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THE AMERICAN TIGER FUNDS
THE AMERICAN TIGER TOP 20 PORTFOLIO
ANNUAL REPORT
DECEMBER 31, 1998
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ANNUAL REPORT, December 31, 1998
AMERICAN TIGER FUNDS
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.
We are quite pleased with the initial results for the American Tiger Top 20
Portfolio. Although the Portfolio is quite new, it has performed very well
during the short period of its existence. The Portfolio is a unique product for
Navellier due to its very concentrated portfolio. The Portfolio was up 25.50% in
its first three months of existence (gross return for the period September 30,
1998 to December 31, 1998).
<TABLE>
<CAPTION>
AMERICAN TIGER
TOP 20
TOTAL RETURNS FOR PERIOD ENDED DECEMBER 31, 1998 PORTFOLIO RUSSELL 3000 RUSSELL 1000
- ----------------------------------------------------- -------------- ------------ ------------
<S> <C> <C> <C>
Since Inception* 25.50% 21.42% 21.88%
Value of a $10,000 investment over Life of Portfolio* $ 12,550 $ 12,142 $ 12,188
*Inception September 30, 1998
</TABLE>
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 original cost.
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 investors best defense is a
strong offense of fundamentally superior stocks. Our focus will remain on those
stocks that
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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 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 US equity market.
RUSSELL 1000-REGISTERED TRADEMARK- INDEX measures the performance of the 1,000
largest companies in the Russell 3000 Index, which represents approximately 89%
of the total market capitalization of the Russell 3000 Index.
THESE INDICES ARE CONSIDERED REPRESENTATIVE OF PERTINENT MARKET SECTORS IN
GENERAL. NONE ARE INVESTMENT PRODUCTS AVAILABLE FOR SALE.
2
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AMERICAN TIGER FUNDS
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PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
AMERICAN TIGER TOP 20 PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- ----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 96.5%
APPAREL -- 18.8%
9,800 AnnTaylor Stores Corp.* $ 386,488
15,500 Children's Place Retail Stores, Inc.* 389,438
4,450 Gap, Inc. 250,313
8,100 Tarrant Apparel Group* 321,975
------------
1,348,214
------------
BIOTECHNOLOGY -- 4.2%
2,900 Amgen, Inc.* 303,231
------------
CELLULAR TELEPHONE - 6.5%
2,905 Vodafone Group, PLC, ADR 468,068
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COMMERCIAL SERVICES -- 8.6%
2,700 CMGI, Inc.* 287,550
6,200 Paychex, Inc. 318,913
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606,463
------------
COMPUTER HARDWARE AND
PERIPHERALS -- 8.9%
4,400 Dell Computer Corp.* 322,025
3,750 EMC Corp.* 318,750
------------
640,775
------------
CONSUMER ELECTRONICS/
APPLIANCES -- 5.3%
6,100 Maytag Corp. 379,725
------------
HOMEBUILDING -- 7.8%
8,100 MDC Holdings, Inc. 173,138
8,050 NVR, Inc.* 383,884
------------
557,022
------------
INSURANCE -- 3.8%
4,895 LandAmerica Financial Group, Inc. 273,201
------------
<CAPTION>
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MARKET VALUE
SHARES (NOTE 1)
- ----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
INTERNET SERVICES -- 6.7%
7,900 Mindspring Enterprises, Inc.* $ 482,393
------------
MEDICAL ELECTRONICS -- 4.9%
4,000 VISX, Inc.* 349,750
------------
OFFICE EQUIPMENT AND SUPPLIES -- 11.1%
4,100 Lexmark International Group, Inc.* 412,050
17,270 Polycom, Inc.* 384,258
------------
796,308
------------
PHARMACEUTICALS -- 5.2%
6,720 Schering-Plough Corp. 371,280
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PRECISION INSTRUMENT -- 4.7%
3,850 Waters Corp.* 335,912
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TOTAL COMMON STOCK
(COST $6,006,562) 6,912,342
------------
MONEY MARKET FUND -- 3.5%
249,293 Fund for Government Investors
(Cost $249,293) 249,293
------------
TOTAL INVESTMENTS -- 100.0%
(COST $6,255,855) $ 7,161,635
------------
------------
</TABLE>
(*) NON-INCOME PRODUCING
ADR AMERICAN DEPOSITORY RECEIPTS
SEE NOTES TO FINANCIAL STATEMENTS.
