<PAGE>
ANNUAL REPORT, December 31, 1997
NAVELLIER SERIES FUND
1 East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
- --------------------------------------------------------------------------------
February 20, 1998
Dear Shareholder:
For the year 1997, the Navellier Series Fund, Aggressive Small Cap Equity
Portfolio ("the Fund") was up 11.24% (7.90% after the maximum load). In 1997 the
Russell 2000* was up 20.52% and the NASDAQ Composite** was up 21.64%. The Fund's
annualized return since public offering (April 1, 1994) is 22.01% (21.01% after
the maximum load). The annualized returns for the Russell 2000 and the Nasdaq
Composite over the same period were 15.91% and 22.04% respectively.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
<S> <C> <C> <C>
Series Fund Russell 2000 NASDAQ Composite
4/1/94 $10,000 $10,000 $10,000
6/30/94 $9,521 $9,571 $9,496
9/30/94 $10,427 $10,202 $10,280
12/30/94 $11,426 $9,972 $10,114
3/31/95 $11,655 $10,387 $10,992
6/30/95 $14,048 $11,297 $12,555
9/29/95 $16,514 $12,363 $14,036
12/29/95 $16,431 $12,585 $14,152
3/29/96 $18,009 $13,175 $14,815
6/28/96 $20,973 $13,806 $15,939
9/30/96 $20,323 $13,797 $16,503
12/31/96 $18,968 $14,443 $17,365
3/31/97 $16,015 $13,645 $16,433
6/30/97 $19,256 $15,788 $19,397
9/30/97 $22,029 $18,076 $22,674
12/31/97 $21,101 $17,407 $21,122
</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 by
December 31, 1997, the value of the investment would have grown to $21,101, a
111.01% 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 over the same period would have grown to $21,122, a 111.22%
increase. Similarly an investment of $10,000 in the Russell 2000 over the same
period would have grown to $17,407, a 74.07% 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>
Value strategies dramatically outperformed growth strategies in 1997 by the
largest margin in 19 years. For example, in 1997 the Russell 2000 Value Index
was up 31.78%, while the Russell 2000 Growth Index was only up 12.95%.
Obviously, because Navellier only had "growth" funds available for much of 1997,
our growth bias hurt our performance. Fundamentally, growth stocks are back at
the same levels they were in 1990, just before they exploded in 1991. Often, we
have found that whatever strategy "lagged" in the previous year, "leads" in the
next year.
This was a particularly strong year for large capitalization stocks as
evidenced by a return of 33.31% for the S&P 500. After flirting with small
capitalization stocks in the second and third quarters, the market once again
became a large capitalization dominated and value oriented market, continuing a
trend that has developed over the last 24 months. A few sobering facts from the
fourth quarter include, a flat Dow Jones, and a 2.5% gain for the S&P 500
compared to a -6.8% return for the NASDAQ and a -3.3% return for the Russell
2000. The growth vs. value comparison is even more telling as the Russell 2000
Growth Index lost 8.2% for the fourth quarter while the Russell 2000 Value Index
gained 1.7%. Technology stocks suffered through an extremely volatile year, with
strong second and third quarters sandwiched between dismal first and fourth
quarters. In December, a few technology stocks disappointed Wall Street with
poor quarterly earnings, so the analyst community immediately blamed the
Southeast Asian crisis as the primary reason that they had grossly overestimated
the latest quarterly earnings numbers. As a result, the analyst community
started to slash their 1998 earnings estimates on many leading technology
stocks. Then another bomb fell in December when both Oracle and 3M announced
that its earnings would be hindered by the Southeast Asian crisis. All of a
sudden, the Southeast Asian crisis was encompassing more than just technology
stocks, so the entire U.S. stock market sold off because the analyst community
rushed to aggressively cut earnings estimates on many leading companies. In 1997
the strongest performing stocks were found in the financial sectors as they
continued to benefit from an excellent interest rate environment. The falling
interest rate environment continues to be very supportive for higher stock
prices. The stock and bond markets compete for capital, so when interest rates
move lower, normally stock prices and price earnings ratios drift higher because
more money tends to flow into the stock market.
