<PAGE>
ANNUAL REPORT, December 31, 1997
NAVELLIER PERFORMANCE FUNDS
1 East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
- --------------------------------------------------------------------------------
February 20, 1998
Dear Shareholder:
We are happy to introduce the new Navellier Large Cap Value Portfolio,
Navellier Small Cap Value Portfolio, Navellier Large Cap Growth Portfolio and
the Navellier International Equity Portfolio. The new portfolios were started on
December 19, 1997 (International Equity Portfolio started on December 26, 1997)
and naturally, have no significant performance numbers to report. We are using a
"value" approach to quantitative analysis for our new Navellier Small Cap Value
Portfolio and the Navellier Large Cap Value Portfolio. We have also introduced
our new Navellier Large Cap Growth Portfolio which uses the more familiar
Navellier methodology but focuses on the larger cap sector of the market. With
all three of these portfolios we are seeking strong returns with reasonable risk
levels by using portfolio optimization and risk analysis programs in conjunction
with our proprietary computerized screening process. Additionally, the Navellier
International Equity Portfolio made its debut this year. We would like to
introduce to you a new member of the Navellier team, Ram Kolluri, who will be
responsible for management of the Navellier International Equity Portfolio. We
strongly encourage all of our clients to call us for more information on the new
portfolios and for help with the recommended allocations for all of our funds.
Value strategies dramatically outperformed growth strategies in 1997 by the
largest margin in 19 years. For example, in 1997 the Russell 2000 Value Index
was up 31.78%, while the Russell 2000 Growth Index was only up 12.95%.
Obviously, because Navellier only had "growth" funds available for much of 1997,
our growth bias hurt our performance. Fundamentally, growth stocks are back at
the same levels they were in 1990, just before they exploded in 1991. Often, we
have found that whatever strategy "lagged" in the previous year, "leads" in the
next year.
This was a particularly strong year for large capitalization stocks as
evidenced by a return of 33.31% for the S&P 500. After flirting with small
capitalization stocks in the second and third quarters, the market once again
became a large capitalization dominated and value oriented market, continuing a
trend that has developed over the last 24 months. A few sobering facts from the
fourth quarter include, a flat Dow Jones, and a 2.5% gain for the S&P 500
compared to a -6.8% return for the NASDAQ and a -3.3% return for the Russell
2000. The growth vs. value comparison is even more telling as the Russell 2000
Growth Index lost 8.2% for the fourth quarter while the Russell 2000 Value Index
gained 1.7%. Technology stocks suffered through an extremely volatile year, with
strong second and third quarters sandwiched between dismal first and fourth
quarters. In December, a few technology stocks disappointed Wall Street with
poor quarterly earnings, so the analyst community immediately blamed the
Southeast Asian crisis as the primary reason that they had grossly overestimated
the latest quarterly earnings numbers. As a result, the analyst community
started to slash their 1998 earnings estimates on many leading technology
stocks. Then another bomb fell in December when both Oracle and 3M announced
that its earnings would be hindered by the Southeast Asian crisis. All of a
sudden, the Southeast Asian crisis was encompassing more than just technology
stocks, so the entire U.S. stock market sold off because the analyst community
rushed to aggressively cut earnings estimates on many leading companies. In 1997
the strongest performing stocks were found in the financial sectors as they
continued to benefit from an excellent interest rate environment. The falling
interest rate environment continues to be very supportive for higher stock
prices. The stock and bond markets compete for capital, so when interest rates
move lower, normally stock prices and price earnings ratios drift higher because
more money tends to flow into the stock market.
<PAGE>
The financial community continues to marvel at the unprecedented third year
of more than 20% growth for the S&P 500. Many analysts were not surprised by the
terrific performance of the market this year given the favorable economic
conditions. With 3.7% real GDP growth and just 2% GDP-based inflation, we saw
the best overall economic performance in decades. Interest rates trended
downward throughout the year, unemployment fell to 4.7%, capital gains taxes
were cut and inflation was practically non-existent. Consumer confidence
remained strong all year as disposable income rose 3.7% and consequently
consumers spent 3.6% more than they did in 1996. Although payroll costs advanced
by 2.4%, corporate profits still managed to climb by 11%, due to significant
increases in productivity. The old news at this point is the Southeast Asian
crisis, which briefly halted the markets' relentless climb in 1997.
So far in 1998, one of the reasons that the stock market started to rally is
that finally some leading stocks, such as Disney, released better than expected
earnings and inspired a little confidence in the overall stock market. Investors
finally came to the realization that Southeast Asia will not cause the entire
U.S. economy to melt down. The stocks that have been most seriously impacted by
the Southeast Asian crisis, namely technology stocks, have also been rallying
strongly. However, the analyst community remains very wary about the earnings
prospects for many technology companies, so we expect that the recent rebound in
technology stocks is just a "dead-cat" bounce that will soon dissipate. Much of
the recent stock market strength has been isolated in a few key industry groups.
Although the breadth and power of the stock market has improved in recent weeks,
we are still expecting a very selective stock market, similar to the third
quarter of 1997, where large capitalization stocks take a breather and small-to-
mid capitalization stocks lead. NASDAQ has been stronger than the Dow
Industrials and the S&P 500 so far in 1998, so this much anticipated leadership
change may have begun already. Our strategy remains focused on uncovering stocks
with better sales and earnings growth potential than the overall stock market.
We hope that by finding those companies that can demonstrate consistent
accelerating earnings growth, our growth funds will shine in an increasingly
selective market.
Please call our new Navellier Marketline for the latest fund prices and
weekly market commentary at (800) 730-9005 and look for our new website at
www.navellier.com.
Thank you for allowing us to manage some of your assets. We feel very
obligated to our shareholders and promise to make every effort to maintain our
high performance standards. As always, please feel free to contact us if you
have any questions or if we can help you in any way.
Sincerely,
<TABLE>
<S> <C>
/s/ LOUIS G. NAVELLIER /s/ ALAN ALPERS
LOUIS G. NAVELLIER ALAN ALPERS
</TABLE>
THIS MATERIAL HAS BEEN PRECEDED BY A NAVELLIER PERFORMANCE FUNDS PROSPECTUS.
2
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SMALL CAP VALUE PORTFOLIO
- ----------------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------------
<C> <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
------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
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>
3
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
LARGE CAP GROWTH PORTFOLIO
- ----------------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------------
<C> <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
------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
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>
4
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
LARGE CAP VALUE PORTFOLIO
- ----------------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------------
<C> <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
------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
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.
5
<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.
6
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SMALL CAP LARGE CAP LARGE CAP
VALUE GROWTH VALUE INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO EQUITY 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.
7
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LARGE CAP INTERNATIONAL
SMALL CAP VALUE GROWTH LARGE CAP 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.
8
<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.
9
<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 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 Afflilates
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 1.00% 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
10
<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>
11
<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>
12
<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 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 & BAKER
Philadelphia, Pennsylvania
February 20, 1998
13
<PAGE>
[LOGO]
NAVELLIER
PERFORMANCE FUNDS
-------------------
SMALL CAP VALUE PORTFOLIO
LARGE CAP GROWTH PORTFOLIO
LARGE CAP VALUE PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
ANNUAL REPORT
DECEMBER 31, 1997
NAVELLIER OFFICES:
ONE EAST LIBERTY THIRD FLOOR
RENO, NEVADA 89501
800-887-8671 P.S.T.
CUSTODIAN & TRANSFER AGENT:
RUSHMORE TRUST AND SAVINGS, FSB
4922 FAIRMONT AVENUE
BETHESDA, MD 20814
800-622-1386 E.S.T.
