated investment company
having more than one segregated portfolio of investments the beneficial
interests in which are owned by the holders of a separate series of stock), each
investment portfolio is treated as a separate corporation for federal income tax
purposes. The Fund will be deemed a series fund for this purpose and, thus,
each Portfolio will be deemed a separate corporation for such purpose.
Each Portfolio of the Fund intends to qualify as a regulated investment
company for federal income tax purposes. Such qualification requires, among
other things, that each Portfolio (a) make a timely election to be a
regulated investment company, (b) derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, and
gains from the sale or other disposition of stock or securities (including
options and futures) or foreign currencies, and (c) diversify its holdings so
that at the end of each fiscal quarter (i) 50% of the market value of its
assets is represented by cash, government securities, securities of other
regulated investment companies, and securities of one or more other issuers
(to the extent the value of the securities of any one such issuer owned by
the Portfolio does not exceed 5% of the value of its total assets and 10% of
the outstanding voting securities of such issuer) and (ii) not more than 25%
of the value of its assets is invested in the securities (other than
government securities and securities of other regulated investment companies)
of any one industry. These requirements may limit the ability of the
Portfolios to engage in transactions involving options and futures contracts.
If each Portfolio qualifies as a regulated investment company, it will not
be subject to federal income tax on its "investment company taxable income"
(calculated by excluding the amount of its net capital gain, if any, and by
excluding the dividends-received and net operating loss deductions) or "net
capital gain" (the excess of its long-term capital gain over its net short-term
capital loss) which is distributed to shareholders. In determining taxable
income, however, a regulated investment company holding stock on the record date
for a dividend is required to include the dividend in income on the later of the
ex-dividend date or the date of acquisition.
Dividends paid out of net investment income and net short-term capital
gains of a Portfolio will be taxable to shareholders as ordinary income
regardless of whether such distributions are reinvested in additional shares or
paid in cash. If a portion of a Portfolio's net investment income is derived
from dividends from domestic corporations, a corresponding portion of the
dividends paid out of such income may be eligible for the dividends-received
deduction. Corporate shareholders will be informed as to the portion, if any,
of dividends received by them which will qualify for the dividends-received
deduction.
21
<PAGE>
Dividends paid out of the net capital gain of a Portfolio that are
designated as capital gain dividends by the Fund will be taxable to shareholders
as long-term capital gains regardless of how long the shareholders have held
their shares. Such dividends will not be eligible for the dividends-received
deduction. If shares of the Fund to which such capital gains dividends are
attributable are held by a shareholder for less than 31 days and there is a loss
on the sale or exchange of such shares, then the loss, to the extent of the
capital gain dividend or undistributed capital gain, is treated as a long-term
capital loss.
All distributions, whether received in shares or cash, must be reported by
each shareholder on his federal income tax return. Taxable dividends declared
in October, November, or December of any year and payable to shareholders of
record on a specified date in such a month will be deemed to have been paid by
the Fund and received by such shareholders on December 31 of the year if such
dividend is actually paid by the Fund during January of the following year.
Any dividends paid shortly after a purchase by an investor may have the
effect of reducing the per share net asset value of the investor's shares by the
per share amount of the dividends. Furthermore, such dividends, although in
effect a return of capital, are subject to federal income taxes. Therefore,
prior to purchasing shares of the Fund, the investor should carefully consider
the impact of dividends, including capital gains distributions, which are
expected to be or have been announced.
The redemption of all or part of the shares of a series held by any
shareholder will generally be treated as a sale or exchange unless the
redemption fails to substantially reduce the shareholder's percentage ownership
interest in the related Portfolio (determined for this purpose using certain
specific rules of constructive ownership). Any redemption that does not
substantially reduce a shareholder's percentage ownership interest in a
Portfolio may be treated as a dividend.
If a redemption is treated as a sale or exchange, the shareholder will
generally recognize gain or loss measured by the difference between the
redemption price and the basis of the shares. This gain will generally be
treated as capital gain (long-term or short-term, depending upon the
shareholder's holding period for the redeemed shares).
The exchange of the shares in one Portfolio for shares in another Portfolio
will be treated as a taxable exchange for federal income tax purposes. If the
exchange occurs within 90 days of the acquisition of the original shares,
however, the shareholder's basis in the original shares will not include the
sales charge, if any, to the extent such charge does not exceed the amount that
would have been charged on the acquisition of the second-acquired shares if such
shares were acquired directly. To the extent that the sales charge, if any,
paid upon acquisition of the original shares is not taken into account in
determining the shareholder's gain or loss from the disposition of the original
shares, it is added to the basis of the newly acquired shares.
22
<PAGE>
On or before January 31 of each year, the Fund will issue to each person
who was a shareholder at any time in the prior year a statement of the federal
income tax status of all distributions made to such shareholder.
Shareholders who fail to provide correct taxpayer identification numbers or
fail to certify as to no loss of exemption from backup withholding or otherwise
fail to comply with applicable requirements of the law relating to backup
withholding will be subject to backup withholding with respect to dividends at
the rate of 31% unless they are corporations or come within other exempt
categories. Any amounts paid as backup withholding will be creditable against
the federal income tax liabilities of the affected shareholders. All
shareholders should consult their own tax advisers with regard to the tax
consequences applicable to their respective investments in the Fund.
The foregoing discussion relates solely to United States federal income tax
laws as applicable to United States persons (that is, citizens and residents of
the United States and domestic corporations, partnerships, trusts, and estates).
Each shareholder who is not a United States person should consult his tax
adviser regarding the United States and non-United States tax consequences of
ownership of shares, including the possibility that distributions by the Fund
may be subject to a United States withholding tax at the rate of 30% (or at a
lower rate under an applicable United States income tax treaty).
Each Portfolio will be subject to a nondeductible excise tax for any year
equal to 4% of the "required distribution" for the year over the "distributed
amount" for the year. For this purpose, the term "required distribution" means,
with respect to any year, the sum of (a) 98% of the Portfolio's "ordinary
income" (that is, its taxable income determined by excluding its net capital
gain, if any, by disallowing the dividends-received and net operating loss
deductions, and by not taking into account any capital gain or loss), (b) 98% of
its net capital gain income (that is, the excess of capital gains over capital
losses) for the one-year period ending on December 31 of the year, and (c) the
"prior year shortfall" (that is, the excess, if any, of the "grossed-up required
distribution" for the prior year over the "distributed amount" for such year).
For this purpose, the term "grossed-up required distribution" means, with
respect to any year, the required distribution for the year (determined by
including 100% of the Portfolio's ordinary income and capital gain net income)
and the term "distributed amount" means, with respect to any year, the sum of
(a) the amount of dividends-paid or deemed paid during the year, (b) any amount
on which the Portfolio is required to pay corporate tax for the year, and
(c) the excess, if any, of the distributed amount for the prior year over the
required distribution for such year.
The individual Portfolios will not be subject to tax in Delaware for any
year in which they each qualify as a regulated investment company. They may,
however, be subject to such tax for any year in which they do not so qualify and
may be subject to tax in certain other states where they are deemed to be doing
business. Moreover, distributions may be subject to state and local taxes. In
those states which have income tax laws, the tax treatment of such Portfolios
and the tax treatment of shareholders with respect to distributions may be
different from the federal income tax treatment of such persons.
23
<PAGE>
If more than 50% of the International Equity Portfolio's assets at fiscal
year-end is represented by debt and equity securities of foreign
corporations, the International Equity Portfolio may elect to permit
shareholders who are U.S. citizens or U.S. corporations to claim a foreign
tax credit or deduction (but not both) on their U.S. income tax returns for
their PRO RATA portion of qualified taxes paid by the International Equity
Portfolio to foreign countries. As a result, the amounts of foreign income
taxes paid by such Portfolio would be treated as additional income to
shareholders of such Portfolio for purposes of the foreign tax credit. Each
such shareholder would include in gross income from foreign sources its PRO
RATA share of such taxes. Certain limitations imposed by the Internal Revenue
Code may prevent shareholders from receiving a full foreign tax credit or
deduction for their allocable amount of such taxes.
The foregoing is a general summary of the federal income tax consequences
of investing in the Fund to shareholders who are U.S. citizens or U.S.
corporations. Shareholders should consult their own tax advisors about the
tax consequences of an investment in the Fund in light of each shareholder's
particular tax situation. Shareholders should also consult their own tax
advisors about consequences under foreign, state, local or other applicable
tax laws.
24
<PAGE>
UNDERWRITERS
The Fund's shares will be continuously distributed through Navellier
Securities Corp. (the "Distributor") located at One East Liberty, Third Floor,
Reno, Nevada 89501, pursuant to a distribution agreement dated October 17, 1995.
The Distributor has been selling this Fund's shares since December 28, 1995.
The Distributor acts as the sole principal underwriter of the Fund's
shares. Through a network established by the Distributor, the Fund's shares may
also be sold through selected investment brokers and dealers. For a description
of the Distributor's obligations to distribute the Fund's securities, see "The
Investment Advisor, Distributor, Custodian and Transfer Agent - Distributor."
The following table sets forth the remuneration received by Navellier
Securities Corp. ("NSC"), the Distributor, (which is wholly owned by Louis
Navellier) for the following years:
<TABLE>
<CAPTION>
Underwriting
Discounts and Compensation Brokerage Other
Year Commissions on Redemptions Commissions Compensation*
---- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
1995 $ 0 $ 0 $ 0 $ 0
1996 $ 0 $ 0 $ 0 $147,832
1997 $ 0 $ 0 $ 0 $258,601
</TABLE>
* These "other compensation" amounts are 12b-1 fees paid to NSC.
25
<PAGE>
CALCULATION OF PERFORMANCE DATA
Performance information for each Portfolio may appear in advertisements,
sales literature, or reports to shareholders or prospective shareholders.
Performance information in advertisements and sales literature may be expressed
as total return on the applicable Portfolio.
The average annual total return on such Portfolios represents an
annualization of each Portfolio's total return ("T" in the formula below) over a
particular period and is computed by finding the current percentage rate which
will result in the ending redeemable value ("ERV" in the formula below) of a
$1,000 payment* ("P" in the formula below) made at the beginning of a one-,
five-, or ten-year period, or for the period from the date of commencement of
the Portfolio's operation, if shorter ("n" in the formula below). The following
formula will be used to compute the average annual total return for the
Portfolio:
n
P (1 + T) = ERV
In addition to the foregoing, each Portfolio may advertise its total return
over different periods of time by means of aggregate, average, year-by-year, or
other types of total return figures.
The Navellier Aggressive Growth Portfolio had a total return of 9.77% for
the fiscal year 1997. The Navellier Mid Cap Growth Portfolio had a total
return of 26.18% for the fiscal year 1997. The Navellier Aggressive Micro Cap
Portfolio (formerly named Aggressive Small Cap Portfolio) had a total return
for the period March 17, 1997 through December 31, 1997 of 32.76%. The Small
Cap Value Portfolio, the Large Cap Growth Portfolio, the Large Cap Value
Portfolio, the International Equity Portfolio and the Aggressive Small Cap
Equity Portfolio are newly formed portfolios which have been in operation for
less than one year and therefore, no performance figures for these portfolios
are included.
Performance information for the Portfolios shall reflect only the
performance of a hypothetical investment in the Portfolios during the particular
time period on which the calculations are based. Performance information should
be considered in light of the investment objectives and policies,
characteristics and quality of the particular Portfolio, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future.
Each Portfolio may, from time to time, include in advertisements containing
total return the ranking of those performance figures relative to such figures
for groups of mutual funds categorized by Lipper Analytical Services, or other
services, as having the same investment objectives. The total return may also
be used to compare the performance of the Portfolio against certain widely
acknowledged outside standards or indices for stock and bond market performance.
The Standard & Poor's Composite Index of 500 stocks ("S&P 500") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of 500 stocks relative to the base period 1941-43. The S&P 500 is
composed almost entirely of common stocks of companies listed on the New York
Stock Exchange, although the common stocks of a few companies listed on the
American Stock Exchange or traded over-the-counter are included.
26
<PAGE>
As summarized in the Prospectus under the heading "Performance and Yield," the
total return of each Portfolio may be quoted in advertisements and sales
literature.
27
<PAGE>
FINANCIAL STATEMENTS*
* (References in these financial statements to the Aggressive Small Cap
Portfolio refer to the Navellier Performance Funds portfolio which is now
named the Navellier Aggressive Micro Cap Portfolio)
28
<PAGE>
December 31, 1997 Audited Financial Statement
29
<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>
THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997
SMALL CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<S> <C>
COMMON STOCKS--63.0% OF TOTAL INVESTMENTS
AEROSPACE -- 3.6%
200 Gencorp, Inc. $5,000
--------
AUTO PARTS -- 2.4%
100 Arvin Industries, Inc. 3,331
--------
BANKS -- 2.5%
100 Firstbank Puerto Rico Commercial 3,406
--------
COMMERCIAL SERVICES -- 3.1%
400 REFAC Technology Development* 4,275
--------
ELECTRIC UTILITIES -- 4.6%
150 Eastern Utilities Associates 3,938
100 Public Service Company of
New Mexico 2,369
--------
6,307
--------
ELECTRONICS -- 1.2%
100 Elron Electronic Industries Ltd. 1,600
--------
FINANCE COMPANIES -- 3.2%
175 Doral Financial Corp. 4,441
--------
INDUSTRIAL MACHINERY AND COMPONENTS -- 1.4%
100 Ampco-Pittsburgh Corp. 1,956
--------
INDUSTRIAL SPECIALTIES -- 6.3%
450 Bairnco Corp. 4,472
275 Deswell Industries, Inc. 4,331
--------
8,803
--------
INSURANCE -- 6.1%
100 Renaissance Holdings, Ltd. 4,413
150 Selective Insurance Group, Inc. 4,050
--------
8,463
--------
INVESTMENT MANAGERS -- 3.3%
150 Oppenheimer Capital LP* 4,537
--------
MARINE TRANSPORTATION -- 3.0%
100 Oglebay Norton, Co. $4,100
--------
MILITARY/GOVERNMENT/TECHNICAL -- 3.1%
400 United Industrial Corp. 4,350
--------
NATURAL GAS DISTRIBUTION -- 3.0%
150 Laclede Gas Co. 4,209
--------
REAL ESTATE INVESTMENT TRUSTS -- 8.7%
200 American Real Estate Investment Co. 3,850
200 Bedford Property Investment, Inc. 4,375
100 MGI Properties 2,400
1,300 Property Capital Trust 1,462
--------
12,087
--------
RETAIL STORES -- 1.5%
150 Haverty Furniture Companies, Inc. 2,025
--------
SAVINGS AND LOAN ASSOCIATIONS -- 2.7%
125 Dime Financial Corp. 3,813
--------
SEMICONDUCTORS -- 0.7%
100 Tower Semiconductor, Ltd. 1,000
--------
TOOLS AND HARDWARE -- 2.6%
100 Starrett (LS) Co. 3,656
--------
TOTAL COMMON STOCKS
(COST $86,150) 87,359
--------
MONEY MARKET FUNDS -- 37.0%
51,380 Fund for Government Investors
(Cost $51,380) 51,380
--------
TOTAL INVESTMENTS -- 100.0%
(COST $137,530) $138,739
--------
--------
</TABLE>
<PAGE>
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997
LARGE CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
SHARES MARKET VALUE
(NOTE 1)
- ----------------------------------------------------------------
<S> <C>
COMMON STOCKS--64.3% OF TOTAL INVESTMENTS
AIRLINES -- 6.7%
175 Southwest Airlines Co. $4,309
75 US Airways Group, Inc.* 4,687
--------
8,996
--------
APPAREL -- 3.4%
100 V.F. Corp. 4,594
--------
BANKS -- 2.9%
50 First of America Bank Corp. 3,856
--------
BUILDING PRODUCTS -- 2.9%
75 Masco Corp. 3,816
--------
DISCOUNT STORES -- 3.8%
75 Dayton Hudson Corp. 5,062
--------
FINANCIAL PUBLISHING AND SERVICES -- 2.8%
50 McGraw Hill Companies, Inc. 3,700
