<PAGE>
[LOGO]
NAVELLIER
VARIABLE INSURANCE
SERIES FUND
ANNUAL REPORT
December 31, 1998
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>
ANNUAL REPORT, December 31, 1998
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
1 East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
- --------------------------------------------------------------------------------
February 24, 1999
Dear Shareholder:
1998 was the most volatile year for the stock market since 1987. The broad
markets finished strongly despite early predictions that the stock market would
cool off. Large cap stocks led the market as evidenced by the S&P 500 return of
over 26%, whereas small caps continued to lag, as shown by the Russell 2000,
down (2.55)%. After a robust first quarter, the stock market faltered a bit in
the second quarter. There was major concern that the third quarter sell-off
would accelerate in the fourth quarter, but the doomsayers were proved wrong
again when the stock market caught fire in the last quarter of 1998. The
stunning fourth quarter surge in the market was broad-based. As strong as the
rally in large cap stocks was, it was the small and mid cap issues that stole
the show in the last quarter. These small and mid cap stocks had been greatly
neglected for many months as investors continued to focus on large cap issues.
When investors decided to reallocate some of their profits from their large cap
investments into these neglected smaller issues they generated strong buy side
volume.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
<S> <C> <C> <C>
Growth Portfolio Russell 2000 Russell 2000 Growth
$10,000 $10,000 $10,000
3/31/98 $10,500 $10,412 $10,420
4/30/98 $10,520 $10,469 $10,484
5/31/98 $10,140 $9,905 $9,721
6/30/98 $10,440 $9,926 $9,821
7/31/98 $9,990 $9,122 $9,001
8/30/98 $7,930 $7,350 $6,923
9/30/98 $8,610 $7,926 $7,625
10/31/98 $8,740 $8,249 $8,023
11/30/98 $9,730 $8,682 $8,646
12/31/98 $11,220 $9,219 $9,428
</TABLE>
The above chart indicates the return of $10,000 invested in the Growth
Portfolio on February 27, 1998. As the chart shows by December 31, 1998, the
value of the investment would have grown to $11,220, a 12.20% increase. For
comparison purposes, look at how the Russell 2000 Index and the Russell 2000
Growth Index performed over the same period. An investment of $10,000 in the
Russell 2000 Index over the same period would have shrank to $9,219, a (7.81)%
decrease. Similarily an investment of $10,000 in the Russell 2000 Growth Index
over the same period would have shrank to $9,428, a (5.72)% decrease.
The above chart 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.
<PAGE>
We are quite pleased with the initial results for the Navellier Variable
Insurance Series Fund -- Growth Portfolio. Although the Fund is quite new, it
has performed very well during the short period of its existence. The Fund was
up 12.20% since its inception (the period February 27, 1998 to December 31,
1998).
Many shareholders want to know our opinion of the high flying internet
stocks. Many of these stocks have extreme valuations and display excessive
volatility. We believe there are still some excellent opportunities in this
industry. However, given the volatility of many of these stocks, we have been
very selective in this area. It is likely that a select few of these high flying
internet stocks may live up to their lofty expectations, but many will fall by
the way side.
One industry that continues to fire on all cylinders is the discount
retailers. Retail sales continued to soar during the recent holiday season.
Despite pessimistic forecasts, the 1998 holiday shopping season was phenomenal.
This robust growth was the best in several years. The best real-wage growth for
the consumer since 1985 and an impressive rebound by the stock market, all
helped to bolster consumer confidence. In fact, consumer confidence is now at
the highest level ever, which is a testament to both low unemployment and a
strong U.S. economy. As you might expect with record consumer confidence, new
housing sales are also breaking records.
The outlook for 1999 remains very promising. The U.S. economy is currently
in economic nirvana with strong growth signals all around. However, as the stock
market climbs higher, it is becoming increasingly overbought and will likely
become more volatile on a day-to-day basis. The stock market can remain
overbought and continue to drift higher for several months, but experienced
investors know that this is no time to be overly confident. The flow of funds
into the stock market has been erratic lately, so the stock market will likely
remain volatile for quite some time. As always, an investor's best defense is a
strong offense of fundamentally superior stocks. Our focus will remain on those
stocks that demonstrate strong sales growth, positive analysts' earnings
forecasts and continued profit margin expansion. It appears that institutional
investors are beginning to focus their attention on small-to-mid capitalization
stocks due to their superior fundamental characteristics. These stocks will
likely continue to benefit from rapid institutional accumulation in the months
ahead.
