NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
One East Liberty, Third Floor
Reno, Nevada 89501
Navellier Variable Insurance Series Fund, Inc. is a management investment
company, sometimes called a mutual fund. It currently has one series - the
Navellier Growth Portfolio.
The Securities and Exchange Commission has not approved or disapproved these
securities nor has it determined that this prospectus is accurate or complete.
It is a criminal offense to state otherwise.
Prospectus dated May 1, 1999
TABLE OF CONTENTS
Page
SUMMARY 3
PERFORMANCE 5
MORE ABOUT PORTFOLIO INVESTMENTS 5
MANAGEMENT OF THE FUND 8
FINANCIAL HIGHLIGHTS 12
INTERESTED IN LEARNING MORE? 13
SUMMARY
This prospectus provides important information about Navellier Variable
Insurance Series Fund, Inc. ("Fund") and its one series - the Navellier Growth
Portfolio ("Growth Portfolio" or "Portfolio"). Navellier & Associates, Inc.
("Adviser") serves as the investment adviser for the Growth Portfolio.
Individuals cannot invest in the shares of the Growth Portfolio directly.
Instead they participate through variable annuity contracts and variable life
insurance policies (collectively, the "Contracts") issued by an insurance
company. You can participate either through a Contract that you purchase
yourself or through a Contract purchased by your employer.
Through your participation in the Contract, you indirectly participate in
Portfolio earnings or losses, in proportion to the amount of money you invest.
Depending on your Contract, if you withdraw your money before retirement, you
may incur charges and additional tax liabilities. For further information about
your Contract, please refer to your Contract prospectus.
The Contracts may be sold by banks. An investment in the Portfolio through a
Contract is not a deposit of a bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
For more information about each type of investment, please read the section in
this prospectus called "More About Portfolio Investments."
Investment Objective - Growth Portfolio
* seeks to achieve long-term growth of capital primarily through investment
in companies with appreciation potential.
Investment Strategy
The Growth Portfolio invests in equity securities traded in all United States
markets including dollar-denominated foreign securities traded in United States
markets.
The Growth Portfolio seeks long-term capital appreciation through investments in
securities of companies which the Adviser feels are undervalued in the
marketplace. Under normal conditions the Portfolio's holdings in non-equity
securities should not exceed 35% of the total assets of the Portfolio. Such
non-equity securities will typically consist of investments in money market
securities and money market funds.
The Growth Portfolio is designed to achieve the highest possible returns while
minimizing risk. The Adviser's selection process focuses on fast growing
companies that offer innovative products, services, or technologies to a rapidly
expanding marketplace. The Adviser uses an objective, "bottom-up," quantitative
screening process designed to identify and select inefficiently priced growth
stocks with superior return compared to their risk characteristics.
The Adviser mainly buys stocks of companies which it believes are poised to rise
in price. The Adviser's investment process focuses on "growth" variables
including, but not limited to, earnings growth, reinvestment rate, and operating
margin expansion.
The Adviser attempts to uncover stocks with strong return potential and
acceptable risk characteristics. To do this, the Adviser uses its proprietary
computer model to calculate and analyze a "reward/risk ratio." The reward/risk
ratio is designed to identify stocks with above average market returns and risk
levels which are reasonable for higher return rates.
The Adviser's research team then applies two or more sets of criteria to
identify the most attractive stocks. Examples of these criteria include earnings
growth, profit margins, reasonable price/earnings ratios based on expected
future earnings, and various other fundamental criteria.
Stocks with the best combination of growth ratios are blended into a
non-diversified portfolio.
The Growth Portfolio will invest up to 100% of its capital in equity securities
selected for their capital growth potential. The Adviser will typically (but not
always) purchase common stocks of issuers which have records of profitability
and strong earnings momentum. 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 Portfolio may invest up to 25% of its assets in foreign securities,
including American Depositary Receipts (ADRs).