--------
FLUID CONTROLS -- 3.4%
100 Parker Hannifin Corp. 4,588
--------
HOTELS AND RESORTS -- 3.1%
50 ITT Corp.* 4,144
--------
INSURANCE -- 19.0%
50 Ace LTD 4,825
50 Allstate Insurance Corp. 4,544
75 Exel Limited 4,753
25 Progressive Corp. 2,997
100 Torchmark Corp. 4,206
75 Travelers Group, Inc. 4,041
--------
25,366
--------
NEWSPAPERS -- 7.0%
75 Ganett, Inc. $4,636
75 Tribune Co. 4,669
--------
9,305
--------
SERVICES: HEALTH INDUSTRY -- 3.3%
150 Servicemaster Co. 4,387
--------
SOFT DRINKS -- 3.1%
100 Cadbury Schweppes PLC 4,138
--------
TELECOMMUNICATIONS -- 3.0%
50 Ameritech, Corp. 4,025
--------
TOTAL COMMON STOCKS
(COST $83,495) 85,977
--------
MONEY MARKET FUNDS -- 35.7%
47,806 Fund for Government Investors
(Cost $47,806) 47,806
--------
TOTAL INVESTMENTS -- 100.0%
(COST $131,301) $133,783
--------
--------
</TABLE>
<PAGE>
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997
LARGE CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
SHARES MARKET VALUE
(NOTE 1)
- ----------------------------------------------------------------
<S> <C>
COMMON STOCKS--56.7% OF TOTAL INVESTMENTS
APPAREL -- 2.4%
150 The Limited, Inc. $3,825
--------
AUTO PARTS -- 1.5%
50 Dana Corp. 2,375
--------
BANKS -- 16.6%
75 Allied Irish Banks 4,350
50 Bank of Boston Corp. 4,697
25 Citicorp 3,161
125 Corporation Bancaria de Espana 3,820
50 PNC Bancorp 2,853
100 Popular, Inc. 4,950
25 Republic of New York Corp. 2,855
--------
26,686
--------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS -- 4.1%
75 Caterpillar, Inc. 3,642
50 Cummins Engine Company, Inc. 2,953
--------
6,595
--------
CONTAINERS AND PACKAGING -- 1.1%
50 Sonoco Products Co. 1,734
--------
DIVERSIFIED MANUFACTURING -- 2.3%
75 Cooper Industries, Inc. 3,675
--------
ELECTRIC UTILITIES -- 2.0%
150 MidAmerican Energy Holdings Co. 3,300
--------
FINANCE COMPANIES -- 2.2%
25 SLM Holding Co. 3,478
--------
FLUID CONTROLS -- 2.8%
100 Parker Hannifin Corp. 4,588
--------
INSURANCE -- 5.2%
50 St. Paul Companies, Inc. 4,103
100 Torchmark Corp. 4,206
--------
8,309
--------
INTEGRATED OIL COMPANIES -- 3.7%
75 Exxon Corp. $4,589
25 Murphy Oil Corp. 1,355
--------
5,944
--------
INVESTMENT BANKING & BROKER SERVICES -- 3.3%
25 Merrill Lynch and Co., Inc. 1,824
100 PaineWebber Group, Inc. 3,456
--------
5,280
--------
RAILROADS -- 2.9%
100 Canadian National Railway Corp. 4,725
--------
SAVINGS AND LOAN ASSOCIATIONS -- 2.0%
50 Charter One Financial, Inc. 3,156
--------
SPECIALTY CHEMICALS -- 2.2%
75 Olin Corp. 3,516
--------
WATER SUPPLY -- 2.5%
150 American Water Works Co., Inc. 4,097
--------
TOTAL COMMON STOCKS
(COST $90,145) 91,283
--------
MONEY MARKET FUNDS -- 43.3%
69,717 Fund for Government Investors
(Cost $69,717) 69,717
--------
TOTAL INVESTMENTS -- 100.0%
(COST $159,862) $161,000
--------
--------
</TABLE>
- -----------------------------------
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SMALL CAP LARGE CAP LARGE CAP INTERNATIONAL
VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Securities at Cost...................... $ 137,530 $ 131,301 $ 159,862 $ --
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
Securities at Value (Note 1)............ $ 138,739 $ 133,783 $ 161,000 $ --
Cash in Custodian Bank.................. -- -- -- 10,000
Receivable for Securities Sold.......... 2,000 -- -- --
Interest Receivable..................... 91 90 98 --
Dividends Receivable.................... -- 15 15 --
Unamortized Organizational Costs
(Note 1).............................. 91,800 91,800 91,800 91,800
---------- ---------- ---------- ------------
Total Assets.......................... 232,630 225,688 252,913 101,800
---------- ---------- ---------- ------------
LIABILITIES
Payable for Securities Purchased........ 39,579 31,300 59,863 --
Investment Advisory Fee Payable
(Note 2).............................. 25 29 18 1
Administrative Fee Payable (Note 2)..... 6 6 6 --
Distribution Plan Fee Payable
(Note 4).............................. 6 6 6 --
Other Payables and Accrued Expenses..... 6 6 6 --
Organizational Expenses Payable to
Adviser............................... 91,800 91,800 91,800 91,800
---------- ---------- ---------- ------------
Total Liabilities..................... 131,422 123,147 151,699 91,801
---------- ---------- ---------- ------------
NET ASSETS.............................. $ 101,208 $ 102,541 $ 101,214 $ 9,999
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
SHARES OUTSTANDING...................... 10,005 10,006 10,008 1,000
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
NET ASSET VALUE PER SHARE............... $ 10.12 $ 10.25 $ 10.11 $ 10.00
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SMALL CAP LARGE CAP LARGE CAP INTERNATIONAL
VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ----------- --------------
FOR THE
FOR THE PERIOD ENDED
PERIOD ENDED DECEMBER 31,
DECEMBER 31, 1997* 1997**
------------------------------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest (Note 1)............... $ 91 $ 91 $ 98 $ --
Dividends (Note 1).............. -- 15 15 --
----------- ----------- ----------- ----
Total Investment Income....... 91 106 113 --
----------- ----------- ----------- ----
EXPENSES
Investment Advisory Fee (Note 2) 25 29 19 1
Administrative Fee (Note 2)..... 6 6 6 --
Distribution Plan Fees (Note 4). 6 6 6 --
Transfer Agent and Custodian Fee
(Note 3)....................... 153 123 93 2
----------- ----------- ----------- ----
Total Expenses................ 190 164 124 3
Less Expenses Reimbursed by
Investment Adviser (Note 2). (147) (117) (87) (2)
----------- ----------- ----------- ----
Net Expenses................ 43 47 37 1
----------- ----------- ----------- ----
NET INVESTMENT INCOME (LOSS)...... 48 59 76 (1)
----------- ----------- ----------- ----
Net Realized Loss on Investment
Transactions..................... (49) -- -- --
Net Change in Unrealized
Appreciation of Investments...... 1,209 2,482 1,138 --
----------- ----------- ----------- ----
NET GAIN ON INVESTMENTS........... 1,160 2,482 1,138 --
----------- ----------- ----------- ----
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS. $ 1,208 $ 2,541 $ 1,214 $ (1)
----------- ----------- ----------- ----
----------- ----------- ----------- ----
</TABLE>
* FROM COMMENCEMENT OF OPERATIONS DECEMBER 19, 1997
** FROM COMMENCEMENT OF OPERATIONS DECEMBER 26, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP LARGE CAP LARGE CAP INTERNATIONAL
VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ------------
FOR THE
FOR THE PERIOD ENDED
PERIOD ENDED DECEMBER 31,
DECEMBER 31, 1997* 1997**
------------------------------- ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss).... $ 48 $ 59 $ 76 $ (1)
Net Realized (Loss) on
Investment Transactions....... (49) -- -- --
Net Change in Unrealized
Appreciation of Investments... 1,209 2,482 1,138 --
--------- --------- --------- -----------
Net Increase (Decrease) in Net
Assets Resulting from
Operations.................. 1,208 2,541 1,214 (1)
--------- --------- --------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income...... (48) (59) (76) --
--------- --------- --------- -----------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of
Shares........................ 100,000 100,000 100,000 10,000
Reinvestment of Distributions... 48 59 76 --
--------- --------- --------- -----------
Net Increase in Net Assets
Resulting from Share
Transactions................ 100,048 100,059 100,076 10,000
--------- --------- --------- -----------
TOTAL INCREASE IN NET
ASSETS...................... 101,208 102,541 101,214 9,999
NET ASSETS -- Beginning of
Period........................... -- -- -- --
--------- --------- --------- -----------
NET ASSETS -- End of Period....... $ 101,208 $ 102,541 $ 101,214 $ 9,999
--------- --------- --------- -----------
--------- --------- --------- -----------
SHARES
Sold............................ 10,000 10,000 10,000 1,000
Issued in Reinvestment of
Distributions................. 5 6 8 --
--------- --------- --------- -----------
Net Increase in Shares........ 10,005 10,006 10,008 1,000
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>
* FROM COMMENCEMENT OF OPERATIONS DECEMBER 19, 1997
** FROM COMMENCEMENT OF OPERATIONS DECEMBER 26, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SMALL CAP LARGE CAP LARGE CAP INTERNATIONAL
VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------
FOR THE
FOR THE PERIOD ENDED
PERIOD ENDED DECEMBER 31,
DECEMBER 31, 1997* 1997**
---------------------------------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period................................ $ 10.00 $ 10.00 $ 10.00 $ 10.00
---------- ---------- ---------- ------------
Income from Investment Operations:
Net Investment Income................. 0.005 0.006 0.008 --
Net Realized and Unrealized Gain on
Investments......................... 0.120 0.250 0.110 --
---------- ---------- ---------- ------------
Total from Investment Operations.... 0.125 0.256 0.118 --
---------- ---------- ---------- ------------
Distributions to Shareholders:
From Net Investment Income............ (0.005) (0.006) (0.008) --
---------- ---------- ---------- ------------
Net Increase in Net Asset Value....... 0.12 0.25 0.11 --
---------- ---------- ---------- ------------
Net Asset Value -- End of Period........ $ 10.12 $ 10.25 $ 10.11 $ 10.00
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
TOTAL INVESTMENT RETURN................... 1.25%(A) 2.56%(A) 1.18%(A) 0.00%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)... 1.75%(B) 1.90%(B) 1.50%(B) 1.75%(B)
Expenses Before Reimbursement
(Note 2).............................. 7.74%(B) 6.66%(B) 5.03%(B) 5.48%(B)
Net Investment Income (Loss)............ 1.94%(B) 2.40%(B) 3.09%(B) (1.75)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................. 2.3% -- -- --
Net Assets at End of Period (000's
omitted).............................. $ 101 $ 103 $ 101 $ 10
Number of Shares Outstanding at End of
Period (000's omitted)................ 10 10 10 1
Average Commission Rate Paid............ $ 0.0300 $ 0.0300 $ 0.0284 --
</TABLE>
- ------------------------
(A) Total returns for periods of less than one year are not annualized
(B) Annualized
* FROM COMMENCEMENT OF OPERATIONS DECEMBER 19, 1997
** FROM COMMENCEMENT OF OPERATIONS DECEMBER 26, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
<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 four of the eight portfolios: the Small Cap
Value Portfolio, a diversified open-end management company, the Large Cap
Growth Portfolio, a non-diversified open-end management company portfolio,
the Large Cap Value Portfolio, a diversified open-end management company
portfolio, and the International Equity 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 from 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 capital gains to its shareholders. Therefore, no
Federal income tax provision is required.
(e) Organizational expenses of the Small Cap Value Portfolio, the Large
Cap Growth Portfolio, the Large Cap Value Portfolio, and the International
Equity Portfolio totaling $91,800, $91,800, $91,800 and $91,800,
respectively, are being deferred and amortized over 60 months beginning with
public offering of shares in the portfolios. Any redemption by an initial
investor during the amortization period will be reduced by a pro rata 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 of the Small Cap Value Portfolio, the Large
Cap Growth Portfolio, the Large Cap Value Portfolio, and the International
Equity Portfolio were $91,800, $91,800, $91,800 and $91,800 respectively.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment advisory services are provided by Navellier Management, Inc. (the
"Advisor"). Under an agreement with the Adviser, the fund pays a fee at the
annual rate of 1.00% of the daily net assets of the Small Cap Value
Portfolio, 1.15% of the daily net assets the Large Cap Growth Portfolio,
0.75% of the daily net assets of the Large Cap Value Portfolio, and 1.00% of
the daily net assets of the International Equity Portfolio. The Adviser
receives an annual fee
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
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 the
Adviser, at any time upon notice to the Fund. During the period ended
December 31, 1997, the Adviser paid operating expenses of the Small Cap Value
Portfolio, Large Cap Growth Portfolio, Large Cap Value Portfolio and
International Equity Portfolio totaling $153, $123, $93 and $2 respectively.
Under the operating expense agreement, the Adviser requested, and the Small
Cap Value Portfolio, the Large Cap Growth Portfolio, and the Large Cap Value
Portfolio reimbursed, $6, $6 and $6 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.
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 Small
Cap Value Portfolio, the Large Cap Growth Portfolio, the Large Cap Value
Portfolio and the International Equity Portfolio for expenses incurred in the
promotion and distribution of shares of the portfolio. These expenses
include, but are not limited to, the printing of prospectuses, statements of
additional information, and reports used for sales purposes, expenses of
preparation of sales literature and related expenses (including Distributor
personnel), advertisements and other distribution-related expenses, including
a prorated portion of the Distributor's overhead expenses attributable to the
distribution of shares. Such payments are made monthly. The 12b-1 fee
includes, in addition to promotional activities, the amount the Fund may pay
to the Distributor or others as a service fee to reimburse such parties for
personal services provided to shareholders of the Fund and/or the maintenance
of shareholder accounts. Such Rule 12b-1 fees are made pursuant to the Plan
and distribution agreements entered into between such service providers and
the Distributor or the Fund directly.
5. SECURITIES TRANSACTIONS
For the period ended December 31, 1997, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
SMALL CAP LARGE CAP LARGE CAP INTERNATIONAL
VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- -------------
<S> <C> <C> <C> <C>
Purchases......................... $91,970 $83,494 $90,145 $ --
------- ------- ------- -------
------- ------- ------- -------
Sales............................. $ 2,000 $ -- $ -- $ --
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
<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>
SMALL CAP LARGE CAP LARGE CAP INTERNATIONAL
VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- ---------- -------------
<S> <C> <C> <C> <C>
Gross Unrealized Appreciation......................... $ 2,715 $ 2,614 $1,240 $ --
Gross Unrealized Depreciation......................... (1,506) (132) (102) --
-------- -------- -------- ------
Net Unrealized Appreciation of Investments............ $ 1,209 $ 2,482 $1,138 $ --
-------- -------- -------- ------
-------- -------- -------- ------
Cost of Investments for Federal Income Tax Purposes... $137,530 $131,301 $159,862 $ --
-------- -------- -------- ------
-------- -------- -------- ------
</TABLE>
7. NET ASSETS
At December 31, 1997, net assets consisted of the following:
<TABLE>
<CAPTION>
SMALL CAP LARGE CAP LARGE CAP INTERNATIONAL
VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- ---------- -------------
<S> <C> <C> <C> <C>
Paid-in-Capital.................................... $100,048 $100,059 $100,076 $ 9,999
Accumulated Net Realized Loss on Investment
Transactions..................................... (49) -- -- --
Net Unrealized Appreciation of Investments......... 1,209 2,482 1,138 --
-------- -------- -------- ------
NET ASSETS......................................... $101,208 $102,541 $101,214 $9,999
-------- -------- -------- ------
-------- -------- -------- ------
</TABLE>
8. FEDERAL INCOME TAX
Permanent differences between tax and financial reporting of net investment
income and realized gain/(loss) are reclassified to paid-in-capital. As of
December 31, 1997, net investment losses were reclassified to paid-in-capital as
follows:
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY
PORTFOLIO
-------------
<S> <C>
Reduction of paid-in capital............................ $1
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Shareholders and Board of Trustees
Navellier Performance Funds
Reno, Nevada
We have audited the accompanying statement of assets and
liabilities of Navellier Small Cap Value Portfolio, Navellier
Large Cap Growth Portfolio, Navellier Large Cap Value Portfolio
and Navellier International Equity 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 Small Cap Value Portfolio, Navellier
Large Cap Growth Portfolio, Navellier Large Cap Value Portfolio and
Navellier International Equity 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 & Baker
Philadelphia, Pennsylvania
February 20, 1998
<PAGE>
APPENDIX
A-1 AND P-1 COMMERCIAL PAPER RATINGS
Each of the Portfolios will invest only in commercial paper which, at the
date of investment, is rated A-1 by Standard & Poor's Corporation ("S&P") or P-1
by Moody's Investors Services, Inc. ("Moody's"), or, if not rated, is issued or
guaranteed by companies which at the date of investment have an outstanding debt
issue rated AA or higher by Standard & Poor's or Aa or higher by Moody's.
Commercial paper rated A-1 by S&P has the following characteristics:
(1) liquidity ratios are adequate to meet cash requirements; (2) long-term
senior debt is rated "A" or better; (3) the issuer has access to at least two
additional channels of borrowing; (4) basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; (5) typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and (6) the reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
(1) evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten years;
(7) financial strength of a parent company and the relationship which exists
with the issuer; and (8) recognition by the management of obligations which may
be present or may arise as a result of public interest questions and
preparations to meet such obligations.
30
<PAGE>
PART C
OTHER INFORMATION
ITEM 24 FINANCIAL STATEMENTS AND EXHIBITS
1. FINANCIAL STATEMENTS:
(a) N/A
(b) Included in Part B of this Registration Statement:
(i) Annual Report as of December 31, 1997.
(ii) Unaudited financial statement for the short period ended
December 31, 1997
(c) Included in Part C of this Registration Statement: none
All other statements and schedules have been omitted because they are not
applicable or the information is shown in the Financial Statements or Financial
Highlights or notes thereto.