Please call us if we can address any questions or concerns for you at
1.800.887.8671 or visit our website at www.navellier.com. The web site includes
the current weekly market commentary which we will be happy to e-mail to you at
your request.
Thank you for allowing us to manage some of your assets. We feel very
obligated to our shareholders and promise to make every effort to manage them
efficiently and ambitiously.
Sincerely,
<TABLE>
<S> <C>
/S/ Louis G. Navellier /S/ Alan Alpers
LOUIS G. NAVELLIER ALAN ALPERS
</TABLE>
* RUSSELL 2000 INDEX MEASURES THE PERFORMANCE OF THE 2,000 SMALLEST
COMPANIES IN THE RUSSELL 3000 INDEX, WHICH REPRESENTS APPROXIMATELY 11%
OF THE TOTAL MARKET CAPITALIZATION OF THE RUSSELL 3000 INDEX. RUSSELL
2000 GROWTH INDEX MEASURES THE PERFORMANCE OF THOSE RUSSELL 2000
COMPANIES WITH HIGHER PRICE-TO-BOOK RATIOS AND HIGHER FORECASTED GROWTH
VALUES.
THESE INDICES ARE CONSIDERED REPRESENTATIVE OF PERTINENT MARKET SECTORS
IN GENERAL. NONE ARE INVESTMENT PRODUCTS AVAILABLE FOR SALE.
2
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NAVELLIER VARIABLE INSURANCE SERIES FUND
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PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 90.3%
APPAREL -- 8.5%
90 Abercrombie & Fitch Co.* $ 6,368
70 American Eagle Outfitters, Inc.* 4,664
112 Gap, Inc. 6,300
------------
17,332
------------
BIOTECHNOLOGY -- 5.1%
80 ALZA Corp., Class A* 4,180
60 Amgen, Inc.* 6,274
------------
10,454
------------
COMMERCIAL SERVICES -- 6.3%
60 CMGI, Inc.* 6,390
100 Dendrite International, Inc.* 2,497
200 Labor Ready, Inc.* 3,937
------------
12,824
------------
COMMUNICATION EQUIPMENT AND SERVICES -- 8.9%
110 Century Telephone Enterprises, Inc. 7,425
50 Nokia Corp., ADR 6,022
30 Vodaphone Group, ADR 4,834
------------
18,281
------------
COMPUTER HARDWARE AND PERIPHERALS -- 15.6%
80 Dell Computer Corp.* 5,855
85 EMC Corp.* 7,225
90 Intervoice, Inc.* 3,105
40 Qlogic Corp.* 5,235
90 Symbol Technologies, Inc. 5,754
140 Xircom, Inc.* 4,760
------------
31,934
------------
COMPUTER AND VIDEO CHAINS -- 6.0%
140 Best Buy, Inc.* 8,592
195 Trans World Entertainment Corp.* 3,717
------------
12,309
------------
COMPUTER SOFTWARE -- 2.6%
80 Legato Systems, Inc.* 5,275
------------
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
CONSUMER ELECTRONICS/APPLIANCES -- 3.0%
100 Maytag Corp. $ 6,225
------------
DRUG STORE CHAIN -- 1.9%
70 CVS Corp. 3,850
------------
ELECTRONIC PRODUCTS -- 1.4%
50 Gemstar International Group, Ltd.* 2,862
------------
ENTERTAINMENT -- 2.9%
80 Viacom, Inc., Class B* 5,920
------------
GROCERY CHAINS -- 1.8%
60 Safeway, Inc.* 3,656
------------
HOUSEHOLD PRODUCTS -- 2.3%
40 Clorox Co. 4,673
------------
INTERNET SERVICES -- 5.6%
170 BroadVision, Inc.* 5,440
100 Mindspring Enterprises, Inc.* 6,106
------------
11,546
------------
MEDICAL DISTRIBUTORS -- 1.0%
40 Bindley Western Industries, Inc. 1,970
------------
MEDICAL EQUIPMENT AND SUPPLIES -- 4.6%
90 MiniMed, Inc.* 9,428
------------
MEDICAL SERVICES -- 4.2%
220 MedQuist, Inc.* 8,690
------------
OFFICE EQUIPMENT AND SUPPLIES -- 2.9%
60 Lexmark International Group, Inc.* 6,030
------------
RECREATIONAL PRODUCTS -- 2.9%
210 THQ, Inc.* 5,880
------------
SAVINGS AND LOAN ASSOCIATIONS -- 2.8%
50 Capital One Financial Corp. 5,750
------------
TOTAL COMMON STOCK
(COST $140,131) 184,889
------------
</TABLE>
3
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NAVELLIER VARIABLE INSURANCE SERIES FUND
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PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998 (continued)
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
MONEY MARKET FUND -- 9.7%
19,847 Fund for Government Investors
(Cost $19,847) $ 19,847
------------
TOTAL INVESTMENTS -- 100.0%
(COST $159,978) $ 204,736
------------
------------
</TABLE>
- --------------------------
(*) NON-INCOME PRODUCING
ADR AMERICAN DEPOSITORY RECEIPTS
SEE NOTES TO FINANCIAL STATEMENTS.