Investment Risks:
The principal risks of investing in the Portfolio are:
Market Risk: the risk that the value of the securities purchased by the
Portfolio will decline as a result of economic, political or market conditions
or an issuer's financial circumstances. The Growth Portfolio employs aggressive
investment strategies and can experience substantial fluctuations, including
declines, so that shares may be worth less than when originally purchased. You
could lose money on your investment in the Portfolio.
Value Investing Risk: the risk that the portfolio manager's judgment that a
particular security is undervalued in relation to the company's fundamental
economic values may prove incorrect.
Small Capitalization Company Risk: the risk that small companies may be
generally subject to more abrupt or erratic market movements than securities of
larger, more established companies.
Liquidity Risk: the risk that the degree of market liquidity of some stocks in
which the Portfolio invests may be relatively limited in that the Portfolio
invests in over-the-counter stocks.
Higher Brokerage Expenses: The Adviser's investment style may result in above
average portfolio turnover which could result in higher brokerage expenses.
Foreign Securities Risks
Political Risk: the risk that a change in a foreign government will occur
and that the assets of a company in which the Portfolio has invested will
be affected.
Currency Risk: the risk that a foreign currency will decline in value. The
Portfolio may trade in currencies other than the U.S. dollar. An increase
in the value of the U.S. dollar relative to a foreign currency will
adversely affect the value of the Portfolio.
Limited Information Risk: the risk that foreign companies may not be
subject to accounting standards or governmental supervision comparable to
U.S. companies and that less public information about their operations may
exist.
Emerging Market Country Risk: the risks associated with investment in
foreign securities are heightened in connection with investments in the
securities of issuers in emerging markets, as these markets are generally
more volatile than the markets of developed countries.
Settlement and Clearance Risk: the risks associated with the clearance and
settlement procedures in non-U.S. markets, which may be unable to keep pace
with the volume of securities transactions and may cause delays.
Liquidity Risk: foreign markets may be less liquid and more volatile than
U.S. markets and offer less protection to investors; over-the-counter
securities may also be less liquid than exchange-traded securities.
PERFORMANCE
The Fund, as of December 31, 1998, had less than one year of operating history
and therefore has not included a bar chart containing performance information in
this Prospectus. Bar charts provide investors with an indication of the risks of
an investment in a fund by comparing the fund's performance with a broad measure
of market performance.
MORE ABOUT PORTFOLIO INVESTMENTS
Certain of the investment techniques, instruments and risks associated with the
Portfolio are referred to in the discussion that follows.
Equity Securities
Equity securities represent an ownership position in a company. The prices of
equity securities fluctuate based on changes in the financial condition of the
issuing company and on market and economic conditions. Companies sell equity
securities to get the money they need to grow.
Stocks are one type of equity security. Generally, there are two types of
stocks:
Common stock - Each share of common stock represents a part of the ownership of
a company. The holder of common stock participates in the growth of a company
through increasing stock price and dividends. If a company experiences
difficulty, a stock price can decline and dividends may not be paid.
Preferred stock - Each share of preferred stock allows the holder to receive a
dividend before the common stock shareholders receive dividends on their shares.
Other types of equity securities include, but are not limited to, convertible
securities, warrants, rights and foreign equity securities such as ADRs, GDRs,
EDRs and IDRs.
Money Market Instruments
The Portfolio may invest in high quality money market instruments. A money
market instrument is high quality when it is rated in one of the two highest
rating categories by S&P or Moody's or another nationally recognized service, or
if unrated, deemed high quality by the Adviser.
Foreign Securities
Foreign securities are the equity, fixed income or money market securities of
foreign issuers. Securities of foreign issuers include obligations of foreign
branches of U.S. banks and of foreign banks, common and preferred stocks, and
fixed income securities issued by foreign governments, corporations and
supranational organizations. They also include ADRs, GDRs, IDRs and EDRs.
ADRs are certificates issued by a U.S. bank or trust company and represent the
right to receive securities of a foreign issuer deposited in a domestic bank or
foreign branch of a U.S. Bank. GDRs, IDRs and EDRs are receipts evidencing an
arrangement with a non-U.S. bank.
Portfolio Turnover
Portfolio turnover occurs when the Portfolio sells its investments and buys new
ones. High portfolio turnover occurs when the Portfolio engages in frequent
trading as part of its investment strategy.