2. EXHIBITS:
Exhibit Number Description
-------------- -----------
1.1 Certificate of Trust of Registrant [initial N-1A filed
December 8, 1995] *
1.2 Declaration of Trust of Registrant [initial N-1A
filed December 8, 1995] *
2 By-Laws of Registrant [initial N-1A filed
December 8, 1995] *
3 None
4 None
5 Investment Management Agreement between the Navellier
Aggresive Growth Portfolio and Navellier Management,
Inc., dated April 27, 1998 [filed herewith]
5.1 Investment Management Agreement between the
Navellier Mid Cap Growth Portfolio and Navellier
Management, Inc., dated April 27, 1998 [filed herewith]
32
<PAGE>
5.2 Investment Management Agreement between the
Navellier Aggressive Micro Cap Portfolio and Navellier
Management, Inc., dated April 27, 1998 [filed herewith]
5.3 Investment Management Agreement between the Navellier
Small Cap Value Portfolio and Navellier Management,
Inc. dated April 27, 1998 [filed herewith]
5.4 Investment Management Agreement between the Navellier
Large Cap Growth Portfolio and Navellier Management,
Inc. dated April 27, 1998 [filed herewith]
5.5 Investment Management Agreement between the Navellier
Large Cap Value Portfolio and Navellier Management,
Inc. dated April 27, 1998 [filed herewith]
5.6 Investment Management Agreement between the Navellier
International Equity Portfolio and Navellier
Management, Inc. dated April 27, 1998 [filed herewith]
5.6 (Exhibit A) Sub-advisory Agreement between Navellier Management,
Inc. and Global Value Investors, Inc. [Post-Effective
Amendment No. 8 filed December 9, 1997]
5.7 Investment Management Agreement between Navellier
Management, Inc. and The Navellier Aggressive Small
Cap Equity Portfolio dated dated April 27, 1998 [filed
herewith]
6.1 Distribution Agreement dated October 17, 1995 [initial
N-1A filed December 8, 1995] *
6.2 Selected Dealer Agreement (specimen) [initial N-1A
filed December 8, 1995] *
7 None
8.1 Administrative Services, Custodian, Transfer Agreement
with Rushmore Trust & Savings, FSB [initial N-1A filed
December 8, 1995] *
8.2 Navellier Administrative Services Agreement [initial
N-1A filed December 8, 1995] *
9.0 Trustee Indemnification Agreements [initial N-1A filed
December 8,1995] *
10 Consent of Counsel [filed herewith]
11 Consent of Independent Auditors [filed herewith]
12 None
13 Subscription Agreement between The Navellier
Performance Funds and Louis Navellier, dated October
17, 1995 [initial N-1A filed December 8, 1995] *
13.1 Investment Advisor Operating Expense Reimbursement
Agreement [initial N-1A filed December 8, 1995] *
14 None
15 12b-1 Distribution Plan for the Navellier Aggressive
Growth Portfolio [initial N-1A filed
December 8, 1995] *
33
<PAGE>
15.1 12b-1 Distribution Plan for the Navellier Mid Cap
Growth Portfolio dated October 30, 1996 [Post-Effective
Amendment No. 4 filed November 26, 1996]*
15.2 12b-1 Distribution Plan for the Navellier Small Cap
Value Portfolio [Post-Effective Amendment No. 7 filed
November 14, 1997]*
15.3 12b-1 Distribution Plan for the Navellier Large Cap
Growth Portfolio [Post-Effective Amendment No. 7 filed
November 14, 1997]*
15.4 12b-1 Distribution Plan for the Navellier Large Cap
Value Portfolio [Post-Effective Amendment No. 7 filed
November 14, 1997]*
15.5 12b-1 Distribution Plan for the Navellier International
Equity Portfolio [Post-Effective Amendment No. 7 filed
November 14, 1997]*
15.6 12b-1 Distribution Plan for the Navellier Aggressive
Small Cap Equity Portfolio dated March 30, 1998 filed
March 31, 1998 via EDGAR incorporated by reference *
15.7 12b-1 Distribution Plan for the Navellier Aggressive
Micro Cap Portfolio dated April 27, 1998 [filed
herewith]
16 N/A
17 Financial Data Schedule (The financial data schedules
are not contained in this N-1A filing, but are
incorporated by reference to the form N-SAR filing
dated 2/27/98. The financial data schedules contained
in the form N-SAR filing are identical to the financial
statements contained in this N-1A filing).
* Denotes the document is incorporated herein by reference.
34
<PAGE>
ITEM 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
(a) As is described in the Statement of Additional Information
("Control Persons and Principal Holders of Securities") the Fund was initially
but no longer is controlled by Louis Navellier, the sole stockholder, officer,
and director of the Investment Advisor, who also serves as Trustee and in
various officer positions with the Fund (as described more fully under "The
Investment Advisor, Distributor, Custodian and Transfer Agent" in the Statement
of Additional Information).
(b) The Distributor Navellier Securities Corp. (incorporated under
the laws of the State of Delaware) is wholly-owned by Louis G. Navellier, who is
also a stockholder, director, and officer of the Investment Advisor and a
Trustee and officer of the Fund.
ITEM 26 NUMBER OF HOLDERS OF SECURITIES
As of December 31, 1997 the Aggressive Growth Portfolio had 3,912
shareholders; the Mid Cap Growth Portfolio had 417 shareholders; and the
Aggressive Micro Cap Portfolio had 530 shareholders. The Small Cap Value
Portfolio, had 1 shareholder; the Large Cap Growth Portfolio, had 1
shareholder; the Large Cap Value Portfolio, had 1 shareholder; the
International Equity Portfolio, had 1 shareholder and the Aggressive
Small Cap Equity Portfolio had 0 shareholders.
ITEM 27 INDEMNIFICATION
The Fund shall indemnify each of its Trustees, officers, employees, and
agents (including persons who serve at its request as directors, officers, or
trustees of another organization in which it has any interest, as a shareholder,
creditor, or otherwise) against all liabilities and expenses (including amounts
paid in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) reasonably incurred by him in connection with the defense or
disposition of any action, suit, or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be threatened, while in office
or thereafter, by reason of his being or having been such a Trustee, officer,
employee, or agent, except with respect to any matter as to which he shall have
been adjudicated to have acted in bad faith, willful misfeasance, gross
negligence, or reckless disregard of his duties; provided, however, that as to
any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such person did not engage in bad faith, willful misfeasance, gross negligence,
or reckless disregard of his duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or by a
reasonable determination, based upon review of readily available facts (as
opposed to a full trial-type inquiry), that he did not engage in such conduct by
written opinion from independent legal counsel approved by a majority of a
quorum of trustees who are neither interested persons nor parties to the
proceedings. The
35
<PAGE>
rights accruing to any person under these provisions shall not exclude any other
right to which he may be lawfully entitled; provided that no person may satisfy
any right of indemnity or reimbursement granted herein or to which he may
otherwise be entitled except out of the Fund Property. A majority of a quorum
of disinterested non-party Trustees may make advance payments in connection with
indemnification under this section, provided that the indemnified person shall
have given a written undertaking adequately secured to reimburse the Fund in the
event it is subsequently determined that he is not entitled to such
indemnification, or a majority of a quorum of disinterested non-party Trustees
or independent counsel determine, after a review of readily available facts,
that the person seeking indemnification will probably be found to be entitled to
indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to the Trustees, officers, and controlling persons of
the Fund pursuant to the provisions described under this Item 27, or otherwise,
the Fund has been advised that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Fund of expenses incurred or paid by
a Trustee, officer, or controlling person of the Fund in the successful defense
of any action, suit, or proceeding) is asserted by such Trustee, officer, or
controlling person in connection with the securities being registered, the Fund
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Fund may purchase and maintain insurance on behalf of an officer,
Trustee, employee, or agent protecting such person, to the full extent permitted
by applicable law, from liability incurred by such person as officer, Trustee,
employee, or agent of the Fund or arising from his activities in such capacity.
Section 9 of the Distribution Agreement between the Fund and Navellier
Securities Corp., provides for indemnification of the parties thereto under
certain circumstances.
Section 4 of the Advisory Agreement between the various portfolios of the
Fund and the Investment Advisor provides for indemnification of the parties
thereto under certain circumstances.
36
<PAGE>
ITEM 28 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
Set forth below is a description of any other business, profession,
vocation, or employment of a substantial nature in which each investment adviser
of the Fund and each director, officer, or partner of any such investment
adviser, is or has been at any time during the past two fiscal years, engaged
for his own account or in the capacity of director, officer, employee, partner,
or trustee:
<TABLE>
<CAPTION>
Name and Principal Positions Held with Registrant Principal Occupations During Past
Business Address and Its Affiliates Two Years
- ------------------ ------------------------------ ---------------------------------
<S> <C> <C>
Louis Navellier One East Trustee and President of The Navellier Mr. Navellier is and has been the CEO and President
Liberty Third Floor Performance Funds, one of Portfolio Managers of Navellier & Associates Inc., an investment
Reno, NV 89501 of the Aggressive Growth Portfolio, the management company since 1988; is and has been CEO
Mid Cap Growth Portfolio and the Aggressive and President of Navellier Management, Inc.; one of
Micro Cap Portfolio. Mr. Navellier the Portfolio Managers for the Investment Advisor
is also the CEO, President, Treasurer, and to this Fund and was one of Portfolio Managers to
Secretary of Navellier Management, Inc., a The Navellier Series Fund; President and CEO of
Delaware Corporation which is the Investment Navellier Securities Corp., the principal
Advisor to the Fund. Mr. Navellier is also Underwriter to this Fund and The Navellier Series
CEO, President, Secretary, and Treasurer of Fund; CEO and President of Navellier Fund
Navellier & Associates Inc., Navellier Management, Inc. and investment advisory company,
Publications, Inc., MPT Review Inc., and since November 30, 1995; and has been publisher and
Navellier International Management, Inc. editor of MPT Review from August 1987 to the
present, and was publisher and editor of the
predecessor investment advisory newsletter OTC
Insight, which he began in 1980 and wrote through
July 1987.
</TABLE>
37
<PAGE>
ITEM 29 PRINCIPAL UNDERWRITERS
(a) The Distributor does not currently act as principal underwriter,
depositor, or investment adviser for any investment company other than the Fund
and The Navellier Series Fund.
(b) The following information is provided, as of the date hereof, with
respect to each director, officer, or partner of each principal underwriter
named in response to Item 21:
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ -------------------- ---------------------
Louis Navellier CEO, President, Director, Trustee, President and
One East Liberty, Treasurer and Secretary CEO
Third Floor
Reno, NV 89501
(c) As of the date hereof, no principal underwriter who is not an
affiliated person of the Fund has received any commissions or other compensation
during the Fund's last fiscal year.
ITEM 30 LOCATION OF ACCOUNTS AND RECORDS
All accounts, records, and other documents required to be maintained under
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained at the office of The Navellier Performance Funds located at One East
Liberty, Third Floor, Reno, Nevada 89501, and the offices of the Fund's
Custodian and Transfer agent at 4922 Fairmont Avenue, Bethesda, MD 20814.
ITEM 31 MANAGEMENT SERVICES
Other than as set forth in Part A and Part B of this Registration
Statement, the Fund is not a party to any management-related service contract.
ITEM 32 UNDERTAKINGS
The Fund hereby undertakes to furnish each person to whom a prospectus is
delivered a copy of the latest annual report to shareholders, upon request and
without change.
The Fund hereby undertakes that if it is requested by the holders of at
least 10% of its outstanding shares to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee, it will do so and
will assist in communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
38
<PAGE>
The Fund hereby files, as to the Navellier Small Cap Value Portfolio,
the Navellier Large Cap Growth Portfolio, the Navellier Large Cap Value
Portfolio, the Navellier International Equity Portfolio and the Navellier
Aggressive Small Cap Equity Portfolio as a post-effective amendment
using unaudited financial statements, which need not be certified, within
four (4) to six (6) months from the effective date of such portfolio's 1933
Act Registration Statement.
39
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 11 to Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Reno, and
State of Nevada on the 26th day of May, 1998.
THE NAVELLIER PERFORMANCE FUNDS
By:___________________________________
Louis Navellier
President and Trustee
The Navellier Performance Funds, and each person whose signature appears
below hereby constitutes and appoints Louis Navellier as such person's true and
lawful attorney-in-fact, with full power to sign for such person and in such
person's name, in the capacities indicated below, any and all amendments to this
Registration Statement, hereby ratifying and confirming such person's signature
as it may be signed by said attorney-in-fact to any and all amendments to said
Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons or their
attorneys-in-fact pursuant to authorization given on October 17, 1995, in the
capacities and on the date indicated:
_____________________ Trustee and President
Louis Navellier(1) (Principal Executive May 26, 1998
Officer), Treasurer
________________________ Trustee
Joel Rossman May 26, 1998
________________________ Trustee
Barry Sander May 26, 1998
________________________ Trustee
Arnold Langsen(2) May 26, 1998
________________________ Trustee and Secretary
Jacques Delacroix May 26, 1998
1 These persons are interested persons affiliated with the Investment
Advisor.
2 This person, although technically not an interested person affiliated with
the Investment Adviser, does own a company which provides consulting services to
Navellier & Associates Inc., a company owned by Louis Navellier.
40
<PAGE>
EXHIBIT 5
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER AGGRESSIVE GROWTH PORTFOLIO
AGREEMENT made as of the 27th day of April, 1998, by and between The
Navellier Aggressive Growth Portfolio ("Portfolio") of THE NAVELLIER PERFORMANCE
FUNDS, a business trust organized under the laws of the State of Delaware (the
"Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Aggressive
Growth Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the Portfolio as to the manner in which
voting rights, rights to consent to trust action, and any
1
<PAGE>
other rights pertaining to how the Portfolio's securities shall be exercised
("Portfolio Voting Rights"). The Portfolio has directed the Custodian, and
Custodian as agreed, to act in accordance with the instructions of the Adviser.
The Adviser shall at no time have custody of or physical control over the
investment account assets or securities, and the Adviser shall not be liable for
any act or omission of the Custodian. The Adviser shall maintain records
required under the Investment Advisers Act of 1940 ("Advisers Act") and shall
make them available to the Portfolio or its designees for review or inspection
upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of eighty-four one-hundredths of one percent (0.84%) (the
"Management Fee") of the Portfolio's average daily net assets. Payment of the
Adviser's compensation for the
2
<PAGE>
preceding month shall be made as promptly as possible after the last day of each
such month. The compensation for the period from the effective date hereof to
the next succeeding last day of the month shall be prorated according to the
proportion which such period bears to the full month ending on such date, and
provided further that, upon any termination of this Agreement before the end of
the month, such compensation for the period from the end of the last month
ending prior to such termination shall be prorated according to the proportion
which such period bears to a full month, and shall be payable upon the date of
termination. If the annual operating expenses borne by the Fund relating to any
Portfolio, including amounts payable to the Adviser hereunder paid or payable by
such Portfolio for any fiscal year, exceed the applicable expense limitations
imposed by state securities laws or regulations thereunder (as same may be
adjusted from time to time), the Adviser will reduce its Management Fee to the
extent of such excess and if required, pursuant to any such laws or regulations
((unless otherwise waived), will reimburse the Portfolio for annual operating
expenses in excess of any such expense limitation up to the amount of the
Management Fee payable to it during that fiscal year with respect to the
Portfolio. The Adviser has the right, but not the obligation, to waive any
portion or all of its Management Fee, from time to time.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition, (c) by the
vote of a majority of the Trustees of the Portfolio who are not parties hereto
nor interested persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment,
3
<PAGE>
within the meaning of the Act, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier Aggressive Growth
Portfolio" or any name derived from the name "Navellier" only for so long as
this Agreement or any extension, renewal, or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the business of the Adviser and for only so long as Navellier Management,
Inc., remains as Adviser to the Portfolio. At such time as such an agreement
shall no longer be in effect, or Adviser's services have terminated, the
Portfolio will (to the extent that it is lawfully able) cease to use such a name
or any other name connected with the Adviser or any organization which shall
have succeeded to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms
4
<PAGE>
"vote of a majority of the outstanding voting securities," "assignment,"
"affiliated person," and "interested person" shall have the respective meanings
specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER AGGRESSIVE GROWTH
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
--------------------------------------------
Barry Sander, Trustee
By:
---------------------------------------------
Attest: Joel Rossman, Trustee
/s/ By:
- ------------------------ ---------------------------------------------
Arnold Langsen, Trustee
By:
--------------------------------------------
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By:
--------------------------------------------
Louis Navellier, President
Attest:
/s/
- ------------------------
6
<PAGE>
EXHIBIT A
7
<PAGE>
INDEMNIFICATION AGREEMENT
The Navellier Aggressive Growth Portfolio of The Navellier Performance
Funds (the "Fund") and Navellier Management, Inc. (the "Advisor") agree as
follows:
1. The Fund agrees with the Advisor, for the benefit of the Advisor and
each person, if any, who controls the Advisor within the meaning of Section 15
of the Securities Act and each and all and any of them, to indemnify and hold
harmless the Advisor and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several (including
reasonable legal fees and expenses) to which they or any of them may become
subject under the Securities Act or under any other statute, at common law or
otherwise, and to reimburse the Advisor and such controlling persons, if any,
for any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
such Registration Statement or Prospectus or any amendment thereof or supplement
thereto. The Advisor and each such controlling person shall, within thirty (30)
days after the complaint shall have been served upon the Advisor or such
controlling person in respect of which indemnity may be sought from the Fund on
account of its agreement contained in this paragraph, notify the Fund in writing
of the commencement thereof. The omission of the Advisor of such controlling
person so to notify the Fund of any such litigation shall relieve the Fund from
any liability which it may have to the Advisor or such controlling person on
account of the indemnity agreement contained in this paragraph if such failure
to timely notify the Fund has resulted in substantial prejudice to the Fund, but
shall not relieve the Fund from any liability which it may have to the Advisor
or controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Advisor or any such controlling person and notice of the
commencement thereof shall have been timely given to the Fund, the Fund shall be
entitled to participate in (and, to the extent that it shall wish, to direct)
the defense thereof at its own expense, but such defense shall be conducted by
counsel of good standing and reasonably satisfactory to the Advisor or such
controlling person(s) or defendant(s) in the litigation. The indemnity
agreement of the Fund contained in this paragraph shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Advisor or any such controlling person, and shall survive any delivery of
shares of the
8
<PAGE>
Fund. The Fund agrees to notify the Advisor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
2. Anything herein to the contrary notwithstanding, the agreement in
paragraph 1 of this Indemnification Agreement, insofar as it constitutes a basis
of reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
3. The Advisor agrees to indemnify and hold harmless the Fund and its
Trustees and such officers as shall have signed any Registration Statement filed
with the Commission from and against any and all losses, claims, damages, or
liabilities, joint or several, to which the Fund or such Trustees or officers
may become subject under the Securities Act, under any other statute, at common
law or otherwise, and will reimburse the Fund or such Trustees or officers for
any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of them in connection with
any litigation, whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities, or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made by the Fund in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Advisor shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. The Fund and its Trustees and such officers
or defendant(s), in any such litigation, shall, within thirty (30) days after
the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Advisor or account
of its agreement contained in this paragraph, notify the Advisor in writing of
the commencement thereof. The omission of the Fund or such Trustee or officer
so to notify the Advisor of any such litigation shall relieve the Advisor from
any liability which it may have to the Fund or such Trustee or officer of
liability which it may have to the Fund or such Trustee or officer on account of
the indemnity agreement contained in this paragraph, but shall not relieve the
Advisor from any liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Fund or any
such Trustee or officer and timely notice of the commencement thereof shall have
been so given to the Advisor, the Advisor shall be entitled to participate in
(and, to the extent it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of good standing and
satisfactory to the Fund. The indemnity agreement of the Advisor
9
<PAGE>
contained in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Fund and shall
survive any delivery of shares of the Fund. The Fund agrees to notify the
Advisor promptly of the commencement of any litigation or proceeding against it
or any of its officers or Trustees or against any such controlling person of
which it may be advised in connection with the issue and sale of the Fund's
shares.
