<PAGE>
As filed with the Securities and Exchange Commission on December 8, 1997
1933 Act File No. 33-64010
1940 Act File No. 811-7768
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 9
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 11
THE NAVELLIER SERIES FUND
(Exact Name of Registrant as Specified in Charter)
One East Liberty Street, Third Floor, Reno, Nevada 89501
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 1-800-887-8671
Stephen E. Cavan, Massachusetts Financial Services Company
500 Boylston Street, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective (check appropriate box)
/x / immediately upon filing pursuant to paragraph (b)
/ / on [DATE] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on [DATE] pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on [DATE] pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Pursuant to Rule 24f-2, the Registrant has registered an indefinite number of
its shares of Beneficial Interest (without par value), under the Securities Act
of 1933. The Registrant will file a Rule 24f-2 Notice with respect to its
fiscal year ended December 31, 1997 on February 28, 1998.
- --------------------------------------------------------------------------------
<PAGE>
THE NAVELLIER SERIES FUND
on Behalf of
THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
CROSS REFERENCE SHEET
(Pursuant to Rule 404 showing location in Prospectus and/or Statement of
Additional Information of the responses to the Items in Parts A and B of Form
N-1A)
<TABLE>
<CAPTION>
ITEM NUMBER STATEMENT OF
FORM N-1A, PART A PROSPECTUS CAPTION ADDITIONAL INFORMATION
- ----------------- ------------------ ----------------------
<S> <C> <C>
1 (a), (b) Front Cover Page *
2 (a) Expense Summary *
(b), (c) * *
3 (a) Financial Highlights *
(b) * *
(c), (d) Performance & Yield Calculation of Performance Data
4 (a) Front Cover Page; Fund Highlights - *
The Fund; Fund Highlights -
Investment Objective; Fund -
Highlights - Investing in Securities
of Foreign Issuers; Investment
Objective and Policies; Special
Investment Methods and Risks -
"Short Sales Against the Box"
(b) Investment Restrictions; *
(c) Special Investment Methods and *
Risks; Risk Factors
<PAGE>
<CAPTION>
ITEM NUMBER STATEMENT OF
FORM N-1A, PART A PROSPECTUS CAPTION ADDITIONAL INFORMATION
- ----------------- ------------------ ----------------------
<S> <C> <C>
5 (a) Management of the Fund - Board *
of Trustees; Management of the Fund -
The Adviser
(b), (d), (e) Front Cover Page; Special Considerations; *
Fund Highlights - Investment Adviser;
Management of the Fund - The Adviser;
Back Cover Page
(c) Management of the Fund - *
The Adviser
(f) Management of the Fund - The Custodian and *
the Transfer Agent; Back Cover Page
(g) Expense Summary; Expenses of the *
Fund - General
(h) Information Concerning Shares of *
the Fund - Expenses
5A (a), (b), (c) ** **
6 (a) Description of Shares; *
Redemption of Shares
(b), (c), (d) * *
(e) Reports and Information; *
Back Cover Page
(f) Dividends and Distribution *
(g) Taxes *
(h) * *
7 (a) Front Cover Page; Management of *
the Fund - the Distributor; Back Cover
Page
<PAGE>
<CAPTION>
ITEM NUMBER STATEMENT OF
FORM N-1A, PART A PROSPECTUS CAPTION ADDITIONAL INFORMATION
- ----------------- ------------------ ----------------------
<S> <C> <C>
(b) Purchase and Pricing of Shares *
(c) Special Considerations; Purchase *
and Pricing of Shares; Certain
Services Provided to Shareholders -
Dividend Election; Terms Applicable
to Letter of Intent
(d) Fund Highlights - How to Invest; *
Purchase and Pricing of Shares
(e), (f), (g) * *
8(a), (b), (c), (d) Redemption of Shares *
Information Concerning Shares of *
the Fund - Redemptions and
Repurchases
9 * *
<PAGE>
<CAPTION>
ITEM NUMBER STATEMENT OF
FORM N-1A, PART B PROSPECTUS CAPTION ADDITIONAL INFORMATION
- ----------------- ------------------ ----------------------
<S> <C> <C>
10 (a), (b) * Front Cover Page
11 * Front Cover Page
12 * *
13 (a), (b), (c) * Investment Objective,
and Policies
(d) * *
14 (a), (b) * Trustees and Officers of the Fund
(c) * Officers
15 (a) * Control Persons and Principal
Holders of Securities
(b), (c) * Trustees and Officers of the Fund
16 (a), (b) Special Considerations; Adviser, Distributor, Custodian
Management of the Fund - and Transfer Agent
The Adviser
(c) * *
(d) * Adviser, Distributor, Custodian
and Transfer Agent
(e) * Brokerage Allocation and Other
Practices
(f) Dividends and Distributions Adviser, Distributor, Custodian
and Transfer Agent
(g) * *
(h) Independent Auditors and Adviser, Distributor, Custodian
Financial Statements and Transfer Agent; Independent
Auditors and Financial Statements
<PAGE>
<CAPTION>
ITEM NUMBER STATEMENT OF
FORM N-1A, PART B PROSPECTUS CAPTION ADDITIONAL INFORMATION
- ----------------- ------------------ ----------------------
<S> <C> <C>
(i) * Adviser, Distributor, Custodian
and Transfer Agent
17 (a), (b), (c) * Brokerage Allocation and Other
(d), (e) Practices
18 (a) * Capital Stock and Other Securities
(b) * *
19 (a), (b) * Purchase, Redemption, and Pricing
of Shares
(c) * *
20 * Taxes
21 (a), (b) Adviser, Distributor, Custodian
and Transfer Agent
(c) * *
22 (a) * *
(b) * Calculation of Performance Data
23 * Independent Auditors and Financial
Statements
</TABLE>
- --------------------------
* Not Applicable
** Contained in Annual Report
<PAGE>
PROSPECTUS
THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO DECEMBER 8, 1997
- --------------------------------------------------------------------------------
The Navellier Aggressive Small Cap Equity Portfolio (the "Fund")
is a diversified series of The Navellier Series Fund (the "Fund"), an open-end
management investment company. The sole objective of the Fund is to seek to
achieve long-term growth of capital primarily through investments in stocks of
small cap companies (companies with market capitalization of less than one
billion dollars) with appreciation potential.
Navellier Management, Inc ("NMI" or the "Adviser") is the Fund's
investment adviser and administrator, and Navellier Securities Corp ("NSC")
is the Fund's distributor. Rushmore Trust and Savings, FSB is the Fund's
transfer agent and custodian (referred to as the "Transfer Agent" or the
"Custodian," as appropriate).
This Prospectus sets forth concisely the information about the Fund that
a prospective investor should know before investing and should be read and
retained for future reference. A Statement of Additional Information ("SAI")
about the Fund has been filed with the Securities and Exchange Commission and
is available upon request and without charge by calling or writing The
Navellier Series Fund, One East Liberty Street, Third Floor, Reno, Nevada
89501, telephone: (800) 887-8671. The SAI bears the same date as this
Prospectus and is incorporated by reference into this Prospectus in its
entirety.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
No dealer, salesman, or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Fund, its investment
adviser, or its distributor. This Prospectus does not constitute an offer to buy
any of the securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
<PAGE>
<TABLE>
<S> <C>
Expense Summary__________________________________________________ 2
Financial Highlights_____________________________________________ 4
Fund Highlights__________________________________________________ 5
Investment Objective and Policies________________________________ 7
Special Investment Methods and Risks_____________________________ 8
Investment Restrictions__________________________________________ 9
Risk Factors_____________________________________________________ 10
Performance______________________________________________________ 11
Management of the Fund___________________________________________ 11
Expenses of the Fund_____________________________________________ 13
Reports and Information__________________________________________ 14
Description of Shares____________________________________________ 14
Dividends and Distributions______________________________________ 15
Taxes____________________________________________________________ 16
Purchase and Pricing of Shares___________________________________ 17
Redemption of Shares_____________________________________________ 22
Certain Services Provided to Shareholders________________________ 24
Additional Information___________________________________________ 24
Assent to Trust Instrument_______________________________________ 24
Terms Applicable to Letter of Intent_____________________________ 24
</TABLE>
<PAGE>
EXPENSE SUMMARY
- -------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases 0%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested
Dividends None
Redemption Fees None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees 1.25%
Other Expenses
Administrative Fee 0.25%
Other (after expense limitation)(1) 0.25%
TOTAL FUND OPERATING EXPENSES (after expense
limitation)(1) 1.75%
</TABLE>
(1) The Adviser has agreed to bear the Fund's normal operating expenses which
accrue on and after July 15, 1997, subject to reimbursement by the Fund, such
that "Total Fund Operating Expenses" do not exceed 1.75% per annum of the Fund's
average daily net assets during the current fiscal year; otherwise, "Other
Expenses," excluding the "Administrative Fee," and "Total Operating Expenses"
are estimated to be 0.36% and 1.86% per annum, respectively, based on the Fund's
average daily net assets for the fiscal year ended December 31, 1996. If this
arrangement had not been in place for the Fund's fiscal year ended December 31,
1996, and the Fund's average daily net assets were $80 million (based on the
Fund's approximate net assets as of July 15, 1997) the Fund's "Other Expenses,"
excluding the "Administrative Fee," and "Total Fund Operating Expenses" are
estimated to be 0.705% and 2.205% per annum, respectively. See "Special
Considerations" and "Expenses of the Fund."
EXAMPLES: The following example indicates the direct and indirect expenses an
investor (maintaining an average annual investment of $1,000) could expect to
incur in a one-year, three-year, five-year and ten-year period, respectively:
<TABLE>
<S> <C> <C> <C>
One-Year______ $ 20 Five-Year_____ $ 102
Three-Year____ $ 63 Ten-Year______ $ 215
</TABLE>
The foregoing example assumes (a) that an investor maintains an average
of $1,000 invested in the Fund; (b) no sales load, (c) a 5% annual return;
(d) percentage amounts listed above for Annual Fund Operating Expenses remain
constant (for all periods shown above); and (e) reinvestment of all dividends
and distributions. The purpose of the expense table is to assist investors in
understanding the various costs and expenses that a shareholder will bear
directly or indirectly.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR LESS THAN THOSE
SHOWN ABOVE.
2
<PAGE>
OTHER CONSIDERATIONS
NMI has agreed to bear the Fund's normal operating expenses which accrue
on and after July 15, 1997, subject to reimbursement by the Fund, such that
the Fund's total operating expenses do no exceed 1.75% per annum of the
Fund's average daily net assets during the current fiscal year and fiscal
1998. This expense limitation arrangement does not cover extraordinary Fund
expenses, such as litigation-related expenses, or any expenses which were
borne, agreed to, or accrued between March 13, 1997 and July 14, 1997.
Louis G. Navellier and Alan Alpers, have brought a legal action in
federal district court against two of the Fund's former trustees, Donald A.
Simon and Kenneth Sletten, and possibly against two other former trustees
basically alleging that said former trustees breached their fiduciary duties
and improperly spent Fund assets. The Fund had entered into
indemnification agreements with members of the Board of Trustees which
provide that the Trust will indemnify and hold harmless the Trustees against
any claim by any of
3
<PAGE>
the Fund's shareholders for any error of judgment or mistake of law or fact,
for any act or omission by the Trustees, or for any losses sustained by the
Trustees or the Fund's shareholders except to the extent that the Trustees
have engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their obligations. The Fund's former Trustees have indicated in
a prior SEC filing that they have errors and omissions liability insurance
coverage with a $250,000 deductible. While the Trust has a Directors' and
Officers' Errors and Omissions Liability Insurance Policy (the "Insurance
Policy"), the deductible under the Insurance Policy is $250,000. Expenses up
to the amount of the deductible incurred by said former Trustees in defending
the legal action could possibly be borne by the Fund, and expenses exceeding
the amount of the deductible could be borne by the Fund if the claims made in
these legal actions are not covered by the former Trustees' Insurance Policy
or if they are not found to have engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of their obligations. The Fund
currently believes that the former Trustees will not be entitled to
indemnification (however, the Fund believes that these claims are so
covered).
Due to these indemnification possibilities, the Fund's "Total Operating
Expenses" may exceed 1.75%, as set forth under the "Expense Summary" above.
Assuming that the Fund incurs $250,000 in litigation-related expenses on
account of the claims discussed above (I.E., the amount of the deductible
under the former Trustees' Insurance Policy), the Fund's "Total Operating
Expenses" for its current fiscal year are estimated to be % per annum at
the current levels of the Fund's management fee (1.15% per annum) and
administrative services fee (0.25% per annum). These estimated expense ratios
are based upon the Fund's net assets of $79 million as of December 5, 1997.
4
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------
The following audited financial highlights shows the per share income and
capital changes for an outstanding share of the Fund for the fiscal years
ended December 31, 1996 and December 31, 1995 and for the period ended
December 31, 1994. The information in the table relating to the audited
financial highlights should be read in conjunction with the financial
statements included in the Fund's Annual Report to shareholders which are
incorporated by reference into the SAI in reliance upon the report of the
Fund's independent auditors, Deloitte & Touche, L.L.P. during fiscal 1994,
1995 and 1996 given upon their authority, as experts in accounting and
auditing. The Fund's current independent auditors are Tait, Weller & Baker.
Also included herein are the unaudited financial highlights showing the per
share income and capital changes for an outstanding share of the Fund for
the period January 1, 1997 to June 30, 1997.
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED FOR THE
MONTHS ENDED DECEMBER 31, PERIOD ENDED
JUNE 30, 1997 ---------------------------------- DECEMBER 31,
(UNAUDITED) 1996 1995 1994*
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value--Beginning of Period............... $ 17.79 $ 15.41 $ 10.98 $ 10.00
-------- --------- -------- --------
Income from Investment Operations:
Net Investment Loss.............................. (0.20) (0.23) (0.16) (0.08)
Net Realized and Unrealized
Gains on Securities............................ 0.47(D) 2.61 4.97 1.06
-------- --------- -------- --------
Total from Investment Operations............... 0.27 2.38 4.81 0.98
-------- --------- -------- --------
Distributions to Shareholders:
From Net Realized Capital Gains.................. -- -- (0.38) --
-------- --------- -------- --------
Net Increase in Net Asset Value.................... 0.27 2.38 4.43 0.98
-------- --------- -------- --------
Net Asset Value--End of Period..................... $ 18.06 $ 17.79 $ 15.41 $ 10.98
-------- --------- -------- --------
-------- --------- -------- --------
TOTAL INVESTMENT RETURN(A)......................... 1.52% 15.44% 43.80% 9.80%
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2).............. 2.44%(B) 1.75% 1.75% 1.68%(B)
Expenses Before Reimbursement (Note 2)............. 2.84%(B) 1.86% 2.10% 4.52%(B)
Net Investment Loss................................ (1.40)%(B) (1.33)% (1.15)% (0.81)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate............................ 54.7% 136.9% 169.6% 139.9%
Net Assets at End
of Period (000's omitted)........................ $77,449 $190,035 $105,299 $18,224
Number of Shares Outstanding
at End of Period (000's omitted)................. 4,288 10,683 6,831 1,660
Average Commission Rate Paid(C).................... $ 0.0414 $ 0.0424 -- --
</TABLE>
- ------------------------
(A) Total returns do not include the maximum sales load. Total returns for
periods of less than one year are not annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged. This amount may vary from period to period
and fund to fund depending on the mix of trades executed in various markets
where trading practices and commission rate structures may differ.
(D) The per share amount is not in accordance with the net realized and
unrealized loss for the period because of the timing of sales of Fund shares
and the amount of per share realized and unrealized gains and losses at such
time.
*FROM COMMENCEMENT OF OPERATIONS JANUARY 3, 1994.
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
FUND HIGHLIGHTS
- -------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust, an open-end management
investment company organized as a business trust under the laws of the State of
Delaware on May 28, 1993.
INVESTMENT OBJECTIVE
The Fund invests in securities traded in the United States securities
markets of domestic issuers and of foreign issuers. The sole objective of the
Fund will be to seek to achieve long-term growth of capital primarily through
investments in stocks of small cap companies (companies with market
capitalization of less than one billion dollars) with appreciation potential.
There can be no assurance that the Fund will achieve its investment objective.
The Fund's investment objective may not be changed without shareholder approval.
The Fund should not be considered suitable for investors seeking current income.
INVESTMENT ADVISER
The Fund has retained Navellier Management Inc. to provide it with a
continuous investment program, including investment research and management
with respect to all securities and investments. The Adviser will determine
from time to time what securities and other investments will be selected and
purchased, retained, or sold by the Fund. The Adviser receives an annual fee,
equal to 1.15% of the value of assets under management for the Fund, payable
monthly, based upon a percentage of the Fund's average daily net assets. The
advisory fees paid by the Fund to the Adviser are higher than those paid by
most other investment companies. The Adviser also receives an annual
administrative fee of 0.25% of the value of assets under management.
5
<PAGE>
DISTRIBUTION OF SHARES
Navellier Securities Corp acts as the sole distributor of the Fund's
shares and also serves as distributor for each of the other funds in The
Navellier Performance Funds. The Distributor may sell shares of the Fund
directly to investors or through a network of broker-dealers selected by the
Distributor. The Distributor will compensate these selected dealers by paying
them directly.
HOW TO INVEST
Shares of the Fund are available for purchase through selected
broker-dealers. The Fund was closed to new investors after April 15, 1996.
Existing shareholders and mutual fund wrap fee advisers, financial advisers and
planners have been able to continue to purchase additional shares after April
15, 1996. The Fund may resume sales to new investors at some future date.
The daily public offering price for shares is the net asset value per
share next computed after receipt of your order. Initial purchases must be at
least $2,000 ($500 in the case of IRA and other retirement plans or
qualifying group plans) and subsequent investments must be $100 or more.
Investments in the Fund can be made through selected securities dealers (who
have the responsibility to transmit orders promptly and may charge a fee for
the purchase or redemption of Fund shares), or through the transfer agent,
Rushmore Trust and Savings, FSB. (See "Purchase and Pricing of Shares").
Investors can also invest in the Fund by completing an application
authorizing the transfer agent to transfer funds automatically every month
from the investor's checking account to the Fund for purchase of Fund shares
for the investor's account.
REDEMPTION OF SHARES
On any day the Fund and the stock exchanges are open for business the shares
will be redeemed at the next determined net asset value per share after receipt
of the redemption order. Redemption orders received after 4:00 p.m. E.S.T. will
be given the next days' net asset value.
If the investor requests payment of redemptions to a third party or to a
location other than his/her address of record listed on the account application,
the request must be in writing and the investor's signature must be guaranteed
by an eligible bank, broker, dealer, credit union, national securities exchange,
registered securities association, clearing agency or savings association.
6
<PAGE>
The Fund will redeem its shares in cash at a redemption price equal to their
net asset value as next computed following the receipt of a request for
redemption. Payment for the redemption price will be made within seven days
after the Fund's receipt of the request for redemption. For investments that
have been made by check, payment on withdrawal requests may be delayed only
until such time as it is reasonably necessary to assure that good payment has
been collected for the purchase of such shares which may be up to fifteen (15)
days from purchase date. This delay is necessary to assure the Fund that
investments made by check are good funds. The proceeds of the redemption will be
forwarded promptly upon confirmation of receipt of good funds.
The right of redemption may also be suspended, or the date of payment
postponed, (a) for any period during which the New York Stock Exchange is closed
(other than customary weekend or holiday closings); or (b) when trading on the
Exchange is restricted, or an emergency exists, as determined by the Securities
and Exchange Commission, so that disposal of the Fund's investments or
determination of net asset value is not reasonably practical; or (c) for such
other periods as the Commission, by order, may permit for protection of the
Fund's investors.
INVESTING IN SECURITIES OF FOREIGN ISSUERS
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issuers. These considerations include, among others,
changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information, the
difficulty of interpreting financial information prepared under laws applicable
to foreign securities markets, the impact of political, social, or diplomatic
developments, difficulties in invoking legal process abroad, and the difficulty
of assessing economic trends in foreign countries.
While to some extent the risks to the Fund of investing in foreign
securities may be limited, since the Fund may not invest more than 25% of its
total net assets in such securities and the Fund may only invest in foreign
securities which are traded in the United States securities markets, the risks
nonetheless exist.
INVESTMENT OBJECTIVE AND POLICIES
- -------------------------------------------------------
The investment objective of the Fund is to achieve long-term growth of
capital primarily through investments in stocks of companies with appreciation
potential.
The Fund will invest primarily in the common stock of small cap companies
(companies with market capitalization of less than one billion dollars) believed
by the Adviser to have appreciation potential. This Fund should not be
considered suitable for investors seeking current income. Since no one class or
type of security necessarily affords the greatest promise for capital
appreciation at all times, the Fund may invest up to 35% of its assets in
non-small cap securities of any issuer believed by the Adviser to offer
potential for capital appreciation over both the intermediate and long term.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in small cap equities. However, that projected minimum percentage could
be temporarily lowered during adverse market conditions. Equity securities
include, but are not limited to, common and preferred stock, and preferred
stocks that are convertible into common stock.
7
<PAGE>
The Fund may also invest in debt securities and money market instruments if,
in the opinion of the Adviser, such investment will further the investment
objective of the Fund. In addition, for temporary defensive purposes, the Fund
may retain cash or invest all or any portion of its assets in cash equivalents.
The Fund's holdings in such non-equity, non-small cap securities will not exceed
35% of the total assets of the Fund. If the Fund's assets or a portion thereof
are retained in cash, such cash will, in all probability, be deposited in
short-term commercial paper.
It is anticipated that all of the Fund's investments in corporate debt
securities (other than commercial paper) and preferred stocks will be
represented by debt securities and preferred stocks which have, at the time of
purchase, a rating within the four highest grades as determined by Moody's
Investors Service, Inc. (Aaa, Aa, A, Baa) or Standard & Poor's Corporation (AAA,
AA, A, BBB). Although investment-quality securities are subject to market
fluctuations, the risk of loss of income and principal is generally expected to
be less than with lower quality securities. In the event the rating of a debt
security or preferred stock in which the Fund has invested drops below
investment grade, the Fund will promptly dispose of such investment.
The Fund invests primarily in undervalued common stocks believed to have
long-term growth potential. Stocks are selected on the basis of an evaluation of
factors such as earnings growth, expanding profit margins, market dominance
and/or factors that create the potential for market dominance, sales growth, and
other factors that indicate a company's potential for growth.
There are no limitations on the type or dividend paying record of small
capitalization companies or industries in which the Fund may invest, the
principal criteria for investment being that the securities provide
opportunities for capital growth. The Fund 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. Such
companies are likely to 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 Adviser may, however,
purchase common stocks of well known, highly researched, large companies if it
believes such common stocks offer opportunity for long-term capital growth.
Investments in such large company stocks will not exceed 35% of the Fund's total
assets.
Diversification is a consideration in selecting investments for the Fund.
However, greater emphasis will be placed upon selection of securities believed
to have good potential for appreciation rather than upon wide diversification.
SPECIAL INVESTMENT METHODS AND RISKS
- -------------------------------------------------------
"SHORT SALES AGAINST THE BOX"
The Fund is permitted to make short sales if at the time of the short sale
the Fund owns or has the right to acquire a security equal in kind and amount to
the security being sold short, at no additional cost. This investment technique
is known as a "short sale against the box."
In a short sale, the seller does not immediately deliver the securities sold
and is said to have a short position in those securities until delivery occurs.
To make delivery to the purchaser, the
8
<PAGE>
executing broker borrows the securities being sold short on behalf of the
seller. While the short position is maintained, the seller collateralizes its
obligation to deliver the securities sold short in an amount equal to the
proceeds of the short sale plus an additional margin amount established by the
Board of Governors of the Federal Reserve. If the Fund engages in a short sale,
the collateral account will be maintained by the Fund's custodian. While the
short sale is open, the Fund will maintain, in a segregated custodial account,
an amount of securities equal in kind and amount to the securities sold short or
securities convertible into or exchangeable for such equivalent securities at no
additional cost. These securities would constitute the Fund's long position.
The Fund may make a short sale against the box, when it believes that the
price of a security may decline, causing a decline in the value of a security
owned by the Fund (or a security convertible into or exchangeable for such
security), or when the Fund desires to sell the security it owns at a current
attractive price, but also wishes to defer recognition of gain or loss for
federal income tax purposes and for purposes of satisfying certain tests
applicable to regulated investment companies under the Internal Revenue Code. In
such a case, any future losses in the Fund's long position should be reduced by
a gain in the short position. The extent to which such gains or losses are
reduced would depend upon the amount of the security sold short relative to the
amount the Fund owns. There will be certain additional transaction costs
associated with short sales against the box, but the Fund will endeavor to
offset these costs with income from the investment of the cash proceeds of short
sales.
Short sales of securities, other than "short sales against the box," will
not be permitted by the Fund.
