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PART B
THE NAVELLIER PERFORMANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 30, 1999
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 April 30, 1999, 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. . . . . . . . . . . . . . . . . . . . 15
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. . . . . . . . . . . 18
THE INVESTMENT ADVISOR, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . .19
BROKERAGE ALLOCATION AND OTHER PRACTICES . . . . . . . . . . . . . . . .29
CAPITAL STOCK AND OTHER SECURITIES . . . . . . . . . . . . . . . . . . .33
PURCHASE, REDEMPTION, AND PRICING OF SHARES. . . . . . . . . . . . . . .35
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
UNDERWRITERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
CALCULATION OF PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . .45
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .47
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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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 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.
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 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 $1.5 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 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 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 $1.5
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 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.
LACK OF OPERATING HISTORY AND EXPERIENCE
The Aggressive Growth Portfolio went effective December 28, 1995 and has
over three 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 and The International Equity Portfolios are all investment
company portfolios which went effective December 18, 1997. The Aggressive
Small Cap Equity Portfolio was originally organized as an investment company
under The Navellier Series Fund which went effective April 1, 1994. 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 owns 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. and 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 merger of 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 were approximately $70 million in assets
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
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 Navellier Aggressive Small Cap Equity Portfolio
and not from the assets of any other Portfolio of this Fund.
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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. Also following are other types
of investments in which the various Portfolios may invest.
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.
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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.
4
<PAGE>
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 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.
5
<PAGE>
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
6
<PAGE>
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
7
<PAGE>
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
8
<PAGE>
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
9
<PAGE>
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
10
<PAGE>
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.
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
11
<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)
12
<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.
13
<PAGE>
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 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 Micro Cap Portfolio for the period January 1,
1998 through December 31, 1998 was 196%. The portfolio turnover rate for the
Navellier Small Cap Value Portfolio for the period January 1, 1998 through
December 31, 1998 was 85%. The portfolio turnover rate for the Navellier
Large Cap Growth Portfolio for the period January 1, 1998 through December
31, 1998 was 80%. The portfolio turnover rate for the Navellier International
Equity Portfolio for the period January 1, 1998 through December 31, 1998 was
41%. The portfolio turnover rate for the Navellier Aggressive Growth
Portfolio for the period January 1, 1998 through December 31, 1998 was 237%.
The portfolio turnover rate for the Navellier Mid Cap Growth Portfolio for
the period January 1, 1998 through December 31, 1998 was 211%. The portfolio
turnover rate for the Navellier Aggressive Small Cap Equity Portfolio for the
period January 1, 1998 through December 31, 1998 was 145%. Portfolio turnover
rate for Navellier Large Cap Value Portfolio was 256%. 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.
14
<PAGE>
TRUSTEES AND OFFICERS OF THE FUND
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 following information, as of March 1, 1999, 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 retired as of December 1, 1998,
695 Mistletoe Rd., #2 formerly he was the President and CEO of Ursa
Ashland, OR 97520 Major Inc., a stencil manufacturing firm
and had been for the past nine years.
Joel Rossman Trustee Currently retired as of March 15, 1998.
6 Spanish Bay Court Formerly he was President and CEO of
Petaluma, CA 94954 Personal Stamp Exchange, Inc., a
manufacturer, designer and
distributor of rubber stamp products.
He had been President and CEO of
Personal Stamp Exchange for the
preceding 10 years.
</TABLE>
15
<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 Mr. Kuyper is and has been an operations
One East Liberty manager for Navellier & Associates, Inc.
Third Floor since 1992 and operations manager
Reno, NV 89501 for Navellier Management, Inc.
and for Navellier Securities Corp.,
since 1993.
</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.
16
<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,
1998
- --------------------------------------------------------------------------------
Louis G. Navellier Trustee, President, $ 0.00
Chief Executive Officer,
and Treasurer
- --------------------------------------------------------------------------------
Barry Sander Trustee $ 7,500.00
- --------------------------------------------------------------------------------
Arnold Langsen Trustee $ 0.00
- --------------------------------------------------------------------------------
Joel Rossman Trustee $ 7,500.00
- --------------------------------------------------------------------------------
Jacques Delacroix Trustee $ 7,500.00
- --------------------------------------------------------------------------------
17
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Louis Navellier is not a control person of the Fund or of any Portfolio.
18
<PAGE>
THE INVESTMENT ADVISOR, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT
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. Louis Navellier is, and has
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<PAGE>
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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<PAGE>
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".
21
<PAGE>
(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.
(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 Performance Funds.
22
<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.
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.
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
-------------------------------------
1998 $ 870,444
---------
Navellier Mid Cap Growth Portfolio
----------------------------------
1998 $ 90,643
---------
Navellier Aggressive Micro Cap Portfolio
----------------------------------------
1998 $ 90,856
---------
Navellier Aggressive Small Cap Equity Portfolio
-----------------------------------------------
1998 $ 591,904
---------
Navellier Small Cap Value Portfolio
-----------------------------------------------
1998 $ 5,147
---------
Navellier Large Cap Growth Portfolio
-----------------------------------------------
1998 $ 7,956
---------
Navellier Large Cap Value Portfolio
-----------------------------------------------
1998 $ 3,950
---------
Navellier International Equity Portfolio
-----------------------------------------------
1998 $ 65,510
---------
23
<PAGE>
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% 1999
Mid Cap Growth Portfolio 1.49% 1999
Aggressive Micro Cap Portfolio 1.49% 1999
Small Cap Value Portfolio 1.49% 1999
Large Cap Growth Portfolio 1.49% 1999
Large Cap Value Portfolio 1.40% 1999
International Equity Portfolio 1.75% 1999
Aggressive Small Cap Equity Portfolio 1.49% 1999
During the twelve month period ended December 31, 1998, the Investment
Advisor paid operating expenses of $__________ for the ______________________
Portfolios, respectively. The Navellier Performance Funds seek future
reimbursement of all unreimbursed past expense incurred on behalf of the
Fund. During the year ended December 31, 1998, the Adviser paid operating
expenses of the Aggressive Small Cap Equity Portfolio, the Aggressive Growth
Portfolio, the Mid Cap Growth Portfolio, the Aggressive Micro Cap Portfolio,
the Small Cap Value Protfolio, the Large Cap Growth Portfolio, the Large Cap
Value Portfolio and the International Equity Portfolio totaling $305,224,
$345,521, $99,926, $107,774, $69,010, $70,472, $68,543, and $116,757,
respectively. Under the operating expense agreement, the Adviser requested,
and the Aggressive Small Cap Equity Portfolio, 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 International Equity Portfolio reimbursed, $117,651,
$164,249, $17,033, $13,974, $986, $1,461, $873, and $16,378, respectively, of
such expenses. Effective May 1, 1998, the Adviser agreed to limit the total
normal expense of each Portfolio to 1.49% of average annual net assets,
except for the Large Cap Value Portfolio's expense limitation of 1.40% and
the International Equity Portfolio's expense limitation of 1.75%. Under the
terms of its operating expense agreement, the Investment Advisor requested
and received reimbursements of $_______________ from the
________________________ Portfolios, 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.
24
<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
25
<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 $217,654 for the Aggressive Growth Portfolio
in 12b-1 fees during the twelve month period ended December 31, 1998. 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 $217,654 for the Aggressive
Growth Portfolio in 12b-1 fees during fiscal 1998 and spent $33,011 for
advertising, $44,698 for printing, $15,745 for mailing (including mailing of
prospectuses to other than current shareholders), $0 to underwriters,
$82,393 to compensate dealers, $73,196 to compensate NSC sales and other
personnel, $0 for interest and $126,638 in other expenses during fiscal
1998.
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<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 $106,980 in 12b-1 fees during the twelve month
period ended December 31, 1998 for services in connection with the Mid Cap
Growth Portfolio, Aggressive Micro Cap Portfolio, Small Cap Value Portfolio,
Aggressive Small Cap Equity Portfolio, Large Cap Growth Portfolio, Large Cap
Value Portfolio and International Equity Portfolio, and spent $33,011 for
advertising, $42,446 for printing, $15,128 for mailing (including mailing of
prospectuses to other than current shareholders), $0 to underwriters, $79,162
to compensate dealers, $70,325 to compensate NSC sales and other personnel,
$0 for interest and $126,672 in other expenses during fiscal 1998. 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.
27
<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. 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.
(d) LEGAL COUNSEL
The Law Offices of Samuel Kornhauser is legal counsel to the Fund, to the
Investment Advisor and to the Distributor.
28
<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.
29
<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.
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
30
<PAGE>
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.)
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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.
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.
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PURCHASE, REDEMPTION, AND PRICING 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:
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.
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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.
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.
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.
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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 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.
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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.
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.
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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
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.
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.
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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.
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.
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.
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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.
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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.
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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.
43
<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
1998 $___ $___ $___ $_______
</TABLE>
* These "other compensation" amounts are 12b-1 fees paid to NSC.
44
<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.
45
<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.