4. Notwithstanding any provision contained in this Agreement, no party
hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
5. Except as expressly provided in paragraphs 1 and 3 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Advisor, and the persons expressly provided for in paragraphs 1
and 3, their respective heirs, successor, personal representatives and assigns,
and except as so provided, nothing expressed or mentioned herein is intended or
shall be construed to give any person, firm or corporation, other than the Fund,
the Advisor, and the persons expressly provided for in paragraphs 1 and 3, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. Except as so
provided, the terms "heirs, successors, personal representatives and assigns"
shall not include any purchaser of shares merely because of such purchase.
10
<PAGE>
ATTEST: THE NAVELLIER AGGRESSIVE GROWTH
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
- -------------------- ---------------------------------------------
Barry Sander, Trustee
By:
---------------------------------------------
Joel Rossman, Trustee
By:
---------------------------------------------
Jacques Delacroix, Trustee
By:
---------------------------------------------
Arnold Langsen, Trustee
ATTEST: NAVELLIER MANAGEMENT, INC.
By:
- -------------------- ---------------------------------------------
Louis Navellier, President
11
<PAGE>
EXHIBIT 5.1
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER MID CAP GROWTH PORTFOLIO
AGREEMENT made as of the 27th day of April, 1998, by and between The
Navellier Mid Cap Growth Portfolio ("Portfolio") of THE NAVELLIER PERFORMANCE
FUNDS, a business trust organized under the laws of the State of Delaware (the
"Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Mid Cap
Growth Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the Portfolio as to the manner in which
voting rights, rights to consent to trust action, and any
1
<PAGE>
other rights pertaining to how the Portfolio's securities shall be exercised
("Portfolio Voting Rights"). The Portfolio has directed the Custodian, and
Custodian as agreed, to act in accordance with the instructions of the Adviser.
The Adviser shall at no time have custody of or physical control over the
investment account assets or securities, and the Adviser shall not be liable for
any act or omission of the Custodian. The Adviser shall maintain records
required under the Investment Advisers Act of 1940 ("Advisers Act") and shall
make them available to the Portfolio or its designees for review or inspection
upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of eighty-four one-hundredths of one percent (0.84%) (the
"Management Fee") of the Portfolio's average daily net assets. Payment of the
Adviser's compensation for the preceding month shall be made as promptly as
possible after the last day of each such month. The compensation for the
2
<PAGE>
period from the effective date hereof to the next succeeding last day of the
month shall be prorated according to the proportion which such period bears to
the full month ending on such date, and provided further that, upon any
termination of this Agreement before the end of the month, such compensation for
the period from the end of the last month ending prior to such termination shall
be prorated according to the proportion which such period bears to a full month,
and shall be payable upon the date of termination. If the annual operating
expenses borne by the Fund relating to any Portfolio, including amounts payable
to the Adviser hereunder paid or payable by such Portfolio for any fiscal year,
exceed the applicable expense limitations imposed by state securities laws or
regulations thereunder (as same may be adjusted from time to time), the Adviser
will reduce its Management Fee to the extent of such excess and if required,
pursuant to any such laws or regulations ((unless otherwise waived), will
reimburse the Portfolio for annual operating expenses in excess of any such
expense limitation up to the amount of the Management Fee payable to it during
that fiscal year with respect to the Portfolio. The Adviser has the right, but
not the obligation, to waive any portion or all of its Management Fee, from time
to time.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition, (c) by the
vote of a majority of the Trustees of the Portfolio who are not parties hereto
nor interested persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment,
3
<PAGE>
within the meaning of the Act, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier Mid Cap Growth Portfolio"
or any name derived from the name "Navellier" only for so long as this
Agreement or any extension, renewal, or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the business of the Adviser and for only so long as Navellier Management,
Inc., remains as Adviser to the Portfolio. At such time as such an agreement
shall no longer be in effect, or Adviser's services have terminated, the
Portfolio will (to the extent that it is lawfully able) cease to use such a name
or any other name connected with the Adviser or any organization which shall
have succeeded to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms
4
<PAGE>
"vote of a majority of the outstanding voting securities," "assignment,"
"affiliated person," and "interested person" shall have the respective meanings
specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER MID CAP GROWTH
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
------------------------------------
Barry Sander, Trustee
By:
------------------------------------
Attest: Joel Rossman, Trustee
/s/ By:
- ------------------------- ------------------------------------
Arnold Langsen, Trustee
By:
------------------------------------
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By:
------------------------------------
Louis Navellier, President
Attest:
/s/
- -------------------------
6
<PAGE>
EXHIBIT A
7
<PAGE>
INDEMNIFICATION AGREEMENT
The Navellier Mid Cap Growth Portfolio of The Navellier Performance Funds
(the "Fund") and Navellier Management, Inc. (the "Advisor") agree as follows:
1. The Fund agrees with the Advisor, for the benefit of the Advisor and
each person, if any, who controls the Advisor within the meaning of Section 15
of the Securities Act and each and all and any of them, to indemnify and hold
harmless the Advisor and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several (including
reasonable legal fees and expenses) to which they or any of them may become
subject under the Securities Act or under any other statute, at common law or
otherwise, and to reimburse the Advisor and such controlling persons, if any,
for any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
such Registration Statement or Prospectus or any amendment thereof or supplement
thereto. The Advisor and each such controlling person shall, within thirty (30)
days after the complaint shall have been served upon the Advisor or such
controlling person in respect of which indemnity may be sought from the Fund on
account of its agreement contained in this paragraph, notify the Fund in writing
of the commencement thereof. The omission of the Advisor of such controlling
person so to notify the Fund of any such litigation shall relieve the Fund from
any liability which it may have to the Advisor or such controlling person on
account of the indemnity agreement contained in this paragraph if such failure
to timely notify the Fund has resulted in substantial prejudice to the Fund, but
shall not relieve the Fund from any liability which it may have to the Advisor
or controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Advisor or any such controlling person and notice of the
commencement thereof shall have been timely given to the Fund, the Fund shall be
entitled to participate in (and, to the extent that it shall wish, to direct)
the defense thereof at its own expense, but such defense shall be conducted by
counsel of good standing and reasonably satisfactory to the Advisor or such
controlling person(s) or defendant(s) in the litigation. The indemnity
agreement of the Fund contained in this paragraph shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Advisor or any such controlling person, and shall survive any delivery of
shares of the
8
<PAGE>
Fund. The Fund agrees to notify the Advisor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
2. Anything herein to the contrary notwithstanding, the agreement in
paragraph 1 of this Indemnification Agreement, insofar as it constitutes a basis
of reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
3. The Advisor agrees to indemnify and hold harmless the Fund and
its Trustees and such officers as shall have signed any Registration Statement
filed with the Commission from and against any and all losses, claims, damages,
or liabilities, joint or several, to which the Fund or such Trustees or officers
may become subject under the Securities Act, under any other statute, at common
law or otherwise, and will reimburse the Fund or such Trustees or officers for
any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of them in connection with
any litigation, whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities, or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made by the Fund in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Advisor shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. The Fund and its Trustees and such officers
or defendant(s), in any such litigation, shall, within thirty (30) days after
the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Advisor or account
of its agreement contained in this paragraph, notify the Advisor in writing of
the commencement thereof. The omission of the Fund or such Trustee or officer
so to notify the Advisor of any such litigation shall relieve the Advisor from
any liability which it may have to the Fund or such Trustee or officer of
liability which it may have to the Fund or such Trustee or officer on account of
the indemnity agreement contained in this paragraph, but shall not relieve the
Advisor from any liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Fund or any
such Trustee or officer and timely notice of the commencement thereof shall have
been so given to the Advisor, the Advisor shall be entitled to participate in
(and, to the extent it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of good standing and
satisfactory to the Fund. The indemnity agreement of the Advisor
9
<PAGE>
contained in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Fund and shall
survive any delivery of shares of the Fund. The Fund agrees to notify the
Advisor promptly of the commencement of any litigation or proceeding against it
or any of its officers or Trustees or against any such controlling person of
which it may be advised in connection with the issue and sale of the Fund's
shares.
4. Notwithstanding any provision contained in this Agreement, no
party hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
5. Except as expressly provided in paragraphs 1 and 3 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Advisor, and the persons expressly provided for in paragraphs 1
and 3, their respective heirs, successor, personal representatives and assigns,
and except as so provided, nothing expressed or mentioned herein is intended or
shall be construed to give any person, firm or corporation, other than the Fund,
the Advisor, and the persons expressly provided for in paragraphs 1 and 3, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. Except as so
provided, the terms "heirs, successors, personal representatives and assigns"
shall not include any purchaser of shares merely because of such purchase.
10
<PAGE>
ATTEST: THE NAVELLIER MID CAP GROWTH
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
- ------------------------- ------------------------------------
Barry Sander, Trustee
By:
------------------------------------
Joel Rossman, Trustee
By:
------------------------------------
Jacques Delacroix, Trustee
By:
------------------------------------
Arnold Langsen, Trustee
ATTEST: NAVELLIER MANAGEMENT, INC.
By:
- ------------------------- ------------------------------------
Louis Navellier, President
11
<PAGE>
EXHIBIT 5.2
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER AGGRESSIVE MICRO CAP PORTFOLIO
AGREEMENT made as of the 27th day of April, 1998, by and between The
Navellier Aggressive Micro Cap Portfolio ("Portfolio") of THE NAVELLIER
PERFORMANCE FUNDS, a business trust organized under the laws of the State of
Delaware (the "Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation
(the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Aggressive
Micro Cap Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the
1
<PAGE>
Portfolio as to the manner in which voting rights, rights to consent to trust
action, and any other rights pertaining to how the Portfolio's securities shall
be exercised ("Portfolio Voting Rights"). The Portfolio has directed the
Custodian, and Custodian as agreed, to act in accordance with the instructions
of the Adviser. The Adviser shall at no time have custody of or physical
control over the investment account assets or securities, and the Adviser shall
not be liable for any act or omission of the Custodian. The Adviser shall
maintain records required under the Investment Advisers Act of 1940 ("Advisers
Act") and shall make them available to the Portfolio or its designees for review
or inspection upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of eighty-four one-hundredths of one percent (0.84%) (the
"Management Fee") of the Portfolio's average daily net assets. Payment of the
Adviser's compensation for the
2
<PAGE>
preceding month shall be made as promptly as possible after the last day of each
such month. The compensation for the period from the effective date hereof to
the next succeeding last day of the month shall be prorated according to the
proportion which such period bears to the full month ending on such date, and
provided further that, upon any termination of this Agreement before the end of
the month, such compensation for the period from the end of the last month
ending prior to such termination shall be prorated according to the proportion
which such period bears to a full month, and shall be payable upon the date of
termination. If the annual operating expenses borne by the Fund relating to any
Portfolio, including amounts payable to the Adviser hereunder paid or payable by
such Portfolio for any fiscal year, exceed the applicable expense limitations
imposed by state securities laws or regulations thereunder (as same may be
adjusted from time to time), the Adviser will reduce its Management Fee to the
extent of such excess and if required, pursuant to any such laws or regulations
((unless otherwise waived), will reimburse the Portfolio for annual operating
expenses in excess of any such expense limitation up to the amount of the
Management Fee payable to it during that fiscal year with respect to the
Portfolio. The Adviser has the right, but not the obligation, to waive any
portion or all of its Management Fee, from time to time.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition, (c) by the
vote of a majority of the Trustees of the Portfolio who are not parties hereto
nor interested persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment,
3
<PAGE>
within the meaning of the Act, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier Aggressive Micro Cap
Portfolio" or any name derived from the name "Navellier" only for so long
as this Agreement or any extension, renewal, or amendment hereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to the business of the Adviser and for only so long as Navellier
Management, Inc., remains as Adviser to the Portfolio. At such time as such an
agreement shall no longer be in effect, or Adviser's services have terminated,
the Portfolio will (to the extent that it is lawfully able) cease to use such a
name or any other name connected with the Adviser or any organization which
shall have succeeded to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms
4
<PAGE>
"vote of a majority of the outstanding voting securities," "assignment,"
"affiliated person," and "interested person" shall have the respective meanings
specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER AGGRESSIVE MICRO
CAP PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
-----------------------------
Barry Sander, Trustee
By:
-----------------------------
Attest: Joel Rossman, Trustee
/s/ By:
- ------------------------- -----------------------------
Arnold Langsen, Trustee
By:
-----------------------------
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By:
-----------------------------
Louis Navellier, President
Attest:
/s/
- --------------------------
6
<PAGE>
EXHIBIT A
7
<PAGE>
INDEMNIFICATION AGREEMENT
The Navellier Arressive Micro Cap Portfolio of The Navellier Performance
Funds (the "Fund") and Navellier Management, Inc. (the "Advisor") agree as
follows:
1. The Fund agrees with the Advisor, for the benefit of the Advisor and
each person, if any, who controls the Advisor within the meaning of Section 15
of the Securities Act and each and all and any of them, to indemnify and hold
harmless the Advisor and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several (including
reasonable legal fees and expenses) to which they or any of them may become
subject under the Securities Act or under any other statute, at common law or
otherwise, and to reimburse the Advisor and such controlling persons, if any,
for any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
such Registration Statement or Prospectus or any amendment thereof or supplement
thereto. The Advisor and each such controlling person shall, within thirty (30)
days after the complaint shall have been served upon the Advisor or such
controlling person in respect of which indemnity may be sought from the Fund on
account of its agreement contained in this paragraph, notify the Fund in writing
of the commencement thereof. The omission of the Advisor of such controlling
person so to notify the Fund of any such litigation shall relieve the Fund from
any liability which it may have to the Advisor or such controlling person on
account of the indemnity agreement contained in this paragraph if such failure
to timely notify the Fund has resulted in substantial prejudice to the Fund, but
shall not relieve the Fund from any liability which it may have to the Advisor
or controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Advisor or any such controlling person and notice of the
commencement thereof shall have been timely given to the Fund, the Fund shall be
entitled to participate in (and, to the extent that it shall wish, to direct)
the defense thereof at its own expense, but such defense shall be conducted by
counsel of good standing and reasonably satisfactory to the Advisor or such
controlling person(s) or defendant(s) in the litigation. The indemnity
agreement of the Fund contained in this paragraph shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Advisor or any such controlling person, and shall survive any delivery of
shares of the
8
<PAGE>
Fund. The Fund agrees to notify the Advisor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
2. Anything herein to the contrary notwithstanding, the agreement in
paragraph 1 of this Indemnification Agreement, insofar as it constitutes a basis
of reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
3. The Advisor agrees to indemnify and hold harmless the Fund and its
Trustees and such officers as shall have signed any Registration Statement filed
with the Commission from and against any and all losses, claims, damages, or
liabilities, joint or several, to which the Fund or such Trustees or officers
may become subject under the Securities Act, under any other statute, at common
law or otherwise, and will reimburse the Fund or such Trustees or officers for
any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of them in connection with
any litigation, whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities, or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made by the Fund in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Advisor shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. The Fund and its Trustees and such officers
or defendant(s), in any such litigation, shall, within thirty (30) days after
the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Advisor or account
of its agreement contained in this paragraph, notify the Advisor in writing of
the commencement thereof. The omission of the Fund or such Trustee or officer
so to notify the Advisor of any such litigation shall relieve the Advisor from
any liability which it may have to the Fund or such Trustee or officer of
liability which it may have to the Fund or such Trustee or officer on account of
the indemnity agreement contained in this paragraph, but shall not relieve the
Advisor from any liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Fund or any
such Trustee or officer and timely notice of the commencement thereof shall have
been so given to the Advisor, the Advisor shall be entitled to participate in
(and, to the extent it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of good standing and
satisfactory to the Fund. The indemnity agreement of the Advisor
9
<PAGE>
contained in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Fund and shall
survive any delivery of shares of the Fund. The Fund agrees to notify the
Advisor promptly of the commencement of any litigation or proceeding against it
or any of its officers or Trustees or against any such controlling person of
which it may be advised in connection with the issue and sale of the Fund's
shares.
4. Notwithstanding any provision contained in this Agreement, no party
hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
5. Except as expressly provided in paragraphs 1 and 3 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Advisor, and the persons expressly provided for in paragraphs 1
and 3, their respective heirs, successor, personal representatives and assigns,
and except as so provided, nothing expressed or mentioned herein is intended or
shall be construed to give any person, firm or corporation, other than the Fund,
the Advisor, and the persons expressly provided for in paragraphs 1 and 3, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. Except as so
provided, the terms "heirs, successors, personal representatives and assigns"
shall not include any purchaser of shares merely because of such purchase.
8
<PAGE>
ATTEST: THE NAVELLIER AGGRESSIVE MICRO CAP
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
- ---------------------- ----------------------------
Barry Sander, Trustee
By:
----------------------------
Joel Rossman, Trustee
By:
----------------------------
Jacques Delacroix, Trustee
By:
----------------------------
Arnold Langsen, Trustee
ATTEST: NAVELLIER MANAGEMENT, INC.
By:
- ---------------------- ----------------------------
Louis Navellier, President
11
<PAGE>
EXHIBIT 5.3
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER SMALL CAP VALUE PORTFOLIO
AGREEMENT made as of the 27th day of April, 1998, by and between The
Navellier Small Cap Value Portfolio ("Portfolio") of THE NAVELLIER PERFORMANCE
FUNDS, a business trust organized under the laws of the State of Delaware (the
"Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Small Cap
Value Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the Portfolio as to the manner in which
voting rights, rights to consent to trust action, and any
1
<PAGE>
other rights pertaining to how the Portfolio's securities shall be exercised
("Portfolio Voting Rights"). The Portfolio has directed the Custodian, and
Custodian as agreed, to act in accordance with the instructions of the Adviser.