RISK FACTORS
LIQUIDITY
The Investment Advisor was organized on May 28, 1993. Although the
Investment Advisor sub-contracts a substantial portion of its
responsibilities for administrative services of the Fund's operations to
various agents, including the Transfer Agent and the Custodian, the
Investment Advisor still has overall responsibility for the administration of
the Fund and oversees the administrative services performed by others as well
as servicing customer's needs and, along with the Fund's Trustees, is
responsible for the selection of such agents and their oversight. The
Investment Advisor also has overall responsibility for the selection of
securities for investment for the Fund. None of the principals, officers,
legal counsel, or directors of the Investment Advisor (including such of
those persons who are also controlling persons or legal counsel of the Fund)
had, before June 1993 ever registered, operated, or supervised the operations
of investment companies in the past, and there is no assurance that their
past business experiences will enable them to successfully manage the assets
of the Fund in the future. The owner of the Investment Advisor has been in
the business of rendering advisory services to significant pools of capital
such as retirement plans and large investors since 1987.
The owner of the Investment Advisor is also the owner of another
investment advisory firm, Navellier & Associates Inc., which presently
manages over $1.5 billion in investor funds. The owner of the Investment
Advisor is also the owner of another investment advisory firm, Navellier Fund
Management, Inc., and controls other investment advisory entities which
manage assets and/or act as sub-advisors, all of which firms employ the same
basic modern portfolio theories and select many of the same over-the-counter
stocks and other securities which the Investment Advisor intends to employ
and invest in while managing the Portfolios of the Fund. Because many of the
over-the-counter and other securities which Investment Advisor intends to, or
may, invest in have a smaller number of shares available to trade than more
conventional companies, lack of shares available at any given time may result
in the Fund not being able to purchase or sell all shares which Investment
Advisor desires to trade at a given time or period of time, thereby creating
a potential liquidity problem which could adversely affect the performance of
the Fund portfolios. Since the Investment Advisor will be trading on behalf
of the Fund in some or all of the same securities at the same time that
Navellier & Associates Inc., Navellier Fund Management, Inc., The Navellier
Performance Funds and other Navellier controlled investment entities are
trading, the potential liquidity problem could be exacerbated. In the event
the number of shares available for purchase or sale in a security or
securities is limited and therefore the trade order cannot be fully executed
at the time it is placed, i.e., where the full trade orders of Navellier &
Associates Inc., Navellier Fund Management, Inc., and other Navellier
controlled investment entities and the Fund cannot be completed at the time
the order is made, Navellier & Associates, Inc., and the other Navellier
controlled investment entities and the Investment Advisor will allocate their
purchase or sale orders in proportion to the dollar value of the order made
by the other Navellier entities, and the dollar value of the order made by
the Fund. For example, if Navellier & Associates Inc., and Navellier Fund
Management, Inc., each place a $25,000 purchase order and Investment Advisor
on behalf of the Fund places a $50,000 purchase order for the same stock and
only $50,000 worth of stock is available for purchase, the order would be
allocated $12,500 each of the stock to Navellier & Associates Inc., and
Navellier Fund Management, Inc., and $25,000 of the stock to the Fund. As
the assets of each Portfolio of the Fund increase the potential for shortages
of buyers or sellers increases, which could adversely affect the performance
of the various Portfolios. While the Investment Advisor generally does not
anticipate liquidity problems (i.e., the possibility that the Portfolio
cannot sell shares of a company and therefore the value of those shares
drops) unless the Fund has assets in excess of two billion dollars (although
liquidity problems could still occur when the Fund has assets of
substantially less than two billion dollars), each investor is being made
aware of this potential risk in liquidity and should not invest in the Fund
if he, she, or it is not willing to accept this potentially adverse risk, and
by investing, acknowledges that he, she or it is aware of the risks.
An investment in shares of the Fund involves certain speculative
considerations. There can be no assurance that any of the Fund's objectives
will be achieved or that the value of the investment will increase.
All securities in which the Fund may invest are inherently subject to
market risk, and the market value of the Fund's investments will fluctuate.
From time to time the Fund may choose to close a portfolio or portfolios to
new investors.
INVESTMENT RESTRICTIONS
- -------------------------------------------------------
The Fund may not invest 25% or more of its total assets in any one industry.
The Fund may not make investments in real estate or commodities or commodity
contracts, including futures contracts, but may purchase securities of issuers
which deal in real estate or commodities. The Fund is also prohibited from
investing in or selling puts, calls, or straddles (or any combination thereof).
The Fund may borrow money only from banks for temporary or emergency (not
leveraging) purposes (provided that, after each borrowing, there is an asset
coverage of at least 300%). In order to secure any such borrowing, the Fund may
pledge, mortgage, or hypothecate up to 10% of the market value of the assets of
the Fund. The investment by the Fund in securities, including American
Depository Receipts, of issuers incorporated or organized, or any governmental
entity or political subdivision thereof, located outside of the United States is
limited to 25% of the net asset value of the Fund, provided that no
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such foreign securities may be purchased unless they are traded in United States
securities markets.
The Fund may not purchase "restricted securities" (as defined in Rule
144(a)(3) of the Securities Act of 1933) if, as a result of such purchase, more
than 10% of the net assets (taken at market value) of the Fund would be invested
in such securities, nor will the Fund invest in illiquid or unseasoned
securities if as a result of such purchase more than 5% of the net assets of the
Fund would be invested in either illiquid or unseasoned securities.
In addition to the investment restrictions described above, the investment
program of the Fund is subject to further restrictions which are described in
the SAI. The restrictions for the Fund are fundamental and may not be changed
without shareholder approval.
INVESTING IN SECURITIES OF FOREIGN ISSUERS
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issuers. These considerations include, among others,
changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information, the
difficulty of interpreting financial information prepared under laws applicable
to foreign securities markets, the impact of political, social, or diplomatic
developments, difficulties in invoking legal process abroad, and the difficulty
of assessing economic trends in foreign countries. The Adviser will use the same
basic selection criteria for investing in foreign securities as it uses in
selecting domestic securities as described in the "Investment Objective and
Policies" section.
While to some extent the risks to the Fund of investing in foreign
securities may be limited, since the Fund may not invest more than 25% of its
net asset value in such securities and the Fund may only invest in foreign
securities which are traded in the United States securities markets, the risks
nonetheless exist.
PORTFOLIO TURNOVER
The annual rate of portfolio turnover for the Fund was 136.9% for its fiscal
year ended December 31, 1996. The Fund does not generally intend to have a
portfolio turnover rate in excess of 200% per annum, however, these anticipated
portfolio turnover rates are NOT restrictions on the Fund and if in the
Adviser's judgment a higher annual portfolio turnover rate is required in order
to attempt to achieve a higher overall performance then the Adviser is permitted
to do so. However, high portfolio turnover (100% or more) will result in
increased brokerage commissions, dealer mark-ups, and other transaction costs on
the sale of securities and on reinvestment in other securities, may result in
increased levels of capital gain distributions to shareholders and could
therefore adversely affect Fund performance and the level of taxable capital
gains received by shareholders. See "Taxes." To the extent that increased
portfolio turnover results in sales at a profit of securities held less than
three months, the Fund's ability to qualify as a "regulated investment company"
under the Internal Revenue Code may be affected. (See the SAI, "Taxes").
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SPECIAL RISK CONSIDERATIONS RELATING TO SECURITIES OF THE PORTFOLIO
For a description of certain other factors, including certain risk factors,
which investors should consider relating to the securities in which the Fund
will invest, see "Investment Objective and Policies."
PERFORMANCE
- -------------------------------------------------------
From time to time the Fund may include its performance history in
advertisements, sales literature, or reports to current or prospective
shareholders. Performance information about the Fund is based on its past
performance only and is not an indication of future performance. Performance
history may be expressed as yield or as total return of the Fund.
The "total return" of the Fund refers to the average annual compounded rate
of return over some representative period that would equate an initial payment
of $1,000 (after deduction of the maximum sales load) at the beginning of a
stated period to the ending redeemable value of the investment, after giving
effect to the reinvestment of all dividends and distributions and deductions of
expenses during the period. For more information about calculation of the
investment performance of the Fund, see the SAI. For further information about
the Fund's performance for the fiscal year ended December 31, 1996, please see
the Fund's Annual Report. A copy of the Annual Report may be obtained without
charge by contacting Navellier Management, Inc. (see back cover for address
and phone number).
MANAGEMENT OF THE FUND
- -------------------------------------------------------
THE BOARD OF TRUSTEES
The Trust's Board of Trustees directs the business and affairs of the Fund
as well as supervises the Adviser, Administrator, Distributor, Accountant,
Transfer Agent and Custodian, as described below.
THE ADVISER
The Adviser is responsible for selecting the securities which will
constitute the pool of securities which will be selected for investment.
Pursuant to a separate Administrative Services Agreement, the Adviser provides
the Fund with certain administrative services, including accounting and
bookkeeping services and supervising the Fund's compliance with its reporting
obligations. The Adviser may contract for the performance of such services to
the Custodian, Transfer Agent, or others, and may share some or all of its fee
with such other person(s). The Adviser also provides the Fund with a continuous
investment program for the Fund's portfolio, including investment research and
management with respect to all securities and investments. The Adviser will
determine from time to time what securities and other investments will be
selected to be purchased, retained, or sold by the Fund.
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The Adviser receives an annual 1.15% investment advisory fee from the Fund,
payable monthly, based upon the Fund's average daily net assets. The advisory
fee paid by the Fund is higher than that paid by most other investment
companies. The Adviser also receives a 0.25% annual fee from the Fund for the
provision of administration services.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On January 3, 1994, in order to fulfill the requirements of Section
18(a)(1) of the Investment Company Act of 1940, one hundred percent (100%) of
the issued and outstanding shares of the only existing Portfolio of the Fund
was purchased by Louis Navellier under an agreement dated May 15, 1993. Such
acquisition was made for an aggregate of $300,000 allocated 100% for the
Navellier Aggressive Small Cap Equity Portfolio (to purchase 30,000 shares).
Louis Navellier is no longer a control person of the Fund.
THE DISTRIBUTOR
Navellier Securities Corp., acts as the Fund's Distributor and is
registered as a broker-dealer under the Securities Exchange Act of 1934 and
is a member of the National Association of Securities Dealers ("NASD"). The
Distributor renders its services to the Fund pursuant to a distribution
agreement pursuant to which it serves as the principal underwriter of the
Fund's shares. The Distributor may sell certain of the Fund's shares by
direct placements. Through a network established by the Distributor, the
Fund's shares may also be sold through selected broker-dealers. (For
information regarding the Fund's expenses and the fees it pays to the
Distributor, see "Expenses of the Fund" following). Louis G. Navellier, an
affiliate of the Fund and the Investment Adviser, is an officer, director,
and sole shareholder of the Distributor.
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THE CUSTODIAN AND THE TRANSFER AGENT
Rushmore Trust and Savings, FSB, 4922 Fairmont Avenue, Bethesda, Maryland,
20814, telephone: (301) 657-1517 or (800) 621-7874, is Custodian for the Fund's
securities and cash and Transfer Agent for the Fund shares.
EXPENSES OF THE FUND
- -------------------------------------------------------
GENERAL
The Fund is responsible for the payment of its own expenses. These expenses
are deducted from investment income before dividends are paid. These expenses
include, but are not limited to: fees paid to the Adviser, the Custodian, the
Transfer Agent, and the Accountant; Trustees' fees; taxes; interest; brokerage
commissions; organization expenses; securities registration ("blue sky") fees;
legal and auditing fees; insurance; and printing and other expenses which are
not directly assumed by the Adviser under its investment advisory and
administrative services agreements with the Fund.
During the year ended December 31, 1996, the Adviser paid operating expenses
of the Fund totaling $660,374. Under an operating expense reimbursement
agreement, the Adviser requested, and the Fund reimbursed, $464,738 of such
expenses. The Adviser voluntarily agreed not to seek future reimbursement of
$195,636 of such 1996 expenses. Accordingly, at December 31, 1996, there were
no prior expenses which could be reimbursed in the future under the agreement.
Subject to termination or revision at the sole discretion of Adviser,
Adviser has agreed to bear the Fund's normal operating expenses which accrue
between July 15, 1997 and December 31, 1997 such that the Fund's "Total Fund
Operating Expenses" do not exceed 1.75% per annum of its average daily net
assets (the "Maximum Percentage"). Adviser has not agreed to bear the Fund's
extraordinary expenses.
BROKERAGE COMMISSIONS
The Adviser may use selected broker-dealers to execute portfolio
transactions for the Fund, provided that the commissions, fees, or other
remuneration received by such party in exchange for executing such transactions
are reasonable and fair compared to those paid to other brokers
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in connection with comparable transactions. The Adviser may consider sales of
shares of the Fund and of the other investment company clients of Adviser as a
factor in the selection of broker-dealers to execute the Fund's portfolio
transactions. From time to time, the Adviser may direct certain portfolio
transactions to broker-dealer firms which, in turn, have agreed to pay a portion
of the Fund's operating expenses (e.g., fees charged by the custodian of the
Fund's assets). (See the SAI).
REPORTS AND INFORMATION
- -------------------------------------------------------
The Fund will distribute to its shareholders semi-annual reports containing
unaudited financial statements and information pertaining to matters of the
Fund. An annual report containing financial statements together with the report
of the independent auditors of the Fund is distributed to shareholders each
year.
Shareholder inquiries should be addressed to the Transfer Agent, Rushmore
Trust and Savings FSB, 4922 Fairmont Avenue, Bethesda, Maryland, 20814, Tel:
(301) 657-1510 or (800) 622-1386.
DESCRIPTION OF SHARES
- -------------------------------------------------------
The Trust is a Delaware business trust organized on May 28, 1993. The
Declaration of Trust permits the Trustees to issue an unlimited number of shares
of beneficial interest. The Board of Trustees has the power to designate one or
more classes of shares of beneficial interest and to classify or reclassify any
unissued shares with respect to such classes. Presently the Trust is only
offering shares of the Fund.
The shares of the Fund, when issued, are fully paid and non-assessable, are
redeemable at the option of the holder, are fully transferable, and have no
conversion or preemptive rights. Shares are also redeemable at the option of the
Fund under certain circumstances (see "Redemption of Shares"). Each share of the
Fund is equal as to earnings, expenses, and assets of the Fund and, in the event
of liquidation of the Fund, is entitled to an equal portion of all of the Fund's
net assets. Shareholders of the Fund are entitled to one vote for each full
share held and fractional votes for fractional shares held. Voting rights are
not cumulative, so that the holders of more than 50% of the shares voting in any
election of Trustees can, if they so choose, elect all of the Trustees. While
the Fund is not required, and does not intend, to hold annual meetings of
shareholders, such meetings may be called by the Trustees at their discretion,
or upon demand by the holders of 10% or more of the outstanding shares of the
Fund for the purpose of electing or removing Trustees.
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All shares (including reinvested dividends and capital gain distributions)
are issued or redeemed in full or fractional shares rounded to the third decimal
place. No share certificates will be issued. Instead, an account will be
established for each shareholder and all shares purchased will be held in
book-entry form by the Fund.
DIVIDENDS AND DISTRIBUTIONS
- -------------------------------------------------------
All dividends and distributions with respect to the shares of the Fund will
be payable in shares at net asset value or, at the option of the shareholder, in
cash. Any shareholder who purchases shares of the Fund prior to the close of
business on the record date for a dividend or distribution will be entitled to
receive such dividend or distribution. Dividends and distributions (whether
received in shares or in cash) are treated either as ordinary income or
short-term or long-term capital gain for federal income tax purposes. Between
the record date and the cash payment date, the Fund retains the use and benefits
of such monies as would be paid as cash dividends.
The Fund will distribute all of its net investment income and net realized
capital gains, if any, annually in December. If a cash payment is requested with
respect to the Fund, a check will be mailed to the shareholder. Unless otherwise
instructed, the Transfer Agent will mail checks or confirmations to the
shareholder's address of record.
The federal income tax laws impose a four percent (4%) nondeductible excise
tax on each regulated investment company with respect to the amount, if any, by
which such company does not meet distribution requirements specified in the
federal income tax laws. The Fund intends to comply with the distribution
requirements and thus does not expect to incur the four percent (4%)
nondeductible excise tax, although the imposition of such excise tax may
possibly occur.
Shareholders will have their dividends and/or capital gain distributions
reinvested in additional shares of the Fund unless they elect in writing to
receive such distributions in cash. Shareholders whose shares are held in the
name of a broker or nominee should contact such broker or nominee to determine
whether they want dividends reinvested or distributed.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions. (See "Taxes" following).
In the case of foreign participants whose dividends are subject to U.S.
income tax withholding and in the case of any participants subject to 31%
federal backup withholding, the Transfer Agent will reinvest dividends after
deduction of the amount required to be withheld.
Experience may indicate that changes in the automatic reinvestment of
dividends are desirable. Accordingly, the Fund reserves the right to amend or
terminate this provision as applied to any dividend or distribution paid
subsequent to written notice of the change sent to shareholders at least 90 days
before the record date for such dividend or distribution.
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<PAGE>
TAXES
- -------------------------------------------------------
FEDERAL TAXES
The Fund is a separate taxpayer and intends to meet the requirements of
Subchapter M of the Internal Revenue Code of 1986 (relating to regulated
investment companies) with respect to diversification of assets, sources of
income, and distributions of taxable income and will elect to be taxed as a
regulated investment company for federal income tax purposes.
However, the Code contains a number of complex tests relating to
qualification which a fund might not meet in any particular year. For example,
if a fund derives 30% or more of its gross income from the sale of securities
held for less than three months, it may fail to qualify. If a fund did not
qualify as a regulated investment company, it would be treated for tax purposes
as an ordinary corporation and receive no tax deduction for payments made to
shareholders and all Fund distributions would be taxable to shareholders as
ordinary dividend income.
Because the Fund intends to distribute all of its net investment income and
net realized capital gains at least annually, it is not expected that the Fund
will be required to pay federal income tax for any year throughout which it was
a regulated investment company nor, for this reason, is it expected that the
Fund will be required to pay the 4% federal excise tax imposed on regulated
investment companies that fail to satisfy certain minimum distribution
requirements. However, the possibility of federal or state income tax and/or
imposition of the federal excise tax does exist.
Dividends (other than capital gains dividends) will be taxable to
shareholders as ordinary income, whether received in shares or cash and will, in
the case of corporate shareholders, generally qualify for the dividends-received
deduction to the extent paid out of qualifying dividends received by the Fund.
Capital gains dividends will ordinarily be taxable to shareholders as
long-term capital gain, regardless of how long they have held their shares. A
dividend is a capital gains dividend if it is so designated by the Fund and is
paid out of the Fund's net capital gain (that is, the excess of the Fund's net
long-term capital gain over its net short-term capital loss).
Any dividends paid shortly after a purchase by an investor may have the
effect of reducing the per share net asset value of the investor's shares by the
per share amount of dividends. Furthermore, such dividends, although in effect a
return of capital, are subject to federal income taxes. Therefore, prior to
purchasing shares of the Fund, the investor should carefully consider the impact
of dividends, including capital gains distributions, which are expected to be or
have been announced.
Upon a disposition or redemption of shares of the Fund, the shareholder will
generally recognize taxable gain or loss measured by the difference between the
redemption price and the basis of the shares. This gain or loss will generally
be treated as capital gain or loss (long-term or short-term, depending upon the
holding period for the redeemed shares).
Shortly after the end of each calendar year, each Fund shareholder will
receive a statement setting forth the federal income tax status of all dividends
and distributions for that year,
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including the portion taxable as ordinary income, the portion taxable as
long-term capital gain, the portion, if any, representing a return of capital
(which is free of current taxes but results in a basis reduction) and the
amount, if any, of federal income tax withheld. Shareholders may be subject to
backup withholding at the rate of 31% on dividends and redemption proceeds
unless (a) they are corporations or come within other exempt categories or (b)
they provide correct taxpayer identification numbers, certify as to no loss of
exemption from backup withholding, and otherwise comply with applicable
requirements of the law relating to backup withholding. Any amounts paid as
backup withholding will be creditable against the federal income tax liabilities
of the affected shareholders. The Fund intends to withhold U.S. federal income
tax at the rate of 30% on dividends and certain other payments that are subject
to such withholding and are made to persons who are neither citizens nor
residents of the U.S., regardless of whether a lower rate may be permitted under
an applicable treaty. Backup withholding will not be applied to payments that
are subject to 30% withholding.
The Fund may pay taxes to foreign countries with respect to dividends or
interest it receives from foreign issuers or from domestic issuers that derive a
substantial amount of their revenues in foreign countries, or such taxes may be
withheld at the source by such issuers. The Fund will generally be entitled to
deduct such taxes in computing its taxable income.
STATE AND LOCAL TAXES
The Fund may be subject to state or local taxation in jurisdictions in which
it may be deemed to be doing business. Taxable income of the Fund and its
shareholders for state and local purposes may be different from taxable income
calculated for federal income tax purposes.
Each prospective investor is advised to consult his or her tax adviser for
advice as to the federal, state, and local taxation which may be applicable to
such investor in connection with an investment in the Fund.
PURCHASE AND PRICING OF SHARES
- -------------------------------------------------------
PURCHASE OF SHARES
The Fund's shares are sold to the general public on a continuous basis
through the Distributor and its network of broker-dealers and Transfer Agent.
The Fund closed to new investors on April 15, 1996. Shareholders of the Fund
as of such closing date may continue to add to an account through the
reinvestment of dividends and cash distributions on any Fund shares owned, and
through the purchase of additional Fund shares. Shareholders of the Fund as of
the April 15, 1996 closing date may also open and add to additional accounts
that use the same social security number as the account existing as of April 15,
1996, such as accounts where the shareholder is the owner, a joint owner or a
custodian for a minor child. Shares of the Fund may continue to be purchased
through mutual fund wrap fee advisers and financial planners. Additionally,
Trustees of the Fund and employees and directors of the Fund's Adviser may
continue to open new Fund accounts. The Fund may resume sales to new investors
at some future date.
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<PAGE>
PURCHASE BY MAIL
Investments in the Fund can be made through selected securities dealers, who
have the responsibility to transmit orders promptly and may charge a processing
fee, or through the Transfer Agent, Rushmore Trust and Savings, FSB.
TO INVEST BY MAIL: Fill out an application and make a check payable to "The
Navellier Aggressive Small Cap Equity Portfolio." Mail the check along with
the application to:
The Navellier Aggressive Small Cap Equity Portfolio
c/o Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
Purchases by check will normally be credited to an account at the closing
net asset value next determined after receipt of payment in good order. Foreign
checks will not be accepted.
Net asset value per share is calculated once daily as of 4:00 p.m. E.S.T. on
each business day. In the event that the New York Stock Exchange or the national
securities exchanges on which stocks are traded adopt different trading hours on
either a permanent or temporary basis, the Trustees of the Trust will reconsider
the time at which net asset value is to be computed. (See "Purchase and Pricing
of Shares--Valuation of Shares").
PURCHASES THROUGH DEALERS
Shares purchased through Dealers will be effected at the net asset value
next determined after the Dealer receives the purchase order, provided that the
Dealer transmits the order to the Transfer Agent and the Transfer Agent accepts
the order by 4:00 p.m. E.S.T. The investor must settle his or her entitlement to
that day's net asset value with the Dealer.
Certain selected Dealers may effect transactions in shares of the Fund on a
"three-day settlement" basis through the National Securities Clearing
Corporation's Fund/SERV system.
Purchases of shares through Dealers not utilizing the National Securities
Clearing Corporation's Fund/SERV system will be effected when received in proper
form by the Transfer Agent, as described above, in the same manner and subject
to the same terms and conditions as are applicable to shares purchased directly
through the Transfer Agent. The sales charge applicable to the investor's
purchase (See "Pricing of Shares" below) is the same when purchased through a
Dealer as when purchased directly through the Transfer Agent.
Shareholders who wish to transfer fund shares from one broker-dealer to
another should contact the Transfer Agent at (800) 622-1386.
TO INVEST BY BANK WIRE: Request a wire transfer to:
Rushmore Federal Savings Bank
Bethesda, MD
Routing Number 0550 71084
For Account of The Navellier Series Fund
Account Number 0293 85770
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AFTER INSTRUCTING YOUR BANK TO TRANSFER MONEY BY WIRE, YOU MUST TELEPHONE
THE TRANSFER AGENT AT (800) 622-1386 OR (301) 657-1510 BETWEEN 8:30 A.M. AND
4:00 P.M. E.S.T. AND TELL US THE AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK
SENDING THE TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. IF THE
PURCHASE IS CANCELLED BECAUSE YOUR WIRE TRANSFER IS NOT RECEIVED, YOU MAY BE
LIABLE FOR ANY LOSS THE FUND MAY INCUR.
Such wire should identify the name of the Fund, the account number, the
order number (if available), and your name.
TO INVEST BY AUTOMATIC MONTHLY INVESTMENT PLAN:
Shareholders may make automatic monthly purchases of the Fund's shares by
executing an automatic monthly withdrawl application authorizing his/her/its
bank to transfer money from his/ her/its checking account to the Transfer Agent
for the automatic monthly purchase of shares of the Fund for the shareholder.