The financial community continues to marvel at the unprecedented third year
of more than 20% growth for the S&P 500. Many analysts were not surprised by the
terrific performance of the market this year given the favorable economic
conditions. With 3.7% real GDP growth and just 2% GDP-based inflation, we saw
the best overall economic performance in decades. Interest rates trended
downward throughout the year, unemployment fell to 4.7%, capital gains taxes
were cut and inflation was practically non-existent. Consumer confidence
remained strong all year as disposable income rose 3.7% and consequently
consumers spent 3.6% more than they did in 1996. Although payroll costs advanced
by 2.4%, corporate profits still managed to climb by 11%, due to significant
increases in productivity. The old news at this point is the Southeast Asian
crisis, which briefly halted the markets' relentless climb in 1997.
So far in 1998, one of the reasons that the stock market started to rally is
that finally some leading stocks, such as Disney, released better than expected
earnings and inspired a little confidence in the overall stock market. Investors
finally came to the realization that Southeast Asia will not cause the entire
U.S. economy to melt down. The stocks that have been most seriously impacted by
the Southeast Asian crisis, namely technology stocks, have also been rallying
strongly. However, the analyst community remains very wary about the earnings
prospects for many technology companies, so we expect that the recent rebound in
technology stocks is just a "dead-cat" bounce that will soon dissipate. Much of
the recent stock market strength has been isolated in a few key industry groups.
Although the breadth and power of the stock market has improved in recent weeks,
we are still expecting a very selective stock
2
<PAGE>
market, similar to the third quarter of 1997, where large capitalization stocks
take a breather and small-to-mid capitalization stocks lead. NASDAQ has been
stronger than the Dow Industrials and the S&P 500 so far in 1998, so this much
anticipated leadership change may have begun already. Our strategy remains
focused on uncovering stocks with better sales and earnings growth potential
than the overall stock market. We hope that by finding those companies that can
demonstrate consistent accelerating earnings growth, our growth funds will shine
in an increasingly selective market.
This year Navellier is proud to announce that we have broadened our
offerings by introducing four new portfolios in the Navellier Performance Funds
family. We are using a "value" approach to quantitative analysis for our new
Navellier Small Cap Value Portfolio and the Navellier Large Cap Value Portfolio.
We have also introduced our new Navellier Large Cap Growth Portfolio which uses
the more familiar Navellier methodology but focuses on the larger cap sector of
the market. With all three of these portfolios we are seeking strong returns
with reasonable risk levels by using portfolio optimization and risk analysis
programs in conjunction with our proprietary computerized screening process.
Additionally, the Navellier International Equity Portfolio made its debut this
year. We would like to introduce to you a new member of the Navellier team, Ram
Kolluri, who will be responsible for management of the Navellier International
Equity Portfolio. We strongly encourage all of our clients to call us for more
information on the new portfolios and for help with the recommended allocations
for all of our funds.
Finally, a short note regarding the proposed merger of the Navellier Series
Fund, Aggressive Small Cap Equity Portfolio into the Navellier Performance Funds
family and the load status of the Fund. As many of you already know we made the
Fund a no-load fund back in December of 1997. We have suffered through a number
of delays in bringing the Fund into the Navellier Performance Funds family and
as a result, we felt it was only fair to make the Fund no-load until the merger
process is completed. The no-load status of the Fund is only one of several
advantages to be achieved through the merger process. In addition, we want to
thank you for your patience and for sticking with us through an unprecedented
period of turmoil last spring and summer.
Please call our new Navellier Marketline for the latest fund prices and
weekly market commentary at (800) 730-9005 and look for our new website at
www.navellier.com.
Thank you for allowing us to manage some of your assets. We feel very
obligated to our shareholders and promise to make every effort to maintain our
high performance standards. As always, please feel free to contact us if you
have any questions or if we can help you in any way.
Sincerely,
<TABLE>
<S> <C>
[SIG] [SIG]
LOUIS G. NAVELLIER ALAN ALPERS
</TABLE>
THIS MATERIAL HAS BEEN PRECEDED BY A NAVELLIER SERIES FUND 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
SALE.