The Adviser shall at no time have custody of or physical control over the
investment account assets or securities, and the Adviser shall not be liable for
any act or omission of the Custodian. The Adviser shall maintain records
required under the Investment Advisers Act of 1940 ("Advisers Act") and shall
make them available to the Portfolio or its designees for review or inspection
upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of eighty-four one-hundredths of one percent (0.84%) (the
"Management Fee") of the Portfolio's average daily net assets. Payment of the
Adviser's compensation for the
2
<PAGE>
preceding month shall be made as promptly as possible after the last day of each
such month. The compensation for the period from the effective date hereof to
the next succeeding last day of the month shall be prorated according to the
proportion which such period bears to the full month ending on such date, and
provided further that, upon any termination of this Agreement before the end of
the month, such compensation for the period from the end of the last month
ending prior to such termination shall be prorated according to the proportion
which such period bears to a full month, and shall be payable upon the date of
termination. If the annual operating expenses borne by the Fund relating to any
Portfolio, including amounts payable to the Adviser hereunder paid or payable by
such Portfolio for any fiscal year, exceed the applicable expense limitations
imposed by state securities laws or regulations thereunder (as same may be
adjusted from time to time), the Adviser will reduce its Management Fee to the
extent of such excess and if required, pursuant to any such laws or regulations
((unless otherwise waived), will reimburse the Portfolio for annual operating
expenses in excess of any such expense limitation up to the amount of the
Management Fee payable to it during that fiscal year with respect to the
Portfolio. The Adviser has the right, but not the obligation, to waive any
portion or all of its Management Fee, from time to time.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition, (c) by the
vote of a majority of the Trustees of the Portfolio who are not parties hereto
nor interested persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment,
3
<PAGE>
within the meaning of the Act, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier Small Cap Value Portfolio"
or any name derived from the name "Navellier" only for so long as this Agreement
or any extension, renewal, or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of the Adviser and for only so long as Navellier Management, Inc.,
remains as Adviser to the Portfolio. At such time as such an agreement shall no
longer be in effect, or Adviser's services have terminated, the Portfolio will
(to the extent that it is lawfully able) cease to use such a name or any other
name connected with the Adviser or any organization which shall have succeeded
to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms
4
<PAGE>
"vote of a majority of the outstanding voting securities," "assignment,"
"affiliated person," and "interested person" shall have the respective meanings
specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER SMALL CAP VALUE
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
----------------------------
Barry Sander, Trustee
By:
----------------------------
Attest: Joel Rossman, Trustee
/s/ By:
- -------------------------- ----------------------------
Arnold Langsen, Trustee
By:
----------------------------
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By:
----------------------------
Louis Navellier, President
Attest:
/s/
- --------------------------
6
<PAGE>
EXHIBIT A
7
<PAGE>
INDEMNIFICATION AGREEMENT
The Navellier Small Cap Value Portfolio of The Navellier Performance Funds
(the "Fund") and Navellier Management, Inc. (the "Advisor") agree as follows:
1. The Fund agrees with the Advisor, for the benefit of the Advisor and
each person, if any, who controls the Advisor within the meaning of Section 15
of the Securities Act and each and all and any of them, to indemnify and hold
harmless the Advisor and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several (including
reasonable legal fees and expenses) to which they or any of them may become
subject under the Securities Act or under any other statute, at common law or
otherwise, and to reimburse the Advisor and such controlling persons, if any,
for any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
such Registration Statement or Prospectus or any amendment thereof or supplement
thereto. The Advisor and each such controlling person shall, within thirty (30)
days after the complaint shall have been served upon the Advisor or such
controlling person in respect of which indemnity may be sought from the Fund on
account of its agreement contained in this paragraph, notify the Fund in writing
of the commencement thereof. The omission of the Advisor of such controlling
person so to notify the Fund of any such litigation shall relieve the Fund from
any liability which it may have to the Advisor or such controlling person on
account of the indemnity agreement contained in this paragraph if such failure
to timely notify the Fund has resulted in substantial prejudice to the Fund, but
shall not relieve the Fund from any liability which it may have to the Advisor
or controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Advisor or any such controlling person and notice of the
commencement thereof shall have been timely given to the Fund, the Fund shall be
entitled to participate in (and, to the extent that it shall wish, to direct)
the defense thereof at its own expense, but such defense shall be conducted by
counsel of good standing and reasonably satisfactory to the Advisor or such
controlling person(s) or defendant(s) in the litigation. The indemnity
agreement of the Fund contained in this paragraph shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Advisor or any such controlling person, and shall survive any delivery of
shares of the
8
<PAGE>
Fund. The Fund agrees to notify the Advisor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
2. Anything herein to the contrary notwithstanding, the agreement in
paragraph 1 of this Indemnification Agreement, insofar as it constitutes a basis
of reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
3. The Advisor agrees to indemnify and hold harmless the Fund and its
Trustees and such officers as shall have signed any Registration Statement filed
with the Commission from and against any and all losses, claims, damages, or
liabilities, joint or several, to which the Fund or such Trustees or officers
may become subject under the Securities Act, under any other statute, at common
law or otherwise, and will reimburse the Fund or such Trustees or officers for
any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of them in connection with
any litigation, whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities, or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made by the Fund in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Advisor shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. The Fund and its Trustees and such officers
or defendant(s), in any such litigation, shall, within thirty (30) days after
the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Advisor or account
of its agreement contained in this paragraph, notify the Advisor in writing of
the commencement thereof. The omission of the Fund or such Trustee or officer
so to notify the Advisor of any such litigation shall relieve the Advisor from
any liability which it may have to the Fund or such Trustee or officer of
liability which it may have to the Fund or such Trustee or officer on account of
the indemnity agreement contained in this paragraph, but shall not relieve the
Advisor from any liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Fund or any
such Trustee or officer and timely notice of the commencement thereof shall have
been so given to the Advisor, the Advisor shall be entitled to participate in
(and, to the extent it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of good standing and
satisfactory to the Fund. The indemnity agreement of the Advisor
9
<PAGE>
contained in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Fund and shall
survive any delivery of shares of the Fund. The Fund agrees to notify the
Advisor promptly of the commencement of any litigation or proceeding against it
or any of its officers or Trustees or against any such controlling person of
which it may be advised in connection with the issue and sale of the Fund's
shares.
4. Notwithstanding any provision contained in this Agreement, no party
hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
5. Except as expressly provided in paragraphs 1 and 3 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Advisor, and the persons expressly provided for in paragraphs 1
and 3, their respective heirs, successor, personal representatives and assigns,
and except as so provided, nothing expressed or mentioned herein is intended
or shall be construed to give any person, firm or corporation, other than the
Fund, the Advisor, and the persons expressly provided for in paragraphs 1 and
3, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any representation, warranty or agreement herein contained.
Except as so provided, the terms "heirs, successors, personal representatives
and assigns" shall not include any purchaser of shares merely because of such
purchase.
10
<PAGE>
ATTEST: THE NAVELLIER SMALL CAP VALUE
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
- ---------------------- -------------------------
Barry Sander, Trustee
By:
-------------------------
Joel Rossman, Trustee
By:
-------------------------
Jacques Delacroix, Trustee
By:
-------------------------
Arnold Langsen, Trustee
ATTEST: NAVELLIER MANAGEMENT, INC.
By:
- ---------------------- -------------------------
Louis Navellier, President
11
<PAGE>
EXHIBIT 5.4
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER LARGE CAP GROWTH PORTFOLIO
AGREEMENT made as of the 27th day of April, 1998, by and between The
Navellier Large Cap Growth Portfolio ("Portfolio") of THE NAVELLIER PERFORMANCE
FUNDS, a business trust organized under the laws of the State of Delaware (the
"Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Large Cap
Growth Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the Portfolio as to the manner in which
voting rights, rights to consent to trust action, and any
1
<PAGE>
other rights pertaining to how the Portfolio's securities shall be exercised
("Portfolio Voting Rights"). The Portfolio has directed the Custodian, and
Custodian as agreed, to act in accordance with the instructions of the Adviser.
The Adviser shall at no time have custody of or physical control over the
investment account assets or securities, and the Adviser shall not be liable for
any act or omission of the Custodian. The Adviser shall maintain records
required under the Investment Advisers Act of 1940 ("Advisers Act") and shall
make them available to the Portfolio or its designees for review or inspection
upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of eighty-four one-hundredths of one percent (0.84%) (the
"Management Fee") of the Portfolio's average daily net assets. Payment of the
Adviser's compensation for the
2
<PAGE>
preceding month shall be made as promptly as possible after the last day of each
such month. The compensation for the period from the effective date hereof to
the next succeeding last day of the month shall be prorated according to the
proportion which such period bears to the full month ending on such date, and
provided further that, upon any termination of this Agreement before the end of
the month, such compensation for the period from the end of the last month
ending prior to such termination shall be prorated according to the proportion
which such period bears to a full month, and shall be payable upon the date of
termination. If the annual operating expenses borne by the Fund relating to any
Portfolio, including amounts payable to the Adviser hereunder paid or payable by
such Portfolio for any fiscal year, exceed the applicable expense limitations
imposed by state securities laws or regulations thereunder (as same may be
adjusted from time to time), the Adviser will reduce its Management Fee to the
extent of such excess and if required, pursuant to any such laws or regulations
((unless otherwise waived), will reimburse the Portfolio for annual operating
expenses in excess of any such expense limitation up to the amount of the
Management Fee payable to it during that fiscal year with respect to the
Portfolio. The Adviser has the right, but not the obligation, to waive any
portion or all of its Management Fee, from time to time.
The Adviser has agreed to pay Robert Barnes a consulting fee of 0.15% of
the Portfolio's average daily net assets for providing Adviser with analysis of
large cap growth stocks. The consulting fee shall be paid solely by Adviser and
shall not be paid by Fund or Portfolio.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition, (c) by the
vote of a majority of the Trustees of the Portfolio who are not parties hereto
nor interested persons of any party, as required by the Act.
3
<PAGE>
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment, within
the meaning of the Act, unless such automatic termination shall be prevented by
an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier Large Cap Growth Portfolio"
or any name derived from the name "Navellier" only for so long as this Agreement
or any extension, renewal, or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of the Adviser and for only so long as Navellier Management, Inc.,
remains as Adviser to the Portfolio. At such time as such an agreement shall no
longer be in effect, or Adviser's services have terminated, the Portfolio will
(to the extent that it is lawfully able)
4
<PAGE>
cease to use such a name or any other name connected with the Adviser or any
organization which shall have succeeded to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person" shall have the
respective meanings specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER LARGE CAP GROWTH
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
---------------------------
Barry Sander, Trustee
By:
---------------------------
Attest: Joel Rossman, Trustee
/s/ By:
- ------------------------- ---------------------------
Arnold Langsen, Trustee
By:
---------------------------
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By:
---------------------------
Louis Navellier, President
Attest:
/s/
- ---------------------------
6
<PAGE>
EXHIBIT A
7
<PAGE>
INDEMNIFICATION AGREEMENT
The Navellier Large Cap Growth Portfolio of The Navellier Performance Funds
(the "Fund") and Navellier Management, Inc. (the "Advisor") agree as follows:
1. The Fund agrees with the Advisor, for the benefit of the Advisor and
each person, if any, who controls the Advisor within the meaning of Section 15
of the Securities Act and each and all and any of them, to indemnify and hold
harmless the Advisor and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several (including
reasonable legal fees and expenses) to which they or any of them may become
subject under the Securities Act or under any other statute, at common law or
otherwise, and to reimburse the Advisor and such controlling persons, if any,
for any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
such Registration Statement or Prospectus or any amendment thereof or supplement
thereto. The Advisor and each such controlling person shall, within thirty (30)
days after the complaint shall have been served upon the Advisor or such
controlling person in respect of which indemnity may be sought from the Fund on
account of its agreement contained in this paragraph, notify the Fund in writing
of the commencement thereof. The omission of the Advisor of such controlling
person so to notify the Fund of any such litigation shall relieve the Fund from
any liability which it may have to the Advisor or such controlling person on
account of the indemnity agreement contained in this paragraph if such failure
to timely notify the Fund has resulted in substantial prejudice to the Fund, but
shall not relieve the Fund from any liability which it may have to the Advisor
or controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Advisor or any such controlling person and notice of the
commencement thereof shall have been timely given to the Fund, the Fund shall be
entitled to participate in (and, to the extent that it shall wish, to direct)
the defense thereof at its own expense, but such defense shall be conducted by
counsel of good standing and reasonably satisfactory to the Advisor or such
controlling person(s) or defendant(s) in the litigation. The indemnity
agreement of the Fund contained in this paragraph shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Advisor or any such controlling person, and shall survive any delivery of
shares of the
8
<PAGE>
Fund. The Fund agrees to notify the Advisor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
2. Anything herein to the contrary notwithstanding, the agreement in
paragraph 1 of this Indemnification Agreement, insofar as it constitutes a basis
of reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
3. The Advisor agrees to indemnify and hold harmless the Fund and
its Trustees and such officers as shall have signed any Registration Statement
filed with the Commission from and against any and all losses, claims, damages,
or liabilities, joint or several, to which the Fund or such Trustees or officers
may become subject under the Securities Act, under any other statute, at common
law or otherwise, and will reimburse the Fund or such Trustees or officers for
any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of them in connection with
any litigation, whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities, or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made by the Fund in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Advisor shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. The Fund and its Trustees and such officers
or defendant(s), in any such litigation, shall, within thirty (30) days after
the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Advisor or account
of its agreement contained in this paragraph, notify the Advisor in writing of
the commencement thereof. The omission of the Fund or such Trustee or officer
so to notify the Advisor of any such litigation shall relieve the Advisor from
any liability which it may have to the Fund or such Trustee or officer of
liability which it may have to the Fund or such Trustee or officer on account of
the indemnity agreement contained in this paragraph, but shall not relieve the
Advisor from any liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Fund or any
such Trustee or officer and timely notice of the commencement thereof shall have
been so given to the Advisor, the Advisor shall be entitled to participate in
(and, to the extent it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of good standing and
satisfactory to the Fund. The indemnity agreement of the Advisor
9
<PAGE>
contained in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Fund and shall
survive any delivery of shares of the Fund. The Fund agrees to notify the
Advisor promptly of the commencement of any litigation or proceeding against it
or any of its officers or Trustees or against any such controlling person of
which it may be advised in connection with the issue and sale of the Fund's
shares.
4. Notwithstanding any provision contained in this Agreement, no
party hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
5. Except as expressly provided in paragraphs 1 and 3 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Advisor, and the persons expressly provided for in paragraphs 1
and 3, their respective heirs, successor, personal representatives and assigns,
and except as so provided, nothing expressed or mentioned herein is intended or
shall be construed to give any person, firm or corporation, other than the Fund,
the Advisor, and the persons expressly provided for in paragraphs 1 and 3, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. Except as so
provided, the terms "heirs, successors, personal representatives and assigns"
shall not include any purchaser of shares merely because of such purchase.
10
<PAGE>
ATTEST: THE NAVELLIER LARGE CAP GROWTH
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
- ---------------------- ---------------------------
Barry Sander, Trustee
By:
---------------------------
Joel Rossman, Trustee
By:
---------------------------
Jacques Delacroix, Trustee
By:
---------------------------
Arnold Langsen, Trustee
ATTEST: NAVELLIER MANAGEMENT, INC.
By:
- ---------------------- ---------------------------
Louis Navellier, President
11
<PAGE>
EXHIBIT 5.5
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER LARGE CAP VALUE PORTFOLIO
AGREEMENT made as of the 27th day of April 1998, by and between The
Navellier Large Cap Value Portfolio ("Portfolio") of THE NAVELLIER PERFORMANCE
FUNDS, a business trust organized under the laws of the State of Delaware (the
"Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Large Cap
Value Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the Portfolio as to the manner in which
voting rights, rights to consent to trust action, and any
1
<PAGE>
other rights pertaining to how the Portfolio's securities shall be exercised
("Portfolio Voting Rights"). The Portfolio has directed the Custodian, and
Custodian as agreed, to act in accordance with the instructions of the Adviser.