High portfolio turnover may cause the Portfolio's expenses to increase. For
example, the Portfolio may have to pay brokerage fees and other related
expenses. A portfolio turnover rate of 100% or more a year is considered high. A
high rate increases the Portfolio's transaction costs and expenses.
Portfolio turnover rates for the Portfolio are found in the Financial Highlights
section of this Prospectus.
A Word About Risk
Participation in the Portfolio involves risk - even the risk that you will
receive a minimal return on your investment or the value of your investment will
decline. It is important for you to consider carefully the following risks when
you allocate purchase payments or premiums to the Portfolio.
Market Risk
Market risk refers to the loss of capital resulting from changes in the price of
investments. Generally, equity securities are considered to be subject to market
risk. For example, market risk occurs when the expectations of lower corporate
profits in general cause the broad market of stocks to fall in price. When this
happens, even though a company may be experiencing a growth in profits, the
price of its stock could fall.
Growth Investing Risk
This investment approach has additional risk associated with it due to the
volatility of growth stocks. Growth companies usually invest a high portion of
earnings in their businesses, and may lack the dividends of value stocks that
can cushion prices in a falling market. Also, earnings disappointments often
lead to sharply falling prices because investors buy growth stocks in
anticipation of superior earnings growth.
Value Investing Risk
This investment approach has additional risk associated with it because the
Portfolio manager's judgment that a particular security is undervalued in
relation to the company's fundamental economic values may prove incorrect.
Risks Associated with Foreign Securities
A foreign security is a security issued by an entity domiciled or incorporated
outside of the U.S. Among the principal risks of owning foreign securities are:
Political Risk: the risk that a change in a foreign government will occur and
that the assets of a company in which the Portfolio has invested will be
affected. In some countries there is the risk that the government may take over
the assets or operations of a company and/or that the government may impose
taxes or limits on the removal of the Portfolio's assets from that country.
Currency Risk: the risk that a foreign currency will decline in value. As long
as the Portfolio holds a security denominated in a foreign currency, its value
will be affected by the value of that currency relative to the U.S. dollar. An
increase in the value of the U.S. dollar relative to a foreign currency will
adversely affect the value of the Portfolio.
Liquidity Risk: foreign markets may be less liquid and more volatile than U.S.
markets and offer less protection to investors. Certain markets may require
payment for securities before delivery and delays may be encountered in settling
securities transactions. In some foreign markets there may not be protection
against failure by other parties to complete transactions.
Limited Information Risk: the risk that less government supervision of foreign
markets may occur. Foreign issuers may not be subject to the uniform accounting,
auditing and financial reporting standards and practices that apply to U.S.
issuers. In addition, less public information about their operations may exist.
Emerging Market Country Risk: the risks associated with investment in foreign
securities are heightened in connection with investments in the securities of
issuers in emerging markets countries. Such countries are generally defined as
countries in the initial stages of their industrialization cycles with low per
capita income. Although the markets of these developing countries offer higher
rates of return, they also pose additional risks to investors, including
immature economic structures, national policies restricting investments by
foreigners and different legal systems.
Settlement and Clearance Risk: the risks associated with the different clearance
and settlement procedures that are utilized in certain foreign markets. In
certain foreign markets, settlements may be unable to keep pace with the volume
of securities transactions, which may cause delays. If there is a settlement
delay, the Portfolio's assets may be uninvested and not earning returns. The
Portfolio also may miss investment opportunities or be unable to dispose of a
security because of these delays.
Year 2000 Risk
Like other mutual funds, as well as other financial and business organizations
around the world, the Fund could be adversely affected if the computer systems
used by the Adviser and other service providers in performing their
administrative functions do not properly process and calculate date-related
information and data as of and after January 1, 2000. This is commonly known as
the "Year 2000 issue." When the Year 2000 arrives, the Fund's operations could
be adversely affected if the computer systems used by its managers, service
providers and other third parties it does business with are not Year 2000 ready.