46
<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)
47
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 92.5%
AIRLINES -- 4.2%
25,000 Amtran, Inc.* $ 678,125
40,000 SkyWest, Inc. 1,307,500
------------
1,985,625
------------
APPAREL -- 14.9%
25,000 American Eagle Outfitters, Inc.* 1,665,625
50,000 AnnTaylor Stores Corp.* 1,971,875
72,200 Children's Place Retail Stores, Inc.* 1,814,025
40,000 Tarrant Apparel Group* 1,590,000
------------
7,041,525
------------
COMMERCIAL SERVICES -- 4.2%
80,000 Dendrite International, Inc.* 1,997,504
------------
COMMUNICATION EQUIPMENT AND
SERVICES -- 4.6%
25,000 Plantronics, Inc.* 2,150,000
------------
COMPUTER NETWORKS -- 3.7%
35,000 Jack Henry & Associates, Inc. 1,741,250
------------
COMPUTER HARDWARE AND
PERIPHERALS -- 6.9%
12,000 QLogic Corp.* 1,570,500
50,000 Xircom, Inc.* 1,700,000
------------
3,270,500
------------
COMPUTER SOFTWARE -- 5.4%
40,000 Mercury Interactive Corp.* 2,530,000
------------
COMPUTER AND VIDEO CHAINS -- 3.0%
75,000 Trans World Entertainment Corp.* 1,429,688
------------
ENGINEERING AND
CONSTRUCTIONS -- 8.4%
35,000 Astec Industries, Inc.* 1,946,875
60,000 Granite Construction, Inc. 2,013,750
------------
3,960,625
------------
HOMEBUILDING -- 4.0%
40,000 NVR, Inc.* 1,907,500
------------
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
INSURANCE -- 11.5%
40,000 Hoopers Holmes, Inc. $ 1,160,000
35,000 LandAmerica Financial Group 1,953,437
40,000 Stewart Information Services Corp. 2,320,000
------------
5,433,437
------------
MEDICAL EQUIPMENT AND
SUPPLIES -- 3.8%
40,000 ResMed, Inc.* 1,815,000
------------
OFFICE EQUIPMENT AND
SUPPLIES -- 4.7%
100,000 Polycom, Inc.* 2,225,000
------------
PHARMACEUTICALS -- 3.0%
65,000 Roberts Pharmaceutical, Inc.* 1,413,750
------------
RECREATIONAL PRODUCTS -- 5.2%
200,000 Acclaim Entertainment, Inc.* 2,450,000
------------
RENTAL AND LEASINGS -- 0.7%
101,400 PDS Financial Corp.* 316,876
------------
WATER SUPPLY -- 4.3%
18,000 Consumers Water Co. 565,875
50,000 Philadelphia Suburban Corp. 1,478,125
------------
2,044,000
------------
TOTAL COMMON STOCKS
(COST $35,088,015) 43,712,280
------------
MONEY MARKET FUNDS -- 7.5%
3,520,830 Fund for Government Investors
(Cost $3,520,830) 3,520,830
------------
TOTAL INVESTMENTS -- 100.0%
(COST $38,608,845) $ 47,233,110
------------
------------
</TABLE>
- --------------------------
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -----------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 90.5%
APPAREL -- 4.5%
30,000 American Eagle
Outfitters, Inc.* $1,998,750
45,000 Tarrant Apparel Group* 1,788,750
-------------
3,787,500
-------------
BIOTECHNOLOGY -- 3.0%
25,000 MedImmune, Inc.* 2,485,937
-------------
CABLE TELEVISION -- 1.7%
20,000 Cox Communication, Inc.* 1,382,500
-------------
COMMERCIAL SERVICES -- 4.3%
185,000 Labor Ready, Inc.* 3,642,187
-------------
COMMUNICATION EQUIPMENT AND
SERVICES -- 12.8%
50,000 RF Micro Devices, Inc.* 2,318,750
80,000 SBC Communications, Inc. 4,290,000
65,000 US West, Inc. 4,200,625
-------------
10,809,375
-------------
COMPUTER HARDWARE AND
PERIPHERALS -- 12.1%
36,200 Cybex Computer Products
Corp.* 1,063,375
70,000 Intervoice, Inc.* 2,415,000
35,000 Symbol Technologies, Inc. 2,237,813
130,000 Xircom, Inc.* 4,420,000
-------------
10,136,188
-------------
COMPUTER SOFTWARES -- 11.2%
48,700 Legato Systems, Inc.* 3,211,156
60,000 New Era of Networks,
Inc.* 2,640,000
172,800 Segue Software, Inc.* 3,499,200
-------------
9,350,356
-------------
COMPUTER AND VIDEO CHAINS -- 2.8%
123,000 Trans World Entertainment
Corp.* 2,344,687
-------------
<CAPTION>
- -----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -----------------------------------------------------
<C> <S> <C>
ELECTRONICS DISTRIBUTORS -- 2.9%
100,000 Miami Computer Supply
Corp.* $ 2,462,500
-------------
ENGINEERING AND
CONSTRUCTIONS -- 5.5%
50,000 Astec Industries, Inc. * 2,781,250
54,100 Granite Construction,
Inc. 1,815,733
-------------
4,596,983
-------------
ENVIRONMENTAL SERVICES -- 2.3%
105,000 Catalytica Inc.* 1,890,000
-------------
FINANCIAL SERVICES -- 4.8%
40,200 SEI Investment Co. 3,994,875
-------------
MEDICAL DISTRIBUTORS -- 2.4%
75,000 D&K Healthcare Resources,
Inc.* 2,043,750
-------------
MEDICAL EQUIPMENT AND
SUPPLIES -- 7.7%
45,000 ResMed, Inc.* 2,041,875
50,000 VISX, Inc.* 4,371,875
-------------
6,413,750
-------------
PHARMACEUTICALS -- 6.2%
80,000 Allergan, Inc. 5,180,000
-------------
PRECISION INSTRUMENTS -- 6.3%
60,000 Waters Corp.* 5,235,000
-------------
TOTAL COMMON STOCKS
(COST $65,343,592) 75,755,588
-------------
MONEY MARKET FUNDS -- 9.5%
7,984,395 Fund for Government
Investors
(Cost $7,984,395) 7,984,395
-------------
TOTAL INVESTMENTS -- 100.0%
(COST $73,327,987) $ 83,739,983
-------------
-------------
</TABLE>
- --------------------------
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
MID CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -----------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 94.6%
APPAREL -- 4.2%
5,200 American Eagle Outfitters,
Inc.* $ 346,450
------------
BANKS -- 2.6%
3,900 Old National Bancorp. 217,425
------------
BIOTECHNOLOGY -- 7.0%
5,100 ALZA Corp., Class A* 266,475
3,700 Biogen, Inc.* 307,100
------------
573,575
------------
BUILDING MATERIALS -- 7.0%
5,000 Martin Marietta Materials,
Inc. 310,937
2,000 Vulcan Materials Co. 263,125
------------
574,062
------------
COMMERCIAL SERVICES -- 4.7%
3,600 CMGI, Inc.* 383,400
------------
COMMUNICATION EQUIPMENT AND
SERVICES -- 3.9%
4,800 Century Telephone
Enterprises 324,000
------------
COMPUTER HARDWARE AND
PERIPHERALS -- 3.9%
5,000 Symbol Technologies, Inc. 319,688
------------
COMPUTER SOFTWARE -- 7.3%
5,000 Legato Systems, Inc.* 329,688
8,000 Macromedia, Inc.* 269,500
------------
599,188
------------
COMPUTER AND VIDEO CHAINS -- 3.4%
4,500 Best Buy, Inc.* 276,187
------------
CONSUMER APPLIANCES -- 3.0%
4,000 Maytag Corp. 249,000
------------
ELECTRICAL UTILITIES -- 11.8%
11,000 Conectiv, Inc. 269,500
4,300 Energy East Corp. 242,950
4,500 IPALCO Enterprises, Inc. 249,470
7,400 PP&L Resources, Inc. 206,275
------------
968,195
------------
<CAPTION>
- -----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -----------------------------------------------------
<C> <S> <C>
ENGINEERING AND
CONSTRUCTION -- 4.3%
10,600 Metromedia Fiber Network,
Inc.* $ 355,100
------------
FINANCIAL SERVICES -- 3.9%
3,200 SEI Investment Co. 318,000
------------
FOOD DISTRIBUTORS -- 4.5%
7,600 U.S. Foodservice, Inc.* 372,400
------------
INSURANCE -- 3.3%
8,400 First American Financial
Corp. 269,850
------------
INTERNET SERVICES -- 4.4%
6,000 Mindspring Enterprises,
Inc.* 366,375
------------
MEDICAL EQUIPMENT AND
SUPPLIES -- 2.7%
4,500 C.R. Bard, Inc. 222,750
------------
MEDICAL SERVICES -- 3.4%
7,000 MedQuist, Inc.* 276,500
------------
PRECISION INSTRUMENTS -- 3.6%
3,400 Waters Corp.* 296,650
------------
PUBLISHING -- 4.6%
8,000 John Wiley & Sons, Inc. 386,500
------------
RECREATIONAL PRODUCTS -- 1.1%
5,000 Escalade Inc. 92,500
------------
TOTAL COMMON STOCKS
(COST $6,057,652) 7,787,795
------------
MONEY MARKET FUNDS -- 5.4%
448,561 Fund for Government
Investors
(Cost $448,561) 448,561
------------
TOTAL INVESTMENTS -- 100.0%
(COST $6,506,213) $ 8,236,356
------------
------------
</TABLE>
- --------------------------
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
MID CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -----------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 94.6%
APPAREL -- 4.2%
5,200 American Eagle Outfitters,
Inc.* $ 346,450
------------
BANKS -- 2.6%
3,900 Old National Bancorp. 217,425
------------
BIOTECHNOLOGY -- 7.0%
5,100 ALZA Corp., Class A* 266,475
3,700 Biogen, Inc.* 307,100
------------
573,575
------------
BUILDING MATERIALS -- 7.0%
5,000 Martin Marietta Materials,
Inc. 310,937
2,000 Vulcan Materials Co. 263,125
------------
574,062
------------
COMMERCIAL SERVICES -- 4.7%
3,600 CMGI, Inc.* 383,400
------------
COMMUNICATION EQUIPMENT AND
SERVICES -- 3.9%
4,800 Century Telephone
Enterprises 324,000
------------
COMPUTER HARDWARE AND
PERIPHERALS -- 3.9%
5,000 Symbol Technologies, Inc. 319,688
------------
COMPUTER SOFTWARE -- 7.3%
