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[REPRESENTATION OF GRAPHIC IMAGE]
NAVELLIER
PERFORMANCE FUNDS
INTERNATIONAL EQUITY PORTFOLIO
SEMIANNUAL REPORT
JUNE 30, 2000
<PAGE>
SEMIANNUAL REPORT, June 30, 2000
NAVELLIER PERFORMANCE FUNDS
1 East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
--------------------------------------------------------------------------------
August 25, 2000
Dear Shareholder:
The global economy expanded at a faster pace in the first quarter of the
year than at any other time since 1987. This strength at the start of the year
was extreme; however, there were clear signs of moderation in global growth
throughout the second quarter. Going into the second half of the year, we expect
global growth to settle to a solid 3.5% to 4.0% range.
It is important to note that some moderation in global growth is expected,
as tighter financial conditions will slow U.S growth. But there are
opportunities here as global leadership in growth and the benefits of the
technology and information revolution shifts from the U.S. to Europe and Japan.
The first six months of the year 2000 have been extremely volatile, with
much of the global markets having a very high correlation with the U.S. markets.
The international market (as represented by the Morgan Stanley EAFE Index*)
dropped 4.63% for the six-months ending June 30, 2000. The Navellier
International Equity Portfolio posted a return of -20.03% for the same period.
The Fund was most negatively impacted during this period by its over-weighted
position in Japanese stocks and the extreme volatility of its technology
holdings in Japan. The Japan Nikkei Index dropped 33.00% from its high in March.
The Fund was also hurt by the inherent volatility of the technology sector, in
which the fund has a significant concentration.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
INTERNATIONAL EQUITY EAFE
<S> <C> <C>
12/26/1997 $10,000 $10,000
12/31/1997 $10,000 $10,164
1/30/1998 $10,020 $10,616
2/27/1998 $10,120 $11,283
3/31/1998 $10,790 $11,617
4/30/1998 $10,800 $11,695
5/29/1998 $11,080 $11,625
6/30/1998 $10,950 $11,699
7/31/1998 $11,420 $11,803
8/31/1998 $9,780 $10,327
9/30/1998 $8,910 $9,996
10/30/1998 $9,620 $11,024
11/30/1998 $10,280 $11,575
12/31/1998 $10,664 $12,017
1/29/1999 $10,429 $11,967
2/26/1999 $9,979 $11,668
3/31/1999 $9,979 $12,141
4/30/1999 $10,184 $12,619
5/28/1999 $9,662 $11,955
6/30/1999 $9,856 $12,406
7/30/1999 $9,805 $12,761
8/31/1999 $9,948 $12,793
9/30/1999 $10,153 $12,907
10/29/1999 $10,593 $13,376
11/30/1999 $11,441 $13,826
12/31/1999 $13,478 $15,053
1/31/2000 $12,895 $14,083
2/29/2000 $14,705 $14,449
3/31/2000 $13,785 $14,995
4/30/2000 $12,230 $14,191
5/31/2000 $10,891 $13,830
6/30/2000 $10,778 $14,356
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
INTERNATIONAL EQUITY PORTFOLIO
<CAPTION>
TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 2000 FUND EAFE INDEX
------------------------------------------------------------ -------- -----------
<S> <C> <C>
Six Months (20.03)% (4.63)%
Annualized Since Inception* 3.03% 15.48%
Value of a $10,000 investment over Life of Fund* $10,778 $14,356
*Inception December 26, 1997
</TABLE>
Notwithstanding the extreme volatility, the current holdings in the Fund
reflect fundamentally superior stocks that we believe are part of the
information technology revolution which will sweep through Asia and Europe in
the coming years. The Fund's concentrated positions in telecommunications,
semiconductors, computer software and hardware and electronics makes it well
positioned for a very strong comeback as the recovery in the U.S. market adds
fuel to a resurgence in the Japanese and European markets.
<PAGE>
Always feel free to contact us if you have any questions or if we can help
you in any way. You may call us at (800) 887-8671 or visit our web site at
www.navellier.com.
Sincerely,
/s/ RAM KOLLURI
Ram Kolluri
Portfolio Manager
* The EAFE Index is an unmanaged index, designed by Morgan Stanley, of equities
in Africa, Asia, and Europe. It is considered representative of the
international stock market in general. It is not an investment product available
for sale.