3
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AMERICAN TIGER FUNDS
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STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
American Tiger
Top 20 Portfolio
<TABLE>
<S> <C>
ASSETS
Securities at Value (Note 1) (Cost $6,255,855)................. $7,161,635
Receivable for Shares Sold..................................... 182,477
Dividends Receivable........................................... 498
Interest Receivable............................................ 1,171
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Total Assets................................................. 7,345,781
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LIABILITIES
Payable for Securities Purchased............................... 128,560
Payable for Shares Redeemed.................................... 7,180
Investment Advisory Fee Payable (Note 2)....................... 4,877
Distribution Plan Fee Payable (Note 4)......................... 2,186
Other Payables and Accrued Expenses............................ 1,219
----------
Total Liabilities............................................ 144,022
----------
NET ASSETS....................................................... $7,201,759
----------
----------
SHARES OUTSTANDING............................................... 573,772
----------
----------
NET ASSET VALUE PER SHARE........................................ $12.55
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
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AMERICAN TIGER FUNDS
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STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1998*
American Tiger
Top 20 Portfolio
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest (Note 1).............................................. $ 3,413
Dividends (Note 1)............................................. 4,107
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Total Investment Income...................................... 7,520
----------
EXPENSES
Investment Advisory Fee ( Note 2).............................. 8,743
Distribution Plan Fee (Note 4)................................. 2,186
Transfer Agent and Custodian Fee (Note 3)...................... 5,367
Registration Fees.............................................. 26,096
Printing Expense............................................... 13,064
Trustees' Fees................................................. 12,000
Other Expenses................................................. 1,587
----------
Total Expenses............................................... 69,043
Less Expenses Reimbursed by Investment Adviser (Note 2)...... (55,929)
----------
Net Expenses............................................... 13,114
----------
NET INVESTMENT LOSS.............................................. (5,594)
----------
Net Realized Gain on Investments............................... 211,487
Change in Net Unrealized Appreciation of Investments........... 905,780
----------
NET GAIN ON INVESTMENTS.......................................... 1,117,267
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $1,111,673
----------
----------
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</TABLE>
(*) From Commencement of Operations September 30, 1998
SEE NOTES TO FINANCIAL STATEMENTS.
5
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AMERICAN TIGER FUNDS
- -----------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1998*
American Tiger
Top 20 Portfolio
<TABLE>
<S> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Loss....................................... $ (5,594)
Net Realized Gain on Investment Transactions.............. 211,487
Change in Net Unrealized Appreciation of Investments...... 905,780
-----------
Net Increase in Net Assets Resulting from Operations.... 1,111,673
-----------
DISTRIBUTIONS TO SHAREHOLDERS
Total Distributions to Shareholders....................... --
-----------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares......................... 6,038,494
Reinvestment of Distributions............................. --
Cost of Shares Redeemed................................... (48,408)
-----------
Net Increase in Net Assets Resulting from Share
Transactions........................................... 5,990,086
-----------
TOTAL INCREASE IN NET ASSETS............................ 7,101,759
NET ASSETS -- Beginning of Period........................... 100,000
-----------
NET ASSETS -- End of Period................................. $ 7,201,759
-----------
-----------
SHARES
Sold...................................................... 567,983
Issued in Reinvestment of Distributions................... --
Redeemed.................................................. (4,211)
-----------
Net Increase in Shares.................................. 563,772
-----------
-----------
- ------------------------------------------------------------
</TABLE>
(*) From Commencement of Operations September 30, 1998
SEE NOTES TO FINANCIAL STATEMENTS.
6
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AMERICAN TIGER FUNDS
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FINANCIAL HIGHLIGHTS
FOR THE PERIOD ENDED DECEMBER 31, 1998*
American Tiger
Top 20 Portfolio
<TABLE>
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of Period.................... $10.00
-------
Income from Investment Operations:
Net Investment Loss..................................... (0.01)
Net Realized and Unrealized Gain on Investments......... 2.56
-------
Total from Investment Operations...................... 2.55
-------
Distributions to Shareholders:
Total Distributions to Shareholders..................... --
-------
Net Increase in Net Asset Value........................... 2.55
-------
Net Asset Value -- End of Period.......................... $12.55
-------
-------
TOTAL INVESTMENT RETURN(A).................................. 25.50%
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)..................... 1.50%(B)
Expenses Before Reimbursement (Note 2).................... 7.90%(B)
Net Investment Loss After Reimbursement (Note 2).......... (0.64)%(B)
Net Investment Loss Before Reimbursement (Note 2)......... (7.04)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................................... 82%
Net Assets at End of Period (in thousands)................ $7,202
Number of Shares Outstanding at End of Period (in
thousands).............................................. 574
</TABLE>
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(A) Total returns for periods of less than one year are not annualized. Total
returns do not include the maximum sales load.
(B) Annualized
*FROM COMMENCEMENT OF OPERATIONS SEPTEMBER 30, 1998
SEE NOTES TO FINANCIAL STATEMENTS.
7
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AMERICAN TIGER FUNDS
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NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Significant Accounting Policies
The American Tiger Funds (the "Fund") is registered under the Investment
Company Act of 1940, as amended, (the "Act") as an open-end management
investment company and is authorized to issue shares of beneficial interests.