For example, the Fund's portfolio and operational areas could be impacted,
including securities trade processing, securities pricing, reporting, custody
functions and others.
When evaluating current and potential portfolio positions, Year 2000 is one of
the factors that the Adviser may consider. The Adviser may rely upon public
filings and other statements made by companies regarding their Year 2000
readiness. The Adviser, of course, cannot audit any company or its major
suppliers to verify their Year 2000 readiness. If a company in which the
Portfolio is invested is adversely affected by Year 2000 problems, it is likely
that the price of its security will also be adversely affected. A decrease in
the value of one or more of the Portfolio's holdings will have similar impact on
the Portfolio's performance.
The Adviser is taking steps that it believes are reasonably designed to address
the Year 2000 issue with respect to computer systems that it uses and to obtain
reasonable assurances that comparable steps are being taken by the Fund's other
major service providers. At this time, however, there can be no assurance that
these steps will be sufficient to avoid any adverse impact to the Fund.
Managing Investment Risks
In pursuing its investment objective, the Portfolio assumes investment risk. The
Portfolio tries to limit its investment risk by diversifying its investments
across different industry sectors.
Defensive Investment Strategy
Under normal market conditions, the Portfolio does not intend to have a
substantial portion of its assets invested in cash or money market instruments.
When the Adviser determines that adverse market conditions exist, the Portfolio
may adopt a temporary defensive posture and invest entirely in cash, money
market instruments and money market mutual funds. When the Portfolio is invested
in this manner, it may not be able to achieve its investment objective.
MANAGEMENT OF THE FUND
The management and affairs of the Fund are supervised by the Board of Directors
under the laws of the State of Maryland. The Directors have approved agreements
under which, as described below, certain companies provide essential management
services to the Fund.
The Adviser
Navellier & Associates, Inc., One East Liberty, Third Floor, Reno, Nevada 89501
serves as the Growth Portfolio's investment adviser. The Adviser is responsible
for selecting the securities which will constitute the pool of securities which
will be selected for investment for the Growth Portfolio. The Adviser was
organized in 1993 and presently manages over $2 billion in investor funds,
including other mutual funds.
Under a separate Administrative Services Agreement, the Adviser provides the
Growth Portfolio with certain administrative services. These services include
accounting and bookkeeping services, supervising other service providers and
monitoring the Portfolio's compliance with reporting obligations.
Portfolio Managers
Louis G. Navellier, the President and CEO of the Adviser, refined the Modern
Portfolio Theory investment strategy which is applied in managing the assets of
the Growth Portfolio. He sets the strategies and guidelines for the Growth
Portfolio and oversees the Portfolio Managers' activities. Mr. Navellier and
Alan Alpers, who are the Portfolio Managers involved in the day-to-day
investment activities of the Growth Portfolio, head up a team of investment
professionals who assist in managing the Portfolio, including research analysts
Jon Tesseo, Shawn Price and Michael Borgen. Mr. Alpers has been an analyst and
portfolio manager for the Adviser since 1989 and has been responsible along with
Mr. Navellier for day-to-day management of over $100 million in individual
accounts for the Adviser.
Additional Information Concerning the Adviser
The Adviser is owned and controlled by its sole shareholder, Louis G. Navellier
(a 100% stockholder). In 1987, Mr. Navellier was in litigation with a business
partner and on the advice of his then legal counsel, as part of a legal
strategy, filed a personal bankruptcy petition in connection with that
litigation. The bankruptcy petition was voluntarily dismissed by Mr. Navellier
less than two months later with all creditors being paid in full. Mr. Navellier
is an affiliated person of the Fund. Mr. Navellier and the Adviser without
admitting liability, did in the past agree to a two-week suspension in
California and agreed to pay civil penalties to the States of California,
Connecticut, and Maryland for allegedly not being properly registered as an
investment adviser. Mr. Navellier is, and has been, in the business of rendering
investment advisory services to significant pools of capital since 1987.