There is no charge by the Fund for this automatic monthly investment plan and
the shareholder can discontinue the service at any time.
PRICING OF SHARES
The shares of the Fund are sold at their net asset value per share next
determined after an order in proper form (completely filled out application
form and additional information or documentation) is received by the Transfer
Agent. If an order for shares of the Fund is received by the Transfer Agent
by 4:00 p.m. on any business day, such shares will be purchased at the net
asset value determined as of 4:00 p.m. on that day. Otherwise, such shares
will be purchased at the net asset value determined as of 4:00 p.m on the
next day. However, orders received by the Transfer Agent from dealers or
brokers after the net asset value is determined that day will receive such
offering price if the orders were received by the broker or dealer from its
customer prior to such determination and were transmitted to and received by
the Transfer Agent prior to its close of business on that day (normally 4:00
p.m. E.S.T.). Shares are entitled to receive any declared dividends on the
day following the date of purchase.
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<PAGE>
GENERAL PURCHASING INFORMATION
The Fund has established a minimum initial investment of $2,000 ($500 in the
case of IRA and other retirement plans or qualifying group plans) and $100 for
subsequent investments. A shareholder who wishes to place an order for shares
should contact The Navellier Series Fund at (800) 887-8671.
20
<PAGE>
VALUATION OF SHARES
The net asset value of the shares of the Fund is calculated by adding the
values of all securities and other assets of the Fund, subtracting liabilities
of the Fund, and dividing by the number of outstanding shares. It is determined
once daily as of 4:00 p.m E.S.T., on days when the New York Stock Exchange is
open for trading. In the event that the New York Stock Exchange or the national
securities exchanges on which stocks are traded adopt different trading hours on
21
<PAGE>
either a permanent or temporary basis, the Trustees of the Fund will reconsider
the time at which net asset value is to be computed. The net asset value is
determined by adding the values of all securities and other assets of the Fund,
subtracting liabilities, and dividing by the number of outstanding shares of the
Fund. The price at which a purchase is effected is based on the next calculation
of net asset value after the order is received.
In determining the value of the assets of the Fund, the securities for which
market quotations are readily available are valued at market value. Debt
securities (other than short-term obligations) are normally valued on the basis
of valuations provided by a pricing service when such prices are believed to
reflect the fair value of such securities. Use of a pricing service has been
approved by the Trustees of the Fund. All other securities and assets are valued
at their fair value as determined in good faith by the Trustees, although the
actual calculations may be made by persons acting pursuant to the direction of
the Trustees. (See "Purchase, Redemption, and Pricing of Shares--Determination
of Net Asset Value" in the SAI.)
REDEMPTION OF SHARES
- -------------------------------------------------------
GENERAL
A shareholder may redeem shares of the Fund at the net asset value next
determined after receipt of a notice of redemption in accordance with the
procedures set forth below and compliance with the further redemption
information and/or additional documentation requirements described in this
Section. As used in this Prospectus, the term "business day" refers to those
days on which stock exchanges trading small cap stocks are open for business.
The Fund may change the following procedures at its discretion.
Any shareholder who redeems shares of the Fund prior to the close of
business on the record date for a dividend or distribution will not be entitled
to receive the dividend or distribution. A check for the proceeds of redemption
will normally be mailed within seven days of receipt of any redemption request
received by the Transfer Agent. Payments in redemption of shares will be reduced
by any income tax required to be withheld. See "Taxes," above. If shares to be
redeemed were purchased by check, the Fund may delay transmittal of redemption
proceeds only until such times as it is reasonably assured that good payment has
been collected for the purchase of such shares, which may be up to 15 days from
purchase date. Such delays can be avoided by wiring Federal Funds in effecting
share purchases.
If a shareholder wishes to redeem his or her entire shareholdings in the
Fund, he or she will receive, in addition to the net asset value of shares, all
declared but unpaid dividends thereon. The net asset value of the shares may be
more or less than a shareholder's cost depending on the market value of the
portfolio securities at the time of the redemption.
22
<PAGE>
REDEMPTION BY MAIL
A shareholder may redeem shares by mail on each day that the New York Stock
Exchange is open by submitting a written redemption request to:
The Navellier Aggressive Small Cap Equity Portfolio
c/o Rushmore Trust and Savings FSB
4922 Fairmont Avenue
Bethesda, MD 20814
The request for redemption should include the name of the Fund, the account
name and number, and should be signed by all registered owners of the shares in
the exact names in which they are registered. Each request should specify the
number or dollar amount of shares to be redeemed or that all shares in the
account are to be redeemed.
OPTION TO MAKE SYSTEMATIC WITHDRAWALS
The owner of $25,000 or more worth of the shares of the Fund may provide for
the payment from his account of any requested dollar amount (but not less than
$1,000) to him or his designated payee monthly, quarterly, or annually. Shares
will be redeemed on the last business day of each month. Unless otherwise
instructed, the Transfer Agent will mail checks to the shareholder at its
address of record. A sufficient number of shares will be redeemed to make the
designated payment. This redemption option is not available with respect to
shares for which certificates are held by a shareholder.
FURTHER REDEMPTION INFORMATION
Additional documentation regarding a redemption by any means may be required
when deemed appropriate by the Transfer Agent, and the request for such
redemption will not be considered to have been received in proper form until
such additional documentation has been received. An investor should contact the
Transfer Agent to inquire what, if any, additional documentation may be
required.
The Fund reserves the right to modify any of the methods of redemption or to
charge a fee for providing these services upon 30 days' written notice to
shareholders.
Due to the high cost of maintaining accounts of less than $2,000 ($500 for
IRA or other qualifying plan accounts), the Fund reserves the right to redeem
shares involuntarily in any such account at their then current net asset value.
Shareholders will first be notified and allowed 30 days to make additional share
purchases to bring their accounts to more than $2,000 ($500 for IRA or other
qualifying plan accounts). An account will not be redeemed involuntarily if the
balance falls below $2,000 ($500 for IRA or other qualifying plan accounts) by
virtue of fluctuations in net asset value rather than through investor
redemptions.
Under certain circumstances, the right of redemption may be suspended or the
redemption may be satisfied by distribution of portfolio securities rather than
cash. Information as to those matters is set forth in the SAI.
23
<PAGE>
CERTAIN SERVICES PROVIDED TO SHAREHOLDERS
- -------------------------------------------------------
STATEMENTS OF ACCOUNT
Statements of Account for the Fund will be sent to each shareholder at least
quarterly.
DIVIDEND ELECTION
A shareholder may elect to receive dividends in shares or in cash. If no
election is made, dividends will automatically be credited to a shareholder's
account in additional shares.
ADDITIONAL INFORMATION
- -------------------------------------------------------
The SAI, available upon request, without charge from the Fund, provides a
further discussion of certain sections of the Prospectus and other information
which may be of interest to certain investors. This Prospectus and the SAI do
not contain all the information included in the Registration Statement filed
with the Securities and Exchange Commission with respect to the securities being
sold, certain portions of which have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The Registration
Statement, including the exhibits filed therewith, may be examined at the office
of the Securities and Exchange Commission in Washington, D.C.
Statements contained in this Prospectus as to the contents of any contract
or other document referred to are not necessarily complete, and, in each
instance, reference is made to the SAI and the copy of such contract or other
document filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, each such statement being qualified in all respects by
such reference.
ASSENT TO TRUST INSTRUMENT
- -------------------------------------------------------
Every shareholder, by virtue of having purchased a Share shall become a
shareholder and shall be held to have expressly assented and agreed to be bound
by the terms hereof.
24
<PAGE>
INVESTMENT ADVISER
Navellier Management, Inc.
One East Liberty Street
Third Floor
Reno, Nevada 89501
(800) 887-8671
DISTRIBUTOR
Navellier Securities Corp.
One East Liberty Street
Third Floor
Reno, Nevada 89501
(800) 887-8671
TRANSFER AGENT AND CUSTODIAN
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 622-1386
SHAREHOLDER INQUIRIES
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 622-1386
INDEPENDENT AUDITORS
Tait Weller & Baker
Certified Public Accountants
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103
LEGAL COUNSEL
Samuel Kornhauser
Law Offices of Samuel Kornhauser
155 Jackson Street, Suite 1807
San Francisco, CA 94111
(415) 981-6281
<PAGE>
THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO ("THE FUND")
STATEMENT OF ADDITIONAL INFORMATION
DATED DECEMBER 8, 1997
This Statement of Additional Information, which is not a prospectus,
should be read in conjunction with the Prospectus of The Navellier Aggressive
Small Cap Equity Portfolio, a series of The Navellier Series Fund, dated
December 8, 1997, a copy of which Prospectus may be obtained, without
charge, by contacting The Navellier Series Fund, One East Liberty Street,
Third Floor, Reno, Nevada, 89501, telephone: (800) 887-8671.
TABLE OF CONTENTS
- -------------------------------------------------------
<TABLE>
<S> <C>
General Information and History________________________________
Investment Objective and Policies______________________________
Trustees and Officers of the Fund______________________________
Officers_______________________________________________________
Control Persons and Principal Holders of Securities____________
Adviser, Distributor, Custodian and Transfer Agent_____________
Brokerage Allocation and Other Practices_______________________
Capital Stock and Other Securities_____________________________
Purchase, Redemption, and Pricing of Shares____________________
Taxes__________________________________________________________
Calculation of Performance Data________________________________
Independent Auditors and Financial Statements__________________
Appendix_______________________________________________________
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
- -------------------------------------------------------
The Trust is a business trust company (organized under the laws of the State
of Delaware on May 28, 1993). The Trust is known as The Navellier Series
Fund. The Trust's only series is known as the Navellier Aggressive Small Cap
Equity Portfolio.
INVESTMENT OBJECTIVE AND POLICIES
- -------------------------------------------------------
INVESTMENT POLICIES. The investment objective and policies of the Fund are
described in the "Investment Objective and Policies" section of the Prospectus.
The following general policies supplement the information contained in that
section of the Prospectus. Prior to being considered as a permissible investment
for the Fund, each issuer of the following instruments will first have to be
determined by the Adviser to qualify as a "Qualified Issuer" (as defined by the
Prospectus).
CERTIFICATES OF DEPOSIT. Certificates of deposit are generally short-term,
interest-bearing, negotiable certificates issued by banks or savings and loan
associates against funds deposited in the issuing institution.
TIME DEPOSITS. Time deposits are deposits in a bank or other financial
institution for a specified period of time at a fixed interest rate for which a
negotiable certificate is not received.
BANKER'S ACCEPTANCES. A banker's acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer, or storage of
goods). The borrower, as well as the bank, is liable for payment, and the bank
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
secondary markets prior to maturity.
COMMERCIAL PAPER. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at the
time of issuance not exceeding nine months.
CORPORATE DEBT SECURITIES. Corporate debt securities with a remaining
maturity of less than one year tend to become liquid and can sometimes be traded
as money market securities.
UNITED STATES GOVERNMENT OBLIGATIONS. Securities issued or guaranteed as to
principal and interest by the United States government include a variety of
Treasury securities, which differ only in their interest rates, maturities, and
times of issuance. Treasury bills have a maturity of one year or less. Treasury
notes have maturities of one to seven years, and Treasury bonds generally have a
maturity of greater than five years.
Agencies of the United States government which issue or guarantee
obligations include, among others, export-import banks of the United States,
Farmers' Home Administration, Federal Housing Administration, Government
National Mortgage Association, Maritime Administration, Small Business
Administration, the Defense Security Assistance Agency of the Department of
Defense, and the Tennessee Valley Authority. Obligations of instrumentalities of
the United States government include securities issued or guaranteed by, among
others, the Federal National Mortgage Associates, Federal Intermediate Credit
Banks, Banks for Cooperatives, and the United States Postal Service. Some of the
securities are supported by the full faith and credit of the United States
government; others are supported by the right of the issuer to
2
<PAGE>
borrow from the Treasury, while still others are supported only by the credit of
the instrumentality.
INVESTMENT RESTRICTIONS. The Fund's fundamental policies cannot be changed
without the approval of a vote of a majority of the outstanding securities of
the Fund. A proposed change in fundamental policy or investment objective will
be deemed to have been effectively acted upon with respect to the Fund if a
majority of the outstanding voting securities of the Fund votes for the matter.
Such a majority is defined as the lesser of (a) 67% or more of the voting shares
of the Fund present at a meeting of shareholders, if the holders of more than
50% of the outstanding shares are present or represented by proxy or (b) more
than 50% of the outstanding shares. For purposes of the following restrictions
and those contained in the Prospectus: (i) all percentage limitations apply
immediately after a purchase or initial investment; and (ii) any subsequent
change in any applicable percentage resulting from market fluctuations or other
changes in the amount of total assets does not require elimination of any
security from the Fund.
The following investment restrictions are fundamental policies of the Fund
(unless otherwise specified below) and may not be changed except as described
above. The Fund may not:
1. Purchase for the Fund securities of any issuer, other than obligations
issued or guaranteed as to principal and interest by the United States
government or its agencies or instrumentalities, if immediately thereafter (i)
more than 5% of the Fund's total assets (taken at market value) would be
invested in the securities of such issuer, or (ii) more than 10% of the voting
securities of any class of such issuer would be held by the Fund.
2. Concentrate the portfolio investments in any one industry. To comply with
this restriction, no security may be purchased for the Fund if such purchase
would cause the value of the aggregate investment of the Fund in any one
industry to be 25% or more of that Fund's total assets (taken at market value).
3. Purchase any securities or other property on margin, or engage in short
sales of securities (unless it owns, or by virtue of its ownership of other
securities has the right to obtain without payment of any additional
consideration securities equivalent in kind and amount to the securities sold);
PROVIDED, HOWEVER, that the Fund may obtain short-term credit as may be
necessary for the clearance of purchases and sales of securities.
4. Make cash loans, except that the Fund may purchase bonds, notes,
debentures, or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not.
5. Make securities loans, except that the Fund may make loans of the
portfolio securities, provided that the market value of the securities subject
to any such loans does not exceed 33 1/3% of the value of the total assets
(taken at market value) of the Fund.
6. Make investments in real estate or commodities or commodity contracts,
including futures contracts, although the Fund may purchase securities of
issuers which deal in real estate or commodities although this is not a primary
objective of the Fund but only if such securities are small cap equity
securities or constitute less than 35% of the Fund's total assets.
7. Invest in oil, gas, or other mineral exploration or development programs,
although the Fund may purchase securities of issuers which engage in whole or in
part of such activities, but only if such securities are small cap equity
securities or constitute less than 35% of the Fund's total assets, although the
Fund may purchase securities of issuers which engage in whole or in part of such
activities.
3
<PAGE>
8. Invest in or sell puts, calls, straddles, and any combination thereof.
9. Purchase securities of companies for the purpose of exercising management
or control.
10. Participate in a joint or joint and several trading account in
securities.
11. Purchase the securities of (i) other open-end investment companies, or
(ii) closed-end investment companies.
12. Issue senior securities or borrow money, except that the Fund may (i)
borrow money only from banks for temporary or emergency (not leveraging)
purposes, including the meeting of redemption requests, that might otherwise
require the untimely disposition of securities, provided that any such borrowing
does not exceed 10% of the value of the total assets (taken at market value),
and (ii) borrow money only from banks for investment purposes, provided that (a)
after each such borrowing, when added to any borrowing described in clause (i)
of this paragraph, there is an asset coverage of at least 300% as defined in the
Investment Company Act of 1940, and (b) is subject to an agreement by the lender
that any recourse is limited to the assets with respect to which the borrowing
has been made. The Fund may not invest in portfolio securities while the amount
of borrowing of the Fund exceeds 5% of the total assets of such Fund.
13. Pledge, mortgage, or hypothecate the assets of the Fund to an extent
greater than 10% of the total assets to secure borrowings made pursuant to the
provisions of Item 12 above.
14. Purchase for the Fund "restricted securities" (as defined in Rule
144(a)(3) of the Securities Act of 1933), if, as a result of such purchase, more
than 10% of the net assets (taken at market value) of the Fund would then be
invested in such securities nor will the Fund invest in illiquid or unseasoned
securities if as a result of such purchase more than 5% of the net assets of
such portfolio would be invested in either illiquid or unseasoned securities.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values of portfolio securities or amount of net assets shall not be
considered a violation of the restrictions, except as to the 5%, 10% and 300%
percentage restrictions on borrowing specified in Restriction Number 12 above.
PORTFOLIO TURNOVER. The portfolio turnover rate is calculated by dividing
the lesser of purchases or sales of portfolio securities during the fiscal year
by the monthly average of the value of the Fund's securities (excluding from the
computation all securities, including options, with maturities at the time of
acquisition of one year or less). A high rate of portfolio turnover generally
involves correspondingly greater expenses to the Fund, including brokerage
commission expenses, dealer mark-ups, and other transaction costs on the sale of
securities, which must be borne directly by the Fund. Turnover rates may vary
greatly from year to year as well as within a particular year and may also be
affected by cash requirements for redemptions of each Fund's shares and by
requirements which enable the Fund to receive certain favorable tax treatment.
The portfolio turnover rate for the Fund during 1996 was 136.9%. The Fund will
attempt to generally limit the annual portfolio turnover rate to 300% or less,
however this rate may be exceeded if in the Adviser's discretion securities are
or should be sold or purchased in order to attempt to increase the Fund's
performance.
4
<PAGE>
TRUSTEES AND OFFICERS OF THE FUND
- -------------------------------------------------------
The following information, as of December 8, 1997, is provided with respect
to each Trustee and officer of the Fund:
<TABLE>
<CAPTION>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS REGISTRANT AND ITS AFFILIATES DURING PAST FIVE YEARS
- ---------------- ----------------------------- ----------------------
<S> <C> <C>
Louis Navellier(1) Trustee and President of The Mr. Navellier is and has been
One East Liberty Navellier Series Fund. the CEO and President of Navellier
Third Floor Mr. Navellier is also the CEO, & Associates Inc., an investment
Reno, NV 89501 President, Secretary, and Treasurer management company since 1988;
of Navellier Management, Inc., a CEO and President of Navellier
Delaware corporation which is the Management, Inc., an investment
Investment Advisor to the Fund. management company since May 10,
Mr. Navellier is also CEO, President, 1993; CEO and President of Navellier
Secretary, and Treasurer of Navellier International Management, Inc.,
Securities Corp., the principal an investment management company,
underwriter of the Fund's shares. since May 10, 1993; CEO and President
of Navellier Securities Corp. since
May 10, 1993; CEO and President of
Navellier Fund Management, Inc., an
investment management company, since
November 30, 1995; and has been publisher
and editor of MPT Review from August 1987
to the present and was publisher and editor
of the predecessor investment advisory
newsletter OTC Insight, which he began in
1980 and wrote through July 1987.
Arnold Langsen(2) Trustee (however, Professor Langsen Professor Langsen is Professor Emeritus
The Langsen Group, Inc. is the President and a shareholder of of Financial Economics, School of
of California The Langsen Group, Inc. of California, Business, California State University
637 Silver Lake Dr. which corporation provides consulting at Hayward (1973-1992); Visiting
Danville, CA 94526 services to Navellier & Associates Professor, Financial Economics,
Inc.) University of California at Berkeley
(1984-1987).
Barry Sander Trustee Currently the President and CEO of Ursa
695 Mistletoe Rd., #2 Major Inc., a stencil manufacturing firm
Ashland, OR 97520 and has been for the past eight years.
Joel Rossman Trustee Currently President and CEO of Personal
Personal Stamp Stamp Exchange, Inc., a manufacturer,
Exchange, Inc. designer and distributor of rubber
360 Sutton Place stamp products. He has been President
Santa Rosa, CA and CEO of Personal Stamp Exchange
95407 for the past 10 years.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
Jacques Delacroix Trustee Professor of Business Administration,
University of Leavy School of Business, Santa Clara
Santa Clara University (1983-present)
Santa Clara, CA
Arjen Kuyper Treasurer
</TABLE>
- ------------------------------
(1) This person is an interested person affiliated with the Investment Advisor.
(2) This person, although technically not an interested person affiliated with
the Investment Advisor, does own a company which provides consulting services to
Navellier & Associates Inc., a company owned by Louis Navellier.
6
<PAGE>
The Trustees of the Fund who are affiliated with the Adviser receive no
salary or fee from the Fund. The Fund's disinterested Trustees are presently
not compensated pending the outcome of the shareholder vote to merge the
Fund into The Navellier Performance Funds, but said disinterested Trustees
are reimbursed for their expenses in attending Board of Trustee meetings.
The Board of Trustees is permitted by the Fund's By-Laws to appoint an
advisory committee which shall be composed of persons who do not serve the Fund
in any other capacity and which shall have no power to dictate corporate
operations or to determine the investments of the Fund. The Fund currently has
no advisory committee.
7
<PAGE>
OFFICERS
The officers of the Fund are affiliated with the Investment Advisor and
receive no salary or fee from the Fund.
The Fund does not expect, in its current fiscal year, to pay aggregate
remuneration in excess of $60,000 for services in all capacities to any
(a) Trustee, (b) officer, (c) affiliated person of the Fund (other than the
Investment Advisor), (d) affiliated person of an affiliate or principal
underwriter of the Fund, or (e) all Trustees and officers of the Fund as a
group.
- --------------------------------------------------------------------------------
REMUNERATION TABLE
- --------------------------------------------------------------------------------
Name Capacity In Which Aggregate
Remuneration Received Remuneration
From
Registrant and
Fund Complex
for the fiscal
year ended
December 31,
1996
- --------------------------------------------------------------------------------
Louis G. Navellier Trustee, President, $ 0.00
Chief Executive Officer,
and Treasurer
- --------------------------------------------------------------------------------
Donald Simon Trustee $ (1)
- --------------------------------------------------------------------------------
Alan Alpers Trustee $ 0.00
- --------------------------------------------------------------------------------
Lawrence Bianchi Trustee $ (1)
- --------------------------------------------------------------------------------
Kenneth Sletten Trustee $ (1)
- --------------------------------------------------------------------------------
(1) Includes $ annual salary and any reimbursement for out-of-pocket
expenses.
8
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- -------------------------------------------------------
The Fund does not control and is not under common control of any person. As
of February 28, 1997, National Financial Services Corp., P.O. Box 3908, Church
Street Station, NY, NY 10008 was the record owner of 7.96% of the outstanding
shares of the Fund, Charles Schwab & Company, 101 Montgomery Street, San
Francisco, CA, 94104-4122 was the record owner in two accounts of 7.62% and
10.42% of the outstanding shares of the Fund.
As of December 1, 1997, all Trustees and officers as a group owned less than
1% of the outstanding shares of the Fund.
ADVISER, DISTRIBUTOR, CUSTODIAN
AND TRANSFER AGENT
- -------------------------------------------------------
ADVISER
The management fee payable to the Adviser under the terms of the Investment
Advisory Agreement (the "Advisory Agreement") between the Adviser and the Fund
is payable monthly and is based upon a percentage of the Fund's average daily
net assets, equal to 1.15%. The Investment Adviser has the right, but not the
obligation, to waive any portion or all of its management fee, from time to
time. For the fiscal years ended December 31, 1996 and 1995 and the period ended
December 31, 1994, the Prior Adviser received management fees from the Fund of
$2,323,690, $664,744 and $56,866, respectively.
Expenses not expressly assumed by the Adviser under the Advisory Agreement
and administrative services agreement are paid by the Fund. The Advisory
Agreement lists examples of expenses paid by the Fund, the major categories of
which relate to taxes, fees to Trustees, legal, accounting, and audit expenses,
custodian and transfer agent expenses, certain printing and registration costs,
and non-recurring expenses, including litigation.
The Advisory Agreement provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund or its
investors except for losses (i) resulting from the willful misfeasance, bad
faith, or gross negligence on its part, or (ii) resulting from reckless
disregard by it of its obligations and duties under the Advisory Agreement.
Pursuant to an Administrative Services Agreement, the Adviser receives an
annual fee of 0.25% of the value of the Fund's average daily net assets and
provides or is responsible for the provision of certain administrative services
to the Fund, including, among others, the preparation and maintenance of certain
books and records required to be maintained by the Fund under the Investment
Company Act of 1940. The Administrative Services Agreement permits the
Investment Adviser to contract out for all of its duties thereunder; however, in
the event of such contracting, the Adviser remains responsible for the
performance of its obligations under the Administrative Services Agreement. The
Adviser has entered into an agreement with Rushmore Trust and Savings, FSB, to
perform, in addition to custodian and transfer agent services, some or all
administrative services.
9
<PAGE>
The Advisory Agreement permits the Adviser to act as investment adviser
for any other person, firm, or corporation, and designates the Adviser as the
owner of the name "Navellier" or any use or derivation of the word Navellier.
If the Adviser shall no longer act as investment adviser to the Fund, the
right of the Fund to use the name "Navellier" as part of its title may, solely
at the Adviser's option, be withdrawn.
The Adviser advanced the Fund's organizational expenses which have been
estimated to be $143,294, of which $18,118 remained unamortized as of
December 31, 1996. The Fund agreed to reimburse the Prior Adviser for the
organizational expenses it advances, without interest on a date or dates to
be chosen at the sole discretion of the Adviser, at any time after the Fund
has $20 million in total net assets or is breaking even or making a profit,
which ever first occurs.