The Fund currently offers shares of beneficial interests in one Portfolio, the
American Tiger Top 20 Portfolio (the "Portfolio"), a non-diversified open-end
management investment company. The Fund was established as a Delaware Business
Trust organized on September 4, 1998. The Fund is authorized to issue an
unlimited number of shares of beneficial interest. Shares of the Fund are
purchased at the public offering price which includes a maximum sales charge of
up to 4.95% depending on the size of the purchase. The financial statements have
been prepared in conformity with generally accepted accounting principles which
permit management to make certain estimates and assumptions at the date of the
financial statements. The following is a summary of significant accounting
policies which the Fund follows:
(a) Listed securities are valued at the last sales price of the New York
Stock Exchange and other major exchanges. Over-the-Counter securities are
valued at the last sales price. If market quotations are not readily
available, the Board of Trustees will value the Fund's securities in good
faith. The Trustees will periodically review this method of valuation and
recommend changes which may be necessary to assure that the Fund's instruments
are valued at fair value.
(b) Security transactions are recorded on the trade date (the date the
order to buy or sell is executed). Interest income is accrued on a daily
basis. Dividend income is recorded on the ex-dividend date. Realized gain and
loss on securities transactions are computed on an identified cost basis.
(c) Dividends from net investment income 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 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.
2. Investment Advisory Fees and Other Transactions with Affiliates
Investment advisory services are provided by Navellier Management, Inc. (the
"Adviser"). Under an agreement with the Adviser, the Fund pays a fee at the
annual rate of 1.00% of the daily net assets of the Portfolio. An officer and
trustee of the Fund is also an officer and director of the Adviser.
Under an agreement between the Fund and the Adviser related to payment of
operating expenses, the Adviser has reserved the right to seek reimbursement for
the past, present and future operating expenses of the Fund paid by the Adviser,
at any time upon notice to the Fund. During the period ended December 31, 1998,
the Adviser paid operating expenses of the portfolio totaling $58,114 under the
operating expense agreements the Adviser requested and the Portfolio reimbursed,
$2,185 of such expenses.
GSG Securities, Inc. (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.
For the period ended December 31, 1998, the Fund was advised that the
Distributor received $278,544 from sales loads earned on sales of the Fund's
capital stock.
The Fund pays each of its Trustees not affiliated with the Adviser $10,000
annually. For the period ended December 31, 1998, Trustees fees totaled $12,000.
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 Trustees.
8
<PAGE>
AMERICAN TIGER FUNDS
- -----------------------------------------------------------------
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 Fund may pay to
the Distributor or others as a service fee to reimburse such parties for
personal services provided to shareholders of the Fund and/or the maintenance of
shareholder accounts. Such Rule 12b-1 fees are made pursuant to the Plan and
distribution agreements entered into between such service providers and the
Distributor or the Fund directly.
5. Securities Transactions
For the period ended December 31, 1998, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
TOP 20
PORTFOLIO
-----------
<S> <C>
Purchases......................................... $ 8,599,954
-----------
-----------
Sales............................................. $ 2,804,879
-----------
-----------
</TABLE>
6. Unrealized Appreciation and Depreciation of Investments
Unrealized appreciation and depreciation as of December 31, 1998, based on
the cost for Federal income tax purposes are as follows:
<TABLE>
<CAPTION>
TOP 20
PORTFOLIO
-----------
<S> <C>
Gross Unrealized Appreciation..................... $ 931,584
Gross Unrealized Depreciation..................... (25,804)
-----------
Net Unrealized Appreciation....................... $ 905,780
-----------
-----------
Cost of Investments for Federal Income Tax
Purposes......................................... $ 6,255,855
-----------
-----------
</TABLE>
7. Net Assets
At December 31, 1998, net assets consisted of the following:
<TABLE>
<CAPTION>
TOP 20
PORTFOLIO
-----------
<S> <C>
Paid-in-Capital................................... $ 6,090,086
Accumulated Net Realized Gain on Investments...... 205,893
Net Unrealized Appreciation of Investments........ 905,780
-----------
NET ASSETS........................................ $ 7,201,759
-----------
-----------
</TABLE>
8. 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, $5,594 from accumulated net investment loss were reclassified to
accumulated net realized gain on investments.
9
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
AMERICAN TIGER FUNDS
RENO, NEVADA
We have audited the accompanying statement of assets and liabilities of American
Tiger Top 20 Portfolio of the American Tiger Funds including the portfolio of
investments, as of December 31, 1998, and the related statement of operations,
the statement of changes in net assets, and the financial highlights for the
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
American Tiger Top 20 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 & Baker
PHILADELPHIA, PENNSYLVANIA
FEBRUARY 19, 1999
10
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INVESTMENT ADVISER:
NAVELLIER MANAGEMENT, INC.
ONE EAST LIBERTY, THIRD FLOOR
RENO, NV 89501
(800) 887-8671
DISTRIBUTOR:
GSG SECURITIES, INC.
980 NORTH FEDERAL HIGHWAY, SUITE 210
BOCA RATON, FL 33432
(800) 723-3326
TRANSFER AGENT AND CUSTODIAN:
RUSHMORE TRUST & SAVINGS, FSB
4922 FAIRMONT AVENUE
BETHESDA, MD 20814
(800) 622-1386