As Filed With The Securities And Exchange Commission On August 19, 2003


                                                               File No. 811-3651

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933


Pre-Effective Amendment No. _2_


Post-Effective Amendment No. __

                           TOUCHSTONE STRATEGIC TRUST
    -------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

            221 East Fourth Street, Suite 300, Cincinnati, Ohio 45202
    -------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (800) 543-0407
    -------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

                               Patrick T. Bannigan
                        221 East Fourth Street, Suite 300
                             Cincinnati, Ohio 45202
   --------------------------------------------------------------------------
               (Name and Address of Agent for Service of Process)

                                   Copies to:


                               Tina Hosking Bloom
                        221 East Fourth Street, Suite 300
                             Cincinnati, Ohio 45202


                             Samuel Kornhauser, Esq.
                         155 Jackson Street, Suite 1807
                         San Francisco, California 94111

Approximate  Date of Proposed  Public  Offering is as soon as practicable  after
this Registration Statement becomes effective.


The  Registrant  has  registered  an indefinite  amount of securities  under the
Securities  Act of 1933 pursuant to Section 24(f) under the  Investment  Company
Act of  1940;  accordingly,  no fee is  payable  herewith.  The  Registrant  has
undertaken  to file on or before June 30, 2004, a Rule 24f-2 Notice for its most
recent fiscal year ended March 31, 2004.


The Registrant hereby amends this  Registration  Statement on such date or dates
as may be necessary to delay its effective date until the Registrant  shall file
a further amendment which specifically  states that this Registration  Statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities  Act of 1933, as amended or until the  Registration  Statement  shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.



                           TOUCHSTONE STRATEGIC TRUST

                       CONTENTS OF REGISTRATION STATEMENT

               This Registration Statement contains the following
                              pages and documents:

                                   Front Cover
                                  Contents Page
                             Letter to Shareholders
                            Notice of Special Meeting

                                     PART A

                       Combined Prospectus/Proxy Statement

                                     PART B

                       Statement of Additional Information

                                     PART C

                                Other Information
                                   Signatures
                                    Exhibits





                         THE NAVELLIER PERFORMANCE FUNDS

                      ONE EAST LIBERTY STREET, THIRD FLOOR
                               RENO, NEVADA 89501

                                 1-800-887-8671


                                 August 19, 2003


                             TO THE SHAREHOLDERS OF

                    THE NAVELLIER LARGE CAP GROWTH PORTFOLIO

Dear Shareholder:


     A special  meeting of the  shareholders  of The Navellier  Large Cap Growth
Portfolio (the "Portfolio"), a series of The Navellier Performance Funds will be
held at 10:00 A.M.,  Pacific  Standard  Time,  on September  19, 2003, or a date
shortly thereafter,  at the offices of The Navellier Performance Funds, One East
Liberty Street Third Floor, Reno, Nevada 89501 (the "Meeting"). The shareholders
of the Portfolio (the "Shareholders") will vote on a proposed Agreement and Plan
of Reorganization  (the "Plan").  Under the Plan, the Navellier Large Cap Growth
Portfolio of The Navellier  Performance Funds and The Navellier Large Cap Growth
Portfolio of The Navellier Millennium Funds will merge into the Touchstone Large
Cap Growth Fund (the "Acquiring  Fund"), a separate  portfolio of the Touchstone
Strategic  Trust  (the  "Reorganization").   Upon  completion  of  the  proposed
Reorganization,  the investment  strategies of the  Touchstone  Large Cap Growth
Fund  will be  changed  to those  of  Navellier  Large  Cap  Growth  Portfolios.
Touchstone  Large  Cap  Growth's  investment   objective  is  identical  to  the
investment  objective of  Navellier  Large Cap Growth and  Touchstone  Large Cap
Growth's  investment  policies  will be  substantially  identical  to  those  of
Navellier Large Cap Growth.  In addition,  the investment  manager of Touchstone
Large Cap Growth will change the investment  sub-advisor of Touchstone Large Cap
Growth to the manager of the Navellier Large Cap Growth,  Navellier  Management,
Inc. The Acquiring Fund has three classes of shares. The Class 'A' shares charge
an  initial  sales  charge of 5.75%.  The Class 'B' shares  charge a  contingent
deferred  sales  charge  which is  incrementally  reduced  over  time from 5% on
redemptions within a year of purchase down to 0% on redemptions after six years.
The Class 'C' shares charge a 1% contingent deferred sales charge on redemptions
within one year of purchase. However, this will not affect you since you will be
a Class 'A'  shareholder  of the Acquiring  Fund and will not be charged a sales
load.  You may continue to purchase Class 'A' shares of the Acquiring Fund after
the  reorganization  without a sales  load for as long as you  maintain  an open
account in the Acquiring Fund.  Like the Portfolio,  the Class 'A' Shares of the
Acquiring Fund are charged an annual 12b-1 fee of 0.25%.


     The  Acquiring  Fund  charges an annual  management  fee of 0.75% of assets
under management which is less than the annual 0.84% you are charged now.

     The total  annual  net  operating  expenses  of the Class 'A' shares of the
Acquiring  Fund for 2002 were  1.37%  which is less than the  total  annual  net
operating expenses of the Portfolio for 2002 which were 1.49%.

     If the Plan is approved and implemented by the Portfolio,  the Shareholders
of the Portfolio will become shareholders of the Acquiring Fund and will receive
shares of the  Acquiring  Fund having an aggregate  value equal to the aggregate
value of his or her investment in the Portfolio. No sales charge will



be  imposed  as a  result  of the  Reorganization.  The  Acquiring  Fund and the
Portfolio have received an opinion of counsel indicating that the Reorganization
will qualify as a tax-free reorganization for Federal income tax purposes.

     I and the Trustees of the Portfolio by a unanimous vote have voted in FAVOR
of the proposed merger and are urging you and the other  Portfolio  Shareholders
to vote FOR a merger of the Portfolio  into the Acquiring  Fund. I and the other
Portfolio  Trustees are soliciting your proxy  (vote)because we believe that the
proposed  merger should benefit  Shareholders  by reducing  portfolio  operating
costs.

     We  believe  that  this  Reorganization  is in  the  best  interest  of the
Portfolio and the Shareholders and,  therefore,  recommend that the Shareholders
vote FOR approving the Plan.


     WE STRONGLY URGE YOU TO REVIEW,  COMPLETE, AND RETURN YOUR WHITE PROXY CARD
AS SOON AS  POSSIBLE.  YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
VOTING YOUR SHARES EARLY WILL HELP TO AVOID COSTLY  FOLLOW-UP MAIL AND TELEPHONE
SOLICITATION. LOUIS NAVELLIER AND NAVELLIER MANAGEMENT, INC. ARE PAYING FOR THIS
PROXY  SOLICITATION AND WILL NOT SEEK  REIMBURSEMENT  FROM THE PORTFOLIO OR YOU.
AFTER REVIEWING THE ENCLOSED MATERIALS, PLEASE EXERCISE YOUR RIGHT TO VOTE TODAY
AND VOTE FOR THE MERGER BY COMPLETING,  DATING,  AND SIGNING EACH PROXY CARD YOU
RECEIVE AND MAILING THE PROXY IN THE  SELF-ADDRESSED,  POSTAGE-PAID  ENVELOPE TO
PROXY TABULATOR,  P.O. BOX 9122,  HINGHAM,  MA 02043-9717.  IT IS VERY IMPORTANT
THAT YOU VOTE AND THAT  YOUR  VOTING  INSTRUCTIONS  BE  RECEIVED  NO LATER  THAN
SEPTEMBER 15, 2003 OR A DATE SHORTLY THEREAFTER.


     Please  note that you may receive  more than one proxy  package if you hold
shares of the  Portfolio in more than one account.  You should  return  separate
proxy  cards for each  such  account.  If you have any  questions,  please  call
Navellier Management, Inc. at 1-800-887-8671.

                                          Sincerely,

                                          Louis G. Navellier

                                          /s/ Louis G. Navellier
                                          -------------------------------
                                          Trustee of The Navellier Large
                                          Cap Growth Portfolio of The
                                          Navellier Performance Funds



                                 THE TRUSTEES OF
                         THE NAVELLIER PERFORMANCE FUNDS

                      ONE EAST LIBERTY STREET, THIRD FLOOR
                               RENO, NEVADA 89501
                            ------------------------

                    THE NAVELLIER LARGE CAP GROWTH PORTFOLIO
                            ------------------------


                    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
           TO BE HELD September 19, 2003 OR A DATE SHORTLY THEREAFTER


To:  The  Shareholders  of the  Navellier  Large  Cap  Growth  Portfolio  of The
     Navellier Performance Funds


     You are hereby notified that a Special  Meeting of the  Shareholders of The
Navellier Large Cap Growth Portfolio of The Navellier  Performance Funds will be
held at the offices of The Navellier Performance Funds, One East Liberty Street,
Third  Floor,  Reno,  Nevada  89501  on  September  19,  2003 or a date  shortly
thereafter at 10:00 a.m. (Pacific Standard Time), for the purpose of considering
and voting upon the following matter:


PROPOSAL 1.

     To approve a proposed  Agreement and Plan of  Reorganization  (the "Plan"),
     whereby  The  Navellier  Large Cap  Growth  Portfolio  ("Portfolio")  would
     transfer all of its assets to the Large Cap Growth Fund, a portfolio of the
     Touchstone  Strategic Trust (the "Acquiring  Fund") in a tax-free  exchange
     for  shares of  beneficial  interest  in the  Acquiring  Fund that would be
     distributed  to the  shareholders  of the  Portfolio.  Also, as part of the
     Plan,  the  Acquiring  Fund  would  assume  all  valid  liabilities  of the
     Portfolio.  Also, as part of the Plan, the Acquiring Fund would acquire all
     of the assets and liabilities of the Navellier  Large Cap Growth  Portfolio
     of the Navellier Millennium Funds.


     The transactions  contemplated by the proposed Plan and related matters are
described in the attached  Combined  Prospectus/Proxy  Statement.  A copy of the
proposed  Plan is  attached  as  Appendix  A thereto.  A copy of the  Investment
Advisory Agreement between the Acquiring Fund and Touchstone Advisors,  Inc. and
a copy of the form of the sub-advisory  agreement between  Touchstone  Advisors,
Inc. and Navellier  Management,  Inc.,  reducing the total annual management fee
that will be charged to you after the  merger to 0.75% of the  Acquiring  Fund's
net asset  value per annum are  attached  thereto as  Appendix B and  Appendix C
respectively.  A copy of the Acquiring  Fund's 12b-1 Plan is attached thereto as
Appendix D.

     You are entitled to vote at the Meeting, and any adjournment(s) thereof, if
you owned shares of the  Portfolio at the close of business on July 31, 2003. If
you attend the Meeting, you may vote your shares in person. If you do not expect
to attend the meeting,  please  complete,  date,  sign,  and return the enclosed
proxy  card  marked  FOR in the  enclosed  self-addressed,  postage-paid  return
envelope.