4
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NAVELLIER VARIABLE INSURANCE SERIES FUND
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STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
- ------------------------------------------------------------------------------------------------------- ---------
<S> <C>
ASSETS
Securities at Value (Note 1) (Cost $159,978)......................................................... $ 204,736
Interest Receivable.................................................................................. 37
Unamortized Organizational Costs (Note 1)............................................................ 14,600
---------
Total Assets....................................................................................... 219,373
---------
LIABILITIES
Investment Advisory Fee Payable (Note 2)............................................................. 128
Administrative Fee Payable (Note 2).................................................................. 38
Other Payables and Accrued Expenses.................................................................. 60
Organizational Expenses Payable to Adviser (Note 1).................................................. 14,600
---------
Total Liabilities.................................................................................. 14,826
---------
NET ASSETS............................................................................................. $ 204,547
---------
---------
SHARES OUTSTANDING..................................................................................... 18,224
---------
---------
NET ASSET VALUE PER SHARE.............................................................................. $11.22
---------
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
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NAVELLIER VARIABLE INSURANCE SERIES FUND
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STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1998*
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
- ------------------------------------------------------------------------------------------------------- -----------
<S> <C>
INVESTMENT INCOME
Interest (Note 1).................................................................................... $ 516
Dividends (Note 1)................................................................................... 393
-----------
Total Investment Income............................................................................ 909
-----------
EXPENSES
Investment Advisory Fee (Note 2)..................................................................... 931
Administrative Fee (Note 2).......................................................................... 274
Transfer Agent and Custodian Fee (Note 3)............................................................ 12,891
Shareholder Reports and Notices...................................................................... 6,002
Trustees' Fees and Expenses (Note 2)................................................................. 12,500
Organizational Expense (Note 1)...................................................................... 2,920
Other Expenses....................................................................................... 41,353
-----------
Total Expenses..................................................................................... 76,871
Less Expenses Reimbursed by Investment Adviser (Note 2)............................................ (75,228)
-----------
Net Expenses..................................................................................... 1,643
-----------
NET INVESTMENT LOSS.................................................................................... (734)
-----------
Net Realized Loss on Investments....................................................................... (21,589)
Change in Net Unrealized Appreciation of Investments................................................... 44,758
-----------
NET GAIN ON INVESTMENTS................................................................................ 23,169
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................... $22,435
-----------
-----------
- -------------------------------------------------------------------------------------------
</TABLE>
*FROM COMMENCEMENT OF OPERATIONS FEBRUARY 27, 1998
SEE NOTES TO FINANCIAL STATEMENTS.