2
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STATEMENT OF NET ASSETS
JUNE 30, 2000
(UNAUDITED)
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
MARKET VALUE
SHARES COUNTRY (NOTE 1)
--------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS -- 95.2%
AIRLINES -- 0.02%
67 Konin Luchtvaart Mij NV Netherlands $ 1,811
----------
AUTO AND TRUCK MANUFACTURERS -- 2.0%
4,000 Toyota Motor Corp. Japan 182,593
----------
COMPUTER SOFTWARE -- 7.6%
22,800 Sage Group United Kingdom 184,148
1,830 SAP AG Germany 274,535
1500 Softbank Corp.* Japan 214,500
----------
673,183
----------
COMPUTERS -- 9.9%
2,300 ASM Lithography Holding NV, ADR Netherlands 101,488
440 Cap Gemini SA* France 77,818
7,500 CMG Plc United Kingdom 105,140
9,765 Logica United Kingdom 233,871
15,100 Sema Group Plc United Kingdom 212,368
1,000 TDK Corp. Japan 144,033
----------
874,718
----------
DIVERSIFIED FINANCIAL SERVICES -- 2.7%
18,000 Daiwa Securities Group, Inc. Japan 238,165
----------
ELECTRICAL MACHINERY -- 7.0%
1,000 Matsushita Communications Japan 117,003
12,000 Mitsubishi Electric Co. Japan 130,197
8,999 Omron Corp. Japan 244,969
2,000 Taiyo Yuden Co. Japan 125,509
----------
617,678
----------
ELECTRONIC EQUIPMENT -- 11.6%
300 Keyence Corp. Japan 99,236
2,000 Murata MFG Japan 287,688
12,000 Sharp Corp. Japan 212,648
1,215 Siemens AG, ADR Germany 183,438
2,605 Sony Corp. Japan 245,684
----------
1,028,694
----------
HOUSEHOLD PRODUCTS/WARES -- 0.02%
88 Celanese AG* Germany 1,716
----------
MEDIA/BROADCASTING -- 6.4%
270 British Sky Broadcasting, ADR United Kingdom 31,354
22 Fuji Television Japan 345,151
1,950 Reuters Group, ADR United Kingdom 194,878
----------
571,383
----------
</TABLE>
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STATEMENT OF NET ASSETS
JUNE 30, 2000
(UNAUDITED)
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
MARKET VALUE
SHARES COUNTRY (NOTE 1)
--------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL -- 2.8%
3,000 Seven-Eleven Co. Japan $ 251,491
----------
SEMICONDUCTORS -- 8.1%
800 Rohm Co. Japan 234,385
3,225 STMicroelectronics NV Netherlands 207,005
2,000 Toyko Electron Japan 274,457
----------
715,847
----------
TELECOMMUNICATION EQUIPMENT -- 12.2%
3,300 Alcatel Alsthom, ADR France 219,450
16,480 Ericsson LM Telephone Co., ADR Sweden 329,600
200 Hikari Tsushin Inc. Japan 8,222
10,520 Nokia Corp. Finland 525,343
----------
1,082,615
----------
TELECOMMUNICATIONS -- 12.8%
360 British Telecommunications, ADR United Kingdom 47,610
1,175 China Mobile Ltd., ADR Hong Kong 208,930
3,750 Fibernet Group United Kingdom 151,387
925 Nippon Telegraph & Telephone, ADR Japan 63,247
4 Nippon Telegraph & Telephone Japan 53,304
12 NTT Mobile Communications Japan 325,492
25,750 T.I.M. SPA Italy 264,115
5,475 Vodafone Airtouch PLC, ADR United Kingdom 226,870
----------
1,340,955
----------
UTILITIES -- 12.1%
3,130 Deutsche Telekom AG, ADR Germany 177,628
5,125 Koninklijke Philips Electronics, ADR Netherlands 243,438
3,775 Nortel Networks Corp. United States 257,644
4,050 Royal PTT Nederland NV, ADR Netherlands 181,997
----------
860,707
----------
TOTAL COMMON STOCKS
(COST $7,979,714) 8,441,556
----------
</TABLE>
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STATEMENT OF NET ASSETS
JUNE 30, 2000
(UNAUDITED)
INTERNATIONAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
MARKET VALUE
SHARES COUNTRY (NOTE 1)
--------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MONEY MARKET FUNDS -- 4.7%
417,778 Fund for Government Investors
(Cost $417,778) $ 417,778
----------
TOTAL INVESTMENTS -- 99.9%
(COST $8,397,492) 8,859,334
Other Assets Less Liabilities -- 0.1% 5,843
----------
NET ASSETS -- 100.0% $8,865,177
==========
NET ASSETS CONSIST OF:
Paid-in-Capital $9,236,218
Net Investment Loss (39,603)
Accumulated Net Realized Loss on Investments and Foreign
Currency Transactions (793,061)
Net Unrealized Appreciation of Investments and Foreign Currency
Transactions 461,623
----------
NET ASSETS $8,865,177
==========
NET ASSET VALUE PER SHARE
(Based on 841,378 Shares Outstanding) $10.54
==========
</TABLE>
--------------------------
* NON-INCOME PRODUCING
ADR AMERICAN DEPOSITORY RECEIPTS
SEE NOTES TO FINANCIAL STATEMENTS.