DISTRIBUTOR
The Fund's Distributor is Navellier Securities Corp. ("NSC"). NSC is
registered as a broker-dealer with the Securities Exchange Commission and
National Association of Securities Dealers and the various states in which
the Fund's securities are offered for sale. The Fund's shares will be
continuously distributed by NSC pursuant to a Distribution Agreement, dated
July 14, 1997. The Distribution Agreement obligates the Distributor to pay
certain expenses in connection with the offering of the shares of the Fund.
The Distributor is responsible for the cost of printing and mailing
Prospectuses to potential investors and of any advertising incurred by it in
connection with the distribution of shares of the Fund.
For the years ended December 31, 1996 and 1995, and for the period ended
December 31, 1994, the Distributor received $924,050, $731,298 and
$162,441, respectively from sales loads earned on sales of the Fund's shares.
CUSTODIAN AND TRANSFER AGENT
Rushmore Trust and Savings, FSB, 4922 Fairmont Avenue, Bethesda, Maryland
20814, serves as the custodian of the Fund's portfolio securities and as the
Fund's transfer agent and, in those capacities, maintains certain accounting and
other records of the Fund and processes requests for the purchase or the
redemption of shares, maintains records of ownership for shareholders, and
performs certain other shareholder and administrative services on behalf of the
Fund.
BROKERAGE ALLOCATION AND OTHER PRACTICES
- -------------------------------------------------------
Specific decisions to purchase or sell securities for the Fund are made by
employees of the Adviser, who are appointed and supervised by its senior
officers. Changes in the Fund's investments are reviewed by the Board of
Trustees. The Fund's portfolio manager may serve other clients of the Adviser.
The primary consideration in placing portfolio security transactions with
broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. The Adviser attempts to achieve this result by selecting
10
<PAGE>
broker-dealers to execute portfolio transactions on behalf of the Fund and other
clients of the Adviser on the basis of their professional capability, the value
and quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities, such as government securities, which are
principally traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), the Adviser
normally seeks to deal directly with the primary market makers, unless in its
opinion, better prices are available elsewhere. In the case of securities
purchased from underwriters, the cost of such securities generally includes a
fixed underwriting commission or concession. From time to time, soliciting
dealer fees are available to the Adviser on the tender of the Fund's portfolio
securities in so-called tender or exchange offers. Such soliciting dealer fees
are in effect recaptured for the Fund by the Adviser. At present no other
recapture arrangements are in effect.
Under the Advisory Agreement and as permitted by Section 28(e) of the
Securities Exchange Act of 1934, the Adviser may cause the Fund to pay a
broker-dealer which provides brokerage and research services to the Adviser an
amount of commission for effecting a securities transaction for the Fund in
excess of the amount other broker-dealers would have charged for the transaction
if the Adviser determines in good faith that the greater commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker-dealer viewed in terms of either a particular
transaction or the Adviser's overall responsibilities to the Fund or to its
other clients. Not all of such services are useful or of value in advising the
Fund.
The term "brokerage and research services" includes advice as to the value
of securities, the advisability of purchasing or selling securities, and the
availability of purchasers or sellers of securities; furnishing analyses and
reports concerning issues, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts; and effecting securities
transactions and performing functions incidental thereto such as clearance and
settlement.
Although commissions paid on every transaction will, in the judgment of the
Adviser, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Fund and the Adviser's other clients in part for providing advice as to the
availability of purchasers or sellers of securities and services in effecting
securities transactions and performing functions incidental thereto such as
clearance and settlement.
The Adviser's investment management personnel attempt to evaluate the
quality of Research provided by brokers. Results of this effort are sometimes
used by the Adviser as a
11
<PAGE>
consideration in the selection of brokers to execute portfolio transactions.
However, the Adviser is unable to quantify the amount of commissions which will
be paid as a result of such Research because a substantial number of
transactions will be effected through brokers which provide Research but which
were selected principally because of their execution capabilities.
The management fee that the Fund pays to the Adviser will not be reduced as
a consequence of the Adviser's receipt of brokerage and research services. To
the extent the Fund's portfolio transactions are used to obtain such services,
the brokerage commissions paid by the Fund will exceed those that might
otherwise be paid, by an amount which cannot be presently determined. Such
services would be useful and of value to the Adviser in serving both the Fund
and other clients and, conversely, such services obtained by the placement of
brokerage business of other clients would be useful to the Adviser in carrying
out its obligations to the Fund. While such services are not expected to reduce
the expenses of the Adviser, the Adviser would, through use of the services,
avoid the additional expenses which would be incurred if it should attempt to
develop comparable information through its own staff.
For the Fund's fiscal year ended December 31, 1996, total brokerage
commissions of $379,000 were paid on transactions (other than U.S. Government
securities, purchased options transactions and short-term obligations) of
$539,713,521. For the Fund's fiscal year ended December 31, 1995, total
brokerage commissions of $254,000 were paid on total transactions (other than
U.S. Government securities, purchased options transactions and short-term
obligations) of $222,132,611. For the Fund's fiscal period ended December 31,
1994, total brokerage commissions of $90,000 were paid on total transactions
(other than U.S. Government securities, purchased options transactions and
short-term obligations) of $30,530,921.
In certain instances there may be securities which are suitable for the
Fund's portfolio as well as for that of one or more of the clients of the
Adviser or The Navellier Performance Funds. Investment decisions for the Fund
and for such other clients are made with a view to achieving their respective
investment objectives. It may develop that a particular security is bought or
sold for only one client even though it might be held by, or bought or sold
for, other clients. Likewise, a particular security may be bought for one or
more clients when one or more other clients are selling that same security.
Some simultaneous transactions are inevitable when several clients receive
investment advice from the same investment adviser, particularly when the
same security is suitable for the investment objectives of more than one
client. When two or more clients are simultaneously engaged in the purchase
or sale of the same security, the securities are allocated among clients in a
manner believed by the Adviser to be equitable to each. It is recognized that
in some cases this system could have a detrimental effect on the price or
volume of the security as far as the Fund is concerned. In other cases,
however, it is believed that the Fund's ability to participate in volume
transactions will produce better executions for the Fund.
CAPITAL STOCK AND OTHER SECURITIES
- -------------------------------------------------------
The rights and preferences attached to the shares of the Fund are described
in the Prospectus (see "Description of Shares"). The Investment Company Act of
1940 requires that where more than one class or series of shares exists, each
class or series must be preferred over all other classes or series in respect of
assets specifically allocated to such class or series. Rule 18f-2 under the Act
provides that any matter required to be submitted by the provisions of the
Investment Company Act or applicable state law, or otherwise, to the holders of
the
12
<PAGE>
outstanding voting securities of an investment company such as the Fund shall
not be deemed to have been effectively acted upon unless approved by the holders
of a majority of the outstanding shares of each class or series affected by such
matter. Rule 18f-2 further provides that a class or series shall be deemed to be
affected by a matter unless the interests of each class or series in the matter
are substantially identical or that the matter does not affect any interest of
such class or series. However, the Rule exempts the selection of independent
public accountants, the approval of principal distribution contracts, and the
election of Trustees from the separate voting requirements of the Rule.
PURCHASE, REDEMPTION, AND PRICING OF SHARES
- -------------------------------------------------------
Purchases of Fund shares are made at the net asset value next determined
after the Transfer Agent receives payment.
REDEMPTION OF SHARES. The Prospectus, under "Redemption of Shares"
describes the requirements and methods available for effecting redemption. The
Fund may suspend the right of redemption or delay payment more than seven days
(a) during any period when the New York Stock Exchange or any other applicable
exchange, is closed (other than a customary weekend
13
<PAGE>
and holiday closing), (b) when trading on the New York Stock Exchange, or any
other applicable exchange, is restricted, or an emergency exists as determined
by the Securities and Exchange Commission ("SEC") or the Fund so that disposal
of the Fund's investments or a fair determination of the net asset value of the
Fund is not reasonably practicable, or (c) for such other periods as the SEC by
order may permit for protection of the Fund's shareholders.
The Fund normally redeems shares for cash. However, the Board of Trustees
can determine that conditions exist making cash payments undesirable. If they
should so determine, redemption payments could be made in securities valued at
the value used in determining net asset value. There may be brokerage and other
costs incurred by the redeeming shareholder in selling such securities.
DETERMINATION OF NET ASSET VALUE. As described in the Prospectus under
"Purchase and Pricing of Shares--Valuation of Shares," the net asset value of
shares of the Fund is determined once daily as of 4:00 p.m. New York time on
each day during which the New York Stock Exchange, or other applicable exchange,
is open for trading. The New York Stock Exchange is scheduled to be closed for
trading on the following days: New Year's Day, Washington's Birthday, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. The Board of Trustees of the Exchange reserves the right to
change this schedule. In the event that the New York Stock Exchange or the
national securities exchanges on which small cap equities are traded adopt
different trading hours on either a permanent or temporary basis, the Board of
Trustees of the Fund will reconsider the time at which net asset value is to be
computed.
In determining the value of the assets of the Fund, the securities for which
market quotations are readily available are valued at market value, which is
currently determined using the last reported sale price, or, if no sales are
reported--as is the case with many securities traded over-the-counter--the last
reported bid price. Debt securities (other than short-term obligations, which
are valued on the basis of amortized cost) are normally valued on the basis of
valuations provided by a pricing service when such prices are believed to
reflect the fair value of such securities. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices and take
into account appropriate factors such as institution-size trading in similar
groups of securities, yield, quality of issue, trading characteristics, and
other market data. Use of a pricing service has been approved by the Board of
Trustees. All other securities and assets are valued at their fair value as
determined in good faith by the Board of Trustees, although the actual
calculations may be made by persons acting pursuant to the direction of the
Board of Trustees.
TAXES
- -------------------------------------------------------
The Fund has elected to be treated and intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986 as amended (the "Code"), by meeting all applicable requirements of
Subchapter M, including requirements as to the nature of the Fund's gross
income, the amount of Fund distributions, and the composition and holding period
of the Fund's portfolio assets. Because the Fund intends to distribute all of
its net investment income and net realized capital gains to shareholders in
accordance with the timing requirements imposed by the Code, it is not expected
that the Fund will be required to pay any federal income or excise taxes,
although the Fund's foreign-source income may be subject to foreign withholding
taxes. If the Fund should fail to qualify as a
14
<PAGE>
"regulated investment company" in any year, the Fund would incur a regular
corporate federal income tax upon its taxable income and Fund distributions
would generally be taxable as ordinary dividend income to shareholders.
Shareholders normally will have to pay federal income taxes, and any state
or local taxes, on the ordinary dividends and capital gain dividends they
receive from the Fund. Dividends paid out of net investment income and net
short-term capital gains of the Fund will be taxable to shareholders as ordinary
income regardless of whether such distributions are reinvested in additional
shares or paid in cash. If a portion of the Fund's net investment income is
derived from dividends from domestic corporations, a corresponding portion of
the dividends paid out of such income may be eligible for the dividends-received
deduction. Shareholders will be informed as to the portion, if any, of dividends
received by them which will qualify for the dividends-received deduction,
provided that the recipient otherwise qualifies for that deduction with respect
to its holding of Fund shares. Availability of the deduction for particular
shareholders is subject to certain limitations, and deducted amounts may be
subject to the alternative minimum tax or result in certain basis adjustments.
Dividends paid out of the net capital gain of the Fund that are designated
as capital gain dividends by the Fund will be taxable to shareholders as
long-term capital gains regardless of how long the shareholders have held their
shares. Such dividends will not be eligible for the dividends-received
deduction.
Any dividends paid shortly after a purchase by an investor may have the
effect of reducing the per share net asset value of the investor's shares by the
per share amount of the dividends. Furthermore, such dividends, although in
effect a return of capital, are subject to federal income taxes. Therefore,
prior to purchasing shares of the Fund, the investor should carefully consider
the impact of dividends, including capital gains distributions, which are
expected to be or have been announced.
The Fund's current dividend and accounting policies will affect the amount,
timing, and character of distributions to shareholders, and may, under certain
circumstances, make an economic return of capital taxable to shareholders. Any
investment in certain securities purchased at a market discount will cause the
Fund to recognize income prior to the receipt of cash payments with respect to
those securities. In order to distribute its recognized income and avoid a tax
on the Fund, the Fund may be required to liquidate portfolio securities that it
might otherwise have continued to hold, potentially resulting in additional
taxable gain or loss to the Fund. Certain positions held by the Fund that
substantially diminish its risk of loss with respect to other positions in its
portfolio may constitute "straddles," and may be subject to special tax rules
that would cause deferral of Fund losses, adjustments in the holding periods of
Fund securities, and conversion of short-term into long-term capital losses.
Special tax considerations apply with respect to foreign investments of the
Fund. Foreign exchange gains and losses realized by the Fund will generally be
treated as ordinary income and losses. Use of foreign currencies for non-hedging
purposes may be limited in order to avoid a tax on the Fund. Investment by the
Fund in certain "passive foreign investment companies" may also be limited in
order to avoid a tax on the Fund. Investment income received by the Fund from
foreign securities may be subject to foreign income taxes withheld at the
source; the Fund does not expect to be able to pass through to shareholders
foreign tax credits or deductions with respect to such foreign taxes. The United
States has entered into tax treaties with many foreign
15
<PAGE>
countries that may entitle the Fund to a reduced rate of tax or an exemption
from tax on such income; the Fund intends to qualify for treaty reduced rates
where available. It is not possible, however, to determine the Fund's effective
rate of foreign tax in advance since the amount of the Fund's assets to be
invested within various countries is not known.
Upon a disposition or redemption of shares of the Fund that are held as a
capital asset, the shareholder will generally recognize capital gain or loss
(long-term or short-term, depending upon the shareholder's holding period for
the redeemed shares) measured by the difference between the redemption price and
the basis of the shares. Any loss recognized upon the sale or exchange of shares
of the Fund within six months from the date of their purchase will be treated as
long-term capital loss to the extent of any amounts treated as dividends paid
during such period out of the net long-term capital gain of the Fund. Any loss
realized upon a disposition of shares may also be disallowed under rules
relating to wash sales. Gain may be increased (or loss reduced) upon a
redemption of shares of the Fund within 90 days after their purchase followed by
any purchase without payment of an additional sales charge (including purchases
by exchange or by reinvestment) of shares of the Fund or Class A shares of
another MFS Fund (or any other shares of an MFS Fund generally sold subject to a
sales charge).
Shortly after the end of each year, the Fund will issue to each person who
was a shareholder at any time in the prior year a statement of the federal
income tax status of all distributions made to such shareholder.
Shareholders who fail to provide correct taxpayer identification numbers or
fail to certify as to no loss of exemption from backup withholding or otherwise
fail to comply with applicable requirements of the law relating to backup
withholding will be subject to backup withholding with respect to dividends and
redemptions at the rate of 31% unless they are corporations or come within other
exempt categories. Any amounts paid as backup withholding will be creditable
against the federal income tax liabilities of the affected shareholders. All
shareholders should consult their own tax advisers with regard to the tax
consequences applicable to their respective investments in the Fund.
The foregoing discussion relates solely to United States federal income tax
laws as applicable to United States persons (that is, citizens and residents of
the United States and domestic corporations, partnerships, trusts, and estates).
Each shareholder who is not a United States person should consult his tax
adviser regarding the United States and non-United States tax consequences of
ownership of shares, including the possibility that distributions by the Fund
may be subject to a United States withholding tax at the rate of 30%.
The Fund will be subject to a nondeductible excise tax for any year equal to
4% of the "required distribution" for the year over the "distributed amount" for
the year. For this purpose, the term "required distribution" means, with respect
to any year, the sum of (a) 98% of the Fund's "ordinary income" (that is, its
taxable income determined by excluding its net capital gain, if any, by
disallowing the dividends-received and net operating loss deductions, and by not
taking into account any capital gain or loss), (b) 98% of its capital gain net
income (that is, the excess of capital gains over capital losses) for the
one-year period ending on December 31 of the year, and (c) the "prior year
shortfall" (that is, the excess, if any, of the "grossed-up required
distribution" for the prior year over the "distributed amount" for such year).
For this purpose, the term "grossed-up required distribution" means, with
respect to any year, the required distribution for the year (determined by
including 100% of the Fund's ordinary income and capital gain net income) and
the term "distributed amount" means, with respect to any year, the
16
<PAGE>
sum of (a) the amount of dividends-paid or deemed paid during the year, (b) any
amount on which the Fund is required to pay corporate tax for the year, and (c)
the excess, if any, of the distributed amount for the prior year over the
required distribution for such year.
The Fund will not be subject to income tax in Delaware for any year in which
it qualifies as a regulated investment company.
CALCULATION OF PERFORMANCE DATA
- -------------------------------------------------------
Performance information for the Fund may appear in advertisements, sales
literature, or reports to shareholders or prospective shareholders. Performance
information in advertisements and sales literature may be expressed as yield or
total return on the Fund.
Quotations of yield for the Fund will be based on all investment income per
share earned during a particular 30-day period (including dividends and
interest), less expenses accrued during the period ("net investment income"),
and are computed by dividing net investment income by the value of the Fund on
the last day of the period, according to the following formula:
<TABLE>
<C> <C> <S>
YIELD = 2[[a-b+1]/6/-1]
---
cd
where a = dividends and interest earned, as calculated in accordance
with the SEC's instructions, during the period by the Fund
b = expenses accrued for the period (net of any reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period
</TABLE>
The average annual total return on the Fund represents an annualization of
the Fund's total return ("T" in the formula below) over a particular period and
is computed by finding the current percentage rate which will result in the
ending redeemable value ("ERV" in the formula below) of a $1,000 payment ("P"
in the formula below) made at the beginning of a one-, five-, or ten-year
period, or for the period from the date of commencement of the Fund's operation,
if shorter ("n" in the formula below). The following formula will be used to
compute the average annual total return for the Fund:
P (1 + T)/n/ = ERV
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year, or other
types of total return figures.
The manner in which total return will be calculated for public use is
described above. The average annual total return for the Fund for the fiscal
year ended December 31, 1996, and for the period from commencement of
operations on January 3, 1994 to December 31, 1996 was 11.96% and 33.03%,
respectively, including the effect of the sales charge and 15.44% and 35.01%,
respectively, without the effect of the sales charge. A sales charge is no
longer imposed on the purchase of Fund shares. The average annual total
return for the Fund would have been lower had an expense limitation not been
in effect.
Performance information for the Fund shall reflect only the performance of a
hypothetical investment during the particular time period on which the
calculations are based. Performance
17
<PAGE>
information should be considered in light of the investment objective and
policies, characteristics and quality of the Fund, and the market conditions
during the given time period, and should not be considered as a representation
of what may be achieved in the future.
As summarized in the Prospectus under the heading "Performance and Yield,"
the total return of the Fund may be quoted in advertisements and sales
literature.
From time to time the Fund may, as appropriate, quote Fund rankings or
reprint all or a portion of evaluations of fund performance and operations
appearing in various independent publications, including but not limited to the
following: Money, Fortune, U.S. News and World Report, Kiplinger's Personal
Finance, The Wall Street Journal, Barron's, Investors Business Daily, Newsweek,
Financial World, Financial Planning, Investment Advisor, USA Today, Pensions and
Investments, SmartMoney, Forbes, Global Finance, Registered Representative,
Institutional Investor, the Investment Company Institute, Johnson's Charts,
Morningstar, Lipper Analytical Services, Inc., CDA Wiesenberger, Shearson Lehman
and Saloman Bros. Indices, Ibbotson, Business Week, Lowry Associates, Media
General, Investment Company Data, The New York Times, Your Money, Strangers
Investment Advisor, Financial Planning on Wall Street, Standard and Poor's,
Individual Investor, THE 100 BEST MUTUAL FUNDS YOU CAN BUY by Gordon K.
Williamson, Consumer Price Index, and Sanford C. Bernstein & Co. Fund
performance may also be compared to the performance of other mutual funds
tracked by financial or business publications or periodicals. The Fund may also
quote evaluations mentioned in independent radio or television broadcasts and
may use charts and graphs to illustrate the past performance of various indices
such as those mentioned above and illustrations using hypothetical rates of
return to illustrate the effects of compounding and tax-deferral. The Fund may
advertise examples of the effects of periodic investment plans, including the
principle of dollar cost averaging. In such a program, an investor invests a
fixed dollar amount in a fund at periodic intervals, thereby purchasing fewer
shares when prices are high and more shares when prices are low. While such a
strategy does not assure a profit or guard against a loss in a declining market,
the investor's average cost per share can be lower than if fixed numbers of
shares are purchased at the same intervals.
From time to time, the Fund may discuss or quote its current portfolio
manager as well as other investment personnel, including such persons' views on:
the economy; securities markets; portfolio securities and their issuers;
investment philosophies, strategies, techniques and criteria used in the
selection of securities to be purchased or sold for the Fund; the Fund's
portfolio holdings; the investment research and analysis process; the
formulation and evaluation of investment recommendations; and the assessment and
evaluation of credit, interest rate, market and economic risks and similar or
related matters.
From time to time the Fund may also discuss or quote the views of its
distributor, its investment adviser and other financial planning, legal, tax,
accounting, insurance, estate planning and other professionals, or from surveys,
regarding individual and family financial planning.
18
<PAGE>
INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
- -------------------------------------------------------
Tait, Weller & Baker, Certified Public Accountants are as of August 14,
1997, the Fund's independent auditors, providing audit services and assistance
and consulation with respect to the preparation of filings with the SEC.
Prior to July 1997 Deloitte & Touche LLP were the Fund's independent auditors.
The Portfolio of Investments at December 31, 1996, the Statement of Assets
and Liabilities at December 31, 1996, the Statement of Operations for the year
ended December 31, 1996, the Statement of Changes in Net Assets for each of the
two years in the period ended December 31, 1996, the Notes to Financial
Statements and the Independent Auditors' Report, each of which is included in
the Annual Report to shareholders of the Fund, are incorporated by reference
into this SAI and have been so incorporated in reliance upon the report of
Deloitte & Touche LLP, independent auditors, given upon their authority as
experts in accounting and auditing. A copy of the Annual Report accompanies this
SAI.
19
<PAGE>
APPENDIX
- -------------------------------------------------------
A-1 AND P-1 COMMERCIAL PAPER RATINGS
The Fund will invest only in commercial paper which, at the date of
investment, is rated A-1 by Standard & Poor's Corporation ("S&P") or P-1 by
Moody's Investors Services, Inc. ("Moody's"), or, if not rated, is issued or
guaranteed by companies which at the date of investment have an outstanding debt
issue rated AA or higher by Standard & Poor's or Aa or higher by Moody's.
Commercial paper rated A-1 by S&P has the following characteristics: (1)
liquidity ratios are adequate to meet cash requirements; (2) long-term senior
debt is rated "A" or better; (3) the issuer has access to at least two
additional channels of borrowing; (4) basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; (5) typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and (6) the reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
(1) evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationship which exists with
the issuer; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and preparations
to meet such obligations.
20
<PAGE>
ANNUAL REPORT, December 31,1996
NAVELLIER SERIES FUND
1 East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
- --------------------------------------------------------------------------------
February 1997
Dear Shareholder:
For the year 1996, the Navellier Aggressive Small Cap Equity Portfolio ("the
Fund") returned the 15.44% (11.98% after the maximum load). This compares
favorably to 14.76% for the Russell 2000*, 14.51% for the Lipper Small
Company Index** and not so favorably to the Nasdaq Composite*** which
returned 22.71% over the same period. The Fund's annualized return since
public offering (April 1,1994) is 26.21% (24.81% after the maximum load). The
annualized returns for the Russell 2000 and the Nasdaq Composite over the
same period were 14.30% and 22.22%, respectively. During the first six months
of 1996, the Navellier Aggressive Small Cap Equity Portfolio gained 27.64%
(23.79% after the maximum load), compared to a 12.63% gain for the Nasdaq
Composite and a 9.70% gain for the Russell 2000. During the second half of
1996 the Fund lost 9.56% (12.27% after the maximum load), compared to a 8.95%
positive return for the Nasdaq Composite and a 4.61% positive return for the
Russell 2000.
Navellier Aggressive Small Cap Equity Portfolio
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHICS
<TABLE>
<CAPTION>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
DATE Small Cap Portfolio NASDAQ Composite Russell 2000
<S> <C> <C> <C>
3/31/1994 $10,000 $10,000 $10,000
4/30/1994 $9,889 $9,871 $10,059
5/31/1994 $9,667 $9,889 $9,929
6/30/1994 $9,213 $9,496 $9,571
7/31/1994 $9,384 $9,714 $9,721
8/31/1994 $9,768 $10,298 $10,249
9/30/1994 $10,030 $10,280 $10,202
10/31/1994 $10,494 $10,458 $10,158
11/30/1994 $10,555 $10,092 $9,729
12/31/1994 $10,616 $10,114 $9,972
1/31/1995 $10,484 $10,158 $9,832
2/28/1995 $10,989 $10,676 $10,219
3/31/1995 $11,372 $10,992 $10,387
4/30/1995 $11,726 $11,352 $10,602
</TABLE>
The above chart indicates the return of $10,000 invested in the Navellier
Aggressive Small Cap Equity Portfolio on April 1, 1994. As the chart shows
December 31, 1996, the value of the investment would have grown to $18,393, a
83.93% increase. For comparison purposes, look at how the NASDAQ Composite
and the Russell 2000 performed over the same period. An investment of $10,000
in the NASDAQ Composite in the same period would have grown to $17,365, a
73.65% increase. Similarly an investment of $10,000 in the Russell 2000 over
the same period would have grown to $14,443, a 44.43% increase.