5,000 Legato Systems, Inc.* 329,688
8,000 Macromedia, Inc.* 269,500
------------
599,188
------------
COMPUTER AND VIDEO CHAINS -- 3.4%
4,500 Best Buy, Inc.* 276,187
------------
CONSUMER APPLIANCES -- 3.0%
4,000 Maytag Corp. 249,000
------------
ELECTRICAL UTILITIES -- 11.8%
11,000 Conectiv, Inc. 269,500
4,300 Energy East Corp. 242,950
4,500 IPALCO Enterprises, Inc. 249,470
7,400 PP&L Resources, Inc. 206,275
------------
968,195
------------
<CAPTION>
- -----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -----------------------------------------------------
<C> <S> <C>
ENGINEERING AND
CONSTRUCTION -- 4.3%
10,600 Metromedia Fiber Network,
Inc.* $ 355,100
------------
FINANCIAL SERVICES -- 3.9%
3,200 SEI Investment Co. 318,000
------------
FOOD DISTRIBUTORS -- 4.5%
7,600 U.S. Foodservice, Inc.* 372,400
------------
INSURANCE -- 3.3%
8,400 First American Financial
Corp. 269,850
------------
INTERNET SERVICES -- 4.4%
6,000 Mindspring Enterprises,
Inc.* 366,375
------------
MEDICAL EQUIPMENT AND
SUPPLIES -- 2.7%
4,500 C.R. Bard, Inc. 222,750
------------
MEDICAL SERVICES -- 3.4%
7,000 MedQuist, Inc.* 276,500
------------
PRECISION INSTRUMENTS -- 3.6%
3,400 Waters Corp.* 296,650
------------
PUBLISHING -- 4.6%
8,000 John Wiley & Sons, Inc. 386,500
------------
RECREATIONAL PRODUCTS -- 1.1%
5,000 Escalade Inc. 92,500
------------
TOTAL COMMON STOCKS
(COST $6,057,652) 7,787,795
------------
MONEY MARKET FUNDS -- 5.4%
448,561 Fund for Government
Investors
(Cost $448,561) 448,561
------------
TOTAL INVESTMENTS -- 100.0%
(COST $6,506,213) $ 8,236,356
------------
------------
</TABLE>
- --------------------------
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
AGGRESSIVE MICRO CAP PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 97.9%
ADVERTISING -- 2.3%
30,000 Display Technologies, Inc.* $ 223,125
------------
AIRLINES -- 4.2%
15,000 Amtran, Inc.* 406,875
------------
APPAREL -- 18.6%
16,000 Chicos FAS, Inc.* 374,000
20,000 Children's Place Retail
Stores, Inc.* 502,500
17,000 Tarrant Apparel Group* 675,750
21,000 United Retail Group, Inc.* 225,750
------------
1,778,000
------------
BUILDING PRODUCTS -- 4.0%
15,000 American Locker Group* 378,750
------------
COMPUTER HARDWARE AND
PERIPHERALS -- 4.0%
7,500 Cybex Computer Products
Corp.* 220,312
17,600 Dataram Corp.* 167,200
------------
387,512
------------
COMPUTER SERVICES -- 2.8%
13,700 Integral Systems, Inc.* 266,294
------------
COMPUTER SOFTWARES -- 10.3%
17,000 Ardent Software, Inc.* 391,000
18,300 Eagle Point Software Corp.* 157,838
14,000 Segu Software, Inc.* 283,500
3,000 TSI International Software
Ltd.* 143,625
------------
975,963
------------
ELECTRIC UTILITIES -- 2.0%
15,000 Bangor Hydo-Electric Co.* 192,188
------------
ELECTRONIC DISTRIBUTORS -- 4.6%
18,000 Miami Computer Supply
Corp.* 443,250
------------
ENGINEERING AND
CONSTRUCTIONS -- 5.5%
9,500 Astec Industries, Inc.* 528,437
------------
HOMEBUILDING -- 4.9%
8,000 NVR, Inc.* 381,500
7,000 Nobility Homes, Inc.* 89,688
------------
471,188
------------
<CAPTION>
- ----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------
<C> <S> <C>
HOTELS AND RESORTS -- 2.6%
42,500 Commodore Holdings Ltd.* $ 249,687
------------
INSURANCE -- 8.8%
15,000 Hoopers Holmes, Inc. 435,000
7,000 Stewart Information
Services Corp. 406,000
------------
841,000
------------
MEDICAL EQUIPMENT AND
SUPPLIES -- 7.2%
11,000 ResMed Inc.* 499,125
6,000 Xomed Surgical Products,
Inc.* 192,000
------------
691,125
------------
MOTION PICTURES -- 3.4%
7,800 Macrovision Corp.* 329,550
------------
RECREATIONAL PRODUCTS -- 1.5%
8,000 Escalade, Inc. 148,000
------------
REAL ESTATE -- 1.1%
41,000 American Insured Mortgage
Investors 110,187
------------
SPECIALTY CHEMICALS -- 3.3%
31,000 Uniroyal Technology Corp.* 313,875
------------
SPECIALTY STORES -- 3.6%
10,000 Sonic Automotive, Inc.* 344,375
------------
WATER SUPPLY -- 3.2%
9,700 Consumers Water Co. 304,944
------------
TOTAL COMMON STOCKS
(COST $7,415,678) 9,384,325
------------
MONEY MARKET FUNDS -- 2.1%
198,878 Fund for Government
Investors
(Cost $198,878) 198,878
------------
TOTAL INVESTMENTS -- 100.0%
(COST $7,614,556) $ 9,583,203
------------
------------
</TABLE>
- --------------------------
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
51
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
SMALL CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 95.6%
AEROSPACE AND DEFENSE -- 1.5%
800 Kaman Corp. $ 12,850
------------
AIRLINES -- 3.1%
600 Alaska Air Group, Inc.* 26,550
------------
APPAREL -- 2.5%
300 Kellwood Co. 7,500
500 Oxford Industries, Inc. 14,125
------------
21,625
------------
AUTO AND TRUCK PARTS -- 5.2%
700 Arvin Industries, Inc. 29,181
1,200 Commercial Intertech Corp. 15,525
------------
44,706
------------
MISC. FABRICATED PRODUCTS -- 2.9%
700 Amcast Industrial Corp. 13,387
400 Barnes Group, Inc. 11,750
------------
25,137
------------
BEVERAGES -- 2.9%
2,700 Quilmes Industrial, ADR 25,144
------------
CATALOG AND SPECIALTY
DISTRIBUTION -- 3.4%
1,300 Blair Corp. 28,844
------------
COMMUNICATION EQUIPMENT -- 1.1%
1,000 United Industrial Corp. 9,813
------------
CONTAINERS AND PACKAGINGS -- 4.7%
2,400 Rock-Tenn Co. 40,650
------------
CONTRACT DRILLING -- 1.0%
2,800 Petroleum Development Corp.* 8,575
------------
CROPS -- 2.6%
1,900 Andersons, Inc. 21,969
------------
ELECTRIC UTILITIES -- 3.2%
300 Central Hudson Gas & Electric 13,425
400 CLECO Corp. 13,725
------------
27,150
------------
ENGINEERING AND CONSTRUCTION -- 2.9%
2,000 Chicago Bridge & Iron Co. 24,625
------------
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ------------------------------------------------------
<C> <S> <C>
HOMEBUILDING -- 8.8%
600 Centex Corp. $ 27,038
1,000 D R Horton, Inc. 23,000
1,200 MDC Holdings, Inc. 25,650
------------
75,688
------------
INDUSTRIAL MACHINERY -- 6.4%
1,200 Ampco-Pittsburgh Corp. 13,050
1,800 Cascade Corp. 28,463
600 Lincoln Electric Holdings Co. 13,350
------------
54,863
------------
INDUSTRIAL SPECIALTIES -- 2.7%
1,800 Bairnco Corp. 12,825
975 Deswell Industries, Inc. 9,994
------------
22,819
------------
INSURANCE -- 2.3%
350 LandAmerica Financial Group 19,534
------------
MARINE TRANSPORTATION -- 1.2%
1,050 Stolt-Nielsen, ADR 10,631
------------
MEDICAL SERVICES -- 1.3%
4,500 NovaCare Corp.* 11,250
------------
NATURAL GAS DISTRIBUTION -- 0.6%
125 New Jersey Resources Corp. 4,937
------------
PERSONAL CARE PRODUCTS -- 1.3%
800 Herbalife International 11,400
------------
PRECISION INSTRUMENTS -- 1.7%
1,500 Spectra-Physics Lasers, Inc.* 14,250
------------
REAL ESTATE INVESTMENT TRUSTS -- 4.1%
600 Bedford Property Investment,
Inc. 10,125
900 MGI Properties, Inc. 25,144
------------
35,269
------------
RECREATIONAL PRODUCTS -- 5.7%
1,800 Arctic Cat, Inc. 18,337
700 Coachman Industries, Inc. 18,375
800 Winnebago Industries, Inc. 12,100
------------
48,812
------------
RESTAURANTS -- 4.7%
850 Buffets, Inc.* 10,147
1,350 FoodMaker, Inc.* 29,784
------------
39,931
------------
</TABLE>
52
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998 (CONTINUED)
SMALL CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------
MARKET
VALUE
SHARES (NOTE 1)
- --------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
SAVINGS AND LOAN
ASSOCIATIONS -- 1.4%
300 TR Financial Corp. $ 11,813
-----------
SEMICONDUCTORS -- 3.9%
3,500 Tower Semiconductor, Ltd.* 33,250
-----------
SPECIALTY STORES -- 5.3%
1,200 Haverty Furniture, Inc. 25,200
1,300 Signet Group, ADR* 20,150
-----------
45,350
-----------
TOOLS AND HARDWARE -- 1.6%
400 Starrett (LS) Co. 13,725
-----------
TRUCKING -- 5.6%
1,450 Arnold Industries, Inc. 23,381
1,300 Yellow Corp.* 24,862
-----------
48,243
-----------
TOTAL COMMON STOCKS
(COST $865,990) 819,403
-----------
<CAPTION>
- --------------------------------------------------
MARKET
VALUE
SHARES (NOTE 1)
- --------------------------------------------------
<C> <S> <C>
MONEY MARKET FUNDS -- 4.4%
37,641 Fund for Government
Investors
(Cost $37,641) $ 37,641
-----------
TOTAL INVESTMENTS -- 100.0%
(COST $903,631) $ 857,044
-----------
-----------
</TABLE>
- --------------------------
* NON-INCOME PRODUCING
ADR AMERICAN DEPOSITORY RECEIPTS
SEE NOTES TO FINANCIAL STATEMENTS.