** 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 SALE.
3
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------
<C> <S> <C>
MARKET VALUE
SHARES (NOTE 1)
<CAPTION>
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--92.4% OF TOTAL INVESTMENTS
AEROSPACE -- 1.9%
40,000 Ducommun, Inc.* $ 1,397,500
-------------
APPAREL -- 2.5%
56,800 Oshkosh B Gosh, Inc. 1,874,400
-------------
AUTOMOTIVE -- 0.9%
16,000 Carlisle Companies, Inc. 684,000
-------------
BANKS -- 5.9%
30,000 City National Corp. 1,108,125
39,000 Commercial Bank of New York 897,000
18,400 First Oak Brook Bancshares,
Inc. 883,200
80,500 Independent Bank Corp. 1,479,187
-------------
4,367,512
-------------
BUILDING AGGREGATES -- 3.8%
35,000 Centex Construction
Products, Inc. 1,054,375
50,800 Florida Rock Industries,
Inc. 1,155,700
10,000 Southdown, Inc. 590,000
-------------
2,800,075
-------------
BUILDING PRODUCTS -- 1.5%
50,600 American Woodmark Corp. 1,113,200
-------------
CATALOG AND SPECIALTY DISTRIBUTION -- 2.8%
49,700 D M Management, Co.* 776,563
38,500 New England Business
Service, Inc. 1,299,375
-------------
2,075,938
-------------
COMPUTER SOFTWARE -- 1.8%
40,800 Compuware Corp.* 1,305,600
-------------
CONSTRUCTION AND HEAVY EQUIPMENT -- 6.8%
42,000 Gardner Denver Machinery,
Inc.* 1,063,125
70,000 Gehl Co.* 1,470,000
55,300 Terex Corp.* 1,299,550
41,100 Wabash National Corp. 1,168,781
-------------
5,001,456
-------------
CONSUMER SERVICES -- 1.0%
38,500 Ambassadors International,
Inc.* 750,750
-------------
CONTAINERS AND PACKAGING -- 0.2%
5,000 BWAY Corp.* 114,375
-------------
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <C>
CONTRACT DRILLING -- 1.9%
36,000 Patterson Energy Inc.* $ 1,392,750
-------------
DISCOUNT STORES -- 1.3%
53,000 Ames Department Stores* 927,500
-------------
EDP PERIPHERALS AND SERVICES -- 3.0%
71,000 Genicom Corp.* 816,500
27,900 Systems & Computer Tech.* 1,384,538
-------------
2,201,038
-------------
ELECTRONICS -- 4.8%
60,000 Advanced Energy Industries,
Inc.* 896,250
30,400 C & D Technologies, Inc. 1,466,800
72,200 EFTC Corp.* 1,173,250
-------------
3,536,300
-------------
FLUID CONTROLS -- 1.1%
49,400 ESSEF Corp.* 790,400
-------------
HOMEBUILDING -- 6.2%
67,400 Engle Homes, Inc. 1,238,475
50,000 Fairfield Communities,
Inc.* 2,212,500
53,000 NVR, Inc.* 1,159,375
-------------
4,610,350
-------------
HOSPITAL AND NURSING MANAGEMENT -- 0.5%
13,950 Quorum Health Group, Inc.* 364,444
-------------
INDUSTRIAL SPECIALTIES -- 1.4%
30,000 Carbide/Graphite Group,
Inc.* 1,012,500
-------------
INSURANCE -- 4.5%
15,000 Allied Group, Inc. 429,375
24,000 Enhance Financial Services
Group 1,428,000
100,000 Hooper Holmes, Inc. 1,456,250
-------------
3,313,625
-------------
INVESTMENT BANKERS AND BROKERS
SERVICES -- 3.6%
40,500 Duff & Phelps Credit
Rating Co. 1,645,312
38,500 Southwest Securities Group,
Inc. 991,375
-------------
2,636,687
-------------
MEDICAL SPECIALTIES -- 0.4%
10,000 Osteotech, Inc.* 272,500
-------------
</TABLE>
4
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
METAL FABRICATIONS -- 2.2%
52,500 Encore Wire Corp.* $ 1,611,094
-------------
MILITARY/GOVERNMENT/TECHNICAL -- 3.4%
50,000 Allied Research Corp.* 621,875
99,100 Applied Signal Technology* 1,362,625
30,000 Engineered Support Systems,
Inc. 551,250
-------------
2,535,750
-------------
OIL AND GAS TRANSMISSION -- 1.3%
21,500 Santa Fe Pacific Pipeline
Partner 983,625
-------------
PRECISION INSTRUMENTS -- 2.2%
43,200 MTS Systems Corp. 1,620,000
-------------
PRINTING AND FORMS -- 2.9%
29,000 Consolidated Graphics,
Inc.* 1,352,125
20,000 Mail-Well, Inc.* 810,000
-------------
2,162,125
-------------
SAVINGS AND LOAN ASSOCIATIONS -- 12.3%
7,000 Advantage Bancorp, Inc. 496,125
10,000 Andover Bancorp, Inc. 402,500
40,500 CFSB Bancorp, Inc. 1,063,125
31,000 Columbia Banking Systems,
Inc.* 837,000
39,466 New York Bancorp, Inc. 1,566,307
101,400 PDS Financial Corp.* 684,450
66,800 St. Paul Bancorp, Inc. 1,753,500
50,000 TR Financial Corp. 1,662,500
16,000 Trans Financial, Inc. 622,000
-------------
9,087,507
-------------
SEMICONDUCTORS -- 1.8%
33,000 Dallas Semiconductor Corp. 1,344,750
-------------
SERVICES: HEALTH INDUSTRY -- 0.7%
54,000 TLII Liquidating Corp. 536,625
-------------
<CAPTION>
- -------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <C>
SPECIALTY FOODS AND CANDY -- 0.8%
9,400 Suiza Food Corp.* $ 559,887
-------------
SPECIALTY STEELS -- 1.5%
74,500 Universal Stainless Alloy* 1,080,250
-------------
SPECIALTY STORES -- 0.5%
24,000 Funco, Inc.* 357,000
-------------
TELECOMMUNICATIONS EQUIPMENT -- 1.3%
51,500 Cognitronics Corp.* 988,156
-------------
TEXTILES -- 2.0%
126,900 Dyersburg Corp. 1,443,488
-------------
TRUCKING -- 1.2%
35,600 Landair Services, Inc.* 863,300
-------------
WHOLESALERS -- 0.7%
20,000 Cellstar Corp.* 397,500
3,000 United Stationers, Inc.* 144,375
-------------
541,875
-------------
TOTAL COMMON STOCK
(COST $60,320,356) 68,258,332
-------------
AGENCY OBLIGATIONS -- 7.6%