The Adviser shall at no time have custody of or physical control over the
investment account assets or securities, and the Adviser shall not be liable for
any act or omission of the Custodian. The Adviser shall maintain records
required under the Investment Advisers Act of 1940 ("Advisers Act") and shall
make them available to the Portfolio or its designees for review or inspection
upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of seventy-five one-hundredths of one percent (0.75%) (the
"Management Fee") of the Portfolio's average daily net assets. Payment of the
Adviser's compensation for the
2
<PAGE>
preceding month shall be made as promptly as possible after the last day of each
such month. The compensation for the period from the effective date hereof to
the next succeeding last day of the month shall be prorated according to the
proportion which such period bears to the full month ending on such date, and
provided further that, upon any termination of this Agreement before the end of
the month, such compensation for the period from the end of the last month
ending prior to such termination shall be prorated according to the proportion
which such period bears to a full month, and shall be payable upon the date of
termination. If the annual operating expenses borne by the Fund relating to any
Portfolio, including amounts payable to the Adviser hereunder paid or payable by
such Portfolio for any fiscal year, exceed the applicable expense limitations
imposed by state securities laws or regulations thereunder (as same may be
adjusted from time to time), the Adviser will reduce its Management Fee to the
extent of such excess and if required, pursuant to any such laws or regulations
((unless otherwise waived), will reimburse the Portfolio for annual operating
expenses in excess of any such expense limitation up to the amount of the
Management Fee payable to it during that fiscal year with respect to the
Portfolio. The Adviser has the right, but not the obligation, to waive any
portion or all of its Management Fee, from time to time.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition, (c) by the
vote of a majority of the Trustees of the Portfolio who are not parties hereto
nor interested persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment,
3
<PAGE>
within the meaning of the Act, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier Large Cap Value Portfolio"
or any name derived from the name "Navellier" only for so long as this Agreement
or any extension, renewal, or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of the Adviser and for only so long as Navellier Management, Inc.,
remains as Adviser to the Portfolio. At such time as such an agreement shall no
longer be in effect, or Adviser's services have terminated, the Portfolio will
(to the extent that it is lawfully able) cease to use such a name or any other
name connected with the Adviser or any organization which shall have succeeded
to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms
4
<PAGE>
"vote of a majority of the outstanding voting securities," "assignment,"
"affiliated person," and "interested person" shall have the respective meanings
specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER LARGE CAP VALUE
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
---------------------------------------
Barry Sander, Trustee
By:
---------------------------------------
Attest: Joel Rossman, Trustee
/s/ By:
- ------------------------- ---------------------------------------
Arnold Langsen, Trustee
By:
---------------------------------------
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By:
---------------------------------------
Louis Navellier, President
Attest:
/s/
----------------------
6
<PAGE>
EXHIBIT A
7
<PAGE>
INDEMNIFICATION AGREEMENT
The Navellier Large Cap Value Portfolio of The Navellier Performance Funds
(the "Fund") and Navellier Management, Inc. (the "Advisor") agree as follows:
1. The Fund agrees with the Advisor, for the benefit of the Advisor and
each person, if any, who controls the Advisor within the meaning of Section 15
of the Securities Act and each and all and any of them, to indemnify and hold
harmless the Advisor and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several (including
reasonable legal fees and expenses) to which they or any of them may become
subject under the Securities Act or under any other statute, at common law or
otherwise, and to reimburse the Advisor and such controlling persons, if any,
for any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
such Registration Statement or Prospectus or any amendment thereof or supplement
thereto. The Advisor and each such controlling person shall, within thirty (30)
days after the complaint shall have been served upon the Advisor or such
controlling person in respect of which indemnity may be sought from the Fund on
account of its agreement contained in this paragraph, notify the Fund in writing
of the commencement thereof. The omission of the Advisor of such controlling
person so to notify the Fund of any such litigation shall relieve the Fund from
any liability which it may have to the Advisor or such controlling person on
account of the indemnity agreement contained in this paragraph if such failure
to timely notify the Fund has resulted in substantial prejudice to the Fund, but
shall not relieve the Fund from any liability which it may have to the Advisor
or controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Advisor or any such controlling person and notice of the
commencement thereof shall have been timely given to the Fund, the Fund shall be
entitled to participate in (and, to the extent that it shall wish, to direct)
the defense thereof at its own expense, but such defense shall be conducted by
counsel of good standing and reasonably satisfactory to the Advisor or such
controlling person(s) or defendant(s) in the litigation. The indemnity
agreement of the Fund contained in this paragraph shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Advisor or any such controlling person, and shall survive any delivery of
shares of the
8
<PAGE>
Fund. The Fund agrees to notify the Advisor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
2. Anything herein to the contrary notwithstanding, the agreement in
paragraph 1 of this Indemnification Agreement, insofar as it constitutes a basis
of reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
3. The Advisor agrees to indemnify and hold harmless the Fund and its
Trustees and such officers as shall have signed any Registration Statement filed
with the Commission from and against any and all losses, claims, damages, or
liabilities, joint or several, to which the Fund or such Trustees or officers
may become subject under the Securities Act, under any other statute, at common
law or otherwise, and will reimburse the Fund or such Trustees or officers for
any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of them in connection with
any litigation, whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities, or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made by the Fund in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Advisor shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. The Fund and its Trustees and such officers
or defendant(s), in any such litigation, shall, within thirty (30) days after
the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Advisor or account
of its agreement contained in this paragraph, notify the Advisor in writing of
the commencement thereof. The omission of the Fund or such Trustee or officer
so to notify the Advisor of any such litigation shall relieve the Advisor from
any liability which it may have to the Fund or such Trustee or officer of
liability which it may have to the Fund or such Trustee or officer on account of
the indemnity agreement contained in this paragraph, but shall not relieve the
Advisor from any liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Fund or any
such Trustee or officer and timely notice of the commencement thereof shall have
been so given to the Advisor, the Advisor shall be entitled to participate in
(and, to the extent it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of good standing and
satisfactory to the Fund. The indemnity agreement of the Advisor
9
<PAGE>
contained in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Fund and shall
survive any delivery of shares of the Fund. The Fund agrees to notify the
Advisor promptly of the commencement of any litigation or proceeding against it
or any of its officers or Trustees or against any such controlling person of
which it may be advised in connection with the issue and sale of the Fund's
shares.
4. Notwithstanding any provision contained in this Agreement, no party
hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
5. Except as expressly provided in paragraphs 1 and 3 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Advisor, and the persons expressly provided for in paragraphs 1
and 3, their respective heirs, successor, personal representatives and assigns,
and except as so provided, nothing expressed or mentioned herein is intended or
shall be construed to give any person, firm or corporation, other than the Fund,
the Advisor, and the persons expressly provided for in paragraphs 1 and 3, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. Except as so
provided, the terms "heirs, successors, personal representatives and assigns"
shall not include any purchaser of shares merely because of such purchase.
10
<PAGE>
ATTEST: THE NAVELLIER LARGE CAP VALUE
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
- ---------------------- ------------------------------------
Barry Sander, Trustee
By:
------------------------------------
Joel Rossman, Trustee
By:
------------------------------------
Jacques Delacroix, Trustee
By:
------------------------------------
Arnold Langsen, Trustee
ATTEST: NAVELLIER MANAGEMENT, INC.
By:
- ---------------------- ------------------------------------
Louis Navellier, President
11
<PAGE>
EXHIBIT 5.6
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER INTERNATIONAL EQUITY PORTFOLIO
AGREEMENT made as of the 27th day of April, 1998, by and between The
Navellier International Equity Portfolio ("Portfolio") of THE NAVELLIER
PERFORMANCE FUNDS, a business trust organized under the laws of the State of
Delaware (the "Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation
(the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier
International Equity Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the
1
<PAGE>
Portfolio as to the manner in which voting rights, rights to consent to trust
action, and any other rights pertaining to how the Portfolio's securities shall
be exercised ("Portfolio Voting Rights"). The Portfolio has directed the
Custodian, and Custodian as agreed, to act in accordance with the instructions
of the Adviser. The Adviser shall at no time have custody of or physical
control over the investment account assets or securities, and the Adviser shall
not be liable for any act or omission of the Custodian. The Adviser shall
maintain records required under the Investment Advisers Act of 1940 ("Advisers
Act") and shall make them available to the Portfolio or its designees for review
or inspection upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of one percent (1.00%) (the "Management Fee") of the Portfolio's
average daily net assets.
2
<PAGE>
Payment of the Adviser's compensation for the preceding month shall be made as
promptly as possible after the last day of each such month. The compensation
for the period from the effective date hereof to the next succeeding last day of
the month shall be prorated according to the proportion which such period bears
to the full month ending on such date, and provided further that, upon any
termination of this Agreement before the end of the month, such compensation for
the period from the end of the last month ending prior to such termination shall
be prorated according to the proportion which such period bears to a full month,
and shall be payable upon the date of termination. If the annual operating
expenses borne by the Fund relating to any Portfolio, including amounts payable
to the Adviser hereunder paid or payable by such Portfolio for any fiscal year,
exceed the applicable expense limitations imposed by state securities laws or
regulations thereunder (as same may be adjusted from time to time), the Adviser
will reduce its Management Fee to the extent of such excess and if required,
pursuant to any such laws or regulations ((unless otherwise waived), will
reimburse the Portfolio for annual operating expenses in excess of any such
expense limitation up to the amount of the Management Fee payable to it during
that fiscal year with respect to the Portfolio. The Adviser has the right, but
not the obligation, to waive any portion or all of its Management Fee, from time
to time.
The Adviser has entered into a Sub-Advisory Agreement with Global Value
Investors, Inc. ("GVI") whereby GVI will make the day-to-day investment
decisions regarding investments by the Portfolio. As part of that Sub-Advisory
Agreement, Adviser has agreed to pay GVI a sub-advisory fee of 0.625% of the
average daily net assets of the Portfolio. The Adviser will pay such fees to
GVI. The Fund and the Portfolio shall have no obligation to pay such fees.
Said Sub-Advisory Agreement is adopted, approved and made a part hereof as
Exhibit A.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit B and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition,
3
<PAGE>
(c) by the vote of a majority of the Trustees of the Portfolio who are not
parties hereto nor interested persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment, within
the meaning of the Act, unless such automatic termination shall be prevented by
an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier International Equity
Portfolio" or any name derived from the name "Navellier" only for so long as
this Agreement or any extension, renewal, or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the
4
<PAGE>
business of the Adviser and for only so long as Navellier Management, Inc.,
remains as Adviser to the Portfolio. At such time as such an agreement shall no
longer be in effect, or Adviser's services have terminated, the Portfolio will
(to the extent that it is lawfully able) cease to use such a name or any other
name connected with the Adviser or any organization which shall have succeeded
to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person" shall have the
respective meanings specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER INTERNATIONAL EQUITY
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
----------------------------
Barry Sander, Trustee
By:
----------------------------
Attest: Joel Rossman, Trustee
/s/ By:
- -------------------- ----------------------------
Arnold Langsen, Trustee
By:
----------------------------
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By:
----------------------------
Louis Navellier, President
Attest:
/s/
- --------------------------
6
<PAGE>
EXHIBIT A
7
<PAGE>
DATED AUGUST 14, 1997
GLOBAL VALUE INVESTORS, INC.
and
THE NAVELLIER PERFORMANCE FUNDS
_____________________________________________
INVESTMENT ADVISORY AGREEMENT
_____________________________________________
8
<PAGE>
THIS AGREEMENT is made the 14th day of August 1998
AMONG
(1) NAVELLIER MANAGEMENT, INC., a corporation incorporated in and under the
laws of the state of Delaware, whose principal office is at One East
Liberty, Third Floor, Reno, Nevada 89501 (hereinafter called "the
Manager"); and
(2) THE NAVELLIER PERFORMANCE FUNDS, a Delaware business trust, whose principal
office is at One East Liberty, Third Floor, Reno, Nevada 89501 (hereinafter
called the "Funds"); and
(3) GLOBAL VALUE INVESTORS, INC., a corporation incorporated in and under the
laws of the state of New Jersey, whose principal office is at 103 Carnegie
Center, Suite 100, Princeton, New Jersey 08540 (hereinafter called "the
Investment Advisor").
WHEREAS
A. The Navellier International Portfolio (the "Portfolio") is to be a new
portfolio of the Funds. The Portfolio is being organized with the
principal object to carry on business as a mutual fund portfolio investing
in international securities. None of the other portfolios of the Funds
invests primarily in securities of companies located outside of the United
States.
B. Manager has previously entered into an agreement with the Funds to provide
certain administrative and management services.
C. The Investment Advisor has experience in investing in international
securities that the Manager desires to utilize in managing the Portfolio.
D. The Manager is desirous of appointing the Investment Advisor to act as a
sub-advisor to the Portfolio and to the Manager in the stock selection and
investment advice relating to the Portfolio, and the Investment Advisor
(having been approved by the trustees of the Funds) has agreed so to act
with a view to attempting to achieve the investment objective of the
Portfolio.
NOW IT IS HEREBY AGREED as follows:
1. APPOINTMENT OF INVESTMENT ADVISOR
(a) The Manager hereby appoints the Investment Advisor and the Investment
Advisor hereby agrees to act as the sole investment advisor to the
Portfolio from the date hereof upon the terms and subject to the
conditions hereinafter contained.
9
<PAGE>
(b) The Investment Advisor shall use its best endeavors to increase the
value of the cash and investments securities of the Portfolio
(hereinafter "Investments") by investing and reinvesting the same in
such manner as the Investment Advisor shall think fit.
(c) In carrying out its duties hereunder the Investment Advisor shall
observe and comply with the Trust Agreement and Bylaws of the
Portfolio, all applicable provisions of the Prospectus (all of which
documents shall first be provided to the Investment Advisor for its
review and approval), the Investment Company Act of 1940 (the "Act"),
and all resolutions and directions of the Board of Trustees of the
Funds (the "Trustees") of which it shall have notice, PROVIDED THAT
such resolutions, Bylaws and provisions of the Prospectus do not
violate any laws or restrictions placed upon the Investment Advisor
under applicable law.
2. DUTIES OF INVESTMENT ADVISOR
The Manager hereby delegates to the Investment Advisor the management of
the investment and reinvestment of the Investments comprising the assets of
the Portfolio with power on behalf of and in the name of the Portfolio at
its discretion:
(a) To direct the purchase, subscription or other acquisition of
Investments and to direct the sale, redemption, exchange thereof,
subject to the duty to render to the Trustees, the Manager and the
institution having custody of the Portfolio's Investments (the
"Custodian") written reports of the composition of the portfolio of
the Portfolio as often as the Trustees shall reasonably require;
(b) To make all decisions (except for decisions relating to leverage)
relating to the manner, method and timing of investment transactions,
to select brokers, dealers and other intermediaries by or through whom
such transactions will be effected, and to engage such consultants,
analysts and experts in connection therewith as may be considered
necessary or appropriate;
(c) To direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Portfolio,
PROVIDED THAT the Investment Advisor shall have no authority to direct
the transfer of Portfolio funds or assets to itself or other persons
and shall have no authority over the disbursement (as opposed to
investment decisions) of funds or assets nor any custody of any
Portfolio funds or assets; and
(d) To take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder;
PROVIDED THAT any specific or general directions which the Trustees may
give to the Investment Advisor with regard to any of the foregoing powers
shall, unless the contrary is expressly stated therein, override the
general authority given by this clause to the extent that the Trustees may,
at any time and from time to time, take over,
10
<PAGE>
either generally or to a limited extent, the exercise of all or any of the
same as they shall think fit and, in particular, the Manager shall have the
right to direct the Investment Advisor to place trades through brokers and
other agents of the Manager's choice, subject to such broker or agents
executing such trades on a "best execution basis", i.e. at the best price
and/or with research or other services which render that broker's services
the most appropriate for the Investment Advisor's needs, and further that
the Investment Advisor is satisfied that the dealing and execution quality
of such brokers are satisfactory to the Investment Advisor; PROVIDED
FURTHER THAT nothing herein shall be construed as giving the Investment
Advisor power to manage the aforesaid cash and Investments in such a manner
as would cause the Portfolio to be considered a "dealer" in stocks,
securities or commodities for U.S. federal income tax purposes; PROVIDED
FURTHER THAT such directions by the Trustees do not violate any fiduciary
duties, U.S. statutes or the laws of any other countries with regard to the
Investment Advisor's duties and responsibilities; and PROVIDED FURTHER THAT
if the Trustees elect to take over, either generally or to a limited
extent, the exercise of all or any of the Investment Advisor's
responsibilities hereunder, then the provisions of clause 3(b) shall be
applicable to those circumstances.
3. REMUNERATION OF THE INVESTMENT ADVISOR
a. The Manager shall pay to the Investment Advisor by way of remuneration
for its services hereunder 50% of the investment advisory fees
received by Manager, i.e., 50% of 1.00% (0.50%) of average daily net
assets of the Portfolio. The fee payable to the Investment Advisor
under this clause shall accrue and be due on the last business day of
each month and shall be paid on that day or as soon thereafter as is
practicable, PROVIDED THAT nothing contained in this clause shall
preclude the Manager from charging the Portfolio a Section 12b-1 fee
of no greater than one-fourth of one percent (0.25%).
b. If Investment Advisor should cease to be Investment Advisor to the
Portfolio for any reason then either:
(i) Investment Advisor and Manager shall agree upon a fair and
equitable severance payment to the Investment Advisor; or
(ii) The Manager shall resign as a manager of the Portfolio, and
neither the Manager nor an affiliated person or affiliated
company of the Manager (as those terms are defined in the Act)
shall accept any compensation, directly or indirectly,
attributable to investment advisory services to the Portfolio
for a period of ten (10) years from the date on which the
Investment Advisor ceases to perform the duties required of him
hereunder.
c. If any of the Manager's rights and responsibilities under the
investment advisory agreement between the Manager and the Funds are
transferred or assigned to a third party, then the Investment Advisor
shall be entitled to one-half (1/2) of the consideration attributable
to the Portfolio in the same form
11
<PAGE>
and at the same time as the Manager receives such compensation. If
receipt of such consideration is subject to the recipients' obligation
to refrain from competing with the assignee or transferee of such
rights, then the Investment Advisor's right to receive any
consideration under this paragraph shall be contingent upon the
agreement of the Investment Advisor to agree to the same restrictions
upon its future activities as those to which the Manager agrees.
4. DEALINGS OF INVESTMENT ADVISOR
(a) Subject to sub-clause (b) below, the duties of the Investment Advisor
hereunder shall not preclude the Investment Advisor from providing
investment advisory services of a like nature to any other person or
entity, including, without limitation, the management of managed
accounts and clients' accounts as part of its existing or future
business and the Investment Advisor shall not be liable to account for
any profit arising therefrom to the Manager, the Portfolio or the
shareholders of the Portfolio (the "Shareholders").
(b) The Investment Advisor undertakes, while acting as investment advisor
to the Portfolio hereunder, and for a period of one year thereafter,
that neither it nor any of its affiliates (as that term is defined in
the Act) shall establish any mutual fund which may reasonably be
deemed to compete with the Portfolio, nor enter into any arrangements
to manage or advise any such fund without obtaining the prior written
consent of the Manager, which consent shall not be unreasonably
withheld. Specifically, the Investment Advisor agrees that it shall
not deal directly with any investor of the Portfolio in connection
with subscription(s) or with the investment of funds in the Portfolio
and will direct all inquiries from prospective investors to the
Manager. The Investment Advisor further agrees that it will not
accept any fee directly from any prospective investor or take any
other action to aid any prospective investor in circumventing the
Manager in connection with its management fee. The Investment Advisor
further agrees that information concerning investors in the Portfolio,
including but not limited to investors' names, addresses, telephone
numbers, net worth, investment objectives, brokers, consultants, and
financial advisors, constitute confidential customer lists and trade
secret information which belong to Manager and Funds only and not to
Investment Advisor. Nothing contained in this paragraph shall limit
or restrict the Investment Adviser from receiving compensation for
rendering investment advice to its clients nor from assisting the
Manager in marketing the Portfolio.