53
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
LARGE CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -----------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 94.2%
ADVERTISING -- 2.0%
870 Omnicom Group, Inc. $ 50,460
------------
APPAREL -- 5.9%
1,827 Gap, Inc. 102,769
1,510 TJX Companies, Inc. 43,790
------------
146,559
------------
BEVERAGES -- 3.8%
1,350 Cadbury Schweppes, ADR 93,488
------------
BIOTECHNOLOGY -- 2.3%
550 Amgen, Inc.* 57,509
------------
BUILDING PRODUCTS -- 3.5%
1,395 Home Depot, Inc. 85,357
------------
COMMERCIAL SERVICES -- 3.1%
1,470 Paychex, Inc. 75,613
------------
COMMUNICATION EQUIPMENT AND
SERVICES -- 17.1%
1,725 Ameritech Corp. 109,322
1,610 Century Telephone
Enterprises 108,675
825 Nokia Corp., ADR 99,361
650 Vodafone Group, ADR 104,731
------------
422,089
------------
COMPUTER HARDWARE AND
PERIPHERALS -- 8.7%
1,420 Dell Computer Corp.* 103,926
1,290 EMC Corp.* 109,650
------------
213,576
------------
COMPUTER NETWORKS -- 4.2%
1,107 Cisco Systems, Inc.* 102,743
------------
COMPUTER SOFTWARES -- 4.0%
715 Microsoft Corp.* 99,161
------------
CONSUMER APPLIANCES -- 3.2%
1,265 Maytag Corp. 78,746
------------
DEPARTMENT STORES -- 2.1%
825 Kohls Corp.* 50,686
------------
<CAPTION>
- -----------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -----------------------------------------------------
<C> <S> <C>
DISCOUNT STORES -- 2.1%
975 Dayton Hudson Corp. $ 52,894
------------
DRUG STORE CHAINS -- 3.6%
1,495 Walgreen Co. 87,551
------------
FINANCIAL SERVICES -- 1.7%
375 Capital One Financial
Corp. 43,125
------------
FOOD DISTRIBUTORS -- 2.9%
2,570 SYSCO Corp. 70,514
------------
HOUSEHOLD PRODUCTS -- 4.0%
840 Clorox Co. 98,123
------------
MANUFACTURING -- 2.7%
870 Tyco International Ltd. 65,631
------------
MOTOR VEHICLES -- 3.5%
1,475 Ford Motor Co. 86,564
------------
OFFICE EQUIPMENT AND
SUPPLIES -- 7.8%
1,125 Lexmark International
Group* 113,063
1,215 Pitney Bowes 80,266
------------
193,329
------------
PHARMACEUTICALS -- 6.0%
475 Pfizer, Inc. 59,583
1,610 Schering-Plough Corp. 88,952
------------
148,535
------------
TOTAL COMMON STOCKS
(COST $1,771,105) 2,322,253
------------
MONEY MARKET FUNDS -- 5.8%
142,371 Fund for Government
Investors
(Cost $142,371) 142,371
------------
TOTAL INVESTMENTS -- 100.0%
(COST $1,913,476) $ 2,464,624
------------
------------
</TABLE>
- --------------------------
* NON-INCOME PRODUCING
ADR AMERICAN DEPOSITORY RECEIPTS
SEE NOTES TO FINANCIAL STATEMENTS.
54
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
LARGE CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 98.9%
AIRLINES -- 3.4%
325 British Airways, ADR $ 22,039
------------
APPAREL -- 7.9%
1200 The Limited, Inc. 34,950
350 V.F. Corp. 16,406
------------
51,356
------------
BANKS -- 9.1%
700 ABN-AMRO Holdings, ADR 15,225
650 Australia & New Zealand Banking Group,
ADR 21,125
675 UnionBancal Corp. 22,992
------------
59,342
------------
BEVERAGES -- 7.1%
1,750 Bass Public Limited Co., ADR 25,156
550 Seagram Company Ltd. 20,900
------------
46,056
------------
BUILDING MATERIALS AND
PRODUCTS -- 1.9%
300 Lafarge Corp. 12,150
------------
CONGLOMERATES -- 3.9%
900 Anglo American Corp. of South Africa,
ADR 25,200
------------
CONSUMER ELECTRONICS AND
APPLIANCES -- 2.1%
250 Whirlpool Corp. 13,844
------------
DEPARTMENT STORES -- 3.8%
600 Coles Myer Ltd., ADR 24,937
------------
DIVERSIFIED FINANCIAL
SERVICES -- 4.0%
225 Transamerica Corp. 25,988
------------
ELECTRIC UTILITIES -- 3.7%
600 Public Service Enterprise Group 24,000
------------
ENGINEERING AND
CONSTRUCTIONS -- 2.9%
450 Fluor Corp. 19,153
------------
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
FOOD DISTRIBUTORS -- 5.6%
1,300 Super Value, Inc. $ 36,400
------------
INDUSTRIAL MACHINERY -- 8.4%
675 Caterpillar, Inc. 31,050
725 Deere & Co. 24,016
------------
55,066
------------
INSURANCE -- 7.0%
250 Cigna Corp. 19,328
275 Hartford Financial Services Group, Inc. 15,091
500 Old Republic International Corp. 11,250
------------
45,669
------------
INVESTMENT SERVICES -- 2.1%
375 Bear Stearns Co's. 14,016
------------
MANUFACTURING -- 3.2%
1,050 Tomkins F H PLC, ADR 21,000
------------
METALS AND MINERALS -- 4.7%
1,800 Pohang Iron & Steel Ltd., ADR 30,375
------------
MISC. TRANSPORTATION -- 2.3%
1,500 Laidlaw, Inc. 15,094
------------
MOTOR VEHICLES -- 10.2%
650 Ford Motor Co. 38,147
1,250 Volvo, ADR 29,141
------------
67,288
------------
OIL COMPANIES -- 3.2%
575 Sunoco, Inc. 20,736
------------
RAILROADS -- 2.4%
375 CSX Corp. 15,562
------------
TOTAL COMMON STOCKS
(COST $590,447) 645,271
------------
MONEY MARKET FUNDS -- 1.1%
7,402 Fund for Government Investors
(Cost $7,402) 7,402
------------
TOTAL INVESTMENTS -- 100.0%
(COST $597,849) $ 652,673
------------
------------
</TABLE>
- --------------------------
* NON-INCOME PRODUCING
ADR AMERICAN DEPOSITORY RECEIPTS
SEE NOTES TO FINANCIAL STATEMENTS.
55
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
MARKET VALUE
SHARES COUNTRY (NOTE 1)
- -----------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS -- 92.1%
AIRLINES -- 2.5%
8,180 Deutsche Lufthansa Germany $ 180,738
2,630 Konin Luchtvaart Mij NV Netherlands 79,600
------------
260,338
------------
APPAREL -- 1.4%
71,700 Bennetton Group SPA Italy 141,865
------------
AUTOMOBILE MANUFACTURERS -- 11.3%
410 Bayerische Motoren Werke Germany 192,011
2,331 Daimler-Benz AG Germany 230,227
66,910 Fiat SPA Italy 232,742
920 Peugeot SA France 142,463
1,460 Renault (Regie) NH France 65,603
3,800 Volkswagen AG Germany 303,448
------------
1,166,494
------------
AUTOMOBILE PARTS & EQUIPMENT -- 1.1%
100 Fischer (Georg) AG Switzerland 33,819
950 Valeo France 74,898
------------
108,717
------------
BANKS -- 15.2%
8,192 ABN Amro Holding NV Netherlands 172,425
18,830 Banca Commerciale Italiana Italy 130,085
10,950 Banca Popolare di Milano Italy 99,536
1,470 Banque Nationale de Paris France 121,105
2,702 Bayer Hypo-Vereins AG Germany 211,712
3,370 Commerzbank AG Germany 106,632
510 Credit Suisse Group Switzerland 79,834
19,020 Credito Italiano SPA Italy 112,898
3,837 Ing Groep NV Netherlands 234,104
780 Societe Generale France 126,369
570 UBS AG Switzerland 177,206
------------
1,571,906
------------
BEVERAGES -- 0.9%
1,610 Heineken NV Netherlands 96,943
------------
BUILDING MATERIALS -- 0.9%
950 Lafarge France 90,306
------------
CHEMICALS -- 3.6%
2,120 Akzo Nobel NV Netherlands 92,519
3,220 BASF AG Germany 122,959
2,110 Bayer AG Germany 88,111
1,600 Hoechst AG Germany 66,381
------------
369,970
------------
</TABLE>
56
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998 (CONTINUED)
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
MARKET VALUE
SHARES COUNTRY (NOTE 1)
COMMON STOCKS (CONTINUED)
- -----------------------------------------------------------------------------------
COMPUTERS -- 1.1%
<C> <S> <C> <C>
2,260 Getronics NV Netherlands $ 111,996
------------
COMPUTERS SOFTWARE -- 2.1%
500 SAP AG Germany 216,148
------------
COSMETICS/PERSONAL CARE -- 2.7%
260 L'Oreal France 188,041
130 Wella AG Germany 91,323
------------
279,364
------------
DIVERSIFIED FINANCIAL SERVICES -- 1.2%
7,095 San Paolo-IMI SPA Italy 125,547
------------
ELECTRONICS -- 1.0%
1,470 Philips Electronics (KON) Netherlands 98,696
------------
ENGINEERING & CONSTRUCTION -- 1.3%
660 Suez Lyonnaise Des Eaux France 135,638
------------
FOOD -- 4.5%
520 Groupe Danone France 148,943
1,636 Ahold NV Netherlands 60,500
120 Nestle SA Switzerland 261,234
------------
470,677
------------
HOUSEHOLD PRODUCTS/WARES -- 1.6%
1,980 Unilever NV Netherlands 169,337
------------
INSURANCE -- 14.6%
930 Allianz AG Germany 341,172
1,595 Asr Verzekerings Groep NV Netherlands 144,485
4,270 Assicurazioni Generali SPA Italy 178,546
1,350 AXA France 195,756
49,970 Institut Naz Assicur Italy 132,180
90 Schweiz-Reuckversicherungs Switzerland 234,652
390 Zuerich Allied AG Switzerland 288,777
------------
1,515,568
------------
LODGING -- 1.4%
670 Accor SA France 145,130
------------
OIL & GAS -- 2.5%
15,420 ENI SPA Italy 100,921
3,110 Royal Dutch Petroleum Netherlands 154,947
------------
255,868
------------
</TABLE>
57
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998 (CONTINUED)
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
MARKET VALUE
SHARES COUNTRY (NOTE 1)
- -----------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C> <C>
PHARMACEUTICALS -- 5.7%
210 Novartis AG Switzerland $ 412,819
1,480 Rhone-Poulenc SA France 76,199
790 Schering AG Germany 99,252
------------
588,270
------------
REAL ESTATE -- 0.2%
49,970 Unione Immobiliare Italy 26,103
------------
RETAIL -- 2.5%
140 Jelmoli Switzerland 30,579
1,200 Pinault-Printemps France 229,429
------------
260,008
------------
TELECOMMUNICATION EQUIPMENT -- 0.8%
660 Alcatel Alsthom France 80,816
------------
TELECOMMUNICATIONS -- 7.0%
51,500 T.I.M. SPA Italy 380,750
40,160 Telecom Italia SPA Italy 343,151
------------
723,901
------------
TELEPHONE -- 5.0%
9,080 Deutsche Telekom AG Germany 298,755
2,740 France Telecom SA France 217,786
------------
516,541
------------
TOTAL COMMON STOCKS
(COST $9,728,741) 9,526,147
------------
MONEY MARKET FUNDS -- 7.9%
811,864 Fund for Government Investors
(Cost $811,864) 811,864
------------
TOTAL INVESTMENTS -- 100.0%
(COST $10,540,605) $ 10,338,011
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
58
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
AGGRESSIVE AGGRESSIVE MID CAP AGGRESSIVE
SMALL CAP EQUITY GROWTH GROWTH MICRO CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Securities at Cost.............................. $ 38,608,845 $ 73,327,987 $ 6,506,213 $ 7,614,556
----------------- ------------ ----------- -----------
----------------- ------------ ----------- -----------
Securities at Value (Note 1).................... $ 47,233,110 $ 83,739,983 $ 8,236,356 $ 9,583,203
Receivable for Securities Sold.................. -- 7,335,903 -- 19,499
Receivable for Shares Sold...................... 198,317 2,032,590 146,515 106,693
Interest Receivable............................. 6,282 13,643 999 700
Dividends Receivable............................ 7,600 27,876 4,613 4,180
Other Receivables............................... -- 162 -- --
Unamortized Organizational Costs (Note 1)....... -- 50,190 -- --
----------------- ------------ ----------- -----------
Total Assets.................................. 47,445,309 93,200,347 8,388,483 9,714,275
----------------- ------------ ----------- -----------
LIABILITIES
Investment Advisory Fee Payable (Note 2)........ 31,752 54,149 6,077 6,611