                                          Louis G. Navellier
                                          ------------------------------
                                          Trustee of The Navellier Large
                                          Cap Growth Portfolio of The
                                          Navellier Performance Funds

August 19, 2003



                             YOUR VOTE IS IMPORTANT
                        NO MATTER HOW MANY SHARES YOU OWN


     PLEASE VOTE "FOR" PROPOSAL 1 ON THE ENCLOSED WHITE PROXY CARD,  THEN PLEASE
DATE AND SIGN THE CARD AND RETURN THE PROXY CARD IN THE  ENVELOPE  PROVIDED.  IF
YOU SIGN, DATE AND RETURN THE PROXY CARD BUT GIVE NO VOTING  INSTRUCTIONS,  YOUR
SHARES WILL BE VOTED "FOR" THE  PROPOSAL  NOTICED  ABOVE.  IN ORDER TO AVOID THE
ADDITIONAL EXPENSE AND DELAY OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN
MAILING IN YOUR WHITE PROXY CARD  PROMPTLY  SO THAT A QUORUM MAY BE  ENSURED.  A
VOTE OF 67% OF THE  SHARES OF THE  PORTFOLIO  WHICH ARE  PRESENT IN PERSON OR BY
PROXY AND ENTITLED TO VOTE (IF MORE THAN 50% OF THE OUTSTANDING SHARES OF RECORD
ARE  PRESENT IN PERSON OR BY PROXY) OR MORE THAN 50% OF THE  OUTSTANDING  SHARES
ENTITLED TO VOTE, WHICHEVER IS LESS, IS REQUIRED TO PASS ANY PROPOSAL, SO RETURN
OF YOUR PROXY IS IMPORTANT.  UNLESS PROXY CARDS  SUBMITTED BY  CORPORATIONS  AND
PARTNERSHIPS  ARE SIGNED BY THE  APPROPRIATE  PERSONS AS INDICATED IN THE VOTING
INSTRUCTIONS ON THE PROXY CARD, SUCH PROXY CARDS CANNOT BE VOTED.


                                          Louis G. Navellier
                                          ------------------------------
                                          Trustee of The Navellier Large
                                          Cap Growth Portfolio of The
                                          Navellier Performance Funds



                               PROXY SOLICITATION
                                       BY
                                 THE TRUSTEES OF
                   THE NAVELLIER LARGE CAP GROWTH PORTFOLIO OF
                         THE NAVELLIER PERFORMANCE FUNDS

                            ------------------------

                      ONE EAST LIBERTY STREET, THIRD FLOOR
                               RENO, NEVADA 89501
                                 1-800-887-8671

                       COMBINED PROSPECTUS/PROXY STATEMENT


     This combined  prospectus/proxy  statement is being furnished in connection
with the  solicitation  of proxies by the  Trustees of The  Navellier  Large Cap
Growth Portfolio  ("Portfolio") of The Navellier Performance Funds ("Fund"), for
use at a special meeting of shareholders  ("Shareholders") of the "Portfolio" to
be held at 10:00 a.m.,  Pacific  Standard  Time,  on September  19, 2003, at the
offices of The  Navellier  Performance  Funds,  One East Liberty  Street,  Third
Floor,  Reno, Nevada 89501, and at any  adjournment(s)  thereof (the "Meeting").
The  Meeting  is  being  held so that  shareholders  can  vote on the  following
proposal made by the Trustees of the Portfolio:


     PROPOSAL 1.

          To  approve  a  proposed  Agreement  and Plan of  Reorganization  (the
     "Plan"),  whereby the  Portfolio  would  transfer  all of its assets to the
     Large Cap Growth Fund, a portfolio of the Touchstone  Strategic  Trust (the
     "Acquiring Fund"), in a tax-free exchange for shares of beneficial interest
     in the Acquiring Fund that would be distributed to the  shareholders of The
     Portfolio.  Also, as part of the Plan,  the Acquiring Fund would assume all
     valid  liabilities  of The  Portfolio.  Also,  as  part  of the  Plan,  the
     Navellier  Large Cap growth  Portfolio of the  Navellier  Millennium  Funds
     ("Millennium  Portfolio")  would  transfer  all of  its  assets  and  valid
     liabilities to the Acquiring Fund.

     The Portfolio is a series  investment  company organized by Louis Navellier
as a  Business  Trust in the State of  Delaware  with one class of common  stock
outstanding,  with such class  representing  an interest in a separate series of
the Fund.  Only  shareholders of the Portfolio are being solicited in connection
with the Meeting.

     The purpose of the Meeting is to consider a proposed Plan of Reorganization
(the  "Plan"),  which would effect a merger of the Portfolio and also the merger
of the  Millennium  Portfolio  into the  Acquiring  Fund,  and the  transactions
contemplated thereby, as described below (collectively,  the  "Reorganization").
The Acquiring Fund is a series open-end investment company which seeks long-term
growth of capital by investing in large cap growth securities. The Plan has been
approved unanimously by the Board of Trustees of the Portfolio,  by the Board of
Trustees  of the  Millennium  Portfolio  and by the  Board  of  Trustees  of the
Acquiring  Fund.  Pursuant  to the  proposed  Plan,  all of  the  assets  of the
Portfolio and all of the assets of the Millennium Portfolio would be acquired by
the  Acquiring  Fund  (which has  investment  policies  the same as those of the
Portfolio),  in a tax-free  exchange  for shares of  beneficial  interest in the
Acquiring Fund ("Acquiring Fund Shares") and the assumption by



the  Acquiring  Fund  of  all  valid  liabilities  of the  Portfolio  and of the
Millennium  Portfolio.  Specifically,  it is  proposed  that the  assets  of the
Portfolio  and the assets of the  Millennium  Portfolio  be  transferred  to the
Acquiring  Fund in a tax-free  exchange for Acquiring Fund Shares of value equal
to the assets transferred from the Portfolio and from the Millennium  Portfolio.
Following  such transfer,  the Acquiring  Fund Shares  received by the Portfolio
would then be distributed  pro rata to the  shareholders  of the Portfolio,  and
then  the  Portfolio   would  be  liquidated.   As  a  result  of  the  proposed
transactions,  each  shareholder of the Portfolio would receive a number of full
and fractional  Acquiring  Fund Shares having a total net asset value equal,  on
the  effective  date  of the  Reorganization,  to the  net  asset  value  of the
Shareholder's shares of beneficial interest in the Portfolio. In order to have a
merger,  the  Trustees  of the  Portfolio  and the  Trustees  of the  Millennium
Portfolio  and the  Trustees of the  Acquiring  Fund must  approve the  proposed
merger.  The Trustees of the Portfolio and of the  Millennium  Portfolio and the
Trustees of the Acquiring Fund have already approved the proposed merger.


     This  combined  prospectus/proxy  statement,  which  should be retained for
future  reference,  sets forth concisely the information about the Portfolio and
the  Acquiring  Fund,  and  the   transactions   contemplated  by  the  proposed
Reorganization,  that an  investor  should know  before  voting on the  proposed
Reorganization.  A copy of the Annual Report of the Touchstone  Strategic  Trust
related to the  Acquiring  Fund for the year ended  March 31, 2003 and a copy of
the current  Prospectus of the Acquiring  Fund dated August 1, 2003 are included
with  this  combined  prospectus/proxy  statement  for each  Shareholder  of the
Portfolio, and are incorporated by reference herein.

     A Statement of Additional  Information regarding Touchstone Strategic Trust
dated August 1, 2003 has been filed with the Securities and Exchange  Commission
(the  "Commission")  and is  incorporated  by reference  herein.  Copies of such
Prospectus,  Statement of Additional  Information and financial reports also may
be obtained  without  charge by contacting  Touchstone  Investments  at 221 East
Fourth Street, Suite 300, Cincinnati, Ohio 45202, or by telephoning toll-free at
1-800-543-0407 or at http://www.touchstoneinvestments.com.

     A Prospectus  and a Statement of  Additional  Information  of the Navellier
Performance  Funds regarding the Portfolio each dated May 1, 2003 and the Annual
Report of the Navellier  Performance  Funds for the year ended December 31, 2002
also have been filed with the Commission and each is  incorporated  by reference
herein.


     Copies of these Portfolio  documents also may be obtained without charge by
contacting Navellier Management,  Inc., at One East Liberty Street, Third Floor,
Reno, Nevada 89501, or by telephoning Navellier  Management,  Inc., toll-free at
1-800-887-8671.


     A Statement of Additional  Information  dated August 19, 2003,  relating to
the proposed transactions described in this combined prospectus/proxy statement,
including  historical financial  statements,  has been filed with the Commission
and is incorporated by reference herein.  Copies of this Statement of Additional
Information may be obtained without charge by contacting  Navellier  Management,
Inc.,  at One East  Liberty  Street,  Third Floor,  Reno,  Nevada  89501,  or by
telephoning Navellier Management, Inc., toll-free at 1-800-887-8671.


                            ------------------------



  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.
                            ------------------------


     The date of this Combined Prospectus/Proxy Statement is August 19, 2003.




                       COMBINED PROSPECTUS/PROXY STATEMENT
                                TABLE OF CONTENTS

                                    ---------

Introduction and Voting Information

Special Meeting



Synopsis

The Proposed Reorganization

Investment Objectives and Policies

Operations of the Touchstone Strategic Trust and the Acquiring Fund following
the Reorganization

Management Fees, Administrative Fees, and Other Operating Expenses

Purchases and Exchanges

Redemption Procedures and Fees

Dividends and Distributions; Automatic Reinvestment

Federal Tax Consequences of the Proposed Reorganization

Costs and Expenses of the Reorganization

Continuation of Shareholder Accounts; Share Certificates

Form of Organization of the Touchstone Strategic Trust

Comparison of Investment Objectives and Policies

Investment Objectives and Policies

Investment Objective of the Acquiring Fund

Investment Objective of the Portfolio

Certain Investment Restrictions and Limitations

Principal Risk Factors

The Proposed Transactions

Proposed Agreement and Plan of Reorganization

Reasons for the Proposed Transactions

Description of Securities to Be Issued

Federal Income Tax Consequences



Pro Forma Capitalization and Ratios

Dissolution of the Portfolios

Navellier Group Recommendation

Required Vote

Additional Information About the Acquiring Fund and the Acquiring Fund Shares

Additional Information About the Portfolio and the Portfolio Shares

Miscellaneous

Available Information

Legal Matters

Financial Statements and Experts


Revocation of Proxies

No Dissenters' Rights of Appraisal.

Additional Voting Information; Voting of Proxies; Adjournment Proxy Solicitation
Other Business

Appendix A: Agreement and Plan of Reorganization


Appendix B: Investment Advisory Agreement Between Acquiring Fund and Touchstone
Advisors, Inc.