<CAPTION>
- -------------------------------------------------------
PRINCIPAL
- ------------------------------------------------------
<C> <S> <C>
$ 5,601,000 Federal Home Loan Bank
Discount Notes, 4.75%,
1/2/97 (Cost $5,599,522) $ 5,599,522
-------------
TOTAL INVESTMENTS -- 100.0%
(COST $65,919,878) $ 73,857,854
-------------
-------------
</TABLE>
- -------------------------------------------------
(*) NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Securities at Value (Note 1) (Cost $65,919,878)........................................ $73,857,854
Cash in Custodian Bank................................................................. 1,863
Receivable for Shares Sold............................................................. 35,000
Dividends Receivable................................................................... 31,419
Interest Receivable.................................................................... 739
Unamortized Organizational Costs (Note 1).............................................. 1,918
-----------
Total Assets......................................................................... 73,928,793
-----------
LIABILITIES
Distributions Payable.................................................................. 584,370
Payable for Shares Redeemed............................................................ 351,137
Investment Advisory Fee Payable (Note 2)............................................... 79,945
Administrative Fee Payable (Note 2).................................................... 15,989
Other Payables and Accrued Expenses.................................................... 15,989
Commissions Payable.................................................................... 204
Organizational Expenses Payable to Adviser (Note 1).................................... 1,918
-----------
Total Liabilities.................................................................... 1,049,552
-----------
NET ASSETS............................................................................... $72,879,241
-----------
-----------
SHARES OUTSTANDING....................................................................... 4,555,116
-----------
-----------
NET ASSET VALUE PER SHARE................................................................ $16.00
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest (Note 1)..................................................................... $ 353,737
Dividends (Note 1).................................................................... 606,957
------------
Total Investment Income............................................................. 960,694
------------
EXPENSES
Investment Advisory Fee (Note 2)...................................................... 1,257,496
Extraordinary Expenses (Note 2)....................................................... 578,902
Administrative Fee (Note 2)........................................................... 251,499
Transfer Agent and Custodian Fee (Note 3)............................................. 230,537
Legal Fees............................................................................ 75,991
Shareholder Reports and Notices....................................................... 63,197
Registration Fees..................................................................... 56,935
Proxy Expense......................................................................... 43,234
Audit Fees............................................................................ 22,100
Trustees' Fees and Expenses (Note 2).................................................. 21,150
Organizational Expense (Note 1)....................................................... 2,892
Other Expenses........................................................................ 31,140
------------
Total Expenses...................................................................... 2,635,073
Less Expenses Reimbursed by Investment Adviser (Note 2)............................. (295,677)
------------
Net Expenses...................................................................... 2,339,396
------------
NET INVESTMENT LOSS..................................................................... (1,378,702)
------------
Net Realized Gain on Investment Transactions............................................ 25,247,521
Net Change in Unrealized Appreciation/Depreciation of Investments....................... (28,940,108)
------------
NET LOSS ON INVESTMENTS................................................................. (3,692,587)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $ (5,071,289)
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
----------------------------
1997 1996
------------- -------------
FROM INVESTMENT ACTIVITIES
<S> <C> <C>
Net Investment Loss.................................................. $ (1,378,702) $ (2,477,826)
Net Realized Gain on Investment Transactions......................... 25,247,521 463,797