Administrative Fee Payable (Note 2)............. 9,450 16,116 1,809 1,968
Distribution Plan Fee Payable (Note 4).......... 9,450 16,116 1,809 1,968
Payable for Securities Purchased................ -- 11,407,975 246,315 --
Payable for Shares Redeemed..................... 129,605 242,009 7,517 51,097
Distributions Payable........................... -- 17 205 --
Other Payables and Accrued Expenses............. 5,670 9,669 1,085 1,185
Organizational Expense Payable to Adviser (Note
1)............................................ -- 50,190 -- --
----------------- ------------ ----------- -----------
Total Liabilities............................. 185,927 11,796,241 264,817 62,829
----------------- ------------ ----------- -----------
NET ASSETS........................................ $ 47,259,382 $ 81,404,106 $ 8,123,666 $ 9,651,446
----------------- ------------ ----------- -----------
----------------- ------------ ----------- -----------
SHARES OUTSTANDING................................ 2,955,086 5,491,448 594,970 472,643
----------------- ------------ ----------- -----------
----------------- ------------ ----------- -----------
NET ASSET VALUE PER SHARE......................... $15.99 $14.82 $13.65 $20.42
------ ------ ----------- -----------
------ ------ ----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
59
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<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.................................. $ 903,631 $ 1,913,476 $ 597,849 $10,540,605
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
Securities at Value (Note 1)........................ $ 857,044 $ 2,464,624 $ 652,673 $10,338,011
Receivable for Securities Sold...................... -- 52,425 -- --
Receivable for Shares Sold.......................... -- 11,513 58 --
Interest Receivable................................. 129 264 70 2,510
Dividends Receivable................................ 1,081 1,251 3,586 1,846
Unamortized Organizational Costs (Note 1)........... 73,440 73,440 73,440 73,440
----------- ----------- ----------- -------------
Total Assets...................................... 931,694 2,603,517 729,827 10,415,807
----------- ----------- ----------- -------------
LIABILITIES
Investment Advisory Fee Payable (Note 2)............ 653 1,661 492 8,374
Administrative Fee Payable (Note 2)................. 194 494 164 2,094
Distribution Plan Fee Payable (Note 4).............. 194 494 164 2,094
Payable for Securities Purchased.................... -- 125,584 -- --
Payable for Shares Redeemed......................... -- -- -- 1,265
Distributions Payable............................... -- -- 30 --
Other Payables and Accrued Expenses................. 117 297 98 2,094
Organizational Expense Payable to Adviser (Note
1)................................................ 73,440 73,440 73,440 73,440
----------- ----------- ----------- -------------
Total Liabilities................................. 74,598 201,970 74,388 89,361
----------- ----------- ----------- -------------
NET ASSETS............................................ $ 857,096 $ 2,401,547 $ 655,439 $10,326,446
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
SHARES OUTSTANDING.................................... 93,069 165,990 57,553 990,083
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
NET ASSET VALUE PER SHARE............................. $9.21 $14.47 $11.39 $10.43
----- ----------- ----------- ------
----- ----------- ----------- ------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
60
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
AGGRESSIVE SMALL AGGRESSIVE MID CAP AGGRESSIVE
CAP EQUITY GROWTH GROWTH MICRO CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest (Note 1)................................. $ 196,099 $ 267,860 $ 34,335 $ 35,023
Dividends (Note 1)................................ 266,225 396,072 84,676 40,669
----------------- ------------ ----------- -----------
Total Investment Income......................... 462,324 663,932 119,011 75,692
----------------- ------------ ----------- -----------
EXPENSES
Investment Advisory Fee (Note 2).................. 591,904 870,444 90,643 90,856
Administrative Fee (Note 2)....................... 136,969 218,920 23,121 23,621
Distribution Plan Fees (Note 4)................... 48,212 218,290 23,157 14,331
Transfer Agent and Custodian Fee (Note 3)......... 146,185 160,728 62,467 62,782
Shareholder Reports and Notices................... 79,524 91,123 12,395 15,586
Registration Fees................................. 55,433 17,789 17,280 20,628
Organizational Expense (Note 1)................... 767 25,200 -- --
Audit Fees........................................ 18,100 23,600 1,950 2,350
Trustees' Fees and Expenses (Note 2).............. 1,784 3,388 3,388 3,388
Other Expenses.................................... 3,431 23,693 2,446 3,040
----------------- ------------ ----------- -----------
Total Expenses.................................. 1,082,309 1,653,175 236,847 236,582
Less Expenses Reimbursed by Investment Adviser
(Note 2)...................................... (187,573) (181,272) (82,893) (93,800)
----------------- ------------ ----------- -----------
Net Expenses.................................. 894,736 1,471,903 153,954 142,782
----------------- ------------ ----------- -----------
NET INVESTMENT LOSS................................. (432,412) (807,971) (34,943) (67,090)
----------------- ------------ ----------- -----------
Net Realized Gain (Loss) on Investment
Transactions...................................... (338,976) 10,857,763 600,569 (593,873)
Change in Net Unrealized Appreciation of
Investments....................................... 686,288 262,591 485,817 938,282
----------------- ------------ ----------- -----------
NET GAIN ON INVESTMENTS............................. 347,312 11,120,354 1,086,386 344,409
----------------- ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $ (85,100) $ 10,312,383 $ 1,051,443 $ 277,319
----------------- ------------ ----------- -----------
----------------- ------------ ----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
61
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
SMALL CAP LARGE CAP LARGE CAP INTERNATIONAL
VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest (Note 1)........................................ $ 2,565 $ 2,871 $ 2,060 $ 33,109
Dividends (Note 1)....................................... 13,169 7,164 14,251 72,300
----------- ----------- ----------- -------------
Total Investment Income................................ 15,734 10,035 16,311 105,409
----------- ----------- ----------- -------------
EXPENSES
Investment Advisory Fee (Note 2)......................... 5,147 7,956 3,950 65,510
Administrative Fee (Note 2).............................. 1,487 2,285 1,316 16,378
Distribution Plan Fee (Note 4)........................... 1,464 2,298 1,321 16,487
Transfer Agent and Custodian Fee (Note 3)................ 28,972 30,396 28,594 81,574
Organizational Expense (Note 1).......................... 18,360 18,360 18,360 18,360
Registration Fees........................................ 8,114 8,114 8,207 7,838
Audit Fees............................................... 8,000 8,000 8,000 3,000
Trustees' Fees and Expenses (Note 2)..................... 3,388 3,388 3,388 3,388
Shareholder Reports and Notices.......................... 2,131 2,155 1,914 2,321
Other Expenses........................................... 45 59 80 276
----------- ----------- ----------- -------------
Total Expenses......................................... 77,108 83,011 75,130 215,132
Less Expenses Reimbursed by Investment Adviser (Note
2)................................................... (68,024) (69,011) (67,670) (100,379)
----------- ----------- ----------- -------------
Net Expenses......................................... 9,084 14,000 7,460 114,753
----------- ----------- ----------- -------------
NET INVESTMENT INCOME (LOSS)............................... 6,650 (3,965) 8,851 (9,344)
----------- ----------- ----------- -------------
Net Realized Gain (Loss) on Investment Transactions........ (49,214) (51,859) 18,166 232,783
Net Realized Gain on Foreign Currency Transactions......... -- -- -- 282
Change in Net Unrealized Appreciation/Depreciation of
Investments.............................................. (47,797) 548,665 53,686 (202,622)
----------- ----------- ----------- -------------
NET GAIN (LOSS) ON INVESTMENTS............................. (97,011) 496,806 71,852 30,443
----------- ----------- ----------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $ (90,361) $ 492,841 $ 80,703 $ 21,099
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
62
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AGGRESSIVE SMALL CAP EQUITY AGGRESSIVE GROWTH
PORTFOLIO PORTFOLIO
----------------------------- -----------------------------
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Loss................... $ (432,412) $ (1,378,702) $ (807,971) $ (1,040,691)
Net Realized Gain (Loss) on Investment
Transactions........................ (338,976) 25,247,521 10,857,763 11,968,088
Change in Net Unrealized Appreciation
of Investments...................... 686,288 (28,940,108) 262,591 321,088
------------- ------------- ------------- -------------
Net Increase (Decrease) in Net
Assets Resulting from
Operations........................ (85,100) (5,071,289) 10,312,383 11,248,485
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Realized Gain................ -- (14,124,008) -- (1,178,202)
------------- ------------- ------------- -------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares..... 69,506,803 60,192,194 267,578,704 148,051,404
Reinvestment of Distributions......... -- 13,539,639 -- 1,148,045
Cost of Shares Redeemed............... (95,041,562) (171,691,808) (298,233,289) (152,769,712)
------------- ------------- ------------- -------------
Net Decrease in Net Assets Resulting
from Share Transactions........... (25,534,759) (97,959,975) (30,654,585) (3,570,263)
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ (25,619,859) (117,155,272) (20,342,202) 6,500,020
NET ASSETS -- Beginning of Year......... 72,879,241 190,034,513 101,746,308 95,246,288
------------- ------------- ------------- -------------
NET ASSETS -- End of Year............... $ 47,259,382 $ 72,879,241 $ 81,404,106 $ 101,746,308
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
SHARES
Sold.................................. 4,515,915 4,277,974 20,345,331 11,764,667
Issued in Reinvestment of