Appendix C: Form of Sub-advisory Agreement between Touchstone Advisors, Inc. and
Navellier Management, Inc

Appendix D: Acquiring Fund Plan of Distribution




                                     PART A

                         SOLICITATION BY THE TRUSTEES OF
                         THE NAVELLIER PERFORMANCE FUNDS

                      ONE EAST LIBERTY STREET, THIRD FLOOR
                               RENO, NEVADA 89501
                                 1-800-887-8671

                            ------------------------

                         THE NAVELLIER PERFORMANCE FUNDS
                   (THE NAVELLIER LARGE CAP GROWTH PORTFOLIO)

                            ------------------------

                       COMBINED PROSPECTUS/PROXY STATEMENT


                         SPECIAL MEETING OF SHAREHOLDERS
                                  TO BE HELD ON
                 September 19, 2003 OR A DATE SHORTLY THEREAFTER


                            ------------------------

                       INTRODUCTION AND VOTING INFORMATION

SPECIAL MEETING; VOTING OF PROXIES; ADJOURNMENT


     This  combined  prospectus/proxy   statement  is  being  furnished  to  the
shareholders  of The Navellier  Performance  Funds'  Navellier  Large Cap Growth
Portfolio  ("Portfolio")  in connection with the solicitation by the Trustees of
the Portfolio, (collectively "your Trustees") of proxies to be used at a special
meeting of the  shareholders  of this Portfolio to be held on September 19, 2003
or a date shortly  thereafter at 10:00 a.m. Pacific Standard Time at the offices
of The Navellier  Performance Funds, One East Liberty Street, Third Floor, Reno,
Nevada 89501 and at any adjournment(s)  thereof (the "Meeting").  The purpose of
the Meeting is to vote on the proposed tax-free  Reorganization  (the "Plan") to
merge the Portfolio into the Large Cap Growth Fund (the "Acquiring Fund"), which
is a series  of the  Touchstone  Strategic  Trust,  pursuant  to the  terms  and
conditions  of the Plan,  as described  below in greater  detail.  A vote on the
approval  or  disapproval  of the Plan will be  conducted  at the Meeting by the
shareholders of the Portfolio.




                                    SYNOPSIS

     The following is a summary of certain  information  contained  elsewhere in
this combined  prospectus/  proxy  statement,  including the prospectuses of the
Portfolio  and  the  Acquiring  Fund  and the  proposed  Agreement  and  Plan of
Reorganization.  Shareholders should read this entire combined  prospectus/proxy
statement carefully.

THE PROPOSED REORGANIZATION

     Shareholders of the Portfolio will be asked at the Meeting to vote upon and
approve  the  proposed  Plan,  which  provides  for  the  Reorganization  of the
Portfolio.  A copy of the  Plan is set  forth  in  Appendix  A to this  combined
prospectus/proxy statement. Pursuant to the Plan, the Portfolio, which




is a series of The Navellier  Performance  Funds,  a  non-diversified,  open-end
management  investment  company  organized as a business trust under the laws of
the State of Delaware,  would be merged  tax-free into the Acquiring Fund of the
Touchstone  Strategic  Trust  (the  "Trust").  Touchstone  Large  Cap  Growth is
currently a separate  diversified series of the Trust, a Massachusetts  business
trust, which as also an open-end management  investment company registered under
the 1940 Act.  However,  if the  shareholders of the Touchstone Large Cap Growth
approve a proposal in a proxy  statement  filed with the Securities and Exchange
Commission  ('SEC') and scheduled for a vote of such  shareholders  in a special
meeting on August 22, 2003,  upon  completion of the  Reorganization  Touchstone
Large Cap  Growth  will  change to a  non-diversified  series  of the  Trust.  A
non-diversified  fund may invest up to 25% of its total assets in the securities
of a single  company and 50% of its total assets could consist of the securities
of only two issuers. With respect to the remainder of the Fund's assets, no more
than 5% could be  invested  in any one  security,  and the Fund may not own more
than 10% of the  outstanding  voting  securities  of any  issuer.  In  addition,
approval by the  shareholders of Touchstone  Large Cap Growth Fund of the change
of the Fund  from a  diversified  to a  non-diversifed  series of the Trust is a
condition of the Reorganization.  The Millennium  Portfolio would also be merged
into  the  Acquiring  Fund.  Approval  by the  shareholders  of  the  Millennium
Portfolio  of the merger  into the  Acquiring  Fund is also a  condition  of the
Reorganization.  The proposed  transaction  will not occur  unless  shareholders
approve these changes.  The Plan sets forth the terms and conditions under which
the proposed Reorganization may be consummated. Approval by the present Trustees
of the Portfolio is required in order to merge the Portfolio  into the Acquiring
Fund. The present Trustees of the Portfolio have approved the proposed merger.


     If the Reorganization is completed, the investment objective and investment
strategies of Touchstone  Large Cap Growth will be changed to those of Navellier
Large Cap Growth  (subject to the  approval of the  shareholders  of  Touchstone
Large Cap Growth to change that Fund to a  non-diversified  fund upon completion
of the  Reorganization),  and the investment manager of the Touchstone Large Cap
Growth will change the investment sub-advisor of the Touchstone Large Cap Growth
to the investment manager of Navellier Large Cap Growth,  Navellier  Management,
Inc.  This  Prospectus/Proxy  statement  has been  prepared  assuming  that such
changes will take place.


     For the reasons set forth below under "The Proposed Transactions -- Reasons
for the Proposed  Transactions",  the Trustees of the Portfolio have unanimously
concluded  that  the  Reorganization  would  be in  the  best  interests  of the
Portfolio and its shareholders  and that the interests of existing  shareholders
will  not be  diluted  as a  result  of  the  transactions  contemplated  by the
Reorganization.  The Portfolio Trustees,  therefore, have submitted the proposed
Plan effecting the proposed  Reorganization  for approval by the shareholders of
the Portfolio at the Meeting and recommend a vote FOR the proposed Plan.


INVESTMENT OBJECTIVES AND POLICIES


     Below  is a  comparison  of the  key  features  of the  Portfolio  and  the
Acquiring Fund.

     INVESTMENT  OBJECTIVE.  The investment  objective of the Acquiring Fund and
the Portfolio is long term growth of capital.




     The investment objective of the Portfolio is a fundamental policy which may
not be changed  without the approval of a vote of at least a "majority" (as that
term is defined in the 1940 Act) of the outstanding shares, respectively, of the
Portfolio or the Acquiring Fund. All other investment  policies of the Portfolio
that are not specified as fundamental  are not  fundamental  policies and may be
changed by the  Acquiring  Fund Board of  Trustees  and the  Portfolio  Board of
Trustees,  respectively,  without shareholder approval. The investment objective
of the Acquiring Fund is non-fundamental,  which means that it may be changed by
vote of the Trustees without shareholder approval.


     INVESTMENT POLICIES.

     The  Portfolio  invests  primarily  in  securities  of large cap  companies
(companies with market capitalization of more than $5 billion) with appreciation
potential by employing a modern portfolio theory to select securities. Navellier
Management,  Inc.,  the investment  adviser to the Portfolio and  sub-advisor in
charge of managing the day to day investments of the Acquiring Fund will use the
same modern  portfolio  theory style of stock  selection for the Acquiring  Fund
that is used in the Portfolio.

     The  Portfolio is designed to achieve the highest  possible  returns  while
minimizing  risk. The selection  process focuses on fast growing  companies that
offer  innovative  products,  services,  or technologies to a rapidly  expanding
marketplace.   Navellier  Management,  Inc.  uses  an  objective,   "bottom-up,"
quantitative  screening  process  designed to identify and select  inefficiently
priced   growth   stocks   with   superior   returns   compared  to  their  risk
characteristics.

     The  Portfolio  mainly buys stocks of large cap companies  (companies  with
market  capitalization  of more than $5 billion) which are believed to be poised
to  rise  in  price.  The  investment  process  focuses  on  "growth"  variables
including, but not limited to, earnings growth, reinvestment rate, and operating
margin expansion.

     Navellier  Management,  Inc.  attempts to uncover stocks with strong return
potential  and  acceptable  risk  characteristics.  To do  this,  a  proprietary
computer  model is used to  calculate  and  analyze a  "reward/risk  ratio." The
reward/risk  ratio is  designed to identify  stocks  with above  average  market
returns and risk levels which are reasonable for higher return rates.

     Navellier  Management Inc.'s research team then applies two or more sets of
criteria to identify  the most  attractive  stocks.  Examples of these  criteria
include earnings growth, profit margins,  reasonable price/earnings ratios based
on expected future earnings, and various other fundamental criteria. Stocks with
the best  combination  of  growth  ratios  are  blended  into a  non-diversified
portfolio.




     The  Acquiring  Fund  will  have  after  the  merger  the  same  investment
sub-advisor  (Navellier  Management,  Inc.) managing the day to day  investments
which the  Portfolio  has and will employ the same modern  portfolio  investment
style which is used by the Portfolio.

     For further discussion of the comparisons in the investment policies of the
Acquiring Fund and of the Portfolio,  see  "Comparison of Investment  Objectives
and  Policies"  in  this  combined  prospectus/proxy  statement.



OPERATIONS OF TOUCHSTONE  STRATEGIC  TRUST AND THE ACQUIRING  FUND FOLLOWING THE
REORGANIZATION


     Touchstone  Strategic Trust and the Acquiring Fund will continue to operate
in  substantially  the  same way as each did  prior to the  Reorganization.  The
responsibilities,  powers and fiduciary  duties of the Trustees of the Acquiring
Fund are essentially the same as those of the Trustees of the Portfolio. Subject
to the provisions of the Touchstone  Strategic Trust Declaration of Trust, dated
November  18,  1982  (the  "Trust  Declaration"),  the  business  of  Touchstone
Strategic  Trust and the Acquiring Fund is managed by the  Touchstone  Strategic
Trust  Board of  Trustees  (the  "Board"),  which has all powers  necessary  and
appropriate to carry out that business responsibility.  The Board supervises the
business  affairs and  investments  of the Acquiring  Fund.  The Acquiring  Fund
receives  investment advisory services from Touchstone  Advisors,  Inc. and will
receive sub-advisory investment services from Navellier Management,  Inc. if the
Reorganization  is approved by the Portfolio  shareholders and by the Millennium
Portfolio shareholders. The Acquiring Fund receives distribution,  marketing and
customer  services from Touchstone  Securities,  Inc. pursuant to a Distribution
Agreement.


MANAGEMENT FEES, ADMINISTRATIVE FEES, AND OTHER OPERATING EXPENSES

     MANAGEMENT AND FEES. Navellier Management,  Inc., is the investment advisor
to the Portfolio  pursuant to an  investment  management  agreement  between the
Portfolio and Navellier Management,  Inc. (the "Portfolio Management Contract").
Touchstone  Advisors,  Inc. (the  'Manager') is the  investment  manager for the
Touchstone  Large  Cap  Growth.  The  Manager  selects  and pays the fees of the
sub-advisor and monitors the sub-advisor's program.  Navellier Management,  Inc.
will manage the investment and reinvestment of the assets of the Acquiring Fund,
as  sub-advisor  after the  merger,  subject to the  supervision  of  Touchstone
Advisors,  Inc.  and of the officers and  Trustees of the  Acquiring  Fund.  The
Portfolio  pays  Navellier  Management,  Inc. an  investment  advisory fee at an
annual  rate of 0.84% of the  aggregate  average  daily net  asset  value of the
Portfolio.  The  Acquiring  Fund  will  pay  to  Touchstone  Advisors,  Inc.  an
investment  advisory  fee at an annual  rate of 0.75% of the  aggregate  average
daily net asset value of the Acquiring Fund. Under the terms of the Sub-Advisory
Agreement,  Navellier  Management,  Inc.  will be paid a fee of 0.45% of average
daily net assets by the Manager,  Touchstone  Advisors,  Inc. The Acquiring Fund
does not pay a fee to the sub-advisor.

     The Trust and the Manager have received an order from the SEC whereby under
certain circumstances, the Manager may select or change sub-advisors, enter into
new-sub-advisory  agreements or amend existing  sub-advisory  agreements without
first obtaining shareholder approval. Pursuant to this order, upon completion of
the  Reorganization,  the Manager will change the  sub-advisor of the Touchstone
Large Cap Growth to the Advisor of Navellier Performance Large Cap Growth.

