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[LOGO]
NAVELLIER
VARIABLE INSURANCE
SERIES FUND
SEMIANNUAL REPORT
June 30, 1999
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.
<PAGE>
SEMIANNUAL REPORT, June 30, 1999
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
One East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
- --------------------------------------------------------------------------------
August 24, 1999
Dear Shareholder:
The first half of 1999 generated significant gains for most investors. Large
cap stocks finished ahead of small caps for the period, even though small caps
dramatically outperformed large caps in the second quarter. The S&P 500*
generated a return of 12.38% over the first six months of the year and the
Russell 2000 Index* was up 9.28%. In the second quarter, the Russell 2000 was up
15.55% compared to 7.05% for the S&P 500.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
<S> <C> <C> <C>
Growth Portfolio Russell 2000 Russell 2000 Growth
2/98 $10,000 $10,000 $10,000
3/98 $10,500 $10,412 $10,420
4/98 $10,520 $10,469 $10,484
5/98 $10,140 $9,905 $9,721
6/98 $10,440 $9,926 $9,821
7/98 $9,990 $9,122 $9,001
8/98 $7,930 $7,350 $6,923
9/98 $8,610 $7,926 $7,625
10/98 $8,740 $8,249 $8,023
11/98 $9,730 $8,682 $8,646
12/98 $11,220 $9,219 $9,428
1/99 $12,680 $9,341 $9,852
2/99 $11,720 $8,585 $8,951
3/99 $12,750 $8,719 $9,270
4/99 $13,350 $9,500 $10,089
5/99 $12,850 $9,639 $10,105
6/99 $14,340 $10,074 $10,637
</TABLE>
<TABLE>
<CAPTION>
GROWTH RUSSELL 2000
TOTAL RETURNS FOR PERIODS ENDED JUNE 30, 1999 PORTFOLIO RUSSELL 2000 GROWTH
- ----------------------------------------------------- -------------- ------------ ------------
<S> <C> <C> <C>
Six Months 27.81% 9.28% 12.82%
Annualized Since Inception* 30.95% 0.55% 4.73%
Value of a $10,000 investment over life of Portfolio* $ 14,340 $ 10,074 $ 10,637
*Inception February 27, 1998
</TABLE>
Small cap stocks outperformed large cap stocks during the second quarter
largely because institutional money began to recognize that the fundamentals for
small caps were, and continue to be, far superior to large caps. The
significance of the sudden resurgence of small capitalization stocks is that the
breadth and power of the overall stock market is suddenly broadening out. This
is a very bullish event, because it is signaling that the stock market is no
longer focusing on blue chips and index investments. Liquidity proved to be the
catalyst for small and mid cap stocks and finally arrived in the second quarter.
We expect that transactional volume will remain high in these asset classes
through the end of the year. Although we had a much-anticipated move in interest
rates during the latter half of the period, it did little to dampen investor
enthusiasm.
<PAGE>
So far, 1999 has been a great year for the Navellier Variable Insurance
Series Fund. Over the past six months, ending June 30, 1999, the Fund was up
27.81%. The Fund is up 43.40% since inception (February 27, 1998 to June 30,
1999).
This is the time of year when the stock market is very turbulent for
seasonal reasons. However, the stock market should rebound impressively in
September as many Wall Street professionals return from their summer hiatus.
Although trading volume and stock prices typically rise after Labor Day when
Wall Street professionals return, skeptics may call this seasonal surge a "dead
cat bounce". Only time will tell, but we suspect that in late September, as
earnings pre-announcement season approaches, the analyst community will start to
aggressively revise their third quarter earnings estimates significantly higher,
just as they did in the last earnings pre-announcement season.
The bottom line is that the stock market has consolidated on light trading
volume, which means that there was no panic selling by investors, and now is the
time for the bargain hunting to begin. Investors must be careful, since Federal
Reserve Board policy could disrupt the stock market. It appears that the Federal
Reserve Board is trying to engineer a "soft" landing for the U.S. economy as GDP
growth slows and interest rates rise.
The corporate earnings environment remains ideal. The third quarter earnings
for the S&P 500 are now projected by the analyst community to grow in excess of
21% annually. We are confident that the day-to-day volatility that now
characterizes the stock market will subside within the next couple of months. We
believe that many stocks in our portfolios, especially many of our favorite mid
capitalization issues, will surge in the upcoming months.
Always feel free to contact us at (800) 887-8671 if you have any questions
or if we can help you in any way. Additionally, please feel free to check our
web site (www.navellier.com) for updated commentary on the market environment.
Sincerely,
<TABLE>
<S> <C>
/S/ Louis G. Navellier /S/ Alan Alpers
LOUIS G. NAVELLIER ALAN ALPERS
</TABLE>
THIS MATERIAL HAS BEEN PRECEDED BY A NAVELLIER VARIABLE INSURANCE SERIES
FUND PROSPECTUS.