Compensation of the Adviser
The Adviser receives an annual .85% fee for investment management of the Growth
Portfolio. The fee is payable monthly, based upon the Portfolio's average daily
net assets. This advisory fee is higher than those generally paid by most other
investment companies. The Growth Portfolio is paying this higher advisory fee
based on its desire to retain the Adviser's specific application of Modern
Portfolio Theory, its particular method of analyzing securities and its
investment advisory services.
The Adviser also receives a 0.25% annual fee for rendering administrative
services to the Fund pursuant to the Administrative Services Agreement and is
entitled to reimbursement for operating expenses it advances for the Fund. The
Adviser 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).
Expense Reimbursement
The Adviser has agreed to reimburse expenses of the Growth Portfolios until
total operating expenses including the advisory fee are at or below 1.50%. This
undertaking is subject to termination at any time without notice to shareholders
after April 30, 2000.
Placing Orders for Shares
The prospectus for your Contract describes the procedures for investing your
purchase payments or premiums in shares of the Portfolio. You may obtain a copy
of that prospectus, free of charge, from the life insurance company or from the
person who sold you the Contract. The Portfolio does not charge any fees for
selling (redeeming) shares.
Payment for Redemptions
Payment for orders to sell (redeem) shares will be made within seven days after
the Fund receives the order.
Suspension or Rejection of Purchases and Redemptions
The Portfolio may suspend the offer of shares, or reject any specific request to
purchase shares from the Portfolio at any time. The Portfolio may suspend its
obligation to redeem shares or postpone payment for redemptions when the New
York Stock Exchange is closed or when trading is restricted on the Exchange for
any reason, including emergency circumstances established by the Securities and
Exchange Commission.
Right to Restrict Transfers
Neither the Fund nor the Separate Accounts are designed for professional market
timing organizations, other entities, or individuals using programmed, large
and/or frequent transfers. The Separate Accounts, in coordination with the Fund,
reserve the right to temporarily or permanently refuse exchange requests if, in
the Adviser's judgment, the Portfolio would be unable to invest effectively in
accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to the Portfolio and
therefore may be refused. Investors should consult the Separate Account
prospectus that accompanies this Fund Prospectus for information on other
specific limitations on the transfer privilege.
Net Asset Value
The value or price of each share of the Portfolio (net asset value per share) is
calculated at the close of business, usually 4:00 p.m., of the New York Stock
Exchange, every day that the New York Stock Exchange is open for business. The
value of all assets held by the Portfolio at the end of the day, is determined
by subtracting all liabilities and dividing the total by the total number of
shares outstanding. This value is provided to the life insurance company, which
uses it to calculate the value of your interest in your Contract. It is also the
price at which shares will be bought or sold in the Portfolio for orders it
received that day.
The value of the net assets of the Portfolio is determined by obtaining market
quotations, where available, usually from pricing services. Short-term debt
instruments maturing in less than 60 days are valued at amortized cost.
Securities for which market quotations are not available are valued at their
fair value as determined, in good faith, by the Adviser based on policies
adopted by the Board of Directors.
Dividends and Distributions
The Portfolio will declare and distribute dividends from net ordinary income and
will distribute its net realized capital gains, if any, at least annually. The
life insurance companies generally direct that all dividends and distributions
of the Portfolio be reinvested in the Portfolio under the terms of the
Contracts.
Tax Matters
The Fund intends to qualify as a regulated investment company under the tax law
and, as such distributes substantially all of the Portfolio's ordinary net
income and capital gains each calendar year as a dividend to the Separate
Accounts funding the Contracts to avoid an excise tax on certain undistributed
amounts. The Fund expects to pay no income tax. Dividends are reinvested in
additional full and partial shares of the Portfolio as of the dividend payment
date.
The Fund and the Portfolio intend to comply with special diversification and
other tax law requirements that apply to investments under the Contracts. Under
these rules, shares of the Fund will generally only be available through the
purchase of a variable life insurance or annuity contract. Income tax
consequences to Contract owners who allocate purchase payments or premiums to
Fund shares are discussed in the prospectus for the Contracts that accompanies
this Prospectus.