     ADMINISTRATIVE  FEES AND OTHER OPERATING  EXPENSES.  The Portfolio pays its
own operating  costs.  Pursuant to an  Administrative  Services  Agreement,  the
Portfolio pays Navellier  Management,  Inc. an annual fee, pro rata monthly,  of
0.25% of the aggregate average daily net asset value of the Portfolio to provide
administrative   services  including   shareholder  servicing  services  to  the
Portfolio.  Its net operating  expenses in 2002 were 1.49%.  The Acquiring  Fund
pays it own operating expenses.  Its net operating expenses after partial waiver
of reimbursement for the period ending December 31, 2002 were 1.37%.

     12b-1 PLAN FEES. The Portfolio has a 12b-1 plan which charges 12b-1 fees of
0.25%  annually.  The Acquiring Fund has a 12b-1 plan for Class 'A' shares which
pays an annual fee of 0.25% of the  aggregate  average  daily net asset value of
the Acquiring Fund for marketing, distribution and client services.




     SALES LOAD.  Shareholders  of the  Acquiring  Fund  currently pay a maximum
sales  charge  ("load")  of  5.75%  on  all  purchase  of  the  Fund.  Portfolio
shareholders  will not be charged  this sales load on  purchases or new accounts
opened after the Reorganization.


     The following  sets forth the fund  operating  expenses (as a percentage of
the average  daily net assets) for the  Portfolio  for the  twelve-month  period
ended  December  31,  2002.  Adjacent  to the column for  Portfolio  expenses is
presented the expected fund  operating  expenses (as a percentage of the average
daily net assets) of the  Acquiring  Fund into which the  Portfolio  would merge
under the Plan.

                                      TABLE

- --------------------------------------------------------------------------------

                          Touchstone            Navellier           Touchstone
                       Large Cap Growth     Performance Large      Combined Pro
    Expense                                  Cap Growth (1)          Forma (2)

- --------------------------------------------------------------------------------
Management Fees              0.75%                0.84%                0.75%
- --------------------------------------------------------------------------------
Distribution                 0.25%                0.25%                0.25%
- --------------------------------------------------------------------------------
Other Expenses               0.40%                1.11%                0.50%
- --------------------------------------------------------------------------------
Total Fund Expense           1.40%                2.22%                1.50%
- --------------------------------------------------------------------------------
Waiver                           -               -0.71%               -0.20%
- --------------------------------------------------------------------------------
Net Expense                      -                1.49%                1.30%
- --------------------------------------------------------------------------------
(1)  Reflects  Navellier's  contractual  waiver of reimbursement of a portion of
     the Portfolio's  operating expense.  The Investment Advisor has also agreed
     to this partial waiver of reimbursement  for the fiscal year ended December
     31, 2003.


(2)  Touchstone  Advisors,  Inc.  and the Trust  have  entered  into an  Expense
     Limitation  Agreement whereby the Total Annual Portfolio Operating Expenses
     for the Class A shares of the  Touchstone  Large Cap Growth will not exceed
     1.30% for the period ending upon  consummation  of the  Reorganization  and
     will not  exceed  1.30% for a two year  period  after  consummation  of the
     Reorganization.  After  reimbursements,  the Total  Annual  Fund  Operating
     Expenses of Touchstone  Large Cap Growth for the period ended  December 31,
     2002 were 1.37%. The Proforma  expenses shown above assume the consummation
     of the  Reorganziation,  including the merger of the  Navellier  Millennium
     Large Cap Portfolio into the Acquiring Fund.


     As reflected  above, it is expected that the Acquiring Fund will have lower
total  operating  expenses than those  historically  incurred by Portfolio.  Mr.
Navellier  believes that the lower  management fee charged to the Acquiring Fund
and avoiding or reducing  costs by merging the Portfolio into the Acquiring Fund
will save the  Portfolio in excess of $50,000 per year by reducing the fees paid
to trustees, outside counsel to the independent trustees,  reducing printing and
mailing  and  reduced  management  fees,  and that the  Reorganization  would be
advantageous to and in the best interests of the Shareholders. See "The Proposed
Transactions--Reasons for the Proposed Transactions".



FEE EXAMPLE

     The tables  below show  examples of the total  expenses  you would pay on a
$10,000 investment over one-, three-,  five- and ten-year periods.  The examples
are intended to help you compare the cost of  investing  in Navellier  Large Cap
Growth versus  Touchstone  Large Cap Growth and Touchstone Large Cap Growth (Pro
Forma),  assuming  the  Reorganization  takes place.  The  examples  assume a 5%
average  annual  return,  that you redeem all of your  shares at the end of each
time period and that you reinvest all of your  dividends.  The following  tables
also assume that total annual operating  expenses remain the same throughout all
periods,  and for  Touchstone  Large Cap  Growth,  are limited for the first two
years following  consummation  of the  Reorganization  and  thereafter,  are not
limited.  The examples are for  illustration  only, and your actual costs may be
higher or lower.


                                    1 Year    3 Years     5 Years     10 Years
Touchstone Large Cap Growth Fund
                                     $143       $443       $766         $1,680
Navellier Performance Large Cap
Growth Fund                          $152       $624       $1,123       $2,497
Pro Forma Combined                   $132       $454       $800         $1,773


PERFORMANCE

     The following charts show how the shares of Navellier Performance Large Cap
Growth and the shares of Touchstone Large Cap Growth have performed in the past.
Past performance is not an indication of future results.

YEAR-BY-YEAR TOTAL RETURN

     The  charts  below  show  the  percentage  gain or loss for the  shares  of
Navellier Large Cap Growth and Touchstone Large Cap Growth in each full calendar
year since the  inception  of each  Portfolio on December 19, 1997 and August 2,
1993,  respectively.  The charts  should give you a general idea of the risks of
investing in the Portfolios by showing how a portfolio's  return has varied from
year-to-year. The charts include the effects of Portfolio expenses. Total return
amounts are based on the inception date of the Portfolio which may have occurred
before your investment began;  accordingly,  your investment results may differ.
The Portfolios can also experience short-term performance swings as indicated in
the high and low quarter information at the bottom of each chart.

                     Navellier Performance Large Cap Growth

    1998           1999          2000          2001          2002
   41.17%         63.03%        -7.66%        -23.47%       -26.70%

                  Highest Quarter: 4th Quarter 1999, up 40.00%
                  Lowest Quarter: 1st Quarter 2001, down 27.98%


The year-to-date  return for the Navellier  Performance  Large Cap Growth Fund's
Class A shares as of June 30, 2003 is 16.16%.




                           Touchstone Large Cap Growth


                                                                  
   1994       1995      1996       1997        1998       1999       2000       2001       2002
  -1.67%     32.07%    14.25%     29.34%      21.90%     18.53%     -19.50%    -23.20%    -36.16%


                  Highest Quarter: 4th Quarter 1998, up 20.28%
                  Lowest Quarter: 1st Quarter 2001, down 22.72%


The  year-to-date  return for the  Touchstone  Large Cap Growth  Fund's  Class A
shares as of June 30, 2003 is 10.68%.


The following  table shows the after-tax  returns  calculated  using the highest
historical  individual  federal marginal income tax rates and do not reflect the
impact  of  state  and  local  taxes.  Actual  after-tax  returns  depend  on an
investor's  tax situation and may differ from those shown.  The loss (if any) in
the "Return after taxes on  distributions  and sale of fund shares" column above
may be less than that shown in the "Return  after taxes on  distributions  only"
column  because it is assumed  that the  shareholder  is subject to the  highest
federal  marginal tax rates.  The  after-tax  returns  shown are not relevant to
investors who hold their fund shares through  tax-deferred  arrangements such as
401(k) plans or individual  retirement accounts.  The index's returns reflect no
deduction for fees, expenses, or taxes. The Fund's past performance,  before and
after taxes,  is not  necessarily  an indication of how the Fund will perform in
the future.



                                                                 Return after
                                             Return after          taxes on
                                               taxes on         distributions
                              Return        Distributions        and sale of     Russell 1000
                           before taxes          only            fund shares     Growth Index

NAVELLIER LARGE CAP
GROWTH PORTFOLIO
                                                                          
  One Year                    -26.70%          -26.70%             -16.13%           -27.89%
  Five Year                     3.58%            3.56%               2.90%           -3.84%
  Since Inception               4.07%            4.05%               3.31%           *-3.24%

TOUCHSTONE LARGE CAP
GROWTH FUND
  One Year                    -36.16%          -39.84%             -24.46%           -27.89%
  Five Year                   -10.63%          -12.39%              -8.11%           -3.84%
  Since Inception               0.97%           -0.50%               0.57%           **7.62%


     *    Date of Index performance is from 12/19/1997.
     **   Date of Index performance is from 08/01/1993.

     The next table lists the average  annual  total return of the shares of the
Portfolio and of Touchstone Large Cap Growth for the past one and five years and
since inception  (through December 31, 2002). This table includes the effects of
Portfolio  expenses and is intended to provide you with some  indication  of the
risks of investing  in each by comparing  its  performance  with an  appropriate
widely  recognized  index of  securities,  a  description  of which can be found
following  the tables.  An index does not reflect  fees or  expenses.  It is not
possible to invest directly in an index.



     Average Annual Total Return (for the period ended 12/31/2002)(1)



                                    1 Year      5 Years        10 Years        From
                                     Ended       Ended          Ended        Inception
                                   12/31/02     12/31/02       12/31/02     to 12/31/02
                                                                  
Navellier Large Cap Growth                                                    4.07%
Portfolio                           -26.70%       3.58%           --          12/19/97

Touchstone Large Cap                                                          0.97%
Growth Fund                         -36.16%     -10.63%           --          8/2/1993

S&P 500 Index                                                                 *-0.59%
                                    -22.10%      -0.59%         9.34%         **9.38%
Russell 1000 Growth Index           -27.89%      -3.84%         6.71%         ***-3.24%
                                                                              **  9.62%


     (1) Reflects waiver of advisory fees and  reimbursements  and/or waivers of
expenses for certain periods.  Without such reimbursements  and/or waivers,  the
average annual total returns during the periods would have been lower.

     *    Date of Index performance is from 01/01/1998.
     **   Date of Index performance is from 08/01/1993.
     ***  Date of Index performance is from 12/19/1997.

     The S&P 500 Index is a widely recognized  unmanaged index that measures the
stock performance of 500 large- and medium-sized  companies and is often used to
indicate the performance of the overall stock market.

     The Russell 1000 Growth Index is a widely  recognized  unmanaged index that
measures  the stock  performance  of the  Russell  1000  companies  with  higher
price-to-book ratios and higher forecasted growth values.

     For a detailed discussion of the manner of calculating total return, please
see  the  Portfolios'  Statements  of  Additional  Information.  Generally,  the
calculations  of total  return  assume the  reinvestment  of all  dividends  and
capital gain  distributions  on the  reinvestment  date and the deduction of all
recurring expenses that were charged to shareholders' accounts.

     Important  information  about Touchstone Large Cap Growth is also contained
in management's  discussion of Touchstone Large Cap Growth's  performance.  This
information  also appears in the most recent Annual Report of the Trust relating
to Touchstone Large Cap Growth.