5. EXPENSES
a. The Investment Advisor shall be entitled to reimbursement from the
Portfolio or Manager of its non-overhead, out-of-pocket, reasonable
expenses properly associated with and incurred by the Investment
Advisor in exercising or carrying out its powers and duties hereunder.
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b. The Investment Advisor shall bear its own overhead research and other
internal operating costs.
c. For the avoidance of doubt, the Portfolio shall bear its own overhead
and other internal operating costs (whether incurred directly or by
the Manager) including, without limitation:
(i) The costs incurred by the Portfolio in registration under the
Act and the Securities Act of 1933, including, but not limited
to the preparation and printing of the prospectus or any
offering literature (including any form of advertisement or
other solicitation materials calculated to lead to investors
subscribing for Shares) and compliance with Blue Sky laws;
(ii) All fees and expenses on behalf of the Portfolio to its
transfer agent and custodian;
(iii) The reasonable fees and expenses of accountants, auditors,
lawyers and other professional advisors to the Portfolio;
(iv) Any interest, fee or charge payable on or on account of any
borrowing by the Portfolio;
(v) Fiscal and governmental charge and duties relating to the
purchase, sale, issue or redemption of Shares and increases in
authorized share capital of the Portfolio;
(vi) The fees of any stock exchange or over-the-counter market on
which the Shares may from time to time by listed, quoted or
dealt in and the expenses of obtaining any such listing,
quotation or permission to deal;
(vii) The fees and expenses (if any) payable to the Trustees;
(viii) Brokerage, fiscal or governmental charges or duties in respect
of or in connection with the acquisition, holding or disposal
of any of the assets of the Portfolio or otherwise in
connection with its business;
(ix) The annual registration fees for the Funds;
(x) The expenses of publishing details and prices of Shares in
newspapers and other publications;
(xi) All expenses incurred in the convening of meetings of
Shareholders or in the preparation of agreements or other
documents relating to the Portfolio or in relation to the safe
custody of the documents of title of any Investments;
(xii) All Trustees' fees and communications costs.
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d. The Manager shall be responsible for all expenses of marketing of the
Portfolio, including fees payable for inclusion in mutual fund
supermarkets.
6. CONCERNING THE INVESTMENT ADVISOR
The Investment Advisor agrees to use its best efforts and judgment and to
take due care in exercising or carrying out its power and duties hereunder,
PROVIDED THAT it shall not, in the absence of wilful default or negligence
as opposed to errors in investment judgment on its part, be liable to the
Manager, the Portfolio or the Shareholders for any act or omission in
connection with the performance of its services hereunder. The Investment
Advisor shall not be liable to the Portfolio or any of its Shareholders or
any other party for any error of judgment or any other action or omission
by the Manager and/or the Portfolio or any of their employees, associates,
brokers, distributors, agents or persons or entities working on their
behalf or for any loss sustained by the Portfolio or its Shareholders or
any third party or entity which is a result of any action or omission taken
by the Manager or the Portfolio, or any of their employees, associates,
brokers, distributors, agents or persons or entities working on their
behalf.
7 INDEMNITY
Each of the Manager and the Investment Advisor Investment Advisor (the
"Indemnifying Party") agrees to indemnify the other (the "Covered Person")
from and against all liabilities, losses, expenses, reasonable attorneys'
fees and costs (other than attorneys' fees and costs in relation to the
preparation of this Agreement, for which each party shall bear its own
costs and attorneys' fees) or damages (other than liabilities, losses,
expenses, attorneys' fees and costs or damages arising from any wilful
default or gross negligence on the Covered Person's part) claimed by any
third party as a result of the acts or commissions of the Indemnifying
Party in connection with the performance of services hereunder, including
but not limited to any claims asserted or threatened by the Portfolio, any
Shareholder, governmental or regulatory agency, or any other person
PROVIDED THAT any claim for indemnity made by a Covered Person under the
terms of this indemnity shall first be made by that party to the
Indemnifying Party. The Indemnifying Party shall advance to the Covered
Party its reasonable expenses and costs (including any reasonable
attorneys' fees and costs) of investigating and/or defending any claim
asserted or threatened by the Portfolio or any such Shareholder or
Shareholders, governmental or regulatory agency or any other third person
in connection with the indemnity provisions of this Agreement, subject
always to the Indemnifying Party first receiving a written undertaking from
the Covered Party to repay any amounts advanced to him in the event and to
the extent of any subsequent determination that the Covered Party was not
entitled to indemnification hereunder in respect thereof. Notwithstanding
any of the foregoing provisions of this paragraph to the contrary, the
Investment Advisor shall not be liable to the Manager hereunder for any
error of judgment or any other action or omission for which the Investment
Advisor would not be liable pursuant to the provisions of Clause 5 of this
Agreement.
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8. INDEPENDENT CONTRACTOR
The Investment Advisor shall for all purposes of this Agreement be deemed
to be an independent contractor and, except as otherwise expressly provided
herein, shall have no authority to act for, bind or represent the Portfolio
in any way or otherwise be deemed to be an agent of the Portfolio. Without
limiting the generality of the foregoing, the Investment Advisor shall have
no authority (nor shall it have any duty) on behalf of the Portfolio
(a) To maintain the principal corporate records or books of account of the
Portfolio;
(b) To disburse funds or assets of the Portfolio payments of dividends,
legal and accounting fees, and trustees' and officers' salaries;
(c) To publish or furnish the subscription price or redemption price of
the shares of the Portfolio;
(d) To make redemptions of the Portfolio's shares;
(e) To calculate or determine the Net Asset Value of the Portfolio's
shares; or
(f) To market, sell, advertise, produce prospectuses and file financial
reports with any governmental agency or to be involved in any such
activity associated with the Fund.
9. ACCOUNT AND OTHER INFORMATION The Investment Advisor shall:
(a) Arrange that there be sent to the Portfolio confirmations of all
transactions in the Portfolio's Investments and periodic statements
(not less frequently than monthly) thereof at a fair market valuation,
together with such further information concerning its services
performed for the Portfolio as the Portfolio may reasonably request;
(b) Provide to the Portfolio and the Manager on execution of this
Agreement a copy of Part II of the Investment Advisors' current Form
ADV filed with the Securities and Exchange Commission (and shall
provide promptly to the Portfolio any supplement or amendment
thereto);
(c) Provide to the Manager such information at such times as the Manager
may reasonably require for the purposes of preparing or procuring the
preparation of monthly trading and quarterly reports for dispatch to
the Shareholders; and
(d) Provide to the Manager, or such other person as the Manager may
direct, timely valuations of Investments for the purpose of
calculating the Net Asset Value of the Porfolio's shares (however, the
Investment Advisor shall have no
15
<PAGE>
responsibility in preparing or calculating the Net Asset Value, which
responsibility shall be solely that of the Manager).
10. USE OF NAMES AND PERFORMANCE RECORD
a. The name and right to the name Navellier Management, Inc. or any
derivation of the name Navellier shall at all times be owned and be
the sole and exclusive property of Louis Navellier. At the conclusion
of the term of this Agreement or in the event of any termination of
this Agreement or if the Investment Advisor's services are terminated
for any reason, the Portfolio and its employees, representatives,
affiliates, associates agree that they shall immediately cease using
the name Navellier and/or any derivatives of said name for the
Portfolio.
b. The Portfolio and Manager shall not publish or distribute to its
Shareholders, prospective investors, sales agents or members of the
public any disclosure document, offering literature (including any
form of advertisement or other solicitation materials calculated to
lead to investors subscribing for shares in the Portfolio) or other
document referring by name to the Investment Advisor unless the
Investment Advisor shall have consented in writing to such references
in the form and context in which they appear.
c. The performance record of the Portfolio shall belong to the Investment
Advisor.
11. TERMINATION
The appointment of the Investment Advisor hereunder shall continue in force
until a date which is twenty-four (24) calendar months after the later of
the date of its initial execution and approval by the Board of Trustees of
the Navellier Performance Funds, and, subject to approval at least annually
by the Board of Trustees, shall continue thereafter until terminated either
by the Portfolio giving to the Investment Advisor notice in writing at any
time or by the Investment Advisor giving to the Manager and/or the
Portfolio not less than sixty (60) days notice in writing. Notwithstanding
the foregoing provisions of this clause to the contrary, the provisions of
clauses 3, 4b and 10 shall survive the termination of the Investment
Advisor's appointment hereunder.
12. NOTICES
Any notice, instruction or other instrument required or permitted to be
given hereunder may be delivered in person to the offices of the parties as
set forth herein during normal business hours, or delivered or sent by
prepaid registered mail or by telex, cable or telecopy to the parties at
such offices or such other address as may be notified by either party from
time to time. Such notice, instruction or other instrument shall be deemed
to have been served, in the case of a registered letter at the expiration
of seventy-two (72) hours after posting; in the case of cable twenty-four
16
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(24) hours after dispatch; and, in the case of telex or telecopy,
immediately on dispatch, and if delivered outside normal business hours it
shall be deemed to have been received at the next time after delivery when
normal business hours commence, and in the case of cable, telex or telecopy
on the business day after the receipt thereof. Evidence that the notice,
instruction or other instrument was properly addressed, stamped and put
into the post shall be conclusive evidence of posting.
13. ASSIGNMENT AND DELEGATION
The benefit of this Agreement shall not be assigned by any party hereto
save with the written consent of the other parties. This Agreement shall
be personal to the Investment Advisor, who shall not sub-contract or
delegate the performance of its services hereunder to any person
whatsoever.
14. PROPER LAW AND FORUM
This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada, and the parties agree that the federal or
state court located in San Francisco, California shall hear and determine
any suit, action or proceeding, and/or settle any disputes between the
parties which may arise out of or in connection with this Agreement unless
otherwise agreed in writing signed by all parties.
15 MODIFICATIONS
Except as otherwise provided herein, this Agreement shall not be considered
amended, modified or waived unless evidenced by an instrument in writing
signed by the party or parties to be charged with such amendment,
modification or waiver.
16. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument. This Agreement shall not be effective until the
execution and delivery between the parties of at least one set of
counterparts. The parties authorize each other to detach and combine
original signature pages and consolidate them into a single identical
original. Any one of such completely executed counterparts shall be
sufficient proof of this Agreement.
17. ATTORNEYS' FEES
In the event of a material breach of this Agreement by any party hereto,
the prevailing party, as determined by the trier of fact, shall be entitled
to its reasonable attorneys' fees and costs as determined by the court in
such action, in addition to any other damages awarded.
18. INTEGRATION
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Unless otherwise agreed in writing between the parties hereto, the parties
intend that the terms of this Agreement shall be the final expression of
their agreement with respect to the subject matter hereof and may not be
contradicted by evidence of any prior or contemporaneous negotiations or
agreement. The parties further intend that this Agreement shall constitute
the complete and exclusive statement of its terms and that no extrinsic
evidence whatsoever may be introduced in any judicial, administrative, or
other legal proceeding involving this Agreement, to alter its terms. Any
dispute as to which persons or entities are liable for a breach of this
Agreement shall be determined by the court or other trier of fact.
19. MUTUAL CONTRIBUTION
This Agreement has been negotiated at arm's length among persons
sophisticated and knowledgeable in the matters dealt with in the Agreement.
In addition, each party has been represented by experienced and
knowledgeable legal counsel. Accordingly, any rule of law or legal
decision that would require interpretation of any ambiguities in this
Agreement against the party that has drafted it is not applicable and it
waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the purposes of the parties and this Agreement.
20. HEADINGS.
The paragraph headings of this Agreement are intended solely for
convenience of reference and shall not be used to define, limit, extend, or
describe the scope of this Agreement or the intent of any provision hereof.
References to clauses or paragraphs shall be deemed to refer to clauses or
paragraphs of this Agreement unless specific reference is made to another
document.
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<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first
set forth above.
GLOBAL VALUE INVESTORS, INC.
---------------------------------
Ram Kolluri, President
August 14, 1997
NAVELLIER MANAGEMENT, INC.
By
---------------------------------
Louis G. Navellier, President
THE NAVELLIER PERFORMANCE FUNDS
By
---------------------------------
Louis G. Navellier
19
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EXHIBIT B
20
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INDEMNIFICATION AGREEMENT
The Navellier International Equity Portfolio of The Navellier Performance
Funds (the "Fund") and Navellier Management, Inc. (the "Advisor") agree as
follows:
1. The Fund agrees with the Advisor, for the benefit of the Advisor and
each person, if any, who controls the Advisor within the meaning of Section 15
of the Securities Act and each and all and any of them, to indemnify and hold
harmless the Advisor and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several (including
reasonable legal fees and expenses) to which they or any of them may become
subject under the Securities Act or under any other statute, at common law or
otherwise, and to reimburse the Advisor and such controlling persons, if any,
for any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
such Registration Statement or Prospectus or any amendment thereof or supplement
thereto. The Advisor and each such controlling person shall, within thirty (30)
days after the complaint shall have been served upon the Advisor or such
controlling person in respect of which indemnity may be sought from the Fund on
account of its agreement contained in this paragraph, notify the Fund in writing
of the commencement thereof. The omission of the Advisor of such controlling
person so to notify the Fund of any such litigation shall relieve the Fund from
any liability which it may have to the Advisor or such controlling person on
account of the indemnity agreement contained in this paragraph if such failure
to timely notify the Fund has resulted in substantial prejudice to the Fund, but
shall not relieve the Fund from any liability which it may have to the Advisor
or controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Advisor or any such controlling person and notice of the
commencement thereof shall have been timely given to the Fund, the Fund shall be
entitled to participate in (and, to the extent that it shall wish, to direct)
the defense thereof at its own expense, but such defense shall be conducted by
counsel of good standing and reasonably satisfactory to the Advisor or such
controlling person(s) or defendant(s) in the litigation. The indemnity
agreement of the Fund contained in this paragraph shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Advisor or any such controlling person, and shall survive any delivery of
shares of the
21
<PAGE>
Fund. The Fund agrees to notify the Advisor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
2. Anything herein to the contrary notwithstanding, the agreement in
paragraph 1 of this Indemnification Agreement, insofar as it constitutes a basis
of reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
3. The Advisor agrees to indemnify and hold harmless the Fund and
its Trustees and such officers as shall have signed any Registration Statement
filed with the Commission from and against any and all losses, claims, damages,
or liabilities, joint or several, to which the Fund or such Trustees or officers
may become subject under the Securities Act, under any other statute, at common
law or otherwise, and will reimburse the Fund or such Trustees or officers for
any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of them in connection with
any litigation, whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities, or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made by the Fund in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Advisor shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. The Fund and its Trustees and such officers
or defendant(s), in any such litigation, shall, within thirty (30) days after
the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Advisor or account
of its agreement contained in this paragraph, notify the Advisor in writing of
the commencement thereof. The omission of the Fund or such Trustee or officer
so to notify the Advisor of any such litigation shall relieve the Advisor from
any liability which it may have to the Fund or such Trustee or officer of
liability which it may have to the Fund or such Trustee or officer on account of
the indemnity agreement contained in this paragraph, but shall not relieve the
Advisor from any liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Fund or any
such Trustee or officer and timely notice of the commencement thereof shall have
been so given to the Advisor, the Advisor shall be entitled to participate in
(and, to the extent it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of good standing and
satisfactory to the Fund. The indemnity agreement of the Advisor
22
<PAGE>
contained in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Fund and shall
survive any delivery of shares of the Fund. The Fund agrees to notify the
Advisor promptly of the commencement of any litigation or proceeding against it
or any of its officers or Trustees or against any such controlling person of
which it may be advised in connection with the issue and sale of the Fund's
shares.
4. Notwithstanding any provision contained in this Agreement, no
party hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
5. Except as expressly provided in paragraphs 1 and 3 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Advisor, and the persons expressly provided for in paragraphs 1
and 3, their respective heirs, successor, personal representatives and assigns,
and except as so provided, nothing expressed or mentioned herein is intended or
shall be construed to give any person, firm or corporation, other than the Fund,
the Advisor, and the persons expressly provided for in paragraphs 1 and 3, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. Except as so
provided, the terms "heirs, successors, personal representatives and assigns"
shall not include any purchaser of shares merely because of such purchase.
23
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ATTEST: THE NAVELLIER INTERNATIONAL EQUITY
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
- ---------------------- ------------------------------
Barry Sander, Trustee
By:
------------------------------
Joel Rossman, Trustee
By:
------------------------------
Jacques Delacroix, Trustee
By:
------------------------------
Arnold Langsen, Trustee
ATTEST: NAVELLIER MANAGEMENT, INC.