Additional Information
This prospectus sets forth concisely the information about the Fund and the
Portfolio that you should know before you invest money in the Portfolio. Please
read this prospectus carefully and keep it for future reference. The Fund has
prepared and filed with the Securities and Exchange Commission a Statement of
Additional Information that contains more information about the Fund and the
Portfolio. You may obtain a free copy of the Statement of Additional Information
from your registered representative who offers you the Contract. You may also
obtain copies by calling the Fund at 1-800-887-8671 or by writing to the Fund at
the following address: One East Liberty, Third Floor, Reno, Nevada 89501.
Mixed and Shared Funding
The Portfolio may sell its shares to insurance companies as investments under
both variable annuity contracts and variable life insurance policies. We call
this mixed funding. The Portfolio may also sell shares to more than one
insurance company. We call this shared funding. Under certain circumstances,
there could be conflicts between the interests of the different insurance
companies, or conflicts between the different kinds of insurance products using
the Portfolio. If conflicts arise, the insurance company with the conflict might
be forced to redeem all of its interest in the Portfolio. If the Portfolio is
required to sell a large percentage of its assets to pay for the redemption, it
may be forced to sell the assets at a discounted price. The Board of Directors
will monitor the interests of the insurance company shareholders for conflicts
to attempt to avoid problems.
Legal Proceedings
Neither the Fund nor the Portfolio is involved in any material legal
proceedings. The Adviser is not involved in any legal proceedings that if
decided against it would materially affect its ability to carry out its duties
to the Portfolio.
FINANCIAL HIGHLIGHTS
The Financial Highlights table is intended to help you understand the
Portfolio's financial performance for the period shown. Certain information
reflects financial results for a single Portfolio share. The total return
figures in the table represent the rate that an investor would have earned on an
investment in the Portfolio (assuming reinvestment of all dividends and
distributions). Your total return would be less due to the fees and charges
under your variable annuity contract or variable life insurance policy. Tait,
Weller & Baker has audited this information and its report and the Fund's
financial statements, are included in the Statement of Additional Information,
which is available upon request.
FINANCIAL HIGHLIGHTS
FOR THE PERIOD ENDED DECEMBER 31, 1998*
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
- - ---------------------------------------- ----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $ 10.00
------
Income from Investment Operations:
Net Investment Loss................. (0.04)
Net Realized and Unrealized Gain on
Investments........................ 1.26
------
Total from Investment
Operations....................... 1.22
------
Distributions to Shareholders:
Total Distributions to
Shareholders....................... --
------
Net Increase in Net Asset Value....... 1.22
------
Net Asset Value -- End of Period...... $ 11.22
------
------
TOTAL INVESTMENT RETURN(A).............. 12.20%
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement.......... 1.50%(B)
Expenses Before Reimbursement......... 70.17%(B)
Net Investment Loss After
Reimbursement....................... (0.67)%(B)
Net Investment Loss Before
Reimbursement....................... (69.34)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............... 129%
Net Assets at End of Period (in
thousands).......................... $205
Number of Shares Outstanding at End of
Period (in thousands)............... 18
</TABLE>
- - -----------------------------------------------------------------------------
(A) Total returns for periods of less than one year are not annualized.
(B) Annualized
* FROM COMMENCEMENT OF OPERATIONS FEBRUARY 27, 1998
INTERESTED IN LEARNING MORE?
The Statement of Additional Information incorporated by reference into this
prospectus contains additional information about the Fund's operations.
Further information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. The Fund's annual report
discusses market conditions and investment strategies that significantly
affected the Fund's performance results during its last fiscal year.
The Fund can provide you with a free copy of these materials or other
information about the Fund. You may reach the Fund by calling 1-800-887- 8671 or
by writing to the Fund at One East Liberty, Third Floor, Reno, Nevada 89501.
The Securities and Exchange Commission also maintains copies of these documents:
To view information on-line: Access the SEC's web site at
http://www.sec.gov.
To review a paper filing or to request that documents be mailed to you,
contact:
SEC Public Reference Room
Washington, D.C. 20549-6009
1-800-SEC-0330
A duplicating fee will be assessed for all copies provided.
The Fund's Investment Company Act filing number is 811-8079.