     Upon consummation of the  Reorganization,  Touchstone Large Cap Growth will
assume and publish the performance  history of Navellier  Performance  Large Cap
Growth.

PURCHASES AND EXCHANGES

     Acquiring Fund Shares are sold in a continuous  offering and are offered to
the public, and may be purchased through securities dealers or directly from the
Acquiring  Fund's  underwriter,  Touchstone  Securities,  Inc., at the net asset
value next  computed  after the  receipt of a purchase  order.  A one time 5.75%
sales charge is imposed by the  Acquiring  Fund on  purchases of Acquiring  Fund
Class 'A' Shares;  however,  Navellier Performance Large Cap Growth shareholders
as of the consummation of the  Reorganization may continue to purchase Class 'A'
shares  without  a sales  charge  for as long  as an open  account  with a share
balance is  maintained  in the Acquiring  Fund.  The  Acquiring  Fund charges an
annual 0.25% 12b-1 fee and securities dealers may charge a processing fee for



orders  transmitted by such dealers to the Acquiring Fund. The Portfolio charges
an annual 0.25% 12b-1 fee.

     The  Acquiring  Fund  currently  offers an  exchange  privilege,  including
telephone exchange privileges,  which, subject to certain  restrictions,  permit
shares of any of the other  portfolios of the Touchstone  Strategic  Trust to be
exchanged for shares of the Acquiring Fund.  These exchanges are based upon each
portfolio's  net asset  value per share  next  computed  following  receipt of a
properly-executed  exchange  request  without any sales charge.  These exchanges
also  may be  made  only  between  identically-registered  accounts,  and  these
exchange  privileges  also are  available  only in states where the shares to be
acquired may be legally sold. If the proposed  merger does not occur,  Portfolio
shareholders  will not be able to exchange their Portfolio  shares for shares of
any series of the Touchstone  Strategic Trust.  Except for the foregoing,  there
would  be  no  material   differences  between  the  exchange  privileges  which
shareholders of the Portfolio  currently have and the exchange  privileges which
such  shareholders  will  have  as  shareholders  of  the  Acquiring  Fund  upon
effectiveness of the Reorganization.

     The Acquiring Fund has reserved the right to reject or refuse, at Acquiring
Fund's discretion, any order for the purchase of its shares in whole or in part.

REDEMPTION PROCEDURES AND FEES

     Acquiring  Fund Shares may be redeemed at a  redemption  price equal to the
net asset  value of the  shares as next  computed  following  the  receipt  of a
request for  redemption  in proper  form.  Payment of  redemption  proceeds  for
redeemed  Acquiring  Fund Shares  ordinarily  are made  within  seven days after
receipt of a redemption request in proper form and documentation.  Shares of the
Acquiring Fund may be redeemed without charge.

DIVIDENDS AND DISTRIBUTIONS; AUTOMATIC REINVESTMENT

     The Acquiring  Fund and the Portfolio each declares and pays dividends from
the net investment income and short-term capital gains, if any, to shareholders.
The  Portfolio  pays  dividends  annually  during  December  of  each  year  and
distributes  long-term capital gains, if any, to shareholders on an annual basis
in December. The Acquiring Fund pays dividends quarterly and pays capital gains,
if any, at least annually.

     The income dividends and capital gains  distributions  for investors in the
Acquiring Fund and in the Portfolio are each automatically  reinvested,  without
sales charge,  in additional  shares of the Acquiring  Fund and of the Portfolio
respectively at the applicable net asset value of such shares  calculated on the
ex-dividend date unless such an investor has requested otherwise in writing.

FEDERAL TAX CONSEQUENCES OF THE PROPOSED REORGANIZATION

     The Acquiring Fund and the Portfolio  have received,  as a condition to the
Reorganization, opinions of legal counsel, to the effect, for Federal income tax
purposes,   that  the  proposed   Reorganization   will  constitute  a  tax-free
reorganization  within the meaning of Section  368(a)(1)(C) of the U.S. Internal
Revenue Code of 1986, as amended (the "Code").  Accordingly, it is believed that
no gain or loss generally will be recognized by Touchstone Strategic Trust or by
the Acquiring Fund, by the Navellier Performance Funds or by the Portfolio, or



by their respective shareholders (see "The Proposed Transactions--Federal Income
Tax Consequences").

COSTS AND EXPENSES OF THE REORGANIZATION

     Navellier Management,  Inc. will pay the costs,  expenses, and professional
fees  incurred in the  preparation  and mailing of this notice and this combined
prospectus/proxy  statement and the proxy,  and in the  solicitation of proxies,
which may include  reimbursement to broker-dealers  and others who forward proxy
materials to their clients and the costs of a  professional  solicitation  firm.
See "Introduction and Voting Information--Proxy Solicitation".

CONTINUATION OF SHAREHOLDER ACCOUNTS; SHARE CERTIFICATES

     As a result of the proposed transactions contemplated by the Reorganization
of the  Portfolio  into  the  Acquiring  Fund,  Shareholders  would  cease to be
shareholders  of the  Portfolio  and would receive on the books of the Acquiring
Fund,  that  number  of full and  fractional  Acquiring  Fund  Shares  having an
aggregate  net asset value equal to the  aggregate net asset value of his or her
Portfolio Shares as of the close of business on the Closing Date.

     The  Acquiring  Fund  will  establish  accounts  on the  Closing  Date  for
Shareholders which will contain the appropriate number of Acquiring Fund Shares.
Acceptance  of  Acquiring  Fund  Shares  by a  Shareholder  will be deemed to be
authorization of the Acquiring Fund and its agents to establish, with respect to
the Acquiring Fund, all of the account options, including telephone redemptions,
if any, and dividend and distribution  options, as have been established for the
Shareholder's  Portfolio account.  Shareholders who are receiving payments under
an Automatic  Investment Plan, with respect to Portfolio Shares, will retain the
same rights and  privileges as to Acquiring  Fund Shares under such an Automatic
Investment Plan after the Reorganization.  Similarly,  no further action will be
necessary in order to  continue,  with  respect to  Acquiring  Fund Shares,  any
retirement plan currently  maintained by a Shareholder with respect to Portfolio
Shares.

     As a series of a Massachusetts  business trust, the Acquiring Fund will not
issue certificates  evidencing ownership of Acquiring Fund Shares.  Shareholders
of Portfolio will have their beneficial  interests in Portfolio cancelled on the
books of  Portfolio  in order to receive  Acquiring  Fund Shares on the books of
Acquiring Fund as a result of the Reorganization.

     No sales or other charges will be imposed in  connection  with the issuance
of   Acquiring   Fund  Shares  to   Portfolio   Shareholders   pursuant  to  the
Reorganization.

FORM OF ORGANIZATION OF TOUCHSTONE STRATEGIC TRUST

     Touchstone  Strategic  Trust  is an  unincorporated  voluntary  association
organized  under  the laws of the State of  Massachusetts  as a  business  trust
pursuant to the  Declaration of Trust.  The  operations of Touchstone  Strategic
Trust and the  Acquiring  Fund (a Portfolio of Touchstone  Strategic  Trust) are
governed by this Declaration of Trust, by Touchstone  Strategic Trust's By-Laws,
and by Massachusetts Law, as applicable.  The Navellier  Performance Funds is an
unincorporated  voluntary  association  organized under the laws of the State of
Delaware as a business trust. The operations of The Navellier  Performance Funds
and the Portfolio are governed by The Navellier Performance Funds' Declaration




of Trust  dated  October 17,  1995,  and by Delaware  law, as  applicable.  Both
Touchstone Strategic Trust and The Navellier Performance Funds, as well as their
series investment portfolios,  are subject to the provisions of the 1940 Act and
to the rules and regulations of the Commission thereunder.  Touchstone Strategic
Trust is  authorized  to issue an  unlimited  number  of  shares  of  beneficial
interest  in one or more  series  investment  portfolios  or  funds.  Currently,
Touchstone   Strategic  Trust  is  composed  of  six  (6)  separate   investment
portfolios:  the Emerging Growth Fund, the Growth  Opportunities Fund, the Large
Cap Growth Fund,  the Enhanced 30 Fund,  the Value Plus Fund,  and the Small Cap
Growth Fund ("the Portfolios").  See "The Proposed  Transactions--Description of
Securities to Be Issued".


PRINCIPAL RISK FACTORS

     The principal  risks  associated  with an investment in the Acquiring  Fund
after the consummation of the  Reorganization  are discussed below.  These risks
are identical to the risks of investing in the Portfolio.

     An investment in shares of the Acquiring Fund involves certain  speculative
considerations.  There  can be no  assurance  that any of the  Acquiring  Fund's
objectives  will be achieved or that the value of the investment  will increase.
An investment in shares of the Portfolio also involves the same risks.


MARKET RISK

     A fund's  share price can fall because of weakness in the broad  market,  a
particular industry, or specific holdings. The market as a whole can decline for
many reasons,  including disappointing corporate earnings,  adverse political or
economic developments here or abroad,  changes in investor psychology,  or heavy
institutional   selling.  The  prospects  for  an  industry  or  a  company  may
deteriorate.  In  addition,  an  assessment  by a fund's  investment  adviser of
particular   companies  may  prove  incorrect,   resulting  in  losses  or  poor
performance by those holdings, even in a rising market. The Acquiring Fund could
miss attractive investment  opportunities if its investment adviser underweights
fixed income  markets or industries  where there are  significant  returns,  and
could lose value if the investment  adviser  overweights fixed income markets or
industries where there are significant declines.

MARKET CAPITALIZATION RISK

     Stocks  fall into  three  broad  market  capitalization  categories--large,
medium and small.  Investing primarily in one category carries the risk that due
to current market conditions that category may be out of favor. If valuations of
large  capitalization  companies  appear to be greatly out of  proportion to the
valuations of small or medium capitalization companies, investors may migrate to
the stocks of small and mid-sized companies causing a fund that invests in these
companies  to increase in value more rapidly than a fund that invests in larger,
fully-valued companies. Larger, more established companies may also be unable to
respond quickly to new competitive  challenges such as changes in technology and
consumer  tastes.  Many larger companies also may not be able to attain the high
growth rate of successful smaller companies,  especially during extended periods
of economic expansion.




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.  Navellier  Management,  Inc.
will use the same basic selection  criteria for investing in foreign  securities
as it uses in selecting domestic securities.

     While,  to some  extent,  the risks to the  Acquiring  Fund of investing in
foreign securities may be limited,  since it may not invest more than 25% of its
net  asset  value in such  securities  and since it may only  invest in  foreign
securities which are traded in the United States securities  markets,  the risks
nonetheless  exist.  The same  risks  apply to the  Portfolio's  investments  in
foreign securities.

PORTFOLIO TURNOVER

     While the future  annual rate of portfolio  turnover is unknown,  Navellier
Management,  Inc.  estimates  but cannot  guarantee  that the  annual  portfolio
turnover rate will not exceed 200%.  Navellier  Management,  Inc., which is also
the investment  advisor to the Portfolio,  will employ the same investment style
for the Acquiring  Fund as it employed in managing the  Portfolio,  which had an
annual  portfolio  turnover  rate  in  2002  of  115%.  However,  these  are NOT
restrictions  on Navellier  Management,  Inc.  and if, in  Navellier  Management
Inc.'s judgment, a higher annual portfolio turnover rate is required in order to
attempt to achieve a higher overall performance, then Navellier Management, Inc.
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 and could therefore adversely affect performance.