By:
- ---------------------- ------------------------------
Louis Navellier, President
24
<PAGE>
EXHIBIT 5.7
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
AGREEMENT made as of the 27th day of April, 1998, by and between The
Navellier Aggressive Small Cap Equity Portfolio ("Portfolio") of THE NAVELLIER
PERFORMANCE FUNDS, a business trust organized under the laws of the State of
Delaware (the "Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation
(the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Aggressive
Small Cap Equity Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the
1
<PAGE>
Portfolio as to the manner in which voting rights, rights to consent to trust
action, and any other rights pertaining to how the Portfolio's securities shall
be exercised ("Portfolio Voting Rights"). The Portfolio has directed the
Custodian, and Custodian as agreed, to act in accordance with the instructions
of the Adviser. The Adviser shall at no time have custody of or physical
control over the investment account assets or securities, and the Adviser shall
not be liable for any act or omission of the Custodian. The Adviser shall
maintain records required under the Investment Advisers Act of 1940 ("Advisers
Act") and shall make them available to the Portfolio or its designees for review
or inspection upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of eighty-four one-hundredths of one percent (0.84%) (the
"Management Fee") of the
2
<PAGE>
Portfolio's average daily net assets. Payment of the Adviser's compensation for
the preceding month shall be made as promptly as possible after the last day of
each such month. The compensation for the period from the effective date hereof
to the next succeeding last day of the month shall be prorated according to the
proportion which such period bears to the full month ending on such date, and
provided further that, upon any termination of this Agreement before the end of
the month, such compensation for the period from the end of the last month
ending prior to such termination shall be prorated according to the proportion
which such period bears to a full month, and shall be payable upon the date of
termination. If the annual operating expenses borne by the Fund relating to any
Portfolio, including amounts payable to the Adviser hereunder paid or payable by
such Portfolio for any fiscal year, exceed the applicable expense limitations
imposed by state securities laws or regulations thereunder (as same may be
adjusted from time to time), the Adviser will reduce its Management Fee to the
extent of such excess and if required, pursuant to any such laws or regulations
((unless otherwise waived), will reimburse the Portfolio for annual operating
expenses in excess of any such expense limitation up to the amount of the
Management Fee payable to it during that fiscal year with respect to the
Portfolio. The Adviser has the right, but not the obligation, to waive any
portion or all of its Management Fee, from time to time.
The Adviser has agreed to pay Robert Barnes a consulting fee of 0.15% of
the Portfolio's average daily net assets for providing Adviser with analysis of
large cap growth stocks. The consulting fee shall be paid solely by Adviser and
shall not be paid by Fund or Portfolio.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition, (c) by the
vote of a majority of the Trustees of the Portfolio who are not parties hereto
nor interested persons of any party, as required by the Act.
3
<PAGE>
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment, within
the meaning of the Act, unless such automatic termination shall be prevented by
an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier Aggressive Small Cap Equity
Portfolio" or any name derived from the name "Navellier" only for so long as
this Agreement or any extension, renewal, or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the business of the Adviser and for only so long as Navellier Management,
Inc., remains as Adviser to the Portfolio. At such time as such an agreement
shall no longer be in effect, or Adviser's services have terminated, the
Portfolio will (to the extent that it is lawfully able)
4
<PAGE>
cease to use such a name or any other name connected with the Adviser or any
organization which shall have succeeded to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person" shall have the
respective meanings specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER AGGRESSIVE SMALL
CAP EQUITY PORTFOLIO OF THE
NAVELLIER PERFORMANCE FUNDS
By:
---------------------------
Louis Navellier, Trustee
By:
---------------------------
Barry Sander, Trustee
By:
---------------------------
Attest: Joel Rossman, Trustee
/s/ By:
- ------------------------- ---------------------------
Arnold Langsen, Trustee
By:
---------------------------
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By:
---------------------------
Louis Navellier, President
Attest:
/s/
- --------------------------
6
<PAGE>
EXHIBIT A
7
<PAGE>
INDEMNIFICATION AGREEMENT
The Navellier Aggressive Small Cap Equity Portfolio of The Navellier
Performance Funds (the "Fund") and Navellier Management, Inc. (the "Advisor")
agree as follows:
1. The Fund agrees with the Advisor, for the benefit of the Advisor and
each person, if any, who controls the Advisor within the meaning of Section 15
of the Securities Act and each and all and any of them, to indemnify and hold
harmless the Advisor and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several (including
reasonable legal fees and expenses) to which they or any of them may become
subject under the Securities Act or under any other statute, at common law or
otherwise, and to reimburse the Advisor and such controlling persons, if any,
for any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
such Registration Statement or Prospectus or any amendment thereof or supplement
thereto. The Advisor and each such controlling person shall, within thirty (30)
days after the complaint shall have been served upon the Advisor or such
controlling person in respect of which indemnity may be sought from the Fund on
account of its agreement contained in this paragraph, notify the Fund in writing
of the commencement thereof. The omission of the Advisor of such controlling
person so to notify the Fund of any such litigation shall relieve the Fund from
any liability which it may have to the Advisor or such controlling person on
account of the indemnity agreement contained in this paragraph if such failure
to timely notify the Fund has resulted in substantial prejudice to the Fund, but
shall not relieve the Fund from any liability which it may have to the Advisor
or controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Advisor or any such controlling person and notice of the
commencement thereof shall have been timely given to the Fund, the Fund shall be
entitled to participate in (and, to the extent that it shall wish, to direct)
the defense thereof at its own expense, but such defense shall be conducted by
counsel of good standing and reasonably satisfactory to the Advisor or such
controlling person(s) or defendant(s) in the litigation. The indemnity
agreement of the Fund contained in this paragraph shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Advisor or any such controlling person, and shall survive any delivery of
shares of the
8
<PAGE>
Fund. The Fund agrees to notify the Advisor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
2. Anything herein to the contrary notwithstanding, the agreement in
paragraph 1 of this Indemnification Agreement, insofar as it constitutes a basis
of reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
3. The Advisor agrees to indemnify and hold harmless the Fund and
its Trustees and such officers as shall have signed any Registration Statement
filed with the Commission from and against any and all losses, claims, damages,
or liabilities, joint or several, to which the Fund or such Trustees or officers
may become subject under the Securities Act, under any other statute, at common
law or otherwise, and will reimburse the Fund or such Trustees or officers for
any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of them in connection with
any litigation, whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities, or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made by the Fund in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Advisor shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. The Fund and its Trustees and such officers
or defendant(s), in any such litigation, shall, within thirty (30) days after
the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Advisor or account
of its agreement contained in this paragraph, notify the Advisor in writing of
the commencement thereof. The omission of the Fund or such Trustee or officer
so to notify the Advisor of any such litigation shall relieve the Advisor from
any liability which it may have to the Fund or such Trustee or officer of
liability which it may have to the Fund or such Trustee or officer on account of
the indemnity agreement contained in this paragraph, but shall not relieve the
Advisor from any liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Fund or any
such Trustee or officer and timely notice of the commencement thereof shall have
been so given to the Advisor, the Advisor shall be entitled to participate in
(and, to the extent it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of good standing and
satisfactory to the Fund. The indemnity agreement of the Advisor
9
<PAGE>
contained in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Fund and shall
survive any delivery of shares of the Fund. The Fund agrees to notify the
Advisor promptly of the commencement of any litigation or proceeding against it
or any of its officers or Trustees or against any such controlling person of
which it may be advised in connection with the issue and sale of the Fund's
shares.
4. Notwithstanding any provision contained in this Agreement, no
party hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
5. Except as expressly provided in paragraphs 1 and 3 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Advisor, and the persons expressly provided for in paragraphs 1
and 3, their respective heirs, successor, personal representatives and assigns,
and except as so provided, nothing expressed or mentioned herein is intended or
shall be construed to give any person, firm or corporation, other than the Fund,
the Advisor, and the persons expressly provided for in paragraphs 1 and 3, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. Except as so
provided, the terms "heirs, successors, personal representatives and assigns"
shall not include any purchaser of shares merely because of such purchase.
10
<PAGE>
ATTEST: THE NAVELLIER AGGRESSIVE SMALL CAP
EQUITY PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
- ---------------------- Louis Navellier, Trustee
By:
Barry Sander, Trustee
By:
Joel Rossman, Trustee
By:
Jacques Delacroix, Trustee
By:
Arnold Langsen, Trustee
ATTEST: NAVELLIER MANAGEMENT, INC.
By:
- ---------------------- ---------------------------
Louis Navellier, President
11
<PAGE>
[LETTERHEAD]
May 26, 1998
The Navellier Performance Funds
One East Liberty, Third Floor
Reno, NV 89501
Re: The Navellier Performance Funds N-1A
Post-Effective Amendment No. 11
File No. 033-80195
File No. 811-09142
Gentlemen:
I have acted as counsel to The Navellier Performance Funds (the "Fund") in
connection with the preparation of the initial Registration Statement on Form
N-1A and all Post-Effective Amendments for filing with the Securities and
Exchange Commission, covering shares of common stock at no par value, of the
Fund.
I hereby consent to the incorporation by reference of my December 7, 1995
Opinion and Consent as an Exhibit to Post-Effective Amendment No. 11 to the
Registration Statement of the Fund and to the reference of my name in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to any application made by or on behalf of the Fund or any
Distributor or dealer in connection with the registration and qualification of
the Fund or its common stock under the securities laws of any state or
jurisdiction. In giving such permission, I do not admit hereby that I come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
LAW OFFICES OF SAMUEL KORNHAUSER
By: /s/ Samuel Kornhauser
--------------------------------
Samuel Kornhauser
SK:ds
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports each dated February 20, 1998, accompanying the
financial statements and financial highlights of Navellier Aggressive Growth
Portfolio, Navellier Mid Cap Growth Portfolio, Navellier Aggressive Micro Cap
Portfolio (formerly "Navellier Aggressive Small Cap Portfolio"), Navellier Small
Cap Value Portfolio, Navellier Large Cap Growth Portfolio, Navellier Large Cap
Value Portfolio, and Navellier International Equity Portfolio, each a series of
shares of Navellier Performance Funds, appearing in the Annual Reports to
Shareholders for the year ended December 31, 1997, which are incorporated by
reference in the Post Effective Amendment No. 11 to the Registration Statement
on Form N-1A of Navellier Performance Funds. We consent to the use of the
aforementioned reports and to the references to our Firm in the Registration
Statement.
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
May 26, 1998
<PAGE>
EXHIBIT 15.7
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
RULE 12b-1 DISTRIBUTION PLAN
FOR
THE NAVELLIER AGGRESSIVE MICRO CAP PORTFOLIO
This distribution plan (the "Rule 12b-1 Distribution Plan" or the
"Plan"), has been adopted by the Aggressive Micro Cap Portfolio ("Aggressive
Micro Cap Portfolio") of The Navellier Performance Funds, a registered open-end
investment company organized as a Delaware Business Trust (the "Fund"), pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act").
W H E R E A S
The Aggressive Micro Cap Portfolio presently distributes its shares of
capital stock through a contractual arrangement with a principal distributor,
Navellier Securities Corp. (the "Principal Distributor"), duly qualified to act
on behalf of the Aggressive Micro Cap Portfolio in such capacity, which contract
has been approved by the Fund's Board of Trustees in accordance with
requirements of the Act (the "Distribution Agreement"). Pursuant to the
Distribution Agreement, the Principal Distributor may enter into service
agreements ("Service Agreements") with certain securities dealers, financial
institutions or other industry professionals, such as investment advisers,
accountants and estate planning firms (severally, a "Service Organization") for
<PAGE>
distribution and promotion of, administration of, and servicing investors in,
the Aggressive Micro Cap Portfolio's shares.
Under this proposal, the Aggressive Micro Cap Portfolio and its
Investment Advisor (the "Advisor") may from time to time and from their own
funds or from such other resources as may be permitted by rules of the
Securities and Exchange Commission, make payments as described in Sections 2 and
3 hereof for distribution and service assistance.
In voting to approve the Plan and related Service Agreement, the Board
requested and evaluated such information as it deemed necessary to an informed
determination and has concluded, in the exercise of their reasonable business
judgment and in light of their respective fiduciary duties, that there is a
reasonable likelihood that the plan will benefit the Aggressive Micro Cap
Portfolio and its shareholders.
NOW, THEREFORE, in consideration of the foregoing, the Aggressive
Micro Cap Portfolio hereby adopts this Plan under the Act:
1. The Principal Distributor shall act as distributor of the
Aggressive Micro Cap Portfolio's shares pursuant to the Distribution Agreement
and shall receive from the Aggressive Micro Cap Portfolio an annual 0.25% 12b-1
fee (payable pro rata monthly) of the average daily net assets of the Aggressive
Micro Cap Portfolio. Payments under this 0.25% 12b-1 fee may exceed actual
expenses of the Principal Distributor in distributing, promoting and servicing
the Aggressive Micro Cap Portfolio. The Principal
<PAGE>
Distributor may, at its own expense, enter into Service Agreements with Service
Organizations for Distribution and Service Assistance.
2. The Aggressive Micro Cap Portfolio shall pay all costs and
expenses in connection with the preparation, printing and distribution of the
Aggressive Micro Cap Portfolio's prospectuses and shareholder reports to
existing shareholders. The Principal Distributor shall pay for printing and
distribution of prospectuses sent to prospective investors and any promotional
material.
3. (a) There shall be paid periodically to one or more Service
Organizations payments in respect of such Service Organizations' services to the
Aggressive Micro Cap Portfolio's shares owned by shareholders for whom the
Service Organization is the dealer of record or holder of record, or owned by
shareholders for whom the Service Organization provides service assistance.
These payments for services shall be included in the 12b-1 fee paid to
Distributor and shall be paid by Distributor to such Service Organization out of
the 12b-1 fee. Payments to the Principal Distributor under the 12b-1 plan may
exceed the Principal Distributor's actual expenses and payments to Service
Organizations. The Service Payments are subject to compliance with the terms of
the Service Agreements between the Service Organization and the Principal
Distributor.
(b) Distribution and Service Assistance, as defined in this
Plan, shall include, but not be limited to, INTER ALIA, (i) formulating and
implementing marketing and promotional activities,
<PAGE>
including, but not limited to, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (ii) arranging and
contracting for the preparation and printing of sales literature and the mailing
and distribution thereof; (iii) procuring, evaluating and providing to the
Aggressive Micro Cap Portfolio such information, analyses and opinions with
respect to marketing and promotional activities as the Aggressive Micro Cap
Portfolio may, from time to time, reasonably request; (iv) providing office
space and equipment, telephone facilities and dedicated personnel as is
necessary to provide the services hereunder; (v) answering Client inquiries
regarding the Aggressive Micro Cap Portfolio and assisting Clients in changing
dividend options, account designations and addresses; (vi) establishing and
maintaining Client accounts and records; (vii) processing purchase and
redemption transactions; (viii) providing automatic investment in Aggressive
Micro Cap Portfolio shares of Client cash account balances; (ix) providing
periodic statements showing a client's account balance and integrating such
statements with those of other transactions and balances in the Client's other
accounts serviced by the Service Organization; and (x) arranging for bank wires
and such other services as the Aggressive Micro Cap Portfolio may request, to
the extent that the Service Organization is permitted by applicable statute,
rule or regulation. Anything stated herein to the contrary notwithstanding and
subject to the rules and regulations of the Act, any Service Payments made
pursuant to this Plan shall cover any series or class of shares of capital stock
of the Aggressive Micro Cap Portfolio as to which the Plan is effective.
<PAGE>
(c) In each year that this Plan remains in effect, the
Distributor of the Aggressive Micro Cap Portfolio and/or the Investment Advisor
shall prepare and furnish to the Board of Trustees of the Aggressive Micro Cap
Portfolio and the Trustees shall review, at least quarterly, written reports,
complying with the requirements of Rule 12b-1 under the Act, of the amounts
expended under the Plan and purposes for which such expenditures were made.
4. The Fund will allocate the amounts expended by it under the Plan
to each series or class of securities of the Fund as to which the Plan is
effective in the proportion that the average daily net asset values of such
series or class of securities bears to the average daily net assets of all such
series or classes of securities as to which the Plan is effective.
5. The Plan shall become effective upon approval by (a) a vote of
(i) the Aggressive Micro Cap Portfolio's Board of Trustees and (ii) the
Qualified Trustees (as defined in Section 8 hereof), cast in person at a meeting
called for the purpose of voting thereon, and (b) with respect to the securities
of the Aggressive Micro Cap Portfolio, at least a majority vote of the
outstanding voting securities of the Aggressive Micro Cap Portfolio, as defined
in Section 2(a)(42) of the Act.
6. This Plan shall remain in effect for one year from its adoption
date and may be continued thereafter if this Plan is approved at least annually
by a vote of the Board of Trustees of the Aggressive Micro Cap Portfolio, and of
the Qualified Trustees, cast in person at a meeting called for the purpose of
voting on
<PAGE>
such Plan. This Plan may not be amended in order to increase materially the
amounts to be expended in accordance with Sections 1, 2 and 3(a) hereof without
approval of each series or class of securities affected in accordance with
Section 5 hereof. All material amendments to this Plan must be approved by a
vote of the Board of Trustees of the Aggressive Micro Cap Portfolio, and of the
Qualified Trustees, cast in person at a meeting called for the purpose of voting
thereon.
7. This Plan may be terminated at any time by a majority vote of the
Trustees who are not interested persons (as defined in Section 2(a)(19) of the
Act) of the Aggressive Micro Cap Portfolio ("Independent Trustees") and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan ("Qualified Trustees"), by vote of a majority of
the outstanding voting securities of the Aggressive Micro Cap Portfolio, as
defined in Section 2(a)(42) of the Act.
8. While this Plan shall be in effect, the selection and nomination
of the Independent Trustees of the Aggressive Micro Cap Portfolio shall be
committed to the discretion of the Independent Trustees then in office.
9. Any termination or noncontinuance of a Service Agreement by the
Principal Distributor with a particular Service Organization shall have no
effect on similar agreements between the Principal Distributor and other Service
Organizations.
10. The Principal Distributor is not obligated by this Plan to
execute a Service Agreement with a qualifying Service Organization nor is it
required to pay all or any portion of the
<PAGE>
12b-1 fee to any service organization. The Principal Distributor shall be
entitled to retain the entire amount of the 12b-1 fee.
11. The Aggressive Micro Cap Portfolio shall preserve copies of this
Plan and any related agreements and all reports made pursuant to Paragraph 6
hereof, for a period of not less than six years from the date of this Plan, or
the agreements or such report, as the case may be, the first two years in an
easily accessible place.
Dated: April 27, 1998
THE AGGRESSIVE MICRO CAP PORTFOLIO OF
THE NAVELLIER PERFORMANCE FUNDS
By
-----------------------------
Barry Sander, Trustee
By
-----------------------------
Joel Rossman, Trustee
By
-----------------------------
Arnold Langsen, Trustee
By
-----------------------------
Jacques Delacroix, Trustee
NAVELLIER SECURITIES CORP.
By
-----------------------------
Louis Navellier, Trustee