The above 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.
<PAGE>
The Fund generally lagged behind the overall stock market during the last six
months of 1996 since primarily large capitalization stocks performed well
during the second half of 1996. One of the startling statistics for 1996 was
highlighted in an article in the January 13, 1997 issue of Fortune, which
stated that the Nasdaq Composite, excluding the 100 largest stocks, was
actually up less than 3% in 1996. In other words, 1996 was predominantly a
large capitalization stock market rally, especially in the second half of the
year. Virtually none of the largest 100 Nasdaq stocks were in the Navellier
Aggressive Small Cap Equity Portfolio. Considering that the Nasdaq Composite
was up less than 3% in 1996 when the 100 largest stocks are excluded, we are
quite satisfied that the Fund had positive results in 1996.
The historical valuation of the stocks in the Navellier Aggressive Small Cap
Equity Portfolio remain very cheap relative to the Dow Industrials and S&P
500. Wave after wave of money flowing into index funds has benefited the S&P
500 and moved it into the high range of its historical price/earnings ratio.
At over 21 times current earnings, the S&P 500 is very expensive, especially
since the most optimistic analysts call for only 14% to 15% earnings growth
in fiscal 1997. The median P/E for stocks in the Navellier Aggressive Small
Cap Equity Portfolio is 17.5 and they literally have much more earnings
growth that the S&P 500. Looking forward, the average stock in the Fund
should continue to have far greater earnings growth than the S&P 500 despite
similar price/earnings ratios. When the current mania fueling index funds
settles down and Wall Street starts rotating into stocks that represent
outstanding fundamental values, my favorite stocks in the Fund should benefit
tremendously. In my opinion, we are now on the verge of a "stock picking"
environment, where predominantly stocks with outstanding fundamental
characteristics, such as those in the Navellier Aggressive Small Cap Equity
Portfolio, will benefit.
On the large scale, economists are having a hard time predicting growth
because increasing productivity is hard to account for in their economic
models. Most economists are predicting 2% to 3% economic growth in 1997,
which would be a slowdown from the more than 4% growth experienced in the
second half of 1996. However, these economists are not factoring in
continuing productivity gains that have bolstered the U.S. economy, resulting
in exceptionally high growth without inflation. The implicit price deflator
is an inflation indicator without volatile food and energy prices. It is most
reliable indicator of inflation and is now at its lowest point in decades.
The recent 0.3% drop in wholesale prices in January is further evidence that
inflation is now deader than dead. The bond market has celebrated this
positive inflation news and as of this writing, Treasury Bond yields are near
the 6.5% level. The low inflation and low interest rate environment sets a
very positive tone for the stock market for the next several months.
Long-term, the Navellier Aggressive Small Cap Equity Portfolio continues to
perform quite well relative to other small capitalization growth funds. We
are eagerly awaiting our three year Lipper and Morningstar Ratings and are
confident that we will receive an outstanding long-term rating. To ensure our
high performance standard, the Fund was closed to new investors on April 16,
1996. Existing shareholders and fee-based financial advisors can continue to
purchase additional shares in the Fund. Existing shareholders will be
receiving a proxy to convert the Navellier Aggressive Small Cap Equity
Portfolio to a pure no-load fund. This conversion will allow us to cut
management fees and save operating expenses. After conversion, existing
shareholders will be able to purchase new shares with no load charged. We
would appreciate it if you could mail back your proxy votes as soon as
possible.
2
<PAGE>
I want to personally thank all shareholders in the Navellier Aggressive Small
Cap Equity Portfolio for selecting us to manage some of your assets. We feel
very obligated to our shareholders and have already closed the Fund to ensure
our high performance standard. Always feel free to contact us if you have any
questions or we can help you in any way.
Sincerely,
/s/ Louis G. Navellier
LOUIS G. NAVELLIER
This material has been preceded by a Navellier Aggressive Small Cap Equity
Portfolio prospectus.
* The Russell 2000 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 purchase.
** The Lipper Small Company Index is an unmanaged net asset value weighted
index of 30 mutual funds that invest primarily in companies with small
market capitalizations.
*** The Nasdaq Composite is an unmanaged index consisting of approximately
5,500 stocks. It is considered representative of the stock market as a
whole. It is not an investment product available for purchase.
3
<PAGE>
December 31, 1996 Navellier Aggressive Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- -----------------------------------------------------------------
Market Value
Shares (Note 1)
- -----------------------------------------------------------------
COMMON STOCKS
Aerospace and Defense -- 0.66%
40,000 Oregon Metallurgical Corp.* $ 1,290,000
------------
Airlines -- 1.33%
174,200 Mesaba Holdings, Inc.* 2,591,225
------------
Aluminum/Metals -- 1.62%
50,000 RMI Titanium Co.* 1,406,250
50,100 Reliance Steel and
Aluminum Co. 1,753,500
------------
3,159,750
------------
Banks - 1.68%
40,000 Andover Bancorp, Inc. 1,025,000
50,000 City National Corp. 1,081,250
40,000 RCSB Financial, Inc. 1,160,000
------------
3,266,250
------------
Basic Materials -- 0.76%
40,000 Lone Star Industries, Inc. 1,475,000
------------
Computer Hardware -- 4.92%
50,000 Centennial Technologies,
Inc.* 2,600,000
35,000 ENCAD, Inc.* 1,443,750
200,000 Iomega Corp.* 3,475,000
75,000 Tech Data Corp.* 2,053,125
------------
9,571,875
------------
Computer Software -- 8.14%
35,500 Acceler8 Tech Corp.* 694,469
140,000 Brooktrout Technology, Inc.* 3,920,000
50,000 Legato Systems, Inc.* 1,631,250
101,000 Rational Software Corp.* 3,995,813
47,000 Remedy Corp.* 2,526,250
65,000 Viasoft, Inc.* 3,071,250
------------
15,839,032
------------
Diversified Technology -- 5.24%
60,000 Dyantech Corp.* 2,655,000
70,000 Engineered Support
Systems, Inc. 1,032,500
42,000 Lindsay Manufacturing Co. 1,963,500
125,200 Zoltek Companies, Inc.* 4,554,150
------------
10,205,150
------------
Education -- 3.42%
159,525 Apollo Group, Inc.* 5,334,117
100,000 Childrens Comprehensive
Services* 1,312,500
------------
6,646,617
------------
Electronics -- 1.73%
37,800 Kuhlman Corp. 732,375
248,000 Zytec* 2,635,000
------------
3,367,375
------------
Energy -- 0.55%
40,000 Holly Corp. 1,070,000
------------
Food -- 1.74%
70,000 Fresh America Corp.* 1,155,000
70,000 Riser Foods, Inc. 2,222,500
------------
3,377,500
------------
Healthcare -- 0.76%
50,000 SONUS Pharmaceuticals,
Inc.* 1,487,500
------------
Heavy Machinery/Construction -- 1.07%
60,800 Gardner Denver Machinery* 2,082,400
------------
Home Furnishings -- 1.45%
30,000 Ethan Allen Interiors, Inc. 1,155,000
58,900 Stanley Furniture Company,
Inc. * 1,170,637
50,000 Winsloew Furniture, Inc.* 487,500
------------
2,813,137
------------
Home Construction -- 0.58%
40,000 Palm Harbor Homes, Inc.* 1,120,000
------------
Insurance -- 0.63%
20,000 Orion Capital Corp. 1,222,500
------------
Industrial and Commercial
Services -- 3.61%
44,200 Amerco, Inc.* 1,547,000
40,000 DT Industries, Inc. 1,400,000
75,000 Mail Well, Inc.* 1,228,125
122,000 Shaw Group, Inc.* 2,851,750
------------
7,026,875
------------
* Non-income producing.
See Notes to Financial Statements.
4
<PAGE>
December 31, 1996 Navellier Aggressive Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
- -----------------------------------------------------------------
Market Value
Shares (Note 1)
- -----------------------------------------------------------------
Manufactured Housing -- 1.46%
100,000 Coachmen Industries, Inc. $ 2,837,500
------------
Natural Gas -- 1.16%
100,000 NUI Corp. 2,262,500
------------
Nonclassifiable Establishment -- 1.17%
65,000 Oppenheimer Capital LP 2,275,000
------------
Oil -- 4.10%
84,400 Cliffs Drilling Co.* 5,338,300
100,000 Comstock Resources, Inc.* 1,300,000
45,200 Swift Energy Co.* 1,350,350
------------
7,988,650
------------
Oil & Gas Exploration -- 7.64%
50,000 American Oilfield Divers,
Inc.* 593,750
20,000 Cooper Cameron Corp.* 1,530,000
30,000 Flores & Rucks, Inc.* 1,597,500
135,000 Marine Drilling Companies,
Inc.* 2,657,812
100,000 Plains Resources, Inc.* 1,562,500
110,000 Seacor Holdings, Inc.* 6,930,000
------------
14,871,562
------------
Pharmaceuticals -- 7.23%
50,400 Cardinal Health, Inc. 2,935,800
100,000 Herbalife International, Inc. 3,262,500
124,875 Jones Medical Industries, Inc. 4,573,547
75,000 Medicis Pharmaceutical
Corp.* 3,300,000
------------
14,071,847
------------
Real Estate -- 0.86%
68,000 Fairfield Communities, Inc.* 1,683,000
------------
Retailers -- 13.24%
100,000 American Eagle Outfitters,
Inc.* 787,500
292,500 Claires Stores, Inc. 3,802,500
140,000 Eagle Hardware and Garden,
Inc.* 2,905,000
100,000 Equity Marketing, Inc.* 1,850,000
100,000 Finish Line, Inc.* 2,112,500
100,000 Funco, Inc.* 837,500
60,000 Pacific Sunwear of California* 1,545,000
164,500 Paul Harris Stores, Inc.* 2,919,875
93,000 Ross Stores, Inc. 4,650,000
104,000 Wet Seal, Inc.* 2,223,000
100,000 Tuesday Morning Corp.* 2,137,500
------------
25,770,375
------------
Savings and Loans -- 3.37%
312,000 Imperial Credit Industries,
Inc.* 6,552,000
------------
Semiconductors and Related -- 1.56%
100,000 Chips and Technologies, Inc.* 1,825,000
25,000 Radisys Corp.* 1,218,750
------------
3,043,750
------------
Steel -- 1.12%
85,900 Olympic Steel, Inc.* 2,179,713
------------
Technical Services -- 0.52%
27,400 SBS Technologies, Inc.* 1,013,800
------------
Telecommunications -- 4.20%
120,600 ATC Communications, Inc.* 1,597,950
216,000 Pairgain Technologies, Inc.* 6,574,500
------------
8,172,450
------------
Temporary Staffing - 4.56%
152,500 AccuStaff, Inc.* 3,221,562
276,000 Employee Solutions, Inc. 5,658,000
------------
8,879,562
------------
Vehicle Parts and Equipment - 0.57%
44,500 Arvin Industries, Inc. 1,101,375
------------
Vitamins/Health Foods -- 1.40%
100,000 Rexall Sundown, Inc.* 2,718,750
------------
Total Common Stocks -- 94.05%
(Cost $146,155,936) 183,034,020
------------
* Non-income producing.
See Notes to Financial Statements.
5
<PAGE>
December 31, 1996 Navellier Aggressive Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued)
- -----------------------------------------------------------------
Market Value
Shares (Note 1)
- -----------------------------------------------------------------
REPURCHASE AGREEMENTS -- 5.95%
With PaineWebber at 6.00%, dated
12/31/96, due 1/2/97, collateralized by
U.S. Treasury Bills, due 5/1/97 (Cost
$11,578,000) 11,578,000
------------
Total Investments -- 100.00%
(Cost $157,733,936) $194,612,020
============
See Notes to Financial Statements.
6
<PAGE>
December 31, 1996 Navellier Aggressive Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
Assets
Securities at Value (Note 1, see portfolio for cost
information) .............................................. $194,612,020
Cash in Custodian Bank ...................................... 18,324
Receivable for Securities Sold .............................. 748,475
Receivable for Shares Sold .................................. 157,806
Dividends Receivable ........................................ 26,370
Interest Receivable ......................................... 1,930
Unamortized Organizational Costs (Note 1) ................... 18,118
-----------
Total Assets .............................................. 195,583,043
-----------
Liabilities
Payable for Securities Purchased ............................ 4,444,194
Payable for Shares Redeemed ................................. 738,267
Investment Advisory Fee Payable (Note 2) .................... 204,806
Other Payables and Accrued Expenses ......................... 82,115
Administrative Fee Payable (Note 2) ......................... 40,961
Commissions Payable ......................................... 20,069
Organizational Expenses Payable to Adviser (Note 1) ......... 18,118
-----------
Total Liabilities ......................................... 5,548,530
-----------
Net Assets .................................................... $190,034,513
============
Shares Outstanding ............................................ 10,683,004
============
Net Asset Value Per Share ..................................... $17.79
======
Maximum Offering Price Per Share (100/97.00 of $17.79) ........ $18.34
======
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
7
<PAGE>
For the Year Ended
December 31, 1996 Navellier Aggressive Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Investment Income
Interest (Note 1) ........................................... $ 603,796
Dividends (Note 1) .......................................... 171,544
------------
Total Investment Income .................................. 775,340
------------
Expenses
Investment Advisory Fee (Note 2) ............................ 2,323,690
Administrative Fee (Note 2) ................................. 464,738
Transfer Agent and Custodian Fee (Note 3) ................... 330,390
Registration Fees ........................................... 108,309
Shareholder Reports and Notices ............................. 62,983
Legal Fees .................................................. 60,915
Trustees' Fees and Expenses (Note 2) ........................ 51,381
Audit Fees .................................................. 19,600
Organizational Expense (Note 1) ............................. 8,053
Other Expenses .............................................. 18,743
------------
Total Expenses ........................................... 3,448,802
Less Expenses Reimbursed by Investment Adviser (Note 2) .. (195,636)
------------
Net Expenses ........................................... 3,253,166
------------
Net Investment Loss ............................................ (2,477,826)
------------
Net Realized Gain on Investment Transactions ................... 463,797
Net Change in Unrealized Appreciation of Investments ........... 18,466,247
------------
Net Gain on Investments ........................................ 18,930,044
------------
Net Increase in Net Assets Resulting from Operations ........... $ 16,452,218
============
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8
<PAGE>
Navellier Aggressive Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
For the Year Ended
December 31,
-----------------------------
1996 1995
------------- -------------
<S> <C> <C>
From Investment Activities
Net Investment Loss ........................................... $ (2,477,826) $ (610,524)
Net Realized Gain on Investment Transactions .................. 463,797 1,524,157
Net Change in Unrealized Appreciation of Investments .......... 18,466,247 15,989,475
------------- -------------
Net Increase in Net Assets Resulting from Operations ....... 16,452,218 16,903,108
------------- -------------
Distributions to Shareholders
From Net Investment Income .................................... -- --
From Net Realized Capital Gains ............................... -- (2,499,314)
------------- -------------
Total Distributions to Shareholders ........................ -- (2,499,314)
------------- -------------
From Share Transactions
Net Proceeds from Sales of Shares ............................. 286,125,562 130,265,618
Reinvestment of Distributions ................................. -- 2,355,336
Cost of Shares Redeemed ....................................... (217,842,421) (59,949,289)
------------- -------------
Net Increase in Net Assets Resulting from
Share Transactions ........................................ 68,283,141 72,671,665
------------- -------------
Total Increase in Net Assets ............................... 84,735,359 87,075,459
Net Assets -- Beginning of Year .................................. 105,299,154 18,223,695
------------- -------------
Net Assets -- End of Year ........................................ $ 190,034,513 $ 105,299,154
============= =============
Shares
Sold .......................................................... 16,325,181 9,128,613
Issued in Reinvestment of Distributions ....................... -- 152,845
Redeemed ...................................................... (12,473,362) (4,110,315)
------------- -------------
Net Increase in Shares ..................................... 3,851,819 5,171,143
============= =============
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
9
<PAGE>
Navellier Aggressive Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For The Year Ended For The
December 31, Period Ended
---------------------- December 31,
1996 1995 1994*
--------- --------- ---------
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year ............. $ 15.41 $ 10.98 $ 10.00
--------- --------- ---------
Income from Investment Operations:
Net Investment Loss ........................... (0.23) (0.16) (0.08)
Net Realized and Unrealized Gains on Securities 2.61 4.97 0.98
--------- --------- ---------
Total from Investment Operations ............ 2.38 4.81 0.98
--------- --------- ---------
Distributions to Shareholders:
From Net Investment Income .................... -- -- --
From Net Realized Capital Gains ............... -- (0.38) --
--------- --------- ---------
Total Distributions to Shareholders ......... -- (0.38) --
--------- --------- ---------
Net Increase in Net Asset Value ................. 2.38 4.43 0.98
--------- --------- ---------
Net Asset Value - End of Year ................... $ 17.79 $ 15.41 $ 10.98
========= ========= =========
Total Investment Return(A) ...................... 15.44% 43.80% 9.80%
Ratios to Average Net Assets:
Expenses After Reimbursement (Note 2) ........... 1.75% 1.75% 1.68%(B)
Expenses Before Reimbursement (Note 2) .......... 1.86% 2.10% 4.52%(B)
Net Investment Loss ............................. (1.33)% (1.15)% (0.81)%(B)
Supplementary Data:
Portfolio Turnover Rate ......................... 136.9% 169.6% 139.9%
Net Assets at End of Year (000's omitted) ....... $ 190,035 $ 105,299 $ 18,224
Number of Shares Outstanding at
End of Year (000's omitted) ................... 10,683 6,831 1,660
Average Commission Rate Paid(C) ................. $0.0424
</TABLE>
- ----------
(A) Total returns do not include the maximum sales load. Total returns for
periods of less than one year are not annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for security
trades on which commissions are charged. This amount may vary from period
to period and fund to fund depending on the mix of trades executed in
various markets where trading practices and commission rate structures may
differ.
*From Commencement of Operations January 3, 1994.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10
<PAGE>
December 31, 1996 Navellier Aggressive Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Navellier Series Fund (the "Fund") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a diversified,
open-end investment company. The Fund consists of one portfolio, Navellier
Aggressive Small Cap Equity Portfolio (the "Portfolio"). Shares of the Fund are
purchased at the public offering price which includes a maximum sales charge of
up to 3.00% depending on the size of the purchase. The Fund is authorized to
issue an unlimited number of shares of capital stock with no stated par value.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain estimates
and assumptions at the date of the financial statements. The following is a
summary of significant accounting policies which the Fund follows:
(a) Listed securities are valued at the last sales price of the New
York Stock Exchange and other major exchanges. Over-the-Counter securities
are valued at the last sales price. If market quotations are not readily
available, the Board of Trustees will value the Portfolio's securities in
good faith. The Board of Trustees will periodically review this method of
valuation and recommend changes which may be necessary to assure that the
Portfolio's instruments are valued at fair value.
(b) Security transactions are recorded on the trade date (the date
the order to buy or sell is executed). Interest income is accrued on a
daily basis. Dividend income is recorded on the ex-dividend date. Realized
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 reinvested in additional shares unless shareholders
request payment in cash. Net capital gains, if any, are distributed
annually.
(d) The Fund complies with the provisions of the Internal Revenue Code
applicable to regulated investment companies and distributes all net
investment income to its shareholders. Therefore, no Federal income tax
provision is required.
(e) Organizational expenses of the Fund totaling $143,294 are being
deferred and amortized over 60 months beginning with the public offering of
shares. Any redemption by an initial investor during the amortization
period will be reduced by a prorata portion of any of the unamortized
organization expenses. Such proration is calculated by dividing the number
of initial shares redeemed by the number of initial shares outstanding at
the date of redemption. At December 31,1996, unamortized organization costs
were $18,118.
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 1.25% of the daily net assets for the Navellier Aggressive Small
Cap Equity Portfolio. The Adviser also receives a 0.25% annual fee 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 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. At December 31, 1995, the Adviser
voluntarily agreed not to seek future reimbursement of all unreimbursed past
expenses incurred on behalf of the Fund. During the year ended December 31,
1996, the Adviser paid operating expenses of the Fund totaling $660,374. Under
the operating expense agreement, the Adviser requested, and the Fund reimbursed,
$464,738 of such expenses. The Adviser voluntarily agreed not to seek future
reimbursement of $195,636 of such 1996 expenses. Accordingly, at December
31,1996, there were no prior expenses which could be reimbursed in the future
under the agreement.
11
<PAGE>
December 31, 1996 Navellier Aggressive Small Cap Equity Portfolio
- --------------------------------------------------------------------------------
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
Funds shares, renders its services to the Fund pursuant to a distribution
agreement. An officer and trustee of the Fund is also an officer and director of
the Distributor.
For the Year ended December 31, 1996, the Fund was advised that the
Distributor received $924,050 from sales loads earned on sales of the Fund's
capital stock.
The Fund pays each of its Trustees not affiliated with the Adviser a fee of
$10,000 annually plus specific amounts for attended board and committee
meetings. When the Fund exceeds $200,000,000 in total net assets, then the
Trustees' fee is raised to $20,000 annually. For the year ended December 31,1996
Trustees' fees and expenses totaled $51,381.
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.
4. SECURITIES TRANSACTIONS
For the year ended December 31,1996, purchases of securities were
$302,971,553 and sales of securities were $ 236,741,968. These totals exclude
short-term securities.
5. NET UNREALIZED APPRECIATION/DEPRECIATION OF INVESTMENTS
As of December 31, 1996, net appreciation of investments for Federal income
tax purposes was $36,878,084 of which $44,036,260 related to appreciated
investments and $7,158,176 related to depreciated investments. At December 31,
1996, the cost of the Fund's securities for Federal income tax purposes was
$157,733,936.
6. NET ASSETS
At December 31, 1996, net assets consisted of the following:
Paid-in-Capital ...................................... $ 155,066,631
Undistributed Net Investment Income .................. --
Accumulated Net Realized Loss on Investments ......... (1,910,202)
Net Unrealized Appreciation on Investments ........... 36,878,084
-------------
NET ASSETS ........................................... $ 190,034,513
=============
7. FEDERAL INCOME TAX
No provision is made for federal income taxes as it is the Fund's intention to
continue to qualify as a regulated investment company and to make requisite
distributions to the shareholders which will be sufficient to relieve it from
all or substantially all Federal income and excise taxes.
Permanent differences between tax and financial reporting of net investment
income and realized gains/(losses) are reclassified to paid-in-capital. As of
December 31, 1996, net investment losses of $2,477,826 were reclassified to
paid-in-capital.
At December 31, 1996, for Federal income tax purposes, the Fund had capital loss
carryovers which may be applied against future net taxable realized gains of
each succeeding year until the earlier of its utilization or its expiration as
follows:
Expires December 31,
2004 ................................................... $ 1,910,202
=============
12
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
of the Navellier Series Fund:
We have audited the Statement of assets and liabilities of the Navellier
Aggressive Small Cap Equity Portfolio of the Navellier Series Fund (the Fund) as
of December 31, 1996, the related statement of operations for the year then
ended and of changes in net assets for the years ended December 31, 1996 and
1995, and the financial highlights for each of the two years in the period ended
December 31, 1996 and the period ended December 31, 1994. These financial
statements and financial highlights 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 audits.