Distributions....................... -- 846,228 -- 86,384
Redeemed.............................. (6,115,945) (11,252,090) (22,510,476) (11,968,178)
------------- ------------- ------------- -------------
Net Decrease in Shares.............. (1,600,030) (6,127,888) (2,165,145) (117,127)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
63
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MID CAP GROWTH
PORTFOLIO
----------------------------- AGGRESSIVE MICRO CAP
PORTFOLIO
FOR THE YEARS ---------------------------------
ENDED FOR THE YEAR FOR THE PERIOD
DECEMBER 31, ENDED ENDED
----------------------------- DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997*
------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Loss................... $ (34,943) $ (41,193) $ (67,090) $ (26,415)
Net Realized Gain (Loss) on Investment
Transactions........................ 600,569 317,596 (593,873) 415,737
Change in Net Unrealized Appreciation
of Investments...................... 485,817 1,208,882 938,282 1,030,365
------------- ------------- -------------- ----------------
Net Increase in Net Assets Resulting
from Operations................... 1,051,443 1,485,285 277,319 1,419,687
------------- ------------- -------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Realized Gain................ (174,079) (341,588) -- (180,781)
------------- ------------- -------------- ----------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares..... 14,064,660 7,858,965 16,347,179 13,757,919
Reinvestment of Distributions......... 170,002 336,620 -- 176,182
Cost of Shares Redeemed............... (15,360,950) (2,608,712) (17,163,447) (4,982,612)
------------- ------------- -------------- ----------------
Net Increase (Decrease) in Net
Assets Resulting from Share
Transactions...................... (1,126,288) 5,586,873 (816,268) 8,951,489
------------- ------------- -------------- ----------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ (248,924) 6,730,570 (538,949) 10,190,395
NET ASSETS -- Beginning of Period....... 8,372,590 1,642,020 10,190,395 --
------------- ------------- -------------- ----------------
NET ASSETS -- End of Period............. $ 8,123,666 $ 8,372,590 $ 9,651,446 $10,190,395
------------- ------------- -------------- ----------------
------------- ------------- -------------- ----------------
SHARES
Sold.................................. 1,082,352 711,277 825,396 741,820
Issued in Reinvestment of
Distributions....................... 12,658 27,081 -- 8,636
Redeemed.............................. (1,173,434) (224,912) (852,387) (250,822)
------------- ------------- -------------- ----------------
Net Increase (Decrease) in Shares... (78,424) 513,446 (26,991) 499,634
------------- ------------- -------------- ----------------
------------- ------------- -------------- ----------------
</TABLE>
* FROM COMMENCEMENT OF OPERATIONS MARCH 17, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
64
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP
VALUE PORTFOLIO LARGE CAP
----------------------------- GROWTH PORTFOLIO
FOR THE ---------------------------------
FOR THE YEAR PERIOD FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997* 1998 1997*
------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss).......... $ 6,650 $ 48 $ (3,965) $ 59
Net Realized Loss on Investment
Transactions........................ (49,214) (49) (51,859) --
Change in Net Unrealized Appreciation
of Investments...................... (47,797) 1,209 548,665 2,482
------------- ------------- -------------- --------
Net Increase (Decrease) in Net
Assets Resulting from
Operations........................ (90,361) 1,208 492,841 2,541
------------- ------------- -------------- --------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income............ (6,650) (48) -- (59)
------------- ------------- -------------- --------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares..... 1,107,661 100,000 2,553,343 100,000
Reinvestment of Distributions......... 6,650 48 -- 59
Cost of Shares Redeemed............... (261,412) -- (747,178) --
------------- ------------- -------------- --------
Net Increase in Net Assets Resulting
from Share Transactions........... 852,899 100,048 1,806,165 100,059
------------- ------------- -------------- --------
TOTAL INCREASE IN NET ASSETS........ 755,888 101,208 2,299,006 102,541
NET ASSETS -- Beginning of Period....... 101,208 -- 102,541 --
------------- ------------- -------------- --------
NET ASSETS -- End of Period............. $ 857,096 $ 101,208 $ 2,401,547 $ 102,541
------------- ------------- -------------- --------
------------- ------------- -------------- --------
SHARES
Sold.................................. 109,516 10,000 216,274 10,000
Issued in Reinvestment of
Distributions....................... 722 5 -- 6
Redeemed.............................. (27,174) -- (60,290) --
------------- ------------- -------------- --------
Net Increase in Shares.............. 83,064 10,005 155,984 10,006
------------- ------------- -------------- --------
------------- ------------- -------------- --------
</TABLE>
* FROM COMMENCEMENT OF OPERATION DECEMBER 19, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
65
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LARGE CAP
VALUE PORTFOLIO INTERNATIONAL
----------------------------- EQUITY PORTFOLIO
FOR THE ---------------------------------
FOR THE YEAR PERIOD FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997* 1998 1997**
------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss).......... $ 8,851 $ 76 $ (9,344) $ (1)
Net Realized Gain on Investment
Transactions........................ 18,166 -- 232,783 --
Net Realized Gain on Foreign Currency
Transactions........................ -- -- 282
Change in Net Unrealized Appreciation
of Investments...................... 53,686 1,138 (202,622) --
------------- ------------- -------------- -------
Net Increase (Decrease) in Net
Assets Resulting from
Operations........................ 80,703 1,214 21,099 (1)
------------- ------------- -------------- -------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income............ (8,851) (76) -- --
From Net Realized Gain................ (33,820) -- (226,731) --
------------- ------------- -------------- -------
Total Distributions to
Shareholders...................... (42,671) (76) (226,731) --
------------- ------------- -------------- -------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares..... 844,096 100,000 11,259,013 10,000
Reinvestment of Distributions......... 42,522 76 226,731 --
Cost of Shares Redeemed............... (370,425) -- (963,665) --
------------- ------------- -------------- -------
Net Increase in Net Assets Resulting
from Share Transactions........... 516,193 100,076 10,522,079 10,000
------------- ------------- -------------- -------
TOTAL INCREASE IN NET ASSETS........ 554,225 101,214 10,316,447 9,999
NET ASSETS -- Beginning of Period....... 101,214 -- 9,999 --
------------- ------------- -------------- -------
NET ASSETS -- End of Period............. $ 655,439 $ 101,214 $10,326,446 $ 9,999
------------- ------------- -------------- -------
------------- ------------- -------------- -------
SHARES
Sold.................................. 75,563 10,000 1,063,405 1,000
Issued in Reinvestment of
Distributions....................... 3,723 8 21,738 --
Redeemed.............................. (31,741) -- (96,060) --
------------- ------------- -------------- -------
Net Increase in Shares.............. 47,545 10,008 989,083 1,000
------------- ------------- -------------- -------
------------- ------------- -------------- -------
</TABLE>
* FROM COMMENCEMENT OF OPERATION DECEMBER 19, 1997
** FROM COMMENCEMENT OF OPERATION DECEMBER 26, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
66
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AGGRESSIVE
SMALL CAP EQUITY PORTFOLIO**
-----------------------------------------------------------------------------------
FOR THE
PERIOD
FOR THE YEARS ENDED DECEMBER 31, ENDED
------------------------------------------------------------------- DECEMBER 31,
1998 1997 1996 1995 1994*
---------------- ---------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $16.00 $17.79 $15.41 $10.98 $10.00
------- ------- ------------- ------------- -------------
Income from Investment Operations:
Net Investment Loss................. (0.15) (0.30) (0.23) (0.16) (0.08)
Net Realized and Unrealized Gain on
Investments....................... 0.14 2.30(C) 2.61 4.97 1.06
------- ------- ------------- ------------- -------------
Total from Investment
Operations...................... (0.01) 2.00 2.38 4.81 0.98
------- ------- ------------- ------------- -------------
Distributions to Shareholders:
From Net Realized Gain.............. -- (3.79) -- (0.38) --
------- ------- ------------- ------------- -------------
Net Increase in Net Asset Value....... (0.01) (1.79) 2.38 4.43 0.98
------- ------- ------------- ------------- -------------
Net Asset Value -- End of Period...... $15.99 $16.00 $17.79 $15.41 $10.98
------- ------- ------------- ------------- -------------
------- ------- ------------- ------------- -------------
TOTAL INVESTMENT RETURN(A).............. (0.06)% 11.24% 15.44% 43.80% 9.80%
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note
2).................................. 1.63% 2.33% 1.75% 1.75% 1.68%(B)
Expenses Before Reimbursement (Note
2).................................. 1.98% 2.62% 1.86% 2.10% 4.52%(B)
Net Investment Loss After
Reimbursement (Note 2).............. (0.79)% (1.37)% (1.33)% (1.15)% (0.81)%(B)
Net Investment Loss Before
Reimbursement (Note 2).............. (1.13)% (1.64)% (1.44)% (1.50)% (3.65)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 145% 184% 137% 170% 140%
Net Assets at End of Period (in
thousands).......................... $47,259 $72,879 $190,035 $105,299 $18,224
Number of Shares Outstanding at End of
Period (in thousands)............... 2,955 4,555 10,683 6,831 1,660
</TABLE>
- -------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
(C) 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 amount of per share realized and unrealized gain and loss at
such time.
* FROM COMMENCEMENT OF OPERATIONS JANUARY 3, 1994
** Financial Highlights include the performance of the Navellier Aggressive
Small Cap Equity Portfolio, a series of the Navellier Series Fund, which
reorganized on July 24, 1998, as a series of the Navellier Performance Funds
(See Note 9).
SEE NOTES TO FINANCIAL STATEMENTS.