6
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NAVELLIER VARIABLE INSURANCE SERIES FUND
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STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1998*
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
- ------------------------------------------------------------------------------------------------------- ---------
<S> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Loss.................................................................................. $ (734)
Net Realized Loss on Investment Transactions......................................................... (21,589)
Change in Net Unrealized Appreciation of Investments................................................. 44,758
---------
Net Increase in Net Assets Resulting from Operations............................................... 22,435
---------
DISTRIBUTIONS TO SHAREHOLDERS
Total Distributions to Shareholders................................................................ --
---------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares.................................................................. 128,396
Reinvestment of Distributions...................................................................... --
Cost of Shares Redeemed............................................................................ (46,284)
---------
Net Increase in Net Assets Resulting from Share Transactions....................................... 82,112
---------
TOTAL INCREASE IN NET ASSETS..................................................................... 104,547
NET ASSETS -- Beginning of Period...................................................................... 100,000
---------
NET ASSETS -- End of Period............................................................................ $ 204,547
---------
---------
SHARES
Sold............................................................................................... 13,412
Issued in Reinvestment of Distributions............................................................ --
Redeemed........................................................................................... (5,188)
---------
Net Increase in Shares............................................................................. 8,224
---------
---------
- ------------------------------------------------------------------------------------------
</TABLE>
*FROM COMMENCEMENT OF OPERATIONS FEBRUARY 27, 1998
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
NAVELLIER VARIABLE INSURANCE SERIES FUND
- ------------------------------------------------------------------
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 (Note
2).................................. 1.50%(B)
Expenses Before Reimbursement (Note
2).................................. 70.17%(B)
Net Investment Loss After
Reimbursement (Note 2).............. (0.67)%(B)
Net Investment Loss Before
Reimbursement (Note 2).............. (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
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
NAVELLIER VARIABLE INSURANCE SERIES FUND
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NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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.
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 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 December 31, 1998, unamortized
organization costs of the Growth Portfolio were $14,600.
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
9
<PAGE>
NAVELLIER VARIABLE INSURANCE SERIES FUND
- ------------------------------------------------------------------
of the Growth Portfolio are first offered to the public. During the period ended
December 31, 1998, the Adviser paid operating expenses of the portfolio
totalling 75,666 under the operating expense agreements, the Adviser requested
and the portfolio reimbursed $438 of such expenses.
Navellier Securities Corp. (the "Distributor") acts as the Fund's
Distributor and is registered as a broker-dealer under the Securities and
Exchange Act of 1934. The Distributor, which is the principal underwriter of the
Fund's shares, renders its services to the Fund pursuant to a distribution
agreement. An officer and 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 period ended December 31, 1998, Directors' fees and expenses
totaled $12,500.
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 Directors.
4. Securities Transactions
For the period from inception, February 27, 1998, through December 31, 1998,
purchases and sales (including maturities) of securities (excluding short-term
securities) were as follows:
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
---------
<S> <C>
Purchases............................................................................................ $ 313,687
---------
---------
Sales................................................................................................ $ 151,946
---------
---------
</TABLE>
5. 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>
GROWTH
PORTFOLIO
---------
<S> <C>
Gross Unrealized Appreciation........................................................................ $ 47,450
Gross Unrealized Depreciation........................................................................ (2,692)
---------
Net Unrealized Appreciation.......................................................................... $ 44,758
---------
---------
Cost of Investments for Federal Income Tax Purposes.................................................. $ 159,978
---------
---------
</TABLE>
10
<PAGE>
NAVELLIER VARIABLE INSURANCE SERIES FUND
- ------------------------------------------------------------------
6. Net Assets
At December 31, 1998, net assets consisted of the following:
<TABLE>
<CAPTION>
GROWTH
PORTFOLIO
---------
<S> <C>
Paid-in-Capital...................................................................................... $ 181,378
Accumulated Net Realized Loss on Investments......................................................... (21,589)
Net Unrealized Appreciation of Investments........................................................... 44,758
---------
NET ASSETS........................................................................................... $ 204,547
---------
---------
</TABLE>
7. Federal Income Tax
Permanent differences between tax and financial reporting of accumulated net
investment income and net realized gain/loss are reclassified. As of December
31, 1998, $734 from accumulated net investment loss were reclassified to
paid-in-capital.
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.
11
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
RENO, NEVADA
We have audited the accompanying statement of assets and liabilities of the
Growth Portfolio of the Navellier Variable Insurance Series Fund, Inc.,
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 period then ended. These financial statements are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit 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. 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
audit 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 the
Growth Portfolio as of December 31, 1998, the results of its operations, the
changes in its net assets, and the financial highlights for the period then
ended, in conformity with generally accepted accounting principles.
[/S/ TAIT, WELLER AND BAKER]
Philadelphia, Pennsylvania
February 19, 1999
12