NON-DIVERSIFICATION RISK


The  Acquiring  Fund is a  non-diversified  investment  companies  (assuming the
approval  of the  shareholders  of the  Acquiring  Fund to change  the Fund to a
non-diversified  fund upon  completion of the  Reorganization)  and as such, may
invest up to 25% of its  assets in a single  issuer  and up to 50% of its assets
may  consist  of  securities  of  only  two  issuers.  A  higher  percentage  of
investments  among fewer issuers may result in greater  fluctuation in the total
market value of the Fund's  investments  than in the investments of a Fund which
invests in numerous issuers.


                COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES


     As discussed below, the investment  objective and policies of the Acquiring
Fund  and the  Portfolio  will  be the  same  (subject  to the  approval  of the
shareholders   of  Touchstone   Large  Cap  Growth  to  change  the  Fund  to  a
non-diversified fund upon completion of the  Reorganization).  The Comparison of
Investment  Objectives and Policies has been prepared assuming such change takes
place.




INVESTMENT OBJECTIVE AND POLICIES

     GENERAL.  The Acquiring  Fund and the  Portfolio  each invest in the common
stocks of large cap companies (companies with market capitalization of more than
$5 Billion).

INVESTMENT OBJECTIVE OF THE ACQUIRING FUND


     The  Investment  Objective of the Acquiring  Fund is and will be to achieve
long-term growth of capital.  The Acquiring Fund invests in securities traded in
the United States securities markets of domestic issuers and of foreign issuers.
After the Reorganization, the sole objective of the Acquiring Fund is to seek to
achieve long term growth of capital primarily through  investments in securities
of large cap companies  (companies  with market  capitalization  of more than $5
Billion)  with  appreciation   potential  by  applying  the  proprietary  modern
portfolio  theory  techniques  of  Navellier  Management,  Inc.  There can be no
assurance that the Acquiring Fund will achieve its  investment  objectives.  The
Acquiring  Fund's  investment  objectives  may be  changed  without  shareholder
approval  subject to 60 days notice to  shareholders.  The Acquiring Fund should
not be considered suitable for investors seeking current income.


INVESTMENT OBJECTIVE OF THE PORTFOLIO

     The  investment  objective of the  Portfolio is the same as the  investment
objective of the Acquiring  Fund.  The  Portfolio's  investment  objective is to
achieve long-term growth of capital  primarily  through  investment in large cap
companies  with  appreciation  potential.  The  Portfolio  invests in securities
traded in the United  States  securities  markets  of  domestic  issuers  and of
foreign issuers.  The sole objective of the Portfolio is to seek to achieve long
term growth of capital primarily through  investments in securities of large cap
companies  (companies with market  capitalization  of more than $5 Billion) with
appreciation  potential.  There  can be no  assurance  that the  Portfolio  will
achieve its investment objectives. The Portfolio's investment objectives may not
be changed without shareholder approval.  The Portfolio should not be considered
suitable for investors seeking current income.

     OTHER  INVESTMENTS.  Both the  Acquiring  Fund and the  Portfolio  may, for
temporary  defensive  purposes or to maintain cash or cash  equivalents  to meet
anticipated  redemptions,  also invest in debt securities and money market funds
if, in the opinion of the investment advisor, such investment will further their
cash needs or  temporary  defensive  needs.  In  addition,  when the  investment
advisor  feels  that  market  or other  conditions  warrant  it,  for  temporary
defensive purposes, both the Acquiring Fund and the Portfolio may retain cash or
invest all or any portion of their assets in cash  equivalents,  including money
market  mutual funds.  Under normal  conditions,  both the Acquiring  Fund's and
Portfolio's holdings in such non-equity  securities should not exceed 20% of the
total assets of such fund.

CERTAIN INVESTMENT RESTRICTIONS AND LIMITATIONS

     The investment  restrictions and limitations of Acquiring Fund and those of
the Portfolio are and will be substantially the same (subject to the approval of
the shareholders of Touchstone Large Cap Growth to change that Fund to a non-



diversified  fund  upon  completion  of the  Reorganization).  Unless  otherwise
specified,  the investment  restrictions  and  limitations  are considered to be
"fundamental" policies, and, as such, may not be changed without approval of the
holders of a  "majority"  (as that term is defined in the 1940 Act) of Acquiring
Fund's or Portfolio's respective outstanding shares.

     The Portfolio may not:

               1.  Purchase  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 Portfolio'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 Portfolio.

               2. Concentrate the Portfolio  investments in any one industry. To
          comply with this  restriction,  no security may be  purchased  for the
          Portfolio  if such  purchase  would  cause the value of the  aggregate
          investment  of the  Portfolio in any one industry to be 25% or more of
          the Portfolio'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 Portfolio
          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 Portfolio 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  Portfolio  may make
          loans of the  securities  of the  Portfolio,  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
          Portfolio.

               6. Make  investments  in real estate or  commodities or commodity
          contracts,  including  futures  contracts,  although the Portfolio may
          purchase   securities   of  issuers  which  deal  in  real  estate  or
          commodities  even  though  this  is  not a  primary  objective  of the
          Portfolio but only if such securities are large cap equity  securities
          or constitute less than 20% of the Portfolio's total assets.

               7.  Invest  in  oil,  gas,  or  other  mineral   exploration   or
          development  programs,  although the Portfolio may purchase securities
          of issuers  which engage in whole or in part of such  activities,  but
          only if such



          securities are large cap equity securities or constitute less than 20%
          of the Portfolio's total assets.

               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
          Portfolio  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) of
          the  Portfolio,  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 of the  Portfolio  with  respect to
          which the  borrowing  has been made.  The  Portfolio may not invest in
          securities  while the amount of its borrowing  exceeds 5% of its total
          assets.

               13.  Pledge,  mortgage,  or  hypothecate  its assets to an extent
          greater  than  10% of its  total  assets  to  secure  borrowings  made
          pursuant to the provisions of Item 12 above.

     The following  investment  restrictions are  "fundamental  policies" of the
Acquiring Fund and may not be changed with respect to the Acquiring Fund without
the  approval  of a  "majority  of the  outstanding  voting  securities"  of the
Acquiring Fund.  "Majority of the outstanding  voting securities" under the 1940
Act, and as used in the Statement of Additional  Information and the Prospectus,
means, the lesser of (i) 67% or more of the outstanding  voting  securities of a
Fund  present  at a meeting if the  holders of more than 50% of the  outstanding
voting  securities  of a Fund are present or  represented  by proxy or (ii) more
than 50% of the outstanding voting securities of the Acquiring Fund.

THE FUNDAMENTAL LIMITATIONS APPLICABLE TO THE ACQUIRIING FUND ARE:

          1.  BORROWING  MONEY.  The Acquiring  Fund may not engage in borrowing
          except as permitted by the  Investment  Company Act of 1940, any rule,
          regulation or order under the 1940 Act or any SEC staff interpretation
          of the 1940 ACT.



          2.  UNDERWRITING.  The Acquiring  Fund may not  underwrite  securities
          issued by other persons, except to the extent that, in connection with
          the sale or  disposition of portfolio  securities,  the Acquiring Fund
          may be deemed to be an underwriter  under certain  federal  securities
          laws or in connection with investments in other investment companies.


          3.  LOANS.  The  Acquiring  Fund may not make  loans to other  persons
          except  that  the   Acquiring   Fund  may  (1)  engage  in  repurchase
          agreements,   (2)  lend  portfolio   securities,   (3)  purchase  debt
          securities,  (4)  purchase  commercial  paper,  and (5) enter into any
          other lending  arrangement  permitted by the Investment Company Act of
          1940,  any rule,  regulation  or order  under the Act or any SEC staff
          interpretation of the Act.

          4. REAL  ESTATE.  The  Acquiring  Fund may not  purchase  or sell real
          estate  except  that the  Acquiring  Fund  may (1) hold and sell  real
          estate  acquired  as a result of the  Acquiring  Fund's  ownership  of
          securities  or other  instruments  (2) purchase or sell  securities or
          other  instruments  backed by real estate or  interests in real estate
          and  (3)  purchase  or  sell  securities  or  entities  or  investment
          vehicles, including real estate investment trusts that invest, deal or
          otherwise  engage in  transactions in real estate or interests in real
          estate.

          5. COMMODITIES.  The Acquiring Fund will not purchase or sell physical
          commodities  except  that  the  Acquiring  Fund  may (1) hold and sell
          physical  commodities  acquired  as a result of the  Acquiring  Fund's
          ownership of  securities  or other  instruments,  (2) purchase or sell
          securities or other instruments  backed by physical  commodities,  (3)
          purchase or sell options, and (4) purchase or sell futures contracts.

          6.  CONCENTRATION OF INVESTMENTS.  The Acquiring Fund may not purchase
          the  securities  of  an  issuer  (other  than  securities   issued  or
          guaranteed  by the  United  States  Government,  its  agencies  or its
          instrumentalities)  if,  as a result,  more than 25% of the  Acquiring
          Fund's total assets would be invested in the  securities  of companies
          whose principal business activities are in the same industry.

          7.  SENIOR  SECURITIES.   The  Acquiring  Fund  my  not  issue  senior
          securities except as permitted by the Investment  Company Act of 1940,
          any  rule,  regulation  or  order  under  the  Act  or any  SEC  staff
          interpretation of the Act.

                            THE PROPOSED TRANSACTIONS

PROPOSED AGREEMENT AND PLAN OF REORGANIZATION


     The terms and conditions of the proposed  merger,  as  contemplated  by the
Reorganization,  are set forth in the Plan.  Significant provisions of the Plan,
with respect to the proposed  Reorganization of the Portfolio into the Acquiring
Fund, are summarized  immediately below. This summary,  however, is qualified in
its  entirety by  reference  to the Plan,  which is  attached  to this  combined
prospectus/ proxy statement as Appendix A.




     With respect to the proposed Reorganization,  the Plan contemplates (i) the
Acquiring Fund, on the closing date of the Reorganization,  acquiring all of the
assets of the  Portfolio  and all the  assets  of the  Millennium  Portfolio  in
exchange for Acquiring  Fund Shares and the  assumption by the Acquiring Fund of
all valid liabilities of the Portfolio and of the Millennium  Portfolio and (ii)
the  constructive  distribution of Acquiring Fund Shares to the  Shareholders of
the Portfolio and to the  shareholders  of the Millennium  Portfolio in exchange
for  the  Portfolio   Shares  and  the  Millennium   Portfolio  Shares  of  such
Shareholders, all as provided for by the Plan.