67
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH
PORTFOLIO
----------------------------------------------------------------
FOR THE
PERIOD
FOR THE YEARS ENDED DECEMBER 31, ENDED
------------------------------------------------ DECEMBER 31,
1998 1997 1996 1995*
---------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $13.29 $12.25 $9.99 $10.00
------- ------------- ------------- ------
Income from Investment Operations:
Net Investment Loss................. (0.15) (0.14) (0.12) --
Net Realized and Unrealized Gain
(Loss) on Investments............. 1.68 1.34 2.38(C) (0.01)
------- ------------- ------------- ------
Total from Investment
Operations...................... 1.53 1.20 2.26 (0.01)
------- ------------- ------------- ------
Distributions to Shareholders:
From Net Realized Gain.............. -- (0.16) -- --
------- ------------- ------------- ------
Net Increase (Decrease) in Net Asset
Value............................... 1.53 1.04 2.26 (0.01)
------- ------------- ------------- ------
Net Asset Value -- End of Period...... $14.82 $13.29 $12.25 $9.99
------- ------------- ------------- ------
------- ------------- ------------- ------
TOTAL INVESTMENT RETURN................. 11.51% 9.77% 22.62% (0.10)%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note
2).................................. 1.68% 2.00% 2.00% 2.00%(B)
Expenses Before Reimbursement (Note
2).................................. 1.89% 2.15% 2.22% 27.25%(B)
Net Investment Income (Loss) After
Reimbursement (Note 2).............. (0.92)% (1.07)% (1.57)% 2.59%(B)
Net Investment Loss Before
Reimbursement (Note 2).............. (1.13)% (1.22)% (1.77)% (12.66)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 237% 247% 169% --
Net Assets at End of Period (in
thousands).......................... $81,404 $101,746 $95,246 $300
Number of Shares Outstanding at End of
Period (in thousands)............... 5,491 7,657 7,774 30
</TABLE>
- -------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
(C) 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 at
such time.
* FROM COMMENCEMENT OF OPERATIONS DECEMBER 28, 1995
SEE NOTES TO FINANCIAL STATEMENTS.
68
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MID CAP GROWTH
PORTFOLIO
------------------------------------------------
FOR THE YEARS ENDED FOR THE
PERIOD
DECEMBER 31, ENDED
-------------------------------- DECEMBER 31,
1998 1997 1996*
-------- ------------- -------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $12.43 $10.27 $10.00
------ ------ -------------
Income from Investment Operations:
Net Investment Income (Loss)........ (0.06) (0.06) 0.01
Net Realized and Unrealized Gain on
Investments....................... 1.59 2.75 0.27
------ ------ -------------
Total from Investment
Operations...................... 1.53 2.69 0.28
------ ------ -------------
Distributions to Shareholders:
From Net Investment Income.......... -- -- (0.01)
From Net Realized Gain.............. (0.31) (0.53) --
------ ------ -------------
Total Distributions to
Shareholders.................... (0.31) (0.53) (0.01)
------ ------ -------------
Net Increase in Net Asset Value....... 1.22 2.16 0.27
------ ------ -------------
Net Asset Value -- End of Period...... $13.65 $12.43 $10.27
------ ------ -------------
------ ------ -------------
TOTAL INVESTMENT RETURN................. 12.31% 26.18% 2.75%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note
2).................................. 1.66% 2.00% 2.00%(B)
Expenses Before Reimbursement (Note
2).................................. 2.56% 3.27% 113.02%(B)
Net Investment Income (Loss) After
Reimbursement (Note 2).............. (0.38)% (0.69)% 0.87%(B)
Net Investment Loss Before
Reimbursement (Note 2).............. (1.27)% (1.96)% (110.15)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 211% 163% --
Net Assets at End of Period (in
thousands).......................... $8,124 $8,373 $1,642
Number of Shares Outstanding at End of
Period (in thousands)............... 595 673 160
</TABLE>
- -------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
* FROM COMMENCEMENT OF OPERATIONS NOVEMBER 26, 1996
SEE NOTES TO FINANCIAL STATEMENTS.
69
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
AGGRESSIVE MICRO CAP
PORTFOLIO
--------------------------------
FOR THE
FOR THE YEAR PERIOD
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1998 1997*
---------------- -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $20.40 $15.64
------ -------------
Income from Investment Operations:
Net Investment Loss................. (0.14) (0.05)
Net Realized and Unrealized Gain on
Investments....................... 0.16 5.17
------ -------------
Total from Investment
Operations...................... 0.02 5.12
------ -------------
Distributions to Shareholders:
From Net Realized Gain.............. -- (0.36)
------ -------------
Net Increase in Net Asset Value....... 0.02 4.76
------ -------------
Net Asset Value -- End of Period...... $20.42 $20.40
------ -------------
------ -------------
TOTAL INVESTMENT RETURN................. 0.10% 32.76%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note
2).................................. 1.51% 1.55%(B)
Expenses Before Reimbursement (Note
2).................................. 2.50% 3.21%(B)
Net Investment Loss After
Reimbursement (Note 2).............. (0.71)% (0.54)%(B)
Net Investment Loss Before
Reimbursement (Note 2).............. (1.70)% (2.20)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 196% 86%
Net Assets at End of Period (in
thousands).......................... $ 9,651 $10,190
Number of Shares Outstanding at End of
Period (in thousands)............... 473 500
</TABLE>
- -------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
* FROM COMMENCEMENT OF OPERATIONS MARCH 17, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
69
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SMALL CAP VALUE
PORTFOLIO LARGE CAP GROWTH
-------------------------------- PORTFOLIO
FOR THE ---------------------------------
FOR THE YEAR PERIOD FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997* 1998 1997*
---------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $10.12 $10.00 $10.25 $10.00
------ ------ ------ ------
Income from Investment Operations:
Net Investment Income (Loss)........ 0.07 0.01 (0.02) 0.01
Net Realized and Unrealized Gain
(Loss) on Investments............. (0.91) 0.12 4.24 0.25
------ ------ ------ ------
Total from Investment
Operations...................... (0.84) 0.13 4.22 0.26
------ ------ ------ ------
Distributions to Shareholders:
From Net Investment Income.......... (0.07) (0.01) -- (0.01)
------ ------ ------ ------
Net Increase (Decrease) in Net Asset
Value............................... (0.91) 0.12 4.22 0.25
------ ------ ------ ------
Net Asset Value -- End of Period...... $9.21 $10.12 $14.47 $10.25
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN................. (8.28)% 1.25%(A) 41.17% 2.56%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note
2).................................. 1.53% 1.75%(B) 1.54% 1.90%(B)
Expenses Before Reimbursement (Note
2).................................. 13.01% 7.74%(B) 9.11% 6.66%(B)
Net Investment Income (Loss) After
Reimbursement (Note 2).............. 1.12% 1.94%(B) (0.43)% 2.40%(B)
Net Investment Loss Before
Reimbursement (Note 2).............. (10.36)% (4.03)%(B) (8.00)% (2.36)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 85% 2% 80% --
Net Assets at End of Period (in
thousands).......................... $857 $101 $2,402 $103
Number of Shares Outstanding at End of
Period (in thousands)............... 93 10 166 10
</TABLE>
- -------------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
* FROM COMMENCEMENT OF OPERATION DECEMBER 19, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
70
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- ---------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LARGE CAP VALUE
PORTFOLIO INTERNATIONAL EQUITY
-------------------------------- PORTFOLIO
FOR THE ---------------------------------
FOR THE YEAR PERIOD FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997* 1998 1997**
---------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $10.11 $10.00 $10.00 $10.00
------ ------ ------- -------
Income from Investment Operations:
Net Investment Income (Loss)........ 0.16 0.01 (0.01) --
Net Realized and Unrealized Gain
(Loss) on Investments............. 1.91 0.11 0.67 --
------ ------ ------- -------
Total from Investment
Operations...................... 2.07 0.12 0.66 --
------ ------ ------- -------
Distributions to Shareholders:
From Net Investment Income.......... (0.16) (0.01) -- --
From Net Realized Gain.............. (0.63) -- (0.23) --
------ ------ ------- -------
Total Distributions to
Shareholders.................... (0.79) (0.01) (0.23) --
------ ------ ------- -------
Net Increase in Net Asset Value....... 1.28 0.11 0.43 --
------ ------ ------- -------
Net Asset Value -- End of Period...... $11.39 $10.11 $10.43 $10.00
------ ------ ------- -------
------ ------ ------- -------
TOTAL INVESTMENT RETURN................. 20.48% 1.18%(A) 6.64% --
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note
2).................................. 1.42% 1.50%(B) 1.75% 1.75%(B)
Expenses Before Reimbursement (Note
2).................................. 14.34% 5.03%(B) 3.29% 5.48%(B)
Net Investment Income (Loss) After
Reimbursement (Note 2).............. 1.69% 3.09%(B) (0.14)% (1.75)%(B)
Net Investment Loss Before
Reimbursement (Note 2).............. (11.22)% (0.45)%(B) (1.68)% (5.48)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 256% -- 41% --
Net Assets at End of Period (in
thousands).......................... $655 $101 $10,326 $10
Number of Shares Outstanding at End of
Period (in thousands)............... 58 10 990 1
</TABLE>
- -------------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
* FROM COMMENCEMENT OF OPERATION DECEMBER 19, 1997
** FROM COMMENCEMENT OF OPERATION DECEMBER 26, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
71
<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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 eight separate portfolios each
with its own investment objectives and policies: the Aggressive Small Cap Equity
Portfolio, a diversified open-end management company portfolio, the Aggressive
Growth Portfolio, a non-diversified open-end management company portfolio, the
Mid Cap Growth Portfolio, a diversified open-end management company portfolio,
the Aggressive Micro Cap Portfolio (formerly the Aggressive Small Cap
Portfolio), a diversified open-end management company portfolio, the Small Cap
Value Portfolio, a diversified open-end management company portfolio, 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 gains and
losses from securities transactions are computed on an identified cost basis.
(c) Dividends from net investment income are declared and paid annually.
Dividends are re-invested in additional shares unless shareholders request
payment in cash. Net capital gains, if any, are distributed annually.
(d) The Fund intends to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies and will distribute all net
investment income and capital gains to its shareholders. Therefore, no Federal
income tax provision is required.