5
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STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY
PORTFOLIO
-------------
<S> <C>
INVESTMENT INCOME
Interest (Note 1)......................................... $ 27,019
Dividends (Note 1)........................................ 21,246
-----------
Total Investment Income................................. 48,265
-----------
EXPENSES
Investment Advisory Fee (Note 2).......................... 50,188
Administrative Fee (Note 2)............................... 12,547
Distribution Plan Fees (Note 4)........................... 12,587
Transfer Agent and Custodian Fee (Note 3)................. 45,858
Shareholder Reports and Notices........................... 547
Registration Fees......................................... 13,717
Organizational Expense (Note 1)........................... 9,180
Audit Fees................................................ 2,000
Trustees' Fees and Expenses (Note 2)...................... 1,406
Other Expenses............................................ 1,841
-----------
Total Expenses.......................................... 149,871
Less Expenses Reimbursed by Investment Adviser
(Note 2)............................................... (62,003)
-----------
Net Expenses.......................................... 87,868
-----------
NET INVESTMENT LOSS......................................... (39,603)
-----------
Net Realized Gain on Investment Transactions................ 161,215
Change in Net Unrealized Appreciation of Investments........ (2,384,768)
-----------
NET LOSS ON INVESTMENTS..................................... (2,223,553)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $(2,263,156)
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
PORTFOLIO
----------------------------------
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
-------------- -----------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss).............................. $ (39,603) $ 112
Net Realized Gain (Loss) on Investment Transactions....... 161,215 (949,623)
Net Realized Loss on Foreign Currency Transactions........ -- (41,691)
Change in Net Unrealized Appreciation/Depreciation of
Investments............................................. (2,384,768) 3,049,013
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from
Operations............................................ (2,263,156) 2,057,811
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Realized Gain.................................... -- (1,644)
----------- -----------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares......................... 2,451,030 1,794,445
Reinvestment of Distributions............................. -- 1,644
Cost of Shares Redeemed................................... (1,377,794) (4,123,605)
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from
Share Transactions.................................... 1,073,236 (2,327,516)
----------- -----------
TOTAL DECREASE IN NET ASSETS............................ (1,189,920) (271,349)
NET ASSETS -- Beginning of Period........................... 10,055,097 10,326,446
----------- -----------
NET ASSETS -- End of Period................................. $ 8,865,177 $10,055,097
=========== ===========
SHARES
Sold...................................................... 193,164 174,257
Issued in Reinvestment of Distributions................... -- 126
Redeemed.................................................. (114,798) (401,454)
----------- -----------
Net Increase (Decrease) in Shares....................... 78,366 (227,071)
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
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FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
PORTFOLIO
-----------------------------------------------------------
FOR THE SIX FOR THE YEARS ENDED FOR THE PERIOD
MONTHS ENDED DECEMBER 31, ENDED
JUNE 30, 2000 ---------------------- DECEMBER 31,
(UNAUDITED) 1999 1998 1997*
-------------- -------- -------- --------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of Period...... $13.18 $ 10.43 $ 10.00 $10.00
------ ------- ------- ------
Income from Investment Operations:
Net Investment Income (Loss).............. (0.05) -- (0.01) --
Net Realized and Unrealized Gain (Loss) on
Investments............................. (2.59) 2.75 0.67 --
------ ------- ------- ------
Total from Investment Operations........ (2.64) 2.75 0.66 --
------ ------- ------- ------
Distributions to Shareholders:
From Net Realized Gain.................... -- -- (0.23) --
------ ------- ------- ------
Net Increase (Decrease) in Net Asset
Value..................................... (2.64) 2.75 0.43 --
------ ------- ------- ------
Net Asset Value -- End of Period............ $10.54 $ 13.18 $ 10.43 $10.00
====== ======= ======= ======
TOTAL INVESTMENT RETURN....................... (20.03)%(A) 26.39% 6.64% 0.00%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)....... 1.75%(B) 1.75% 1.75% 1.75%(B)
Expenses Before Reimbursement (Note 2)...... 2.99%(B) 3.05% 3.29% 5.48%(B)
Net Investment Gain (Loss) After
Reimbursement (Note 2).................... (0.79)%(B) -- (0.14)% (1.75)%(B)
Net Investment Loss Before Reimbursement
(Note 2).................................. (2.03)%(B) (1.30)% (1.68)% (5.48)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate..................... 27% 84% 41% --
Net Assets at End of Period (in
thousands)................................ $8,865 $10,055 $10,326 $ 10
Number of Shares Outstanding at End of
Period (in thousands)..................... 841 763 990 1
</TABLE>
---------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
* FROM COMMENCEMENT OF OPERATION DECEMBER 26, 1997
SEE NOTES TO FINANCIAL STATEMENTS.
8
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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
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's
objective is to achieve long-term capital growth. 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. These financial statements report on one of
the eight portfolios: the International Equity Portfolio (the "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 Portfolio'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 Portfolio's
instruments are valued at fair value.