Net Change in Unrealized Appreciation/Depreciation of Investments.... (28,940,108) 18,466,247
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations.... (5,071,289) 16,452,218
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Realized Gain............................................... (14,124,008) --
------------- -------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares.................................... 60,192,194 286,125,562
Reinvestment of Distributions........................................ 13,539,639 --
Cost of Shares Redeemed.............................................. (171,691,808) (217,842,421)
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Share
Transactions..................................................... (97,959,975) 68,283,141
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................ (117,155,272) 84,735,359
NET ASSETS -- Beginning of Year........................................ 190,034,513 105,299,154
------------- -------------
NET ASSETS -- End of Year.............................................. $ 72,879,241 $ 190,034,513
------------- -------------
------------- -------------
SHARES
Sold................................................................. 4,277,974 16,325,181
Issued in Reinvestment of Distributions.............................. 846,228 --
Redeemed............................................................. (11,252,090) (12,473,362)
------------- -------------
Net Increase (Decrease) in Shares.................................. (6,127,888) 3,851,819
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
FOR THE YEARS ENDED DECEMBER 31, PERIOD ENDED
-------------------------------- DECEMBER 31,
1997 1996 1995 1994*
-------- --------- --------- ------------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C>
Net Asset Value -- Beginning of Period...................... $17.79 $15.41 $10.98 $10.00
-------- --------- --------- ------------
Income from Investment Operations:
Net Investment Loss....................................... (0.30) (0.23) (0.16) (0.08)
Net Realized and Unrealized Gain on Investments........... 2.30(C) 2.61 4.97 1.06
-------- --------- --------- ------------
Total from Investment Operations........................ 2.00 2.38 4.81 0.98
-------- --------- --------- ------------
Distributions to Shareholders:
From Net Realized Gain.................................... (3.79) -- (0.38) --
-------- --------- --------- ------------
Net Increase (Decrease) in Net Asset Value.................. (1.79) 2.38 4.43 0.98
-------- --------- --------- ------------
Net Asset Value -- End of Period............................ $16.00 $17.79 $15.41 $10.98
-------- --------- --------- ------------
-------- --------- --------- ------------
TOTAL INVESTMENT RETURN(A).................................. 11.24% 15.44% 43.80% 9.80%
RATIOS TO AVERAGE NET ASSETS:
Expenses After Reimbursement (Note 2)....................... 2.33% 1.75% 1.75% 1.68%(D)
Expenses Before Reimbursement (Note 2)...................... 2.62% 1.86% 2.10% 4.52%(D)
Net Investment Loss......................................... (1.37)% (1.33)% (1.15)% (0.81)%(D)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate..................................... 183.5% 136.9% 169.6% 139.9%
Net Assets at End of Period (000's omitted)................. $72,879 $190,035 $105,299 $18,224
Number of Shares Outstanding at End of Period (000's
omitted).................................................. 4,555 10,683 6,831 1,660
Average Commission Rate Paid(B)............................. $0.0402 $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) 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.
(C) The per share amount does not coincide with the net realized and
unrealized loss for the year because of the timing of sales and
redemptions of Fund shares and the amount of per share realized and
unrealized gain and loss at such time.
(D) Annualized
*FROM COMMENCEMENT OF OPERATIONS JANUARY 3, 1994
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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. Prior to
December 8, 1997, shares of the Fund were purchased at the public offering price
which includes a maximum sales charge of up to 3% depending on the size of the
purchase. Since December 8, 1997, shares of the Fund are sold without sales
charge. 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. Short-term obligations, which mature in 60
days or less, are valued at amortized cost, which approximates current 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 gain and
loss 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 intends to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies and distributes all net
investment income and net capital gains to its shareholders. Therefore, no
Federal income or excise 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. During 1997, the initial investor redeemed a portion of the
initial shares. At December 31, 1997, unamortized organization costs were
$1,918.