We conducted our audits 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 at December
31, 1996 by correspondence with the custodian and brokers. 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 audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Navellier Small
Cap Equity Portfolio of the Navellier Series Fund at December 31, 1996, the
results of its operations, the changes in its net assets, and the financial
highlights for the presented periods in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Washington, DC
January 31, 1997
13
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
[Artwork Omitted]
NAVELLIER
Series Fund
ANNUAL REPORT
December 31, 1996
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>
SEMI-ANNUAL REPORT, JUNE 30, 1997
NAVELLIER SERIES FUND
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 97.71%
OF TOTAL INVESTMENTS
AEROSPACE -- 1.34%
45,000 GenCorp, Inc. $ 1,040,625
-------------
AIRLINES -- 2.56%
7,500 Atlas Airlines, Inc.* 258,750
117,500 Mesaba Holdings, Inc.* 1,733,125
-------------
1,991,875
-------------
APPAREL & TEXTILES -- 0.16%
3,600 Budget Group, Inc.* 124,200
-------------
AUTOMOTIVE -- 0.72%
16,000 Carlisle Companies, Inc. 558,000
-------------
BANKS & CREDIT COMPANIES -- 3.86%
10,000 Andover Bancorp, Inc. 303,750
30,000 City National Corp. 721,875
39,000 Commercial Bank of New York 706,875
25,000 Interra Financial, Inc. 1,048,437
4,500 TCF Financial Corp. 222,188
-------------
3,003,125
-------------
BIOTECHNOLOGY -- 0.84%
52,900 Idexx Laboratories, Inc.* 657,944
-------------
BUILDING -- 2.05%
14,000 Lone Star Industries, Inc. 634,375
25,000 Medusa Corp. 959,375
-------------
1,593,750
-------------
BUSINESS MACHINES -- 1.46%
40,500 Affiliated Computer Services
Co.* 1,134,000
-------------
BUSINESS SERVICES -- 13.06%
60,700 AFC Cable Systems, Inc.* 1,638,900
45,200 APAC Teleservices, Inc.* 878,575
36,300 AccuStaff, Inc.* 859,856
14,600 BDM International, Inc.* 335,800
14,100 BISYS Group, Inc.* 588,675
800 Carey International, Inc.* 12,200
16,800 Claremont Technology Group,
Inc.* 399,000
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BUSINESS SERVICES (CONTINUED)
19,300 DST Systems, Inc.* $ 642,931
18,200 Danka Business Systems, Inc. 743,925
15,600 Dendrite International Inc.* 257,400
15,200 Equity Corp. International* 367,650
17,800 Interim Services, Inc.* 792,100
35,800 May & Speh, Inc.* 483,300
28,900 PMT Services, Inc.* 440,725
10,900 Personnel Group America,
Inc.* 314,056
20,000 Service Experts, Inc.* 490,000
500 Strayer Education, Inc. 19,000
14,600 Technology Solutions Co.* 576,700
10,000 Transaction Systems
Architects* 345,000
-------------
10,185,793
-------------
CHEMICALS -- 1.52%
21,500 H.B. Fuller Co. 1,182,500
-------------
COMPUTER SOFTWARE --
PERSONAL COMPUTERS -- 1.53%
10,300 Apex PC Solutions, Inc.* 203,425
30,000 P-Com, Inc.* 990,000
-------------
1,193,425
-------------
COMPUTER SOFTWARE -- SYSTEMS -- 8.85%
17,500 American Business
Information, Inc.* 380,625
9,200 Black Box Corp.* 370,300
25,300 Cadence Design Systems, Inc.* 847,550
28,500 Clarify, Inc.* 322,406
20,400 Compuware Corp.* 974,100
16,900 Control Data Systems, Inc.* 251,388
40,800 Daou Systems, Inc.* 652,800
7,700 HNC Software, Inc.* 293,563
5,500 JDA Software Group* 187,687
600 LHS Group, Inc.* 26,287
14,700 Pure Atria Corp.* 207,637
14,700 Simulation Sciences, Inc.* 224,175
26,600 Sterling Software, Inc.* 831,250
15,700 USCS International, Inc.* 514,175
1,700 Vantive Corp.* 48,025
7,400 Viasoft, Inc.* 375,550
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE -- SYSTEMS (CONTINUED)
26,100 Xionics Document
Technologies* $ 384,975
-------------
6,892,493
-------------
CONSUMER GOODS & SERVICES -- 2.65%
32,700 Alternative Resources Corp.* 666,262
11,850 Blyth Industries, Inc.* 399,937
7,100 Meta Group, Inc.* 154,425
7,600 Schweitzer-Mauduit
International 285,000
5,800 Signature Resorts, Inc.* 200,462
14,000 U.S. Rentals, Inc.* 354,375
-------------
2,060,461
-------------
DEFENSE ELECTRONICS -- 1.53%
35,000 Esco Electronics Corp.* 441,875
40,000 Engineered Support Systems,
Inc.* 750,000
-------------
1,191,875
-------------
ELECTRICAL EQUIPMENT -- 2.74%
10,400 Belden, Inc. 354,250
95,000 Zytec* 1,781,250
-------------
2,135,500
-------------
ELECTRONICS -- 7.19%
26,800 ACT Manufacturing, Inc.* 1,118,900
5,600 Actel Corp.* 95,550
14,300 Analog Devices, Inc.* 379,844
13,200 Burr Brown Corp.* 455,400
19,800 Hadco Corp.* 1,296,900
14,100 Kulicke & Softa Industries,
Inc.* 457,810
31,200 PMC-Sierra, Inc.* 819,000
6,200 Photromics, Inc.* 296,050
7,700 Triquint Semiconductor, Inc.* 264,688
18,100 Ultratech Steeper, Inc.* 414,038
-------------
5,598,180
-------------
ENTERTAINMENT -- 3.56%
17,500 American Radio Systems Corp.* 697,812
14,200 Argyle Television, Inc.* 362,100
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ENTERTAINMENT (CONTINUED)
30,000 Funco, Inc.* $ 555,000
2,900 Heftel Broadcasting Corp. 160,225
16,300 Jacor Communications, Inc.* 623,475
20,300 Gemstar International Group
LT.* 373,013
-------------
2,771,625
-------------
FINANCIAL INSTITUTIONS -- 6.59%
50,000 Ace Cash Express, Inc.* 625,000
12,100 BA Merchant Services, Inc.* 230,656
5,800 Franklin Resources, Inc. 420,862
40,000 RCSB Financial, Inc. 1,915,000
35,000 Southwest Securities Group,
Inc. 682,500
50,000 T R Financial Corp. 1,259,375
-------------
5,133,393
-------------
FOOD & BEVERAGE PRODUCTS -- 0.51%
9,700 Suiza Foods Corp.* 397,700
-------------
FOREST & PAPER PRODUCTS -- 1.80%
67,000 Fibremark, Inc.* 1,398,625
-------------
INSURANCE -- 0.74%
40,000 Dynex Capital, Inc. 557,500
600 Hartford Life, Inc.* 22,500
-------------
580,000
-------------
MACHINERY -- 3.87%
35,000 Gehl Co.* 586,250
30,000 Graco, Inc. 903,750
15,500 Greenfield Industries, Inc. 418,500
7,000 Lincoln Electric Co. 245,000
22,500 Zoltek Companies, Inc.* 860,625
-------------
3,014,125
-------------
MEDICAL & HEALTH PRODUCTS -- 0.40%
11,200 Kos Pharmaceuticals, Inc.* 310,800
-------------
MEDICAL & HEALTH TECHNOLOGY
& SERVICES -- 7.37%
16,400 Amerisource Health Corp.* 817,950
8,800 CRA Managed Care, Inc.* 459,250
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MEDICAL & HEALTH TECHNOLOGY
& SERVICES (CONTINUED)
13,700 Hologic, Inc.* $ 364,762
39,000 Horizon / CMS Healthcare
Corp.* 782,438
11,000 IDX Systems Corp.* 379,500
9,500 Medicis Pharmaceutical Corp.* 473,813
9,300 Quorum Health Group, Inc.* 332,475
15,300 Renal Treatment Center* 411,187
10,400 Steris Corp.* 388,700
10,100 Total Renal Care Holdings,
Inc.* 405,894
95,000 Westbridge Capital Corp.* 920,313
-------------
5,736,282
-------------
OIL SERVICES -- 1.29%
13,600 Cooper Cameron Corp.* 635,800
25,000 Plains Resources, Inc.* 368,750
-------------
1,004,550
-------------
OILS -- 0.05%
1,100 Santa Fe International, Inc. 37,400
-------------
RAILROAD -- 1.49%
31,100 Wisconsin Central
Tranportation* 1,158,475
-------------
REAL ESTATE -- 4.16%
50,000 Fairfield Communities, Inc.* 1,681,250
40,000 First American Financial
Corp. 1,560,000
-------------
3,241,250
-------------
RESTAURANTS & LODGING -- 2.36%
12,500 Applebees International, Inc. 334,375
8,900 Doubletree Corp.* 366,013
16,100 Outback Steakhouse, Inc.* 389,419
2,600 Papa Johns International,
Inc.* 95,550
32,900 Prime Hospitality Corp.* 649,775
-------------
1,835,132
-------------
SPECIAL PRODUCTS & SERVICES -- 4.79%
65,000 Barnes Group, Inc. 1,925,625
14,500 Catalina Marketing Corp.* 697,813
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SPECIAL PRODUCTS & SERVICES (CONTINUED)
31,000 DT Industries, Inc. $ 1,108,250
-------------
3,731,688
-------------
STEEL -- 0.90%
30,000 Carbide / Graphite Group,
Inc.* 697,500
-------------
STORES -- 3.93%
33,200 Corporate Express, Inc.* 479,327
15,300 Gymboree Corp.* 367,200
11,200 Hollywood Entertainment
Corp.* 256,200
14,500 Mazel Stores, Inc.* 253,750
35,000 Micro Warehouse, Inc.* 599,375
30,000 Paul Harris Stores, Inc.* 502,500
13,400 Petco Animal Supplies, Inc.* 402,000
6,500 U.S. Office Products Co.* 198,656
-------------
3,059,008
-------------
TELECOMMUNICATIONS -- 1.84%
17,200 Aspect Telecommunications
Corp.* 382,700
14,500 Brooks Fiber Properties,
Inc.* 489,375
16,100 Cable Design Technologies
Corp.* 473,944
7,900 VDI Media* 88,875
-------------
1,434,894
-------------
TOTAL COMMON STOCK
(COST $64,205,180) 76,086,193
-------------
REPURCHASE AGREEMENTS -- 2.29%
With PaineWebber at 5.85%, dated
6/30/97, due 7/1/97, collateralized by
$1,789,000 U.S. Treasury Notes, 5.75%,
due 9/30/97. Proceeds at maturity are
$1,781,289. (Cost $1,781,000) 1,781,000
-------------
TOTAL INVESTMENTS -- 100.00%
(COST $65,986,180) $ 77,867,193
-------------
-------------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Securities at Value (Note 1) (Cost $65,986,180)........................................ $77,867,193
Cash in Custodian Bank................................................................. 7,708
Receivable for Securities Sold......................................................... 389,730
Receivable for Shares Sold............................................................. 17,459
Dividends Receivable................................................................... 23,485
Interest Receivable.................................................................... 289
Unamortized Organizational Costs (Note 1).............................................. 2,686
-----------
Total Assets......................................................................... 78,308,550
-----------
LIABILITIES
Payable for Shares Redeemed............................................................ 391,719
Investment Advisory Fee Payable (Note 2)............................................... 162,414
Extraordinary Expenses Payable......................................................... 136,362
Payable for Securities Purchased....................................................... 111,089
Administrative Fee Payable (Note 2).................................................... 32,483
Other Payables and Accured Expenses.................................................... 15,762
Commissions Payable.................................................................... 7,004
Organizational Expenses Payable to Adviser (Note 1).................................... 2,686
-----------
Total Liabilities.................................................................... 859,519
-----------
NET ASSETS............................................................................... $77,449,031
-----------
-----------
SHARES OUTSTANDING....................................................................... 4,288,209
-----------
-----------
NET ASSET VALUE PER SHARE................................................................ $18.06
------
------
MAXIMUM OFFERING PRICE PER SHARE (100/97 of $18.06)...................................... $18.62
------
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest (Note 1)..................................................................... $ 233,933
Dividends (Note 1).................................................................... 394,918
------------
Total Investment Income............................................................. 628,851
------------
EXPENSES
Investment Advisory Fee (Note 2)...................................................... 759,717
Extraordinary Expenses (Note 2)....................................................... 417,516
Administrative Fee (Note 2)........................................................... 151,944
Transfer Agent and Custodian Fee (Note 3)............................................. 128,832
Legal Fees............................................................................ 62,482
Registration Fees..................................................................... 56,375
Proxy Solicitation Expenses........................................................... 43,234
Shareholder Reports and Notices....................................................... 40,875
Audit Fees............................................................................ 22,100
Trustees' Fees and Expenses (Note 2).................................................. 21,150
Organizational Expense (Note 1)....................................................... 2,125
Other Expenses........................................................................ 22,210
------------
Total Expenses...................................................................... 1,728,560
Less Expenses Reimbursed by Investment Adviser (Note 2)............................. (247,439)
------------
Net Expenses...................................................................... 1,481,121
------------
NET INVESTMENT LOSS..................................................................... (852,270)
------------
Net Realized Gain on Investments........................................................ 13,671,730
Net Change in Unrealized Appreciation of Investments.................................... (24,997,071)
------------
NET LOSS ON INVESTMENTS................................................................. (11,325,341)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $(12,177,611)
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 1997 (UNAUDITED) DECEMBER 31, 1996
-------------------------- -------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Loss........................................... $ (852,270) $ (2,477,826)
Net Realized Gain on Investment Transactions.................. 13,671,730 463,797
Net Change in Unrealized Appreciation Depreciation of
Investments................................................. (24,997,071) 18,466,247
--------------- -------------------
Net Increase (Decrease) in Net Assets Resulting from
Operations................................................ (12,177,611) 16,452,218
--------------- -------------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares............................. 46,540,394 286,125,562
Cost of Shares Redeemed....................................... (146,948,265) (217,842,421)
--------------- -------------------
Net Increase (Decrease) in Net Assets Resulting from Share
Transactions.............................................. (100,407,871) 68,283,141
--------------- -------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... (112,585,482) 84,735,359
NET ASSETS -- Beginning of Period............................... 190,034,513 105,299,154
--------------- -------------------
NET ASSETS -- End of Period..................................... $ 77,449,031 $ 190,034,513
--------------- -------------------
--------------- -------------------
SHARES
Sold.......................................................... 2,713,978 16,325,181
Redeemed...................................................... (9,108,773) (12,473,362)
--------------- -------------------
Net Increase (Decrease) in Shares........................... (6,394,795) 3,851,819
--------------- -------------------
--------------- -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED DECEMBER FOR THE
JUNE 30, 31, PERIOD ENDED
1997 --------------------------- DECEMBER 31,
(UNAUDITED) 1996 1995 1994*
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of Period.... $ 17.79 $ 15.41 $ 10.98 $ 10.00
------------ ---------- ---------- ------------
Income from Investment Operations:
Net Investment Loss..................... (0.20) (0.23) (0.16) (0.08)
Net Realized and Unrealized
Gains on Securities................... 0.47(D) 2.61 4.97 1.06
------------ ---------- ---------- ------------
Total from Investment Operations...... 0.27 2.38 4.81 0.98
------------ ---------- ---------- ------------
Distributions to Shareholders:
From Net Realized Capital Gains......... -- -- (0.38) --
------------ ---------- ---------- ------------
Net Increase in Net Asset Value........... 0.27 2.38 4.43 0.98
------------ ---------- ---------- ------------
Net Asset Value -- End of Period.......... $ 18.06 $ 17.79 $ 15.41 $ 10.98
------------ ---------- ---------- ------------
------------ ---------- ---------- ------------
TOTAL INVESTMENT RETURN(A) ............... 1.52% 15.44% 43.80% 9.80%
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)..... 2.44%(B) 1.75% 1.75% 1.68%(B)
Expenses Before Reimbursement (Note 2).... 2.84%(B) 1.86% 2.10% 4.52%(B)
Net Investment Loss....................... (1.40)%(B) (1.33)% (1.15)% (0.81)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................... 54.7% 136.9% 169.6% 139.9%
Net Assets at End
of Period (000's omitted)............... $77,449 $190,035 $105,299 $18,224
Number of Shares Outstanding
at End of Period (000's omitted)........ 4,288 10,683 6,831 1,660
Average Commission Rate Paid(C)........... $0.0414 $0.0424 -- --
</TABLE>
- -------------------------------------------
(A) Total returns do not include the maximum sales load. Total returns for
periods of less than one year are not annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged. This amount may vary from period to period
and fund to fund depending on the mix of trades executed in various markets
where trading practices and commission rate structures may differ.
(D) The per share amount is not in accordance with the net realized and
unrealized loss for the period because of the timing of sales of Fund shares
and the amount of per share realized and unrealized gains and losses at such
time.
*FROM COMMENCEMENT OF OPERATIONS JANUARY 3, 1994.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Navellier Series Fund (the "Fund") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a diversified,
open-end investment company. The Fund consists of one portfolio, Navellier
Aggressive Small Cap Equity Portfolio (the "Portfolio"), known as the MFS
Aggressive Small Cap Equity Fund from March 16, 1997 to July 14, 1997. Shares of
the Fund are purchased at the public offering price which includes a maximum
sales charge of up to 3% depending on the size of the purchase. The Fund is
authorized to issue an unlimited number of shares of capital stock with no
stated par value. 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 on the New York
Stock exchange and other major exchanges. Over-the-Counter securities are
valued at the last sales price. Short-term obligations, which mature in 60
days or less, are valued at amortized cost, which approximates value.
Securities for which there are no such quotations or valuations are valued at
fair value in good faith by or at the direction of the Trustees.
(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 or
losses from securities transactions are computed on an identified cost basis.
(c) Dividends, if any, 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 may enter into repurchase agreements with institutions that
the Fund's investment adviser has deemed creditworthy. Each repurchase
agreement is recorded at cost. The Fund requires that the securities purchased
in a repurchase agreement be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
default under the repurchase agreement. The Fund monitors, on a daily basis,
the value of the securities transferred to ensure the value, including the
accrued interest, of the securities under each repurchase agreement is greater
than the amounts owed to the Fund.
(e) The Fund intends to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies and distributes all net
investment income to its shareholders. Therefore, no Federal income or excise
tax provision is required.
(f) Organizational expenses of the Fund totaling $143,294 are being
deferred and amortized over 60 months beginning with the public offering of
shares. Any redemption by an initial shareholder during the amortization
period will be reduced by the pro rata portion of any of the unamortized
organization expenses. Such proration is calculated by dividing the number of
initial shares redeemed by the number of initial shares outstanding at the
date of the redemption. During the six month period ended June 30, 1997, the
initial investor redeemed a portion of the initial shares. At June 30, 1997,
unamortized organization costs were $2,686.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER
For the period from January 1, 1997 to March 15, 1997, investment advisory
services and administrative services were provided by Navellier Management, Inc.
("Navellier"). From March 16, 1997 to June 30, 1997, investment advisory
services and administrative service were provided by Massachusetts Financial
Services Company ("MFS"). The advisory fee paid to Navellier and to MFS for
investment advisory services was 1.25% of the daily net assets on an
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
annual basis. Navellier and MFS received 0.25% of the daily net assets on an
annual basis for administrative services provided to the Fund. Navellier and MFS
also received reimbursement for certain operating expenses incurred on behalf of
the Fund, as more fully described below. Certain Directors and officers of
Navellier served as Trustees of the Fund during the period from January 1, 1997
to March 15, 1997. A Director of MFS served as a Trustee of the Fund from March
16, 1997 through June 18, 1997, when he resigned, and certain officers of MFS
served as officers of the Fund from March 16, 1997 to June 30, 1997.
Prior to March 15, 1997 under an agreement between the Fund and Navellier
related to the payment of the Fund's operating expenses, Navellier reserved the
right to request reimbursement for past, present and future operating expenses
of the Fund paid by Navellier at any time upon notice to the Fund. Navellier
voluntarily agreed not to seek future reimbursement of all past expenses which
had not been reimbursed at December 31, 1996. For the period from March 16, 1997
to June 30, 1997 MFS agreed to bear the Fund's normal operating expenses,
subject to reimbursement by the Fund. The expense reimbursement arrangement with
MFS does not include extraordinary Fund expenses, such as litigation-related
expenses or any expenses which were borne or accrued prior to March 16, 1997.
During the period March 16, 1997 to June 30, 1997, the Fund incurred $417,516 in
extraordinary expenses in connection with litigation, proxy solicitation and
proxy certification expenses incurred above the normal expense of holding a
routine shareholder meeting, and administrative expenses related to the transfer
of the investment advisory contract and the administrative services contract
from Navellier to MFS.
Under the operating expense agreement between Navellier and the Fund from
January 1, 1997 to March 15, 1997 and the operating expense agreement between
MFS and the Fund from March 16, 1997 to June 30, 1997, the following amounts
were paid or incurred, based on a reimbursement rate of 0.25% of the daily net
assets on an annual basis for the respective periods. Amounts paid or incurred,
amounts reimbursed and amounts not reimbursed at June 30, 1997, for Navellier
and MFS are disclosed below.
<TABLE>
<CAPTION>
NAVELLIER MFS
--------- ---------
<S> <C> <C>
Operating expenses incurred............................................................... $ 184,421 $ 214,962
Amounts reimbursed........................................................................ 89,969 61,975
--------- ---------
Unreimbursed amounts...................................................................... $ 94,452 $ 152,987
--------- ---------
--------- ---------
Amount subject to request for reimbursement............................................... $ 94,452 $ 152,987
Amount subject to reimbursement which has been waived by the investment adviser........... $ 94,452 $ 152,987
</TABLE>
DISTRIBUTOR
For the period from January 1, 1997 to March 15, 1997, Navellier Securities
Corp. ("NSC") acted as the Fund's distributor pursuant to a distribution
agreement with the Fund. During this period an officer and Trustee of the Fund
also was an officer and Director of NSC. For the period from March 16, 1997 to
June 30, 1997, MFS Funds Distributor, Inc. ("MFD") acted as the Fund's
distributor pursuant to a distribution agreement with the Fund. A Trustee of the
Fund was also a Director of MFD. For the semiannual period ended June 30, 1997,
NSC and MFD received $40,154 and $25,314, respectively, as the portion of sales
charges on sales of shares of the Fund.
TRUSTEES
The Fund pays each of its Trustees not affiliated with the Adviser a fee of
$10,000 annually plus specific amounts for attended board and committee
meetings. When the Fund exceeds $200,000,000 in total net assets, then the
Trustees' fee is raised to $20,000 annually. For the period ended June 30, 1997
Trustees' fees and expenses totaled $21,150.
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
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 on a fee schedule approved by the Board of Trustees.
4. SECURITIES TRANSACTIONS
For the six months ended June 30, 1997, purchases and sales of investments,
other than short-term obligations, totaled $62,865,540 and $108,743,765,
respectively.
5. NET UNREALIZED APPRECIATION/DEPRECIATION OF INVESTMENTS
At June 30, 1997, net appreciation of investments for Federal income tax
purposes was $11,722,909 of which $12,685,935 related to appreciated investments
and $963,026 related to depreciated investments. At June 30, 1997, the cost of
the Fund's securities for Federal income tax purposes was $66,144,284.
6. NET ASSETS
At June 30, 1997 net assets consisted of the following:
<TABLE>
<S> <C>
Paid-in-capital......................................................................... $54,658,760
Undistributed net investment loss....................................................... (852,270)
Accumulated net realized gain on investments............................................ 11,761,528
Net unrealized appreciation on investments.............................................. 11,881,013
-----------
NET ASSETS.............................................................................. $77,449,031
-----------
-----------
</TABLE>
7. TAX MATTERS AND DISTRIBUTIONS
The Fund's policy is to comply with the provisions of the Internal Revenue
Code (the "Code") applicable to regulated investment companies and to distribute
to shareholders all of its net investment income, if any, including any realized
gain on investments. Accordingly, no provision for Federal income or excise tax
is provided. The Fund files a tax return annually using tax accounting methods
required under provisions of the Code which may differ from generally accepted
accounting principles, the basis on which these financial statements are
prepared. Accordingly, the amount of net investment income and net realized gain
reported on these financial statements may differ from those reported on the
Fund's tax return and, consequently, the character of distributions to
shareholders, if any, reported in the financial highlights may differ from that
reported to shareholders on Form 1099-DIV. Distributions to shareholders, if
any, are recorded on the Fund's records on the ex-dividend date.
Permanent differences between tax and financial reporting of net investment
income and realized gains or losses are reclassified to paid-in-capital. As of
December 31, 1996, net investment losses of $2,477,826 were reclassified to
paid-in-capital.
At December 31, 1996, for Federal income tax purposes, the Fund had a
capital loss carryover totaling $1,910,202 which may be applied against future
net taxable gains of each succeeding year until the earlier of its utilization
or its expiration date, which at December 31, 1996 was December 31, 2004.
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
8. SUBSEQUENT EVENTS
On July 14, 1997, the Trustees of the Fund re-appointed Navellier
Management, Inc. investment adviser and administrator to the Fund at
substantially the same fees of 1.25% and 0.25% of daily net assets,
respectively, as had been in effect prior to March 16, 1997. Navellier
Securities Corp. was also re-appointed as distributor to the Fund. On July 11,
1997, a Director of Navellier was appointed a Trustee and officer of the Fund.
On or prior to July 14, 1997, the unaffiliated Trustees of the Fund and the
Trustee and the officers of the Fund affiliated with MFS resigned.
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS INCLUDED IN PART A AND B:
INCLUDED IN PART A OF THIS REGISTRATION STATEMENT:
For the period January 1, 1997 - June 30, 1997,
For the two years ended December 31, 1996, and the period
ended December 31, 1994:
Financial Highlights
INCLUDED IN PART B OF THIS REGISTRATION STATEMENT:
At December 31, 1996* and at June 30, 1997**:
Portfolio of Investments*
Statement of Assets and Liabilities*
For the two years ended December 31, 1996* and at June 30,
1997**:
Statement of Changes in Net Assets*
For the year ended December 31, 1996 and at June 30, 1997**:
Statement of Operations*
- ------------------------------
* Incorporated herein by reference to the Fund's Annual Report to
Shareholders, dated December 31, 1996, filed with the SEC via EDGAR on
February 28, 1997.