     The assets of the Portfolio and the assets of the  Millennium  Portfolio to
be acquired  by the  Acquiring  Fund  include all  property,  including  without
limitation,  all  cash,  securities,   commodities  and  futures  interests  and
dividends or interest  receivables  which are owned by the  Portfolio  and those
owned by the Millennium  Portfolio and any deferred or prepaid expenses shown as
an  asset on the  books  of the  Portfolio  and on the  books of the  Millennium
Portfolio on the closing date of the  Reorganization.  The  Acquiring  Fund will
assume  from  the  Portfolio  and  from  the  Millennium   Portfolio  all  valid
liabilities,  expenses,  costs,  charges and  reserves  reflected  on  unaudited
statements of assets and  liabilities  of the  Portfolio  and of the  Millennium
Portfolio.  The Acquiring  Fund also will deliver  Acquiring  Fund Shares to the
Portfolio  and to the  Millennium  Portfolio,  which  Acquiring  Fund Shares the
Portfolio and the Millennium Portfolio shall then distribute to their respective
Shareholders in exchange for such  Shareholders'  Portfolio Shares or Millennium
Portfolio  Shares.  The exchange of the  Portfolio's  assets and the  Millennium
Portfolio's  assets for the  Acquiring  Fund Shares is  anticipated  to occur on
September  19,  2003,  or such  later  date as the  parties  may agree upon (the
"Closing Date").


     The value of the Portfolio's  assets and the Millennium  Portfolio's assets
to be  acquired by the  Acquiring  Fund and the value of the  Portfolio's  valid
liabilities and the Millennium  Portfolio's  valid  liabilities to be assumed by
the Acquiring Fund and the net asset value of a share of the Acquiring Fund will
be determined as of immediately  after the close of regular  trading on the NYSE
on the Closing Date,  using the valuation  procedures set forth in the Acquiring
Fund's then-current Prospectus and Statement of Additional Information.

     Upon the Closing  Date,  the Portfolio and the  Millennium  Portfolio  will
liquidate and distribute pro rata to their  Shareholders of record (as evidenced
by such Shareholders'  Portfolio and Millennium  Portfolio Shares) the Acquiring
Fund Shares  received by the Portfolio and the Millennium  Portfolio in exchange
for such Shareholders'  interests in the Portfolio and the Millennium Portfolio.
These liquidations and distributions will be accomplished by opening accounts on
the books of the Acquiring Fund in the name of each shareholder of record in the
Portfolio and in the  Millennium  Portfolio and by crediting  thereon the shares
previously credited to the Portfolio and to the Millennium  Portfolio account of
the shareholder on those books, as described above (see  "Synopsis--Continuation
of  Shareholder  Accounts;  Share  Certificates").   Each  such  Acquiring  Fund
shareholder  account  shall  represent  the  respective  pro-rata  number of the
Acquiring Fund Shares due to such Shareholder.

     Accordingly,  every Shareholder will own Acquiring Fund Shares  immediately
after the Reorganization, the total value of which Acquiring Fund Shares will be
equal to the total value of his or her Portfolio Shares or Millennium  Portfolio
Shares immediately prior to the Reorganization. Moreover,



because the Acquiring  Fund Shares will be issued at net asset value in exchange
for the net  assets  transferred  from  the  Portfolio  or from  the  Millennium
Portfolio,  the total net asset value of the Acquiring  Fund Shares  received by
Portfolio  Shareholders or Millennium Portfolio  Shareholders after the transfer
of  assets  will be equal to the net  asset  value of the  Portfolio  Shares  or
Millennium  Portfolio Shares at the Closing Date. Thus, the Reorganization  will
not result in a dilution in value of any Shareholder account.

     The   consummation  of  the  proposed   transaction   contemplated  by  the
Reorganization  is subject to a number of conditions set forth in the Plan, some
of which conditions may be waived by the Touchstone  Strategic Trust Board or by
the  Performance  Funds Board,  or by an  authorized  officer of the  Touchstone
Strategic Trust or The Navellier  Performance  Funds, as appropriate.  Among the
significant conditions (which may not be waived) for the Reorganization are: (i)
the  receipt  by  the  Portfolio  and  by the  Millennium  Portfolio  and by the
Acquiring Fund of an opinion of counsel as to certain Federal income tax aspects
of the  Reorganization  (see  "The  Proposed  Transactions--Federal  Income  Tax
Consequences")  (which opinion of counsel has already been  received);  (ii) the
approval of the Plan by the  affirmative  vote of the holders of at least 67% of
the Portfolio shares and of the Millennium Portfolio Shares present in person or
by proxy  entitled  to vote at the  Portfolio  shareholders'  meeting and at the
Millennium Portfolio  Shareholder's meeting if a quorum is present or a majority
of the Portfolio's and of the Millennium Portfolio's  outstanding voting shares,
whichever  percentage is less and (iii) approval of the Plan by the  Portfolio's
Board of Trustees and by the  Millennium  Portfolio's  Board of Trustees  (which
approvals have also already been  obtained).  The Plan may be terminated and the
Reorganization   abandoned  at  any  time,  before  or  after  approval  by  the
Shareholders,  prior to the applicable  Closing Date or by mutual consent of the
Portfolio or the Millennium  Portfolio and the Acquiring Fund. In addition,  the
Plan may be amended in any  mutually-agreeable  manner, except that no amendment
may be made to the Plan  subsequent  to the  Meeting  that  would be  materially
detrimental to the Shareholders.


     In addition,  approval by the  shareholders  of the  Acquiring  Fund of the
change of that Fund from a diversified to a  non-diversifed  series of the Trust
is a condition precedent to the consummation of the Reorganization.

     The Investment  Sub-Advisor to the Acquiring  Fund  (Navellier  Management,
Inc.) contemplates that the Portfolio's and the Millennium Portfolio's assets at
the date of the transactions of the Reorganization  will be invested in a manner
consistent with the investment objectives and policies of both the Portfolio and
the Millennium Portfolio and the Acquiring Fund.


REASONS FOR THE PROPOSED TRANSACTIONS

     As described  below in greater  detail,  the  Portfolio's  Trustees and the
Millennium   Portfolio's  Trustees  believe  the  Reorganization  would  benefit
Shareholders of the Portfolio and of the Millennium  Portfolio by  substantially
reducing  existing  operating  costs and  expenses of the  Portfolio  and of the
Millennium  Portfolio by an estimated $50,000 per year or more thereby promoting
more  efficient  operations.  It is  estimated  that a  proposed  merger  of the
Portfolio  and of  the  Millennium  Portfolio  into  the  Acquiring  Fund  would
substantially  reduce the annual operating  expenses of the Portfolio and of the
Millennium Portfolio by reducing the Portfolio's and the Millennium  Portfolio's
annual Independent Trustee's fees, expenses,  independent counsel's fees and; by
reducing liability insurance,  costs of printing separate  prospectuses,  annual
and semi-annual shareholder reports, quarterly reports and mailings for the



Portfolio  and for the  Millennium  Portfolio;  by reducing the  management  fee
charged by the Investment  Advisor;  and that a proposed  merger would generally
increase the  efficiency of operations and would not result in any change in the
way the  assets  were  managed,  since  the  Investment  Sub-Advisor,  Navellier
Management,  Inc.,  would remain the same and would operate pursuant to the same
investment objectives and restrictions.  For these reasons, the Trustees believe
that the  Reorganization  of the Portfolio and of the Millennium  Portfolio into
the Acquiring Fund is in the best interests of the Shareholders of the Portfolio
and of the Millennium  Portfolio and that the interests of the  Shareholders  of
the  Portfolio  and of the  Millennium  Portfolio  would not be  diluted  by the
Reorganization.

     The Portfolio Trustees and the Millennium Portfolio Trustees recommend that
the  Shareholders  of the Portfolio  and of the  Millennium  Portfolio  vote FOR
Proposal 1 (the Reorganization) based on a number of factors, first and foremost
of which is that the Reorganization  should result in substantial  savings.  The
Portfolio  Trustees and the Millennium  Portfolio Trustees also believe that the
Reorganization,  if effected,  would enable the  resulting  larger fund complex,
with its larger asset base, to achieve enhanced distribution  capability.  It is
also  believed  that the  anticipated  reduction  in costs  should  increase the
performance of the Portfolio and of the Millennium Portfolio.

     It is estimated  that the proposed  merger  should  permit the reduction or
elimination of certain costs and expenses  presently  incurred for services that
are  separately  performed for the Portfolio,  the Millennium  Portfolio and the
Acquiring  Fund.  For  example,  the  projected  Independent  Trustees  fees and
expenses expected to be paid to the Independent Trustees of the Portfolio and of
the Millennium  Portfolio would be reduced, as would the liability insurance and
the attorney's fees and costs of outside  counsel for the Independent  Trustees.
These costs should be eliminated or greatly reduced.  Printing and mailing costs
should  be  reduced  as a result  of a single  prospectus,  annual  report,  and
semi-annual report. As a general rule,  economies can be expected to be realized
primarily with respect to fixed expenses, such as costs of printing and fees for
professional  services.  Expenses  that are  based on the value of assets or the
number of  shareholder  accounts,  such as  custody  and  transfer  agent  fees,
however, would be largely unaffected by the Reorganization. Achievement of these
goals, of course, cannot be assured.

     The Portfolio Trustees and the Millennium  Portfolio Trustees recommend the
proposed  Reorganization,  and the  transactions  contemplated  thereby,  to the
Shareholders  for the  reasons  set forth  above as well as on a number of other
factors, including the following:

1.   the  terms  and  conditions  of the  Reorganization  and the fact  that the
     Reorganization would not result in dilution of Shareholder interests;

2.   the fact that the investment  objectives,  policies,  Navellier  investment
     style and restrictions of the Portfolio,  the Millennium  Portfolio and the
     Acquiring Fund would remain essentially the same;

3.   similar service  features  available to shareholders in the Portfolio,  the
     Millennium Portfolio and the Acquiring Fund;

4.   the  anticipated  benefits to the  Shareholders of the Portfolio and of the
     Millennium Portfolio by being part of the Touchstone Investments;

5.   the tax-free nature and consequences of the Reorganization;



6.   the expense  ratios,  fees,  and  expenses of  Touchstone  Large Cap Growth
     including the fact that the investment advisory fee rate paid by Touchstone
     Large Cap Growth is lower than that paid by Navellier Large Cap Growth;

7.   the fact  that the  Manager  has  contractually  agreed  to limit the total
     annual operating of the Acquiring Fund for at least two years and that such
     expenses  would  be  lower  than  the  current  operating  expenses  of the
     Portfolio;

8.   the fact that Navellier Management, Inc. and Touchstone Advisors, Inc. will
     bear the  expenses  incurred by the  Portfolio  and the  Acquiring  Fund in
     connection with the Reorganization;

The Trustees of the Trust have also  approved  the Plan on behalf of  Touchstone
Large Cap Growth.