THE PRECEDING CHARTS AND PERFORMANCE NUMBERS ASSUME REINVESTMENT OF ALL
DISTRIBUTIONS.
PLEASE BE AWARE THAT PAST PERFORMANCE IS NO INDICATION OF FUTURE
PERFORMANCE. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
* INDICES:
THE RUSSELL 2000-REGISTERED TRADEMARK- INDEX IS AN UNMANAGED INDEX
CONSISTING OF THE SMALLEST 2000 STOCKS IN THE RUSSELL 3000 INDEX. IT IS
CONSIDERED REPRESENTATIVE OF THE SMALL CAP MARKET IN GENERAL. IT IS NOT
AN INVESTMENT PRODUCT AVAILABLE FOR SALE.
THE RUSSELL 2000-REGISTERED TRADEMARK- GROWTH INDEX CONTAINS THOSE
RUSSELL 2000 SECURITIES WITH A GREATER-THAN-AVERAGE GROWTH ORIENTATION.
IT IS NOT AN INVESTMENT PRODUCT AVAILABLE FOR SALE.
RUSSELL 3000-REGISTERED TRADEMARK- INDEX MEASURES THE PERFORMANCE OF THE
3,000 LARGEST U.S. COMPANIES BASED ON TOTAL MARKET CAPITALIZATION, WHICH
REPRESENTS APPROXIMATELY 98% OF THE INVESTABLE U.S. EQUITY MARKET. IT IS
NOT AN INVESTMENT PRODUCT FOR SALE.
THE S&P 500 IS AN UNMANAGED INDEX CONSISTING OF 500 LARGE CAP STOCKS. IT
IS CONSIDERED REPRESENTATIVE OF THE STOCK MARKET AS A WHOLE. IT IS NOT AN
INVESTMENT PRODUCT AVAILABLE FOR SALE.
2
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NAVELLIER VARIABLE INSURANCE SERIES FUND
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 91.4%
APPAREL -- 11.8%
180 Abercrombie & Fitch Co. * $ 8,640
350 American Eagle Outfitters, Inc. * 15,925
150 Ann Taylor Stores Corp.* 6,750
112 Gap, Inc. 8,463
------------
39,778
------------
BIOTECHNOLOGY AND DRUGS -- 8.9%
110 Andrx Corp.* 8,484
53 Bindley Western Industries, Inc. 1,222
230 ICOS Corp. 9,387
160 MedImmune, Inc.* 10,840
------------
29,933
------------
COMMERCIAL SERVICES -- 3.6%
50 CMGI, Inc. * 5,703
200 Labor Ready, Inc. * 6,500
------------
12,203
------------
COMMUNICATION EQUIPMENT AND SERVICES -- 4.8%
230 Commscope, Inc.* 7,073
100 Nokia Corp., ADR 9,156
------------
16,229
------------
COMPUTER AND VIDEO CHAINS -- 2.8%
140 Best Buy, Inc.* 9,450
------------
COMPUTER HARDWARE AND PERIPHERALS -- 10.0%
280 Adaptec, Inc.* 9,888
170 EMC Corp. * 9,350
220 Lexmark International Group, Inc. * 14,534
------------
33,772
------------
COMPUTER SOFTWARE AND PROGRAMMING -- 18.3%
170 BroadVision, Inc.* 12,538
190 Citrix System, Inc.* 10,735
270 Clarify, Inc.* 11,138
170 Electronics for Imaging, Inc.* 8,734
385 Macromedia, Inc.* 13,571
140 Mercury Interactive Corp.* 4,953
------------
61,669
------------
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
ELECTRONIC PRODUCTS -- 5.9%
200 Gemstar International Group Ltd.* $ 13,050
150 Jabil Circuit, Inc.* 6,769
------------
19,819
------------
FINANCIAL SERVICES -- 2.8%
90 Ameritrade Holding Corp.* 9,538
------------
HEALTHCARE -- 1.5%
300 Apria Healthcare Group, Inc.* 5,100
------------
MEDICAL EQUIPMENT AND SUPPLIES -- 7.4%
100 MiniMed, Inc. * 7,694
220 VISX, Inc.* 17,421
------------
25,115
------------
PRECISION INSTRUMENTS -- 2.2%
140 Waters Corp.* 7,437
------------
SEMICONDUCTORS AND RELATED -- 11.4%
180 Alpha Industries, Inc.* 8,573
120 Power Integrations, Inc.* 8,775
80 QLogic Corp. * 10,560
140 RF Micro Devices, Inc.* 10,447
------------
38,355
------------
TOTAL COMMON STOCKS
(COST $227,619) 308,398
------------
MONEY MARKET FUND -- 8.6%
29,142 Fund for Government Investors
(Cost $29,142) 29,142
------------
TOTAL INVESTMENTS -- 100.0%
(COST $256,761) $ 337,540
------------
------------
</TABLE>
- --------------------------
* NON-INCOME PRODUCING
ADR AMERICAN DEPOSITORY RECEIPTS
SEE NOTES TO FINANCIAL STATEMENTS.