** Incorporated by reference to the Funds Semi Annual Report to Shareholders
dated June 30, 1997
(b) EXHIBITS
1.1 Certificate of Trust of Registrant. (1)
1.2 Declaration of Trust of Registrant. (1)
1.3 Certificate of Amendment to Certificate of Trust, dated
December 8, 1997 filed herewith.
2 By-Laws of Registrant. (1)
3 Not Applicable.
4 None.
5 Investment Advisory Agreement, dated July 19, 1997 filed
herewith.
<PAGE>
6.1 Distribution Agreement, dated July 19, 1997 filed herewith.
7 None.
8 Administrative Services, Custodian and Transfer Agent
Agreement with Rushmore Trust and Savings, FSB, dated
March 10, 1994. (1)
9.1 Trustee Indemnification Agreements. (1)
9.2 Administrative Services Agreement with Navellier Management,
Inc., dated July 19, 1997. (1)
10 Consent and Opinion of Counsel filed with Registrant's
Rule 24f-2 Notice for fiscal year ended December 31,
1996 on February 28, 1997.
11 Consent of Independent Auditors; to be filed.
12 Not Applicable.
13 Subscription Agreement between the Trust and Louis
Navellier, dated May 15, 1993. (1)
14 Not Applicable.
15 Not Applicable.
16 Not Applicable.
17 Financial Data Schedules. (2)
18 Power of Attorney filed herewith.
- -----------------------------
(1) Incorporated by reference to the Registrant's Post-Effective Amendment
No. 6 filed with the SEC via EDGAR on April 29, 1996.
(2) Incorporated by reference to Registrant's Post-Effective Amendment No. 7
filed with the SEC via EDGAR on April 10, 1997.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Shares of Beneficial Interest 8,450
(without par value) (as of February 28, 1997)
ITEM 27. INDEMNIFICATION
Reference is hereby made to (a) Article X of Registrant's Declaration
of Trust, incorporated by reference to Post-Effective Amendment No. 6, filed
with the SEC on April 29, 1996.
The Fund shall indemnify each of its Trustees, officers, employees,
and agents (including persons who serve at its request as directors, officers,
or trustees of another organization in which it has any interest, as a
shareholder, creditor, or otherwise) against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as fines
and penalties, and as counsel fees) reasonably incurred by him in connection
with the defense or disposition of any action, suit, or other proceeding,
whether civil or criminal, in which he may be involved or with which he may be
threatened, while in office or thereafter, by reason of his being or having been
such a Trustee, officer, employee, or agent, except with respect to any matter
as to which he shall have been adjudicated to have acted in bad faith, willful
misfeasance, gross negligence, or reckless disregard of his duties; provided,
however, that as to any matter disposed of by a compromise payment by such
Person, pursuant to a consent decree or otherwise, no indemnification either for
said payment or for any other expenses shall be provided unless there has been a
determination that such person did not engage in bad faith, willful misfeasance,
gross negligence, or reckless disregard of his duties involved in the conduct of
his office by the court or other body approving the settlement or other
disposition or by a reasonable determination, based upon review of readily
available facts (as opposed to a full trial-type inquiry), that he did not
engage in such conduct by written opinion from independent legal counsel
approved by a majority of a quorum of trustees who are neither interested
persons nor parties to the proceedings. The rights accruing to any person under
these provisions shall not exclude any other right to which he may be lawfully
entitled; provided that no person may satisfy any right of indemnity or
reimbursement
<PAGE>
granted herein or to which he may otherwise be entitled except out of the Fund
Property. A majority of a quorum of disinterested non-party Trustees may make
advance payments in connection with indemnification under this section, provided
that the indemnified person shall have given a written undertaking adequately
secured to reimburse the Fund in the event it is subsequently determined that he
is not entitled to such indemnification, or a majority of a quorum of
disinterested non-party Trustees or independent counsel determine, after a
review of readily available facts, that the person seeking indemnification will
probably be found to be entitled to indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to the Trustees, officers, and controlling persons
of the Fund pursuant to the provisions described under this Item 27, or
otherwise, the Fund has been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Fund of expenses incurred or
paid by a Trustee, officer, or controlling person of the Fund in the successful
defense of any action, suit, or proceeding) is asserted by such Trustee,
officer, or controlling person in connection with the securities being
registered, the Fund will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Fund may purchase and maintain insurance on behalf of an officer,
Trustee, employee, or agent protecting such person, to the full extent permitted
by applicable law, from liability incurred by such person as officer, Trustee,
employee, or agent of the Fund or arising from his activities in such capacity.
The Trustees and officers of the Registrant and the personnel of the
Registrant's investment adviser and principal underwriter are insured under an
errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940, as amended.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Set forth below is a description of any other business, profession,
vocation, or employment of a substantial nature in which each investment adviser
of the Fund and each director, officer, or partner of any such investment
adviser, is or has been at any time during the past two fiscal years, engaged
for his own account or in the capacity of director, officer, employee, partner,
or trustee:
<TABLE>
<CAPTION>
Name and Principal Positions Held with Registrant Principal Occupations During Past
Business Address and Its Affiliates Two Years
- ------------------ ------------------------------ ---------------------------------
<S> <C> <C>
Louis Navellier One East Trustee and President of The Navellier Mr. Navellier is and has been the CEO and President
Liberty Third Floor Series Fund. Mr. Navellier is also the of Navellier & Associates Inc., an investment
Reno, NV 89501 CEO, President, Treasurer, and Secretary management company since 1988; is and has been CEO
of Navellier Management, Inc., a and President of Navellier Management, Inc.; one of
Delaware Corporation which is the the Portfolio Managers for the Investment Advisor
Investment Advisor to the Fund. Mr. to this Fund and was one of Portfolio Managers to
Navellier is also CEO, President, The Navellier Performance Funds; President and CEO
Secretary, and Treasurer of Navellier & of Navellier Securities Corp., the principal
Associates Inc., Navellier Publications, Underwriter to this Fund and The Navellier
Inc., MPT Review Inc., and Navellier Performance Funds; CEO and President of Navellier
International Management, Inc. and Fund Management, Inc. and investment advisory
President, CEO Treasurer and Secretary company, since November 30, 1995; and has been
of Navellier Securities Corp. publisher and editor of MPT Review from August 1987
to the present, and was publisher and editor of the
predecessor investment advisory newsletter OTC
Insight, which he began in 1980 and wrote through
July 1987.
</TABLE>
<PAGE>
ITEM 29. DISTRIBUTORS
(a) The Distributor does not currently act as principal underwriter,
depositor, or investment adviser for any investment company other than the Fund
and The Navellier Series Fund.
(b) The following information is provided, as of the date hereof, with
respect to each director, officer, or partner of each principal underwriter
named in response to Item 21:
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ -------------------- ---------------------
Louis Navellier CEO, President, Director, Trustee, President and
One East Liberty, Treasurer and Secretary CEO
Third Floor
Reno, NV 89501
(c) As of the date hereof, no principal underwriter who is not an
affiliated person of the Fund has received any commissions or other compensation
during the Fund's last fiscal year.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, records, and other documents required to be maintained under
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained at the office of The Navellier Performance Funds located at One East
Liberty, Third Floor, Reno, Nevada 89501, and the offices of the Fund's
Custodian and Transfer agent at 4922 Fairmont Avenue, Bethesda, MD 20814.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of its latest annual report to shareholders upon
request and without charge.
(d) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the provisions set forth in Item 27 of
this Part C, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the Securities being Registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
(e) The Fund hereby undertakes that if it is requested by the holders
of at least 10% of its outstanding shares to call a meeting of shareholders for
the purpose of voting upon the question of removal of a Trustee, it will do so
and will assist in communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in Reno, Nevada on the 8th
day of December, 1997.
THE NAVELLIER SERIES FUND
By: /s/ LOUIS NAVELLIER
-------------------------------------
Name: Louis Navellier
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities indicated on December 8, 1997.
SIGNATURE TITLE
/s/ LOUIS NAVELLIER Chairman, Principal Executive
- ------------------------- Officer and Trustee
Louis Navellier
ARJEN KUYPER* Treasurer (Principal Financial Officer
- ------------------------- and Principal Accounting Officer)
JACQUES DELACROIX* Trustee
- -------------------------
ARNOLD LANGSEN* Trustee
- -------------------------
BARRY SANDER* Trustee
- -------------------------
JOEL ROSSMAN Trustee
- -------------------------
*Executed by Louis Navellier, on
behalf of those indicated pursuant to a
Power of Attorney filed herewith.
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
1.3 Certificate of Amendment of Certificate of Trust,
dated December 8, 1997
5 Investment Advisory Agreement dated July 19, 1997
6.1 Distribution Agreement dated July 19, 1997
9.2 Administrative Services Agreement with Navellier
Management, Inc. dated July 19, 1997
18 Power of Attorney
<PAGE>
EXHIBIT 99.1.3
<PAGE>
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF TRUST
Pursuant to Title 12, Section 3810(b) of the Delaware General Corporation
Law, the undersigned corporation executed the following Certificate of
Amendment:
1. Name of Business Trust: THE MFS SERIES TRUST
----------------------------------------------------
- -------------------------------------------------------------------------------
2. The Certifcate of Amendment to the Certificate of Trust is hereby amended
as follows: ARTICLE 1 OF THE CERTIFICATE OF TRUST IS HEREBY AMENDED TO
----------------------------------------------------------------
READ AS FOLLOWS: THE NAME OF THE DELAWARE BUSINESS TRUST IS THE NAVELLIER
----------------------------------------------------------------------------
SERIES FUND
----------------------------------------------------------------------------
---------------------------------------------------------------------------.
[set forth amendment(s)]
3. This Certificate of Amendments shall be effective on 12-8-97
-----------------------.
IN WITNESS WHEREOF, the undersigned have executed this Certificate on
the 8TH day of DECEMBER, 1997
--- -------- ---
By: /s/ Louis G. Navellier
--------------------------
Trustee
Name: LOUIS G. NAVELLIER
------------------------
Type or Print
<PAGE>
EXHIBIT 99.5
<PAGE>
THE NAVELLIER SERIES FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 19th day of July, 1997, by and between THE
NAVELLIER SERIES FUND, a business trust organized under the laws of the State of
Delaware (the "Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation
(the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund is currently comprised of one portfolio designated as the
"Navellier Aggressive Small Cap Equity Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Fund desires to retain the Adviser as investment adviser to
furnish advisory and portfolio management services to the Fund;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Fund hereby appoints the Adviser to act as the
investment adviser to the Fund with respect to all of the Fund's Portfolios (the
"Portfolios"), and, subject to the supervision of the Board of Trustees of the
Fund, to provide investment advisory services to the Fund as hereinafter set
forth: (i) to obtain and evaluate such information and advice relating to the
economy, securities markets, and securities as it deems necessary or useful to
discharge its duties hereunder; (ii) to continuously manage the assets of the
Fund in a manner consistent with applicable law and the investment objectives
and policies set forth in the most current prospectus and statement of
additional information of the Fund under the Securities Act of 1933 (the
"Prospectus"); (iii) to determine which issuers will be deemed "Qualified
Issuers" (as defined in the Prospectus); (iv) to determine the timing of
purchases, sales, and dispositions of securities; (v) to take such further
action in its sole discretion (but always in compliance with applicable law and
the Prospectus) without obligation to give prior notice to the Board of Trustees
of the Fund, or the Custodian, including the placing of purchase and sale orders
on behalf of the Fund as
<PAGE>
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Fund such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Fund may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Fund's Board of
Trustees; (viii) to make decisions for the Fund as to the manner in which voting
rights, rights to consent to trust action, and any other rights pertaining to
how the Fund's portfolio securities shall be exercised ("Portfolio Voting
Rights"). The Fund has directed the Custodian, and Custodian as agreed, to act
in accordance with the instructions of the Adviser. The Adviser shall at no
time have custody of or physical control over the investment account assets or
securities, and the Adviser shall not be liable for any act or omission of the
Custodian. The Adviser shall maintain records required under the Investment
Advisers Act of 1940 ("Advisers Act") and shall make them available to the Fund
or its designees for review or inspection upon demand and at the Adviser's
expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Fund, furnish
the services of such members of the Adviser's organization as may be duly
elected to be officers of the Fund, subject to their individual consent to serve
and to any limitations imposed by law.
The Fund will pay or cause to be paid all other expenses of the Fund
(except for the expenses to be paid by the Fund's Distributor), including,
without limitation, the following: (i) services rendered by the Custodian and
the Transfer Agent, (ii) fees, voluntary assessments, and other expenses
incurred in connection with membership in investment company organizations,
(iii) cost of stock certificates, reports, proxy materials and notices to
shareholders, and other like miscellaneous expenses, (iv) brokerage commissions
and other brokerage expenses, (v) taxes (including any income or franchise
taxes), and any fees payable to federal, state, and other governmental agencies,
(vi) fees and salaries payable to the Trustees, officers, and advisory board
members of the Fund, if any, (vii) auditing the Fund's books and accounts,
(viii) the cost of bookkeeping and accounting services, (ix) any and all Fund
legal expenses, (x) costs of mailing and tabulating proxies and costs of
shareholders' and Trustees' meetings, (xi) the cost of investment
2
<PAGE>
company literature and other publications provided by the Fund to its Trustees
and officers, (xii) costs of any liability, uncollectible items of deposit and
other insurance or fidelity bonds, (xiii) any extraordinary expenses (including
fees and disbursements of counsel) incurred by the Fund, (xiv) costs of printing
and mailing monthly statements and confirmations, (xv) expense of organizing the
Fund, (xvi) filing fees and expenses relating to the registration and
qualification of the Fund's shares under federal and/or state securities laws
and maintaining such registrations and qualifications and (vii) other expenses
properly payable by the Fund.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Fund shall pay to the Adviser, on a monthly basis, an
annual fee of one and a quarter percent (1.25%) (the "Management Fee") of the
Fund's average daily net assets for the Navellier Aggressive Small Cap Equity
Portfolio and a one and a quarter percent (1.25%) management fee for any other
Portfolio subsequently opened and managed by Adviser. Payment of the Adviser's
compensation for the preceding month shall be made as promptly as possible after
the last day of each such month. The compensation for the period from the
effective date hereof to the next succeeding last day of the month shall be
prorated according to the proportion which such period bears to the full month
ending on such date, and provided further that, upon any termination of this
Agreement before the end of the month, such compensation for the period from the
end of the last month ending prior to such termination shall be prorated
according to the proportion which such period bears to a full month, and shall
be payable upon the date of termination. If the annual operating expenses
borne by the Fund relating to any Portfolio, including amounts payable to the
Adviser hereunder paid or payable by such Portfolio for any fiscal year, exceed
the applicable expense limitations imposed by state securities laws or
regulations thereunder (as same may be adjusted from time to time), the Adviser
will reduce its Management Fee to the extent of such excess and if required,
pursuant to any such laws or regulations ((unless otherwise waived), will
reimburse the applicable Portfolio for annual operating expenses in excess of
any such expense limitation up to the amount of the Management Fee payable to it
during that fiscal year with respect to such Portfolio. The Adviser has the
right, but not the obligation, to waive any portion or all of its Management
Fee, from time to time.
The "average daily net assets" of each Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for such Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
3
<PAGE>
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Fund or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Fund also
agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Fund; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the fund, and, in addition, (c) by the vote of
a majority of the Trustees of the Fund who are not parties hereto nor interested
persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Fund, or by a vote of a majority (as
defined in the Act) of the outstanding voting securities of the Fund, in either
case upon written notice to the Adviser, and it may be terminated by the Adviser
upon sixty (60) days' written notice to the Fund. This Agreement shall
automatically terminate in the event of its assignment, within the meaning of
the Act, unless such automatic termination shall be prevented by an exemptive
order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
4
<PAGE>
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Fund, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Fund) cast in person at a
meeting called for that purpose, and by the holders of a majority (as defined in
the Act) of the outstanding voting securities of the Portfolios of the Fund to
which this Agreement is applicable.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Fund to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Fund nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Fund and the Adviser and their respective successors.
9. NAME OF THE FUND. The Fund acknowledges that the name "Navellier" is
and shall remain the sole property of the Adviser, notwithstanding the use
thereof by the Fund. The Fund may use the name "The Navellier Series Fund" or
any name derived from the name "Navellier" only for so long as this Agreement or
any extension, renewal, or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of the Adviser and for only so long as Navellier Management, Inc.,
remains as Adviser to the Fund. At such time as such an agreement shall no
longer be in effect, or Adviser's services have terminated, the Fund will (to
the extent that it is lawfully able) cease to use such a name or any other name
connected with the Adviser or any organization which shall have succeeded to the
business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person" shall have the
respective meanings specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
5
<PAGE>
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Fund hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Fund's agreement relating to the
performance of investment advisory services for the Fund, and no evidence or
parol evidence may be introduced to vary or change the terms of this written
Agreement which is the full and final expression of the parties' agreement. Any
change in the terms of this Agreement must be in writing signed by both parties.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in San Francisco, California.
THE NAVELLIER SERIES FUND
By:
----------------------------------------------
Louis Navellier, Trustee
By:
----------------------------------------------
Barry Sander, Trustee
By:
----------------------------------------------
Arnold Langsen, Trustee
By:
----------------------------------------------
Attest: Joel Rossman, Trustee
/s/ By:
- ------------------------- ----------------------------------------------
Jacques Delacroix, Trustee
NAVELLIER MANAGEMENT, INC.
By:
----------------------------------------------
Louis Navellier, President
Attest:
/s/
- --------------------------
6
<PAGE>
EXHIBIT 99.6.1
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 19th day of July 1997, by and between The
Navellier Series Fund, a business trust organized under the laws of the State of
Delaware (the "Fund"), and Navellier Securities Corp., a corporation organized
under the laws of the State of Delaware (the "Distributor").
W I T N E S S E T H
WHEREAS, the Fund is registering as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and intends to
engage in business as an open-end management investment company;
WHEREAS, the Fund desires to employ the Distributor to act as principal
underwriter (as defined in the Act) with respect to the continuous offering
of its shares of common stock, at no par value (the "Shares"), which shall
INITIALLY be sold in one series consisting of an equity portfolio (the
"Navellier Aggressive Small Cap Equity Portfolio"), along with any other
series as may be created in the future, from time to time (the "Portfolios"),
and the Distributor is willing to serve in such capacity pursuant to the
terms and conditions of this Agreement;
WHEREAS, this Agreement has been approved by a vote of the Board of
Trustees of the Fund, including a majority of the Trustees who are not
"interested persons" of the Fund, as defined in the Act, and who have no direct,
or indirect financial interest in the operation of this Agreement (the
"disinterested Trustees") cast in person at a meeting called for the purpose of
voting on this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed by and between the parties hereto as follows:
1. APPOINTMENT OF THE DISTRIBUTOR.
(a) The Fund hereby appoints the Distributor as the principal
underwriter and distributor of each of the Fund's Portfolios whether now
existing or hereafter created, to sell and to arrange for the sale of Shares to
the public on the terms set forth in this Agreement and the Distributor hereby
accepts such appointment and agrees to act in accordance herewith. The Fund,
during the term of this Agreement, shall sell Shares to the Distributor upon the
terms and conditions set forth herein.
(b) The Distributor agrees to purchase Shares, as principal for its
own account, from the Fund and to sell Shares, as principal, to investors and
dealers, upon the terms described herein and in the Fund's prospectus (the
"Prospectus") and statement of additional information (the "Statement of
Additional
1
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Information") included in the Fund's Registration Statement (the "Registration
Statement") last filed with the Securities and Exchange Commission (the "SEC")
and declared effective under the 1933 Act and 1940 Act or as said Prospectus and
Statement of Additional Information may be otherwise amended or supplemented
from time to time thereafter.
2. EXCLUSIVE NATURE OF DUTIES. The Distributor shall be the exclusive
representative of the Fund, in respect of the Portfolios, and act as its
principal underwriter and distributor, except that neither the exclusive rights
granted to the Distributor to sell the Shares nor the right to receive
compensation under Section 3(b) hereof or otherwise hereunder shall apply to
Shares issued by the Fund (i) in connection with the merger or consolidation of
any other investment company or personal holding company with the Fund or the
Portfolios or the acquisition by purchase or otherwise of all (or substantially
all) of the assets or outstanding shares of any such company by the Fund or the
Portfolios, or (ii) pursuant to reinvestment of dividends or capital gains
distributions.
3. PURCHASE OF SHARES FROM THE FUND AND COMPENSATION OF DISTRIBUTOR.
(a) Subsequent to the effective date of the Registration Statement,
the Fund will commence a continuous offering of the Shares. During such
continuous offering, the Distributor shall have the right to buy from the Fund
the Shares needed, but not more than the Shares needed (except for clerical
errors in transmissions), to fill unconditional orders for Shares placed with
the Distributor by investors or securities dealers. The price which the
Distributor shall pay for the Shares so purchased from the Fund shall be the net
asset value (determined as set forth in Section 3(e) hereof) used in determining
the public offering price on which such orders were based.
(b) A sales charge of 3% of the net asset value of the Shares sold
shall constitute the entire compensation (subject to any fees reimbursed to the
Distributor as provided in Section 8 hereof) of the Distributor for acting as
principal underwriter and distributor of the Portfolios. The 3% sales charge
shall be reduced to 2.5% for purchases of between $25,000 and $49,999.99, and
shall be reduced to 2% for purchases of between $50,000 and $74,99.99, and shall
be reduced to 1-1/2% for purchases of between $75,000 and $99,999.99, and shall
be reduced to 1% for purchases of $100,000 or more. The sales charge shall also
be reduced for other purchases as specified in the Prospectus. The sales charge
will be deducted from the purchase price paid by the investor at the time of
making the purchase.
(c) The Shares are to be resold by the Distributor to investors at
the public offering price, as set forth in Section 3(d) hereof, or to Selected
Dealers (as hereinafter
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defined) having agreements with the Distributor upon the terms and conditions
set forth in Section 7 hereof.
(d) The public offering price(s) of the Shares, i.e., the price per
share at which the Distributor or Selected Dealers (as hereinafter defined) may
sell the Shares to the public, shall be the public offering price as set forth
in the then current Prospectus and the Statement of Additional Information
relating to the Shares. If the public offering price does not equal an even
cent, the public offering price may be adjusted to the nearest cent. All
payments to the Fund hereunder shall be made in the manner set forth in
Section 3(g).
(e) The net asset value of the shares of each Portfolio of the Fund
shall be determined by the Fund or any agent of the Fund once daily at the times
and otherwise in accordance with the terms set forth in the Prospectus and the
Statement of Additional Information and guidelines established by the Board of
Trustees of the Fund, from time to time.
(f) The Fund shall have the right to suspend the sale of the Shares
at times when redemption is suspended pursuant to the conditions set forth in
Section 4(c) hereof. The Fund shall also have the right to suspend the sale of
the Shares if trading on the New York Stock Exchange or other exchange shall
have been suspended, if a banking moratorium shall have been declared by federal
or state authorities, or if there shall have been some other extraordinary
event, which, in the judgment of the Fund, makes it impracticable to sell the
Shares. The Fund also reserves the right to suspend the sale of Shares at any
time, in the absolute discretion of its Board of Trustees.
(g) The Fund, or any agent of the Fund designated in writing by the
Fund, shall be promptly advised of all purchase orders for Shares received by
the Distributor. Any order may be rejected by the Fund; PROVIDED, HOWEVER, that
the Fund will not arbitrarily or without reasonable cause refuse to accept
orders for the purchase of Shares. The Distributor (or its agent) upon receipt
of payment therefore will enter the purchase and ownership on its books (in lieu
of issuing stock certificates) or a statement confirming the issuance of Shares.
The Distributor agrees to cause such payment and such instructions to be
delivered promptly to the Fund (or its agent).
4. REPURCHASE OR REDEMPTION OF SHARES.
(a) Any of the outstanding shares of any Portfolio may be tendered
for redemption at any time, and the Fund agrees to redeem the Shares so tendered
in accordance with the applicable provisions set forth in the Prospectus and the
Statement of Additional Information. The price to be paid to redeem the Shares
shall be equal to the net asset value calculated in accordance with the
provisions of Section 3(e) hereof. All
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<PAGE>
payments by the Fund hereunder shall be made in the manner set forth below.
The Fund, on behalf of the applicable Portfolio, shall pay the total
amount of the redemption price subsequent to its having received the notice of
redemption in proper form, all in accordance with applicable provisions of the
Prospectus and the Statement of Additional Information on or before the seventh
day after receipt of notice of redemption.