(e) Organizational expenses of the Aggressive Growth Portfolio, the Small
Cap Value Portfolio, the Large Cap Growth Portfolio, the Large Cap Value
Portfolio, and the International Equity Portfolio totaling $126,000, $91,800,
$91,800, $91,800, and $91,800, respectively, are being deferred and amortized
over 60 months beginning with the 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, 1998, the unamortized organization costs of the
Aggressive Growth Portfolio, the Small Cap Value Portfolio, the Large Cap
Growth Portfolio, the Large Cap Value Portfolio, and the International Equity
Portfolio were $50,190, $73,440, $73,440, $73,440 and $73,440, respectively.
2. Investment Advisory Fees and Other Transactions with Afflilates
Investment advisory services are provided by Navellier Management, Inc. (the
"Adviser"). Effective May 1, 1998, under an agreement with the Adviser, the Fund
pays a fee at the annual rate of 0.84% of the daily net assets of the Aggressive
Small Cap Equity Portfolio, the Aggressive Growth Portfolio, the Mid Cap Growth
Portfolio, the Aggressive Micro Cap Portfolio, the Small Cap Value Portfolio,
and 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 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. At December 31, 1998, the Adviser
voluntarily agreed not to
72
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THE NAVELLIER PERFORMANCE FUNDS
- -----------------------------------------------------------------
seek future reimbursement of all unreimbursed past expense incurred on behalf of
the Fund. During the year ended December 31, 1998, the Adviser paid operating
expenses of the Aggressive Small Cap Equity Portfolio, 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 International Equity Portfolio totaling $305,224, $345,521,
$99,926, $107,774, $69,010, $70,472, $68,543, and $116,757, respectively. Under
the operating expense agreement, the Adviser requested, and the Aggressive Small
Cap Equity Portfolio, 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
International Equity Portfolio reimbursed, $117,651, $164,249, $17,033, $13,974,
$986, $1,461, $873, and $16,378, respectively, of such expenses. Effective May
1, 1998, the Adviser agreed to limit the total normal expenses of each Portfolio
to 1.49% of average annual net assets, except for the Large Cap Value
Portfolio's expense limitation of 1.40% and the International Equity Portfolio's
expense limitation of 1.75%.
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, 1998, Trustees' fees and expenses
totaled $25,500.
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
Small Cap Equity Portfolio, 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
International Equity Portfolio for expenses incurred in the promotion and
distribution of shares of the Fund. 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, 1998, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
AGGRESIVE AGGRESSIVE MID CAP AGGRESSIVE
SMALL CAP EQUITY GROWTH GROWTH MICRO CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Purchases.................................... $ 73,746,379 $ 192,553,844 $ 17,779,736 $17,049,010
----------------- ------------- ------------ -------------
----------------- ------------- ------------ -------------
Sales........................................ $ 98,638,433 $ 223,588,024 $ 18,851,872 $17,462,892
----------------- ------------- ------------ -------------
----------------- ------------- ------------ -------------
<CAPTION>
LARGE CAP LARGE CAP INTERNATIONAL
SMALL CAP VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Purchases.................................... $ 1,279,497 $ 2,454,057 $ 1,671,541 $12,352,270
----------------- ------------- ------------ -------------
----------------- ------------- ------------ -------------
Sales........................................ $ 450,444 $ 714,375 $ 1,188,768 $ 2,843,156
----------------- ------------- ------------ -------------
----------------- ------------- ------------ -------------
</TABLE>
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<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
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6. Unrealized Appreciation and Depreciation of Investments
Unrealized appreciation and depreciation as of December 31, 1998, based on
the cost for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
AGGRESSIVE AGGRESSIVE MID CAP AGGRESSIVE
SMALL CAP EQUITY GROWTH GROWTH MICRO CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Gross Unrealized Appreciation.................. $ 9,785,243 $ 11,149,032 $ 1,725,489 $ 2,202,901
Gross Unrealized Depreciation.................. (1,160,978) (919,282) (45,531) (234,254)
----------------- ------------ ----------- -------------
Net Unrealized Appreciation.................... $ 8,624,265 $ 10,229,750 $ 1,679,958 $ 1,968,647
----------------- ------------ ----------- -------------
----------------- ------------ ----------- -------------
Cost of Investments for Federal Income Tax
Purposes...................................... $ 38,608,845 $ 93,510,233 $ 6,556,398 $ 7,614,556
----------------- ------------ ----------- -------------
----------------- ------------ ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP INTERNATIONAL
SMALL CAP VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Gross Unrealized Appreciation.................. $ 55,278 $ 547,955 $ 73,772 $ 735,754
Gross Unrealized Depreciation.................. (102,540) (891) (18,948) (943,002)
----------------- ------------ ----------- -------------
Net Unrealized Appreciation (Depreciation)..... $ (47,262) $ 547,064 $ 54,824 $ (207,248)
----------------- ------------ ----------- -------------
----------------- ------------ ----------- -------------
Cost of Investments for Federal Income Tax
Purposes...................................... $ 904,306 $ 1,917,560 $ 597,849 $10,545,259
----------------- ------------ ----------- -------------
----------------- ------------ ----------- -------------
</TABLE>
7. Net Assets
At December 31, 1998, net assets consisted of the following:
<TABLE>
<CAPTION>
AGGRESSIVE AGGRESSIVE MID CAP AGGRESSIVE
SMALL CAP EQUITY GROWTH GROWTH MICRO CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Paid-in-Capital................................ $ 42,291,459 $ 62,208,028 $ 6,032,218 $ 8,080,116
Undistributed Net Investment Loss.............. -- -- -- (11,986)
Accumulated Net Realized Gain (Loss) on
Investment Transactions....................... (3,656,342) 8,784,082 361,305 (385,331)
Net Unrealized Appreciation (Depreciation) of
Investments................................... 8,624,265 10,411,996 1,730,143 1,968,647
----------------- ------------ ----------- -------------
NET ASSETS..................................... $ 47,259,382 $ 81,404,106 $ 8,123,666 $ 9,651,446
----------------- ------------ ----------- -------------
----------------- ------------ ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP INTERNATIONAL
SMALL CAP VALUE GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Paid-in-Capital................................ $ 952,946 $ 1,902,258 $ 616,269 $10,532,078
Accumulated Net Realized Gain (Loss) on
Investment and Foreign Currency
Transactions.................................. (49,263) (51,859) (15,654) (3,010)
Net Unrealized Appreciation (Depreciation) of
Investment and Foreign Currency
Transactions.................................. (46,587) 551,148 54,824 (202,622)
----------------- ------------ ----------- -------------
NET ASSETS..................................... $ 857,096 $ 2,401,547 $ 655,439 $10,326,446
----------------- ------------ ----------- -------------
----------------- ------------ ----------- -------------
</TABLE>
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<PAGE>
THE NAVELLIER PERFORMANCE FUNDS
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8. Federal Income Tax
Permanent differences between tax and financial reporting of net investment
income and net realized gain/ loss are reclassified. As of December 31, 1998,
net investment losses were reclassified to paid-in-capital and accumulated net
realized gain/loss on investment transactions as follows:
<TABLE>
<CAPTION>
AGGRESSIVE SMALL AGGRESSIVE MID CAP
CAP EQUITY GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------- -------------
<S> <C> <C> <C>
Reduction of paid-in capital.................................. $ 125,792 -- $ (34,943)
Reduction of accumulated net realized gain.................... $ 306,620 $(807,971) --
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP INTERNATIONAL
AGGRESSIVE MICRO GROWTH EQUITY
CAP PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------- -------------
<S> <C> <C> <C>
Reduction of paid-in-capital.................................. $ (55,104) $ (3,965) --
Reduction of accumulated net realized gain.................... -- -- $ (9,062)
</TABLE>
Additionally, as of December 31, 1998, the Aggressive Small Cap Equity
Portfolio reclassified $5,397,358 of accumulated net realized gain on
investments to paid-in-capital.
At December 31, 1998, for Federal income tax purposes, the following Funds
had capital loss carryovers which may be applied against future net taxable
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
AGGRESSIVE SMALL LARGE CAP AGGRESSIVE
CAP EQUITY SMALL CAP VALUE GROWTH MICRO CAP
EXPIRES DECEMBER 31, PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------- ----------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
2005....................................... -- $ 50 -- --
2006....................................... $ 3,656,342 32,827 $ 39,186 $ 422,402
----------------- ------- ----------- -------------
$ 3,656,342 $ 32,877 $ 39,186 $ 422,402
----------------- ------- ----------- -------------
----------------- ------- ----------- -------------
</TABLE>
9. Reorganization
On July 24, 1998, the Navellier Aggressive Small Cap Equity Portfolio of the
Navellier Performance Funds (the "Acquiring Portfolio") acquired all the net
assets of the Navellier Aggressive Small Cap Equity Portfolio of the Navellier
Series Fund (the "Series Fund") pursuant to a plan of reorganization approved by
the Series Fund's shareholders on June 26, 1998. The acquisition was
accomplished by a tax-free exchange of 3,318,156 shares of the Acquiring
Portfolio (valued at $54,597,912) for the 3,318,156 shares of the Series Fund
outstanding on July 24, 1998. Series Fund's net assets at that date
($54,597,912), including $6,897,784 of unrealized appreciation, were combined
with those of the Acquiring Portfolio. The aggregate net assets of the Acquiring
Portfolio and Series Fund immediately before the acquisition were $10,298 and
$54,597,912, respectively.
75
<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 Small Cap Equity Portfolio, Navellier Aggressive Growth
Portfolio, Navellier Mid Cap Growth Portfolio, Navellier Aggressive Micro 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 the Navellier Performance Funds
including the portfolio of investments, as of December 31, 1998, and the related
statement of operations, the statement of changes in net assets, and the
financial highlights for the periods indicated therein. 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 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, 1998, 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 Small Cap Equity Portfolio, Navellier Aggressive Growth
Portfolio, Navellier Mid Cap Growth Portfolio, Navellier Aggressive Micro Cap
Portfolio, Navellier Small Cap Value Portfolio, Navellier Large Cap Growth
Portfolio, Navellier Large Cap Value Portfolio and Navellier International
Equity Portfolio as of December 31, 1998, the results of its operations, the
changes in its net assets, and the financial highlights for the periods referred
to above, in conformity with generally accepted accounting principles.
[SIGNATURE]
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 19, 1999
76