     YOUR TRUSTEES BELIEVE THE PROPOSED  REORGANIZATION PLAN SHOULD BE APPROVED.
The consummation of the proposed transactions contemplated by the Reorganization
is  subject  to a number of  conditions  set  forth in the  Plan,  some of which
conditions    may   be   waived   by   the    Trustees.    See   "The   Proposed
Transactions--Agreement   and  proposed  Plan  of  Reorganization."   Among  the
significant  conditions (which may not be waived) for the Reorganization are (i)
the receipt by each of the Funds of an opinion of counsel  (or a revenue  ruling
of the U.S.  Internal  Revenue Service) as to certain Federal income tax aspects
of the  Reorganization  (see  "The  Proposed  Transactions--Federal  Income  Tax
Consequences") (that opinion of counsel has been received) and (ii) the approval
of the Plan by the affirmative  vote of at least 67% of the Portfolio Shares and
at least 67% of the Millennium Portfolio Shares present in person or by proxy if
a quorum of shareholders is present or the holders of at least a majority of the
outstanding  voting Shares of the Portfolio and of the Shares of the  Millennium
Portfolio, whichever amount is less and (iii) approval of the proposed merger by
the Trustees of the  Portfolio and of the Trustees of the  Millennium  Portfolio
(these conditions have also been satisfied).  The Plan provides, with respect to
the  Reorganization,  for the acquisition of all the assets of the Portfolio and
all the assets of the Millennium Portfolio by the Acquiring Fund in exchange for
Acquiring  Fund Shares and the  assumption  by the  Acquiring  Fund of all valid
liabilities of the Portfolio and of the Millennium Portfolio. The Acquiring Fund
Shares  received by the Portfolio and the Acquiring Fund shares  received by the
Millennium  Portfolio then would be distributed pro rata to the  Shareholders of
the Portfolio and to the Shareholders of the Millennium Portfolio  respectively.
The  outstanding  Shares of the  Portfolio  would be cancelled and the Portfolio
would be liquidated. The outstanding Shares of the Millennium Portfolio would be
cancelled and the Millennium  Portfolio would be liquidated.  The Reorganization
is anticipated to occur on September 19, 2003, or such later date as the parties
may agree upon (the "Closing  Date").  As a result of the proposed  transactions
contemplated by the Reorganization,  each portfolio  shareholder would receive a
number of full and fractional shares of the corresponding  Acquiring Fund having
a total net  asset  value  equal in value to the net  asset  value of his or her
Shares in the Portfolio  and/or the Millennium  Portfolio as of the Closing Date
of the Reorganization.


DESCRIPTION OF SECURITIES TO BE ISSUED

     GENERAL.  The Acquiring  Fund Shares to be issued  pursuant to the proposed
Reorganization represent shares of beneficial interest in the Large Cap




Growth Fund of the Touchstone Strategic Trust, which is a diversified,  open-end
management  investment company.  Touchstone Strategic Trust is an unincorporated
voluntary  association organized under the laws of the State of Massachusetts as
a business trust, pursuant to Touchstone Strategic Trust's Declaration of Trust,
dated November 18, 1982 (the  "Declaration of Trust").  The Declaration of Trust
authorizes  Touchstone Strategic Trust to issue an unlimited number of shares of
beneficial interest in one or more series. Currently, Touchstone Strategic Trust
has authorized six series:  the Small Cap Growth Fund, the Emerging Growth Fund,
the Growth  Opportunities  Fund, the Large Cap Growth Fund, the Enhanced 30 Fund
and the Value  Plus  Fund.  Other  series  in the  Touchstone  Strategic  Trust,
however,  may be added in the future.  Each Acquiring  Fund Share  represents an
equal proportionate  interest with each other Acquiring Fund Share and each such
Acquiring  Fund Share is entitled to equal  voting,  dividend,  liquidation  and
redemption  rights.  Acquiring Fund Shares entitle their holders to one vote per
full  share  held and to  fractional  votes  for  fractional  shares  held.  The
Acquiring Fund Shares do not have cumulative voting rights, preemptive rights or
subscription  rights and are fully paid,  nonassessable,  redeemable  and freely
transferable.


     Currently,  each  shareholder of the Acquiring Fund is permitted to inspect
the  records,  accounts  and  books of the  Touchstone  Strategic  Trust for any
legitimate business purpose.

     MEETINGS. As a Massachusetts business trust,  Touchstone Strategic Trust is
not  required to hold an annual  shareholders'  meeting if the 1940 Act does not
require such a meeting. The Declaration of Trust provides that a special meeting
of Touchstone Strategic Trust shareholders of any series of Touchstone Strategic
Trust may be called by the Trustees of Touchstone  Strategic  Trust and shall be
called by the Trustees upon the written request of shareholders  owning at least
10% of the  outstanding  shares of a series of the  Touchstone  Strategic  Trust
entitled  to vote.  Touchstone  Strategic  Trust will hold  special  shareholder
meetings  as  required  or deemed  desirable  by the Board for such  purposes as
electing  Trustees,  changing  fundamental  policies or approving an  investment
advisory or  shareholder  services  agreement.  Any Trustee may be removed  from
office with or without cause at any time either by written instrument, signed by
at least  two-thirds  (2/3) of the  number of  Trustees  prior to such  removal,
specifying the date upon which such removal shall become effective, or by a vote
of Touchstone  Strategic Trust shareholders  owning at least two-thirds (2/3) of
the  outstanding  shares  of a series  of the  Touchstone  Strategic  Trust.  If
requested by shareholders of at least 10% of the outstanding  shares of a series
of the  Touchstone  Strategic  Trust,  Touchstone  Strategic  Trust  will call a
shareholder  meeting for the purpose of voting upon the  question of the removal
of a Trustee and will assist in communications  with other Touchstone  Strategic
Trust shareholders as required by Section 16(c) of the 1940 Act.

     SHAREHOLDER LIABILITY. Beneficial owners of a Massachusetts business trust,
such as Touchstone  Strategic  Trust,may under some  circumstances be liable for
obligations of the Fund. Touchstone Strategic Trust's governing instrument,  the
Trust Declaration,  however,  specifically  disclaims  shareholder liability for
acts or obligations of Touchstone  Strategic  Trust and provides that Touchstone
Strategic Trust's  shareholders  shall not be subject to any personal  liability
for the acts or obligations of Touchstone Strategic Trust. The Trust Declaration
further  provides  for  indemnification,  out of the  property  of the series of
Touchstone  Strategic Trust with respect to which such shareholder's  shares are
issued,  for all losses and expenses of any shareholder  held personally  liable
solely by reason of his or her being or having been a shareholder of such series
and not because of his or her acts or omissions or for some other reason. Thus,



the risk of a shareholder of Touchstone Strategic Trust incurring financial loss
on account of shareholder liability is considered remote since such liability is
limited to  circumstances  in which a disclaimer is  inoperative  and Touchstone
Strategic Trust would be unable to meet its obligations.

     LIABILITY OF TRUSTEES.  Under the  Declaration  of Trust, a Trustee will be
held  personally  liable only for the  Trustee's  own willful  misfeasance,  bad
faith,  gross  negligence  or reckless  disregard of the duties  involved in the
conduct of the office of a Trustee. Under said Declaration of Trust and separate
indemnity  agreements,  Trustees  and  officers of  Touchstone  Strategic  Trust
("Trust  Officers") will be indemnified  for the expenses of litigation  against
them  unless it is  determined  that the person did not act in good faith in the
reasonable  belief  that the  person's  action was in or not opposed to the best
interest of Touchstone  Strategic Trust or if the person's conduct is determined
to  constitute  willful  misfeasance,  bad faith,  gross  negligence or reckless
disregard of that person's duties.  Touchstone  Strategic Trust also may advance
money  for  these  expenses  provided  that the  Trustee  or the  Trust  Officer
undertakes to repay Touchstone Strategic Trust if that person's conduct later is
determined  to  preclude  indemnification.   The  Navellier  Performance  Funds'
Declaration  of Trust and  separate  indemnity  agreements  currently  set forth
comparable provisions.

     The  foregoing  is only a summary  of  certain  characteristics  of (i) the
shares  of  beneficial  interest  of  Touchstone  Strategic  Trust to be  issued
pursuant to the  proposed  Reorganization,  (ii) the  operations  of  Touchstone
Strategic Trust's Declaration of Trust and By-Laws, and (iii) Massachusetts law.
The foregoing is not a complete description of the shares of beneficial interest
of Touchstone  Strategic Trust nor of the documents or laws cited.  Shareholders
should  refer to the  provisions  of  Massachusetts's  law  directly  for a more
thorough description.

FEDERAL INCOME TAX CONSEQUENCES


     Touchstone  Strategic  Trust  and  The  Navellier  Performance  Funds  have
received,  as a condition  to the  Reorganization,  an opinion  from  Sullivan &
Worcester LLP to the effect, for Federal income tax purposes and with respect to
the Reorganization, that:

1.   the proposed  Reorganization and the transactions  contemplated thereby, as
     described herein,  will constitute a tax-free  "reorganization"  within the
     meaning of Section 368(a)(1)(C) of the Internal Revenue Code (the "Code");

2.   no gain or loss  generally  will be recognized  to the  Portfolio  upon the
     transfer of all of the Portfolio's assets to the Acquiring Fund in exchange
     solely for Acquiring  Fund Shares and the  assumption by the Acquiring Fund
     of all valid  liabilities of the Portfolio and the subsequent  distribution
     of those Acquiring Fund Shares to the Portfolio's Shareholders of record in
     liquidation thereof;

3.   no gain or loss will be recognized  to the Acquiring  Fund upon the receipt
     of those Portfolio  assets in exchange solely for Acquiring Fund Shares and
     the assumption by the Acquiring Fund of those valid Portfolio liabilities;



4.   the Acquiring  Fund's basis for those Portfolio  assets  transferred by the
     Portfolio to the  Acquiring  Fund will be the same as the basis  thereof in
     the  Portfolio's  hands  immediately  before  the  Reorganization  and  the
     Acquiring   Fund's  holding  period  for  those  assets  will  include  the
     Portfolio's holding periods therefore;

5.   each  Shareholder  of  record  will  recognize  no gain or  loss  upon  the
     constructive  exchange  of all of his or her  Portfolio  Shares  solely for
     Acquiring Fund Shares pursuant to the Reorganization;

6.   each  Shareholder's  basis for the Acquiring  Fund Shares to be received by
     the  Shareholder  pursuant  to the  Reorganization  will be the same as the
     Shareholder's   basis  in  the  Portfolio   Shares  to  be   constructively
     surrendered in exchange therefore; and

7.   each such Shareholder's holding period for those Acquiring Fund Shares will
     include the period during which the Portfolio  Shares to be  constructively
     surrendered in exchange for Acquiring  Fund Shares were held,  provided the
     Portfolio  Shares were held as capital  assets by that  Shareholder  on the
     date of the Reorganization.


     A revenue ruling of the Internal  Revenue Service as to the  Reorganization
is not expected to be obtained.


     THE  FOREGOING  IS INTENDED TO BE ONLY A SUMMARY OF THE  PRINCIPAL  FEDERAL
INCOME TAX CONSEQUENCES OF THE REORGANIZATION AND SHOULD NOT BE CONSIDERED TO BE
TAX ADVICE.  THERE CAN BE NO ASSURANCE  THAT THE INTERNAL  REVENUE  SERVICE WILL
CONCUR  ON  ALL  OR  ANY OF THE  ISSUES  DISCUSSED  ABOVE.  SHAREHOLDERS  OF THE
PORTFOLIO  ARE URGED TO CONSULT  THEIR OWN TAX ADVISORS  REGARDING  THE FEDERAL,
STATE AND LOCAL TAX CONSEQUENCES  WITH RESPECT TO THE FOREGOING  MATTERS AND ANY
OTHER CONSIDERATIONS WHICH MAY BE APPLICABLE TO THE SHAREHOLDERS.


PRO FORMA CAPITALIZATION AND RATIOS

     The  following  table  shows  the  capitalization  of  the  Portfolio,  the
Millennium  Portfolio,  , and the Acquiring Fund shares as of December 31, 2002,
and  combined in the  aggregate  on a pro forma  basis,  as of December 31, 2002
giving effect to the Reorganization:





- ---------------------------------------------------------------------------------------------------------
                                                                                        Touchstone Large
                                                     Navellier          Navellier          Cap Growth