(b) The Distributor is authorized, as agent for the Fund, to
repurchase Shares from investors and Selected Dealers in accordance with the
applicable provisions set forth in the then current Prospectus and the Statement
of Additional Information. The Distributor shall promptly transmit to the
Fund's transfer agent for redemption, all orders so received from Selected
Dealers or investors for the repurchase of Shares. The Distributor shall be
responsible for the accuracy of instructions transmitted to the Fund's transfer
agent in connection with all such repurchases.
(c) The Fund may suspend the right of redemption or dealer payment
more than seven days (a) during any period when the New York Stock Exchange or
other exchange is closed (other than a customary weekend and holiday closing),
(b) when trading on any Exchange is restricted or an emergency exists as
determined by the Securities and Exchange Commission or the Fund so that
disposal of the Fund's investments or determination of the net asset value of
the Portfolios is not reasonably practicable, or (c) during any other period
when the Securities and Exchange Commission, by order, so permits.
5. DUTIES OF THE FUND.
(a) The Fund shall furnish to the Distributor copies of all
information (including, without limitation, sales literature and
advertisements), financial statements and other papers prepared (or caused by
the Fund to be prepared) for publication or distribution which refer in any way
to the Distributor, prior to the use thereof, and shall not use such material if
the Distributor reasonably objects in writing within five (5) business days (or
such other time as may be mutually agreed) after receipt thereof. The foregoing
sentence shall survive the termination of this Agreement. The Fund shall
furnish or otherwise make available to the Distributor such other information as
the Distributor may reasonably request for use in connection with the
distribution of the Shares, including one certified copy, upon request by the
Distributor, of all financial statements prepared by the Fund, in respect of the
Portfolios, and examined by independent accountants. The Fund shall, subject to
the provisions of Section 8 hereof, make available to the Distributor such
number of copies of the Prospectus and the Statement of Additional Information
as the Distributor shall reasonably request.
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(b) The Fund shall take, from time to time, but subject to the
necessary approval of the Portfolios' shareholders (as may be required by
applicable law), all necessary action to fix the number of its authorized Shares
and to register the Shares under the 1933 Act, to the end that there will be
available for sale such number of the Shares as investors may reasonably be
expected to purchase.
(c) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of the Shares for sale under the
securities laws of such states as the Distributor and the Fund may approve. Any
such qualification may be withheld, terminated or withdrawn by the Fund at any
time in its discretion. The Distributor shall furnish such information and
other material relating to its affairs and activities as may be required by the
Fund in connection with such qualification.
(d) The Fund shall immediately advise the Distributor (i) when any
post-effective amendment to its Registration Statement or any further amendment
or supplement thereto or any further Registration Statement or amendment or
supplement thereto becomes effective, (ii) of any request by the SEC for
amendment to the Registration Statement or the then effective Prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, or the
initiation of any proceedings for that purpose, and (iv) of the happening of any
event which makes untrue any material statement made in the Registration
Statement or the current Prospectus or which, in the opinion of counsel for the
Fund, requires the making of a change in the Registration Statement or the
current Prospectus in order to make the statements therein not misleading. In
case of the happening at any time of any event which materially affects the Fund
or its securities and which should be set forth in a supplement to or an
amendment of the then effective Prospectus in order to make the statements
therein not misleading, the Fund shall prepare and furnish to the Distributor
such amendment or amendments to the then effective Prospectus, as will correct
the Prospectus so that as corrected it will not contain, or such supplement or
supplements to the then effective Prospectus which, when read in conjunction
with the then effective Prospectus, will make the combined information not
contain any untrue statement of a material fact or any omission to state any
material fact necessary in order to make the statements in the then effective
Prospectus not misleading. The Fund shall, if at any time the SEC shall issue
any stop order suspending the effectiveness of the Registration Statement, make
reasonable effort to obtain the prompt lifting of such order.
(e) Except as otherwise contemplated by Section 8(a) hereof, the Fund
shall, at the expense of the Distributor, furnish, in reasonable quantities upon
request of the Distributor, copies of Prospectuses, Statements of Additional
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Information, Proxies and annual and interim reports of the Fund, in respect of
the Portfolios.
6. DUTIES OF THE DISTRIBUTOR.
(a) The Distributor shall devote reasonable time and effort to effect
sales of the Shares (but only in states and other jurisdictions in which it may
legally do so), but shall not be obligated to sell any specific number of
Shares. The services of the Distributor hereunder are not to be deemed
exclusive and nothing herein contained shall prevent the Distributor from
entering into distribution or dealer arrangements with other investment
companies so long as the performance of its obligations hereunder are not
impaired thereby.
(b) Neither the Distributor nor any Selected Dealer nor any other
person is authorized by the Fund to give any information or to make any
representations, other than those contained in the Registration Statement or
related Prospectus and Statement of Additional Information and any sales
literature specifically approved by the Fund.
(c) The Distributor shall cooperate with the Fund in effecting the
qualifications contemplated by Section 5(c) hereof.
(d) The Distributor shall furnish to the Fund copies of all
information including, without limitation, sales literature and advertisements,
financial statements and other papers prepared (or caused by the Distributor to
be prepared) for the publication or distribution, which refer in any way to the
Fund, prior to the use thereof, and shall not use such material if the Fund
reasonably objects in writing within (5) business days (or such other time as
may be mutually agreed) after receipt thereof. The foregoing sentence shall
survive the termination of this Agreement.
(e) In selling the Shares, the Distributor shall use its best efforts
in all respects to duly conform with the requirements of all applicable federal,
state and foreign laws. In connection therewith, the Distributor shall use its
best efforts in granting any Distributor's Consent under Section 7(b) hereof, to
make certain that such Foreign Offer or Sale does not violate applicable law or
otherwise cause the Fund to have any liability with respect to such Foreign
Offer or Sale.
7. SELECTED DEALER AGREEMENTS.
(a) The Distributor shall have the right to enter into selected
dealer agreements ("Selected Dealer Agreements") with securities dealers of its
choice (the "Selected Dealers") for the sale of Shares. In connection with such
sales by Selected Dealers, the Selected Dealer Agreement shall provide that the
portion of the Sales Charge which may be allocated to Selected Dealers shall be
limited to all or a portion of the Sales Charge
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as stated in the Fund's then current Prospectus. In making agreements with
Selected Dealers, the Distributor shall act only as principal and not as agent
for the Fund. Shares sold to Selected Dealers shall be for resale by such
dealers only at the public offering price(s) set forth in the Prospectus and the
Statement of Additional Information.
(b) The Distributor shall offer and sell Shares only to such Selected
Dealers as are (i) members in good standing of the National Association of
Securities Dealers (the "NASD"), or (ii) exempt from membership in the NASD. In
any Selected Dealer Agreement, the Distributor shall require the Selected Dealer
to obtain the written consent of the Distributor (the "Distributor's Consent")
prior to such Selected Dealer's making, causing to be made or otherwise
participating, directly or indirectly, in the making of any offer or sale of any
of the Fund's shares to any individual, corporation, partnership, trust, joint
venture, or other person or entity located outside of the United States of
America (a "Foreign Offer or Sale"). Such Selected Dealer Agreements shall also
provide that any Foreign Offer or Sale shall be made only upon the terms and in
accordance with the conditions set forth in the Distributor's Consent.
(c) The Distributor shall adopt and follow procedures, as approved by
the Fund, for the confirmation of sales and Shares to investors and Selected
Dealers, the collection of amounts payable by investors and Selected Dealers on
such sales, and the cancellation of unsettled transactions, as may be necessary
to comply with the requirements of the National Association of Securities
Dealers, as such requirements may from time to time exist.
8. EXPENSES.
(a) The Fund shall, on a monthly basis, reimburse the Distributor for
particular expenditures incurred by it in connection with the distribution of
such Shares. Such expenditures shall include the cost of (i) preparation,
filing and printing of any Registration Statements and Prospectuses required to
be filed by or under applicable federal, state or foreign law, (ii) the
preparation and mailing of annual and interim reports, Prospectuses and proxy
material to current shareholders, (iii) qualifications of Shares for sale (and
the Fund as a broker, as applicable) under the securities laws of such states or
other jurisdiction as shall be selected by the Fund and the Distributor in
accordance with Section 5(c) hereof and the costs and expenses payable to each
such state or other jurisdiction for continuing qualifications therein.
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(b) The Fund will not pay any of Distributor's interest expenses,
carrying charges, or other financing costs or the overhead of the Distributor.
"Overhead costs" include items of expense generally referred to as overhead,
including, without limitation, costs related to leases, depreciation, salaries,
payroll taxes, supplies and insurance.
(c) The Fund shall not bear the expense of the registration or
qualification of the Distributor as a dealer or a broker under federal, state or
other applicable law or the expenses of continuing such registration or
qualification.
9. INDEMNIFICATION.
(a) The Fund agrees with the Distributor, for the benefit of the
Distributor and each person, if any, who controls the Distributor within the
meaning of Section 15 of the Securities Act and each and all and any of them, to
indemnify and hold harmless the Distributor and any such controlling person from
and against any and all losses, claims, damages or liabilities, joint or several
(including reasonable legal fees and expenses) to which they or any of them may
become subject under the Securities Act or under any other statute, at common
law or otherwise, and to reimburse the Distributor and such controlling persons,
if any, for any legal or other expenses (including the cost of any investigation
and preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Distributor for inclusion in
any such Registration Statement or Prospectus or any amendment thereof or
supplement thereto. The Distributor and each such controlling person shall,
within thirty (30) days after the complaint shall have been served upon the
Distributor or such controlling person in respect of which indemnity may be
sought from the Fund on account of its agreement contained in this
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paragraph, notify the Fund in writing of the commencement thereof. The omission
of the Distributor of such controlling person so to notify the Fund of any such
litigation shall relieve the Fund from any liability which it may have to the
Distributor or such controlling person on account of the indemnity agreement
contained in this paragraph if such failure to timely notify the Fund has
resulted in substantial prejudice to the Fund, but shall not relieve the Fund
from any liability which it may have to the Distributor or controlling person
otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Distributor
or any such controlling person and notice of the commencement thereof shall have
been timely given to the Fund, the Fund shall be entitled to participate in
(and, to the extent that it shall wish, to direct) the defense thereof at its
own expense, but such defense shall be conducted by counsel of good standing and
reasonably satisfactory to the Distributor or such controlling person(s) or
defendant(s) in the litigation. The indemnity agreement of the Fund contained
in this paragraph shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of the Distributor or any such
controlling person, and shall survive any delivery of shares of the Fund. The
Fund agrees to notify the Distributor promptly of the commencement of any
litigation or proceeding against it or any of it officers or directors of which
it may be advised in connection with the issue and sale of shares of the Fund.
(b) Anything herein to the contrary notwithstanding, the agreement in
subparagraph (a) of this Section, insofar as it constitutes a basis of
reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
(c) The Distributor agrees to indemnify and hold harmless the Fund
and its Trustees and such officers as shall have signed any Registration
Statement filed with the Commission from and against any and all losses, claims,
damages, or liabilities, joint or several, to which the Fund or such Trustees or
officers may become subject under the Securities Act, under any other statute,
at common law or otherwise, and will reimburse the Fund or such Trustees or
officers for any legal or other
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expenses (including the cost of any investigation and preparation) reasonably
incurred by it or them or any of them in connection with any litigation, whether
or not resulting in any liability, insofar as such losses, claims, damages,
liabilities, or litigation arise out of, or are based upon, any untrue statement
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, which
statement or omission was made by the Fund in reliance upon information
furnished in writing to the Fund by the Distributor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Distributor shall not
be liable for amounts paid in settlement of any such litigation if such
settlement was effected without its consent. The Fund and its Trustees and such
officers or defendant(s), in any such litigation, shall, within thirty (30) days
after the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Distributor or
account of its agreement contained in this paragraph, notify the Distributor in
writing of the commencement thereof. The omission of the Fund or such Trustee
or officer so to notify the Distributor of any such litigation shall relieve the
Distributor from any liability which it may have to the Fund or such Trustee or
officer of liability which it may have to the Fund or such Trustee or officer on
account of the indemnity agreement contained in this paragraph, but shall not
relieve the Distributor from any liability which it may have to the Fund or such
Trustee or officer otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Fund or any such Trustee or officer and timely notice of the
commencement thereof shall have been so given to the Distributor, the
Distributor shall be entitled to participate in (and, to the extent it shall
wish, to direct) the defense thereof at its own expense, but such defense shall
be conducted by counsel of good standing and satisfactory to the Fund. The
indemnity agreement of the Distributor contained in this paragraph shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Fund and shall survive any delivery of shares of the Fund.
The Fund agrees to notify the Distributor promptly of the commencement of any
litigation or proceeding against it or any of its officers or Trustees or
against any such controlling person of which it may be advised in connection
with the issue and sale of the Fund's shares.
(d) Notwithstanding any provision contained in this Agreement, no
party hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
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(e) Except as expressly provided in subparagraphs (a) and (c) hereof,
the agreements herein set forth have been made and are made solely for the
benefit of the Fund, the Distributor, and the persons expressly provided for in
subparagraphs (a) and (c), their respective heirs, successor, personal
representatives and assigns, and except as so provided, nothing expressed or
mentioned herein is intended or shall be construed to give any person, firm or
corporation, other than the Fund, the Distributor, and the persons expressly
provided for in subparagraphs (a) and (c), any legal or equitable right, remedy
or claim under or in respect of this Agreement or any representation, warranty
or agreement herein contained. Except as so provided, the terms "heirs,
successors, personal representatives and assigns" shall not include any
purchaser of shares merely because of such purchase.
10. DURATION, TERMINATION AND AMENDMENT OF THIS AGREEMENT.
This Agreement shall become effective on the date it shall be approved
by a vote of the Board of Trustees of the Fund and of a majority of the
disinterested Trustees, and shall, unless terminated as hereinafter provided,
continue in effect for a period of more than one (1) year from such date so long
as such continuance is specifically approved at least annually by a vote of the
Board of Trustees of the Fund and of a majority of the disinterested Trustees or
by vote of a majority of the outstanding voting securities of the Fund. This
Agreement may be terminated by the Fund at any time or by the Distributor on
sixty (60) days' written notice to the Fund. No provisions of this Agreement
may be changed, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought and approved by a majority of
the disinterested Trustees.
11. NOTICES.
Any notice of other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, to the Distributor or to the Fund, each at 100 East
Liberty, Third Floor Reno, Nevada 89501.
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12. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware and any action arising out of a breach of this
Agreement shall be brought in the State or federal court in Reno, Nevada.
ATTEST: THE NAVELLIER SERIES FUND
By:
- ------------------------------ ----------------------------------------
Louis Navellier, Trustee
By:
----------------------------------------
Barry Sander, Trustee
By:
----------------------------------------
Joel Rossman, Trustee
By:
----------------------------------------
Jacques Delacroix, Trustee
By:
----------------------------------------
Arnold Langsen, Trustee
ATTEST: NAVELLIER SECURITIES CORP.
By:
- ------------------------------ ----------------------------------------
Louis Navellier, President
12
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EXHIBIT 99.9.2
<PAGE>
THE NAVELLIER SERIES FUND
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 19th day of July, 1997, by and between THE
NAVELLIER SERIES FUND, a business trust organized under the laws of the State of
Delaware (the "Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation
(the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund is currently comprised of one portfolio designated as the
"Navellier Aggressive Small Cap Equity Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is registering as an investment adviser under the
Investment Advisers Act of 1940, and will be engaged in the business of acting
as investment adviser and providing certain other services to the Fund; and
WHEREAS, the Fund desires to retain the Adviser to render certain
additional services to the Fund regarding certain bookkeeping, accounting, and
administrative services (the "Services") in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, the Adviser desires to be retained to perform such services on
said terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and the Adviser agree as follows:
1. DUTIES OF ADVISER: (a) The Fund hereby retains the Adviser to provide
to the Fund: (A) such accounting and bookkeeping services and functions as are
reasonably necessary for the operation of the Fund. Such services shall
include, but shall not be limited to, preparation and maintenance of the
following books, records, and other documents: (1) journals containing daily
itemized records of all purchases and sales, and receipts and deliveries of
securities, and all receipts and disbursements of cash, and all other debits and
credits, in the form required by Rule 31a-1(b)(1) under the Investment Company
Act; (2) general and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, in the form required by
Rules 31a-1(b)(2)(i)-(iii) under the Investment Company Act; (3) a securities
record or ledger reflecting separately for each portfolio security as of trade
date all "long" and "short" positions carried by the Fund for the account of
each Portfolio, if any, and showing the location of all securities long and the
off-setting position to all securities short, in the form required by Rule 31a-
1(b)(3) under the Investment Company Act; (4) a record of all portfolio
purchases or sales, in the form required by Rule 31a-1(b)(6) under the
Investment Company Act; (5) a record of all puts, calls, spreads, straddles,
and all other options, if any, in which any Portfolio has any direct or indirect
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interest or which any Portfolio has granted or guaranteed, in the form required
by Rule 31a-1(b)(7) under the Investment Company Act; (6) a record of the proof
of money balances in all ledger accounts maintained pursuant to this Agreement,
in the form required by Rule 31a-1(b)(8) under the Investment Company Act; and
(7) price make-up sheets and such records as are necessary to reflect the
determination of each Portfolio's net asset value. The foregoing books and
records shall be maintained by the Adviser in accordance with and for the time
periods specified by applicable rules and regulations, including Rule 31a-2
under the Investment Company Act. All such books and records shall be the
property of the Fund and upon request therefore, the Adviser shall surrender to
the Fund such of the books and records so requested; and (B) certain
administrative services including, but not limited to, administrative services
to shareholders of the Fund and to respond to inquiries related to shareholder
accounts.
(b) The services to be provided hereunder shall also include
supervisory services relating to the preparation and filing with the appropriate
offices of any reports or other documents, on behalf of the Fund, as shall be
required by applicable law and requested by the Fund, from time to time,
including but not limited to tax returns, financial statements, and such
Forms N-1A and other filings required by the securities laws of the United
States or any state as may be requested form time to time by the Fund.
2. PROVISION OF PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall, from time to time, determine to be necessary or
useful to the performance of its obligations under this Agreement. Without
limiting the generality of the foregoing, such staff and personnel shall be
deemed to include officers of the Adviser and persons employed or otherwise
retained by the Adviser to provide or assist in providing of the Services to the
Fund.
3. PROVISION OF CERTAIN FACILITIES AND EQUIPMENT. The Adviser shall
provide such office space, facilities, and equipment (including, but not limited
to, computer equipment, communication lines and supplies) and such clerical help
and other services as shall be necessary to provide the services to the Fund.
In addition, the Adviser may arrange, on behalf of the Fund and its Portfolios,
to obtain: (1) data processing and/or all of the above services, subject to
approval by a majority of the Fund's Board of Trustees, as necessary to assist
it in providing the Services to the Fund, and (2) pricing information regarding
the Fund's investment securities from such company or companies as are approved
by a majority of the Fund's Board of Trustees, and the Fund shall be financially
responsible to such company or companies as aforesaid, for the reasonable cost
of such services.
4. PROVISION OF INFORMATION TO THE ADVISER. The Fund will, from time to
time, furnish or otherwise make available to the Adviser such information
relating to the business and affairs of the Fund as the Adviser may reasonably
require in order to discharge its duties and obligations hereunder.
5. REIMBURSEMENT OF EXPENSES OF ADVISER. The Fund shall reimburse the
Adviser for such direct expenses, including, but not limited to, (i) those
listed in paragraph 1(b) and 3 above, incurred on behalf of the Fund that are
associated with the providing of the Services, and (ii) those paid to any
delegates of the Adviser pursuant to Section 13 hereof.
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<PAGE>
In no event, however, shall such reimbursement exceed levels that are fair and
reasonable in light of the usual and customary charges made by others for
services of the same nature and quality. Reimbursement under this Agreement
shall be calculated and paid monthly.
The Adviser shall not be required to pay any filing fees and expenses
incurred in connection with the filing of reports or documents pursuant to
section 1(b) herein, or required to be filed by applicable federal or state law,
which fees or expenses shall be borne directly by the Fund.
6. ACCESS TO RECORDS. The Adviser will permit representatives of the
Fund, including the Fund's independent auditors, to have reasonable access to
the personnel and records of the Adviser in order to enable such representatives
to monitor the quality of services being provided and the determination of
reimbursements due the Adviser pursuant to this Agreement. In addition, the
Adviser shall promptly deliver to the Board of Trustees of the Fund such
information as may reasonably be requested form time to time to permit the Board
of Trustees to make an informed determination regarding continuation of this
Agreement and the payments contemplated to be made hereunder.
7. LIMITATION OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or for any loss suffered by
the Fund or its investors in connection with the matters to which this Agreement
relates, except (i) a loss resulting from willful misfeasance, bad faith, or
gross negligence on the part of the Adviser in the performance of its duties or
from reckless disregard by the Adviser of its obligations and duties under this
Agreement, or (ii) a loss for which the Adviser would not be permitted to be
indemnified under the Federal Securities laws.
8. DURATION OF AGREEMENT. This Agreement shall become effective as of the
date of execution hereof and shall remain in effect for two (2) years from the
date hereof and from year to year thereafter, provided such continuance is
approved at least annually by the vote of a majority of the Trustees of the Fund
who are not parties to this Agreement or "interested persons" (as defined in the
Investment Company Act) of any such party, which vote must be cast in person at
a meeting called for the purpose of voting on such approval; and further
PROVIDED, HOWEVER, that (a) the Fund may, at any time and without the payment of
any penalty, terminate this Agreement upon written notice to the Adviser;
(b) this Agreement shall immediately terminate in the event of its "assignment"
(within the meaning of the Investment company Act) to the extent that it would
similarly be required to terminate under similar circumstances if it were an
advisory contract subject to the provisions of Section 15 of the Investment
Company Act and the rules thereunder; and (c) the Adviser may terminate this
Agreement without payment of penalty on sixty days' written notice to the Fund.
Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed post-paid, to the other party at the principal office of
such party.
9. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the applicable provisions of the
Investment Company Act. To the extent the applicable law of the State of Nevada
or any of the provisions herein conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
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10. SEPARATE CONTRACT. This Agreement is separate and distinct from, and
neither affects nor is affected by (i) the Distribution Agreement in effect
between the Fund and Navellier Securities Corp., a Delaware Corporation, or
(ii) the Investment Advisory Agreement in effect between the Adviser and the
Fund.
11. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Fund and the Adviser and their respective successors.
12. AMENDMENT. No amendment or modification of this Agreement shall be
effective unless in writing signed by other parties and witnessed and until
approved by a majority of the outstanding shares of the Fund.
13. DELEGATION OF DUTIES. The Adviser may delegate each duty to be
performed by it hereunder; PROVIDED, HOWEVER, that notwithstanding any such
delegation, the Adviser shall remain responsible for the performance of the
duties to be performed by it hereunder as though such delegation had not
occurred.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
15. COMPENSATION. The Fund shall, in addition to reimbursing Adviser for
expenses as described in Section 5, pay Adviser an annual fee payable monthly
equal to .25% of the Fund's average daily net asset value for performing such
administrative services.
4
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in San Francisco, California.
THE NAVELLIER SERIES FUND
By:
----------------------------------------------
Louis Navellier, Trustee
ATTEST:
By:
----------------------------------------------
Barry Sander, Trustee
/s/ By:
- ------------------------- ----------------------------------------------
Joel Rossman, Trustee
By:
----------------------------------------------
Jacques Delacroix, Trustee
By:
----------------------------------------------
Arnold Langsen, Trustee
Attest:
/s/
- -------------------------
NAVELLIER MANAGEMENT, INC.
By:
----------------------------------------------
Louis Navellier, President
5
<PAGE>
EXHIBIT 99.18
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that THE NAVELLIER SERIES FUND, a Delaware
Business Trust (the "Trust"), and each of its undersigned officers and Trustees
hereby nominate, constitute and appoint Louis Navellier his true and lawful
attorney-in-fact and agent, for him and in his name, place and stead in any and
all capacities, to make, execute and sign all amendments to the Trust's
Registration Statement on Form N-1A under the Securities Act of 1933 and the
Investment Company Act of 1940, and to file with the Securities and Exchange
Commission and any other regulatory authority having jurisdiction over the offer
and sale of shares of the Trust, such amendments, and any and all amendments and
supplements thereto, and any and all exhibits and other documents requisite in
connection therewith granting unto said attorney, full power and authority to do
and perform each and every act necessary and/or appropriate as fully to all
intents and purposes as the Trust and the undersigned officers and Trustees
themselves might or could do.
IN WITNESS WHEREOF, THE NAVELLIER SERIES FUND has caused this power of
attorney to be executed in its name by its Chairman and attested by its
Secretary, and the undersigned officers and Trustees have hereunto set their
hands this 14th day of July, 1997.
ATTEST: THE NAVELLIER SERIES FUND
By:
- ------------------------------ ----------------------------------------
Samuel Kornhauser, Attorney Louis Navellier, Trustee
----------------------------------------
Barry Sander, Trustee
----------------------------------------
Joel Rossman, Trustee
----------------------------------------
Jacques Delacroix, Trustee
----------------------------------------
Arnold Langsen, Trustee