3
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NAVELLIER VARIABLE INSURANCE SERIES FUND
- -----------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
- ---------------------------------------------------------------------------------------------------- ---------
<S> <C>
ASSETS
Securities at Value (Note 1) (Cost $256,761)...................................................... $ 337,540
Interest Receivable............................................................................... 98
Unamortized Organizational Costs (Note 1)......................................................... 12,848
---------
Total Assets.................................................................................... 350,486
---------
LIABILITIES
Investment Advisory Fee Payable (Note 2).......................................................... 220
Administrative Fee Payable (Note 2)............................................................... 64
Other Payables and Accrued Expenses............................................................... 103
Organizational Expenses Payable to Adviser (Note 1)............................................... 12,848
---------
Total Liabilities............................................................................... 13,235
---------
NET ASSETS.......................................................................................... $ 337,251
---------
---------
SHARES OUTSTANDING.................................................................................. 23,520
---------
---------
NET ASSET VALUE PER SHARE........................................................................... $14.34
---------
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
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NAVELLIER VARIABLE INSURANCE SERIES FUND
- -----------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
- ---------------------------------------------------------------------------------------------------- -----------
<S> <C>
INVESTMENT INCOME
Interest (Note 1)................................................................................. $ 407
Dividends (Note 1)................................................................................ 117
-----------
Total Investment Income......................................................................... 524
-----------
EXPENSES
Investment Advisory Fee (Note 2).................................................................. 1,030
Administrative Fee (Note 2)....................................................................... 303
Transfer Agent and Custodian Fee (Note 3)......................................................... 12,066
Legal Fees........................................................................................ 9,356
Trustees' Fees and Expenses (Note 2).............................................................. 6,000
Shareholder Reports and Notices................................................................... 5,894
Organizational Expense (Note 1)................................................................... 1,752
Other Expenses.................................................................................... 619
-----------
Total Expenses.................................................................................. 37,020
Less Expenses Reimbursed by Investment Adviser (Note 2)......................................... (35,202)
-----------
Net Expenses.................................................................................. 1,818
-----------
NET INVESTMENT LOSS................................................................................. (1,294)
-----------
Net Realized Gain on Investments.................................................................... 26,191
Change in Net Unrealized Appreciation of Investments................................................ 36,019
-----------
NET INCOME ON INVESTMENTS........................................................................... 62,210
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................ $60,916
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
NAVELLIER VARIABLE INSURANCE SERIES FUND
- -----------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
---------------------------------
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
JUNE 30, 1999 ENDED
(UNAUDITED) DECEMBER 31, 1998*
------------- ------------------
FROM INVESTMENT ACTIVITIES
<S> <C> <C>
Net Investment Loss.......................................... $ (1,294) $ (734)
Net Realized Gain (Loss) on Investment Transactions.......... 26,191 (21,589)
Change in Net Unrealized Appreciation of Investments......... 36,019 44,758
------------- --------
Net Increase in Net Assets Resulting from Operations....... 60,916 22,435
------------- --------
DISTRIBUTIONS TO SHAREHOLDERS
Total Distributions to Shareholders........................ -- --
------------- --------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares.......................... 87,228 128,396
Reinvestment of Distributions.............................. -- --
Cost of Shares Redeemed.................................... (15,440) (46,284)
------------- --------
Net Increase in Net Assets Resulting from Share
Transactions............................................. 71,788 82,112
------------- --------
TOTAL INCREASE IN NET ASSETS............................. 132,704 104,547
NET ASSETS -- Beginning of Period.............................. 204,547 100,000
------------- --------
NET ASSETS -- End of Period.................................... $ 337,251 $ 204,547
------------- --------
------------- --------
SHARES
Sold....................................................... 6,543 13,412
Issued in Reinvestment of Distributions.................... -- --
Redeemed................................................... (1,247) (5,188)
------------- --------
Net Increase in Shares..................................... 5,296 8,224
------------- --------
------------- --------
- --------------------------------------------------------------
</TABLE>
*FROM COMMENCEMENT OF OPERATIONS FEBRUARY 27, 1998
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
NAVELLIER VARIABLE INSURANCE SERIES FUND
- -----------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
-----------------------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998*
---------------- ----------------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C>
Net Asset Value -- Beginning of
Period.............................. $ 11.22 $ 10.00
------ ------
Income from Investment Operations:
Net Investment Loss................. (0.06) (0.04)
Net Realized and Unrealized Gain on
Investments....................... 3.18 1.26
------ ------
Total from Investment
Operations...................... 3.12 1.22
------ ------
Distributions to Shareholders:
Total Distributions to
Shareholders...................... -- --
------ ------
Net Increase in Net Asset Value....... 3.12 1.22
------ ------
Net Asset Value -- End of Period...... $ 14.34 $ 11.22
------ ------
------ ------
TOTAL INVESTMENT RETURN................. 27.81%(A) 12.20%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note
2).................................. 1.50%(B) 1.50%(B)
Expenses Before Reimbursement (Note
2).................................. 30.50%(B) 70.17%(B)
Net Investment Loss After
Reimbursement (Note 2).............. (1.07)%(B) (0.67)%(B)
Net Investment Loss Before
Reimbursement (Note 2).............. (30.07)%(B) (69.34)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 68% 129%
Net Assets at End of Period (in
thousands).......................... $337 $205
Number of Shares Outstanding at End of
Period (in thousands)............... 24 18
</TABLE>
- --------------------------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
* FROM COMMENCEMENT OF OPERATIONS FEBRUARY 27, 1998
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
NAVELLIER VARIABLE INSURANCE SERIES FUND
- -----------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
1. Significant Accounting Policies
The Navellier Variable Insurance Series Fund, Inc. (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 management
investment company authorized to issue multiple series of shares, each
representing a portfolio of investments. The Fund currently has authorized one
series, the Navellier Growth Portfolio (the "Growth Portfolio"), a diversified
open-end management investment company. The Fund was established as a Maryland
corporation organized on February 28, 1997. The Fund is authorized to issue
500,000,000 shares of capital stock with no stated par value of the Growth
Portfolio. The Fund's shares are offered only to (a) insurance companies to fund
benefits under their variable annuity contracts and variable life insurance
policies and (b) tax-qualified pension and retirement plans ("Qualified Plans"),
including participant-directed Qualified Plans which elect to make the Fund
available as investment options for Qualified Plan participants. 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 Directors will value the Fund's securities in good
faith. The Directors 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.
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 Growth Portfolio totaling $17,520 are
being deferred and amortized over 60 months beginning with public offering of
shares in the Fund. 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, 1999, unamortized
organization costs of the Growth Portfolio were $12,848.
2. Investment Advisory Fees and Other Transactions with Affiliates
Investment advisory services are provided by Navellier & Associates, Inc.
(the "Adviser"). Under an agreement with the Adviser, the Fund pays a fee at the
annual rate of 0.85% of the daily net assets of the Growth 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 director of the Fund is also an officer
and director of the Adviser.
Under an agreement between the Fund and the Adviser, the Adviser has agreed
to waive its advisory fee and/ or reimburse expenses until the total portfolio
operating expenses are at or below 1.50%. This agreement is subject to
termination at any time without notice to shareholders after the expiration of
the twelve months from the date shares of the Growth Portfolio are first offered
to the public. During the period ended June 30, 1999, the Adviser paid operating
expenses of the portfolio totaling $35,687 under the operating expense
agreements, the Adviser requested and the portfolio reimbursed $485 of such
expenses.
8
<PAGE>
NAVELLIER VARIABLE INSURANCE SERIES FUND
- -----------------------------------------------------------------
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 director of the Fund is also an officer and director
of the Distributor.
The Fund pays each of its Directors not affiliated with the Adviser $6,000
annually. For the six months ended June 30, 1999, Directors' fees and expenses
totaled $6,000.
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 Directors.
4. Securities Transactions
For the six months ended June 30, 1999, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
---------
<S> <C>
Purchases......................................................................................... $ 218,272
---------
---------
Sales............................................................................................. $ 155,007
---------
---------
</TABLE>
5. Unrealized Appreciation and Depreciation of Investments
Unrealized appreciation and depreciation as of June 30, 1999, based on the
cost for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
---------
<S> <C>
Gross Unrealized Appreciation..................................................................... $ 86,001
Gross Unrealized Depreciation..................................................................... (5,222)
---------
Net Unrealized Appreciation....................................................................... $ 80,779
---------
---------
Cost of Investments for Federal Income Tax Purposes............................................... $ 256,761
---------
---------
</TABLE>
6. Net Assets
At June 30, 1999, net assets consisted of the following:
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
---------
<S> <C>
Paid-in-Capital................................................................................... $ 253,164
Undistributed Net Investment Loss................................................................. (1,294)
Accumulated Net Realized Gain on Investments...................................................... 4,602
Net Unrealized Appreciation of Investments........................................................ 80,779
---------
NET ASSETS........................................................................................ $ 337,251
---------
---------
</TABLE>
7. Federal Income Tax
As of December 31, 1998, for Federal income tax purposes, the Fund had
$13,778 of capital loss carryovers, expiring December 31, 2006, which may be
applied against future net taxable realized gain of each succeeding year until
the earlier of its utilization or its expiration.
9