2. Investment Advisory Fees and Other Transactions with Affiliates
INVESTMENT ADVISER
For the periods from January 1, 1997, to March 15, 1997, and from July 15,
1997, to December 31, 1997, investment advisory services and administrative
services were provided by Navellier Management, Inc., (the "Adviser"). From
March 16, 1997, to July 14, 1997, investment advisory services and
administrative services 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 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
10
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
Directors and officers of Navellier served as Trustees of the Fund during the
periods from January 1, 1997 to March 15, 1997 and from July 11, 1997 to
December 31, 1997, and certain officers of MFS served as officers of the Fund
from March 16, 1997, to July 14, 1997.
Prior to March 15, 1997, and during the period July 15, 1997, to December
31, 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, 1997. For the period from March 16, 1997
to July 14, 1997, MFS agreed to bear the Fund's normal operating expenses,
subject to reimbursement by the Fund. The expense reimbursement arrangement with
MFS did 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 July 14, 1997, the Fund incurred $578,902
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
the periods from January 1, 1997, to March 15, 1997, and July 15, 1997, to
December 31, 1997, and the operating expense agreement between MFS and the Fund
from March 16, 1997, to July 14, 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 December 31, 1997, for Navellier and
MFS are disclosed below.
<TABLE>
<CAPTION>
NAVELLIER MFS
--------- ---------
<S> <C> <C>
Operating expenses incurred................................................. $ 306,581 $ 240,595
Amounts reimbursed.......................................................... 182,162 69,337
--------- ---------
Unreimbursed amounts........................................................ $ 124,419 $ 171,258
--------- ---------
--------- ---------
Amount subject to request for reimbursement which has been waived by the
investment adviser......................................................... $ 124,419 $ 171,258
--------- ---------
--------- ---------
</TABLE>
DISTRIBUTOR
For the periods January 1, 1997, to March 15, 1997, and July 15, 1997, to
December 31, 1997, Navellier Securities Corp. ("NSC") acted as the Fund's
Distributor pursuant to a distribution agreement with the Fund. During these
periods an officer and Trustee of the Fund also was an officer and Director of
NSC. For the period from March 16, 1997, to July 14, 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 year ended December 31, 1997, NSC and MFD received $48,963 and
$23,540, 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 year ended December 31,
1997, Trustees' fees and expenses totaled $21,150.
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.
11
<PAGE>
NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO
- ------------------------------------------------------------------
4. Securities Transactions
For the period ended December 31, 1997, purchases of securities were
$176,220,122 and sales of securities were $287,303,049. These totals exclude
short-term securities.
5. Net Unrealized Appreciation/Depreciation of Investments
As of December 31, 1997, net appreciation of investments for Federal income
tax purposes was $7,936,642 of which $10,897,501 related to appreciated
investments and $2,960,859 related to depreciated investments. At December 31,
1997, the cost of the Fund's securities for Federal income tax purposes was
$65,921,212.
6. Net Assets
At December 31, 1997, net assets consisted of the following:
<TABLE>
<S> <C>
Paid-in-Capital......................................................................... $62,554,653
Accumulated Net Realized Gain on Investment Transactions................................ 2,386,612
Net Unrealized Appreciation of Investments.............................................. 7,937,976
-----------
NET ASSETS.............................................................................. $72,879,241
-----------
-----------
</TABLE>
7. Federal Income Tax
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 shareholder all of its net investment income, if any, and all of its realized
gain on investments. Accordingly, no provision is made for Federal income taxes
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
statement 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 gain or loss are reclassified. As of December 31, 1997, net
investment loss of $1,378,702 was reclassified to accumulated net realized gain
on investments and $5,447,997 of accumulated net realized gain on investments
was reclassified to paid-in-capital.
12
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
Navellier Series Fund
Reno, Nevada
We have audited the accompanying statement of assets and liabilities of the
Navellier Aggressive Small Cap Equity Portfolio of the Navellier Series Fund,
including the portfolio of investments, as of December 31, 1997, and the related
statement of operations, the statement of changes in net assets, and the
financial highlights for the year then ended. These financial statements are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The financial statements and financial highlights presented for the year
ended December 31, 1996 and prior were audited by other auditors whose report
dated January 31, 1997, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1997, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Navellier Aggressive Small Cap Equity Portfolio as of December 31, 1997, the
results of its operations, the changes in its net assets, and the financial
highlights for the year then ended in conformity with generally accepted
accounting principles.
[LOGO]
Philadelphia, Pennsylvania
February 20, 1998
13
<PAGE>
[LOGO]
NAVELLIER
SERIES FUND
-------------------
ANNUAL REPORT
DECEMBER 31, 1997
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.