(b) Security transactions are recorded on the trade date (the date the
order to buy or sell is executed). Interest income is accrued on a daily
basis. Dividend income is recorded on the ex-dividend date. Realized gain and
loss from securities transactions are computed on an identified cost basis.
(c) Dividends from net investment income, if any, are declared and paid
annually. Dividends are reinvested in additional shares unless shareholders
request payment in cash. Net capital gains, if any, are distributed annually.
(d) The Portfolio 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 International Equity Portfolio totaling
$91,800 are being deferred and amortized over 60 months beginning with public
offering of shares in the portfolios. Any redemption by an initial investor
during the amortization period will be reduced by a pro rata portion of any of
the unamortized organization expenses. Such proration is to be calculated by
dividing the number of initial shares redeemed by the number of initial shares
outstanding at the date of redemption. At June 30, 2000, the unamortized
organization costs of the Portfolio were $45,900.
2. Investment Advisory Fees and Other Transactions with Affiliates
Investment advisory services are provided by Navellier Management, Inc. (the
"Adviser"). Effective May 1, 1998, under an agreement with the Adviser, the
Portfolio pays a fee at the annual rate of 1.00% of its daily net assets. The
Adviser receives an annual fee equal to 0.25% of the Portfolio's average daily
net assets in connection with the rendering of services under the administrative
services agreement and is reimbursed by the Portfolio for operating expenses
incurred on behalf of the Portfolio. An officer and trustee of the Portfolio is
also an officer and director of the Adviser.
Under an agreement between the Portfolio and the Adviser related to payment
of operating expenses, the Adviser has reserved the right to seek reimbursement
for the past, present and future
9
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THE NAVELLIER PERFORMANCE FUNDS
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operating expenses of the Portfolio paid by the Adviser, at any time upon notice
to the Portfolio. At December 31, 1999, the Adviser voluntarily agreed not to
seek future reimbursement of all unreimbursed past expense incurred on behalf of
the Portfolio. During the six months ended June 30, 2000, the Adviser paid
operating expenses of $74,549 for the International Equity Portfolio. Under the
operating expense agreement, the Adviser requested, and the Portfolio,
reimbursed $12,546 of such expenses. Effective May 1, 1998, the Adviser agreed
to limit the total normal expenses of the Portfolio to 1.75% of average annual
net assets.
Navellier Securities Corp. (the "Distributor") acts as the Portfolio'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
Portfolio's shares, renders its services to the Portfolio pursuant to a
distribution agreement. An officer and trustee of the Portfolio is also an
officer and director of the Distributor.
The Portfolio pays each of its Trustees not affiliated with the Adviser $938
annually. For the six months ended June 30, 2000, Trustees' fees and expenses
for the Portfolio totaled $1,406.
3. Transfer Agent and Custodian
Rushmore Trust and Savings, FSB ("Rushmore Trust"), provides transfer
agency, dividend disbursing and other shareholder services to the Portfolio. In
addition, Rushmore Trust serves as custodian of the Portfolio'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
Portfolio for expenses incurred in the promotion and distribution of shares of
the Portfolio. These expenses include, but are not limited to, the printing of
prospectuses, statements of additional information, and reports used for sales
purposes, expenses of preparation of sales literature and related expenses
(including Distributor personnel), advertisements and other distribution-related
expenses, including a prorated portion of the Distributor's overhead expenses
attributable to the distribution of shares. Such payments are made monthly. The
12b-1 fee includes, in addition to promotional activities, the amount the
Portfolio may pay to the Distributor or others as a service fee to reimburse
such parties for personal services provided to shareholders of the Portfolio
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 Portfolio directly.
5. Securities Transactions
For the six months ended June 30, 2000, purchases and sales (including
maturities) of securities (excluding short-term securities) were $3,318,417 and
$2,437,123, respectively.
6. Unrealized Appreciation and Depreciation of Investments
At June 30, 2000, the cost of the investment securities for Federal income
tax purposes was $8,397,492. Net unrealized appreciation was $461,842 of which
$1,410,584 related to appreciated investment securities and $948,742 related to
depreciated investment securities.
7. Liquidation
On May 25, 2000, the Board of Trustees of the Navellier Performance Funds
resolved to liquidate the International Equity Portfolio effective September 30,
2000. Shareholders at that date will receive a liquidating cash redemption based
on the final net asset value per share.
10
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NAVELLIER OFFICES:
ONE EAST LIBERTY THIRD FLOOR
RENO, NEVADA 89501
800-887-8671 P.S.T.
CUSTODIAN & TRANSFER AGENT:
RUSHMORE TRUST AND SAVINGS, FSB
4922 FAIRMONT AVENUE
BETHESDA, MD 20814
800-622-1386 E.S.T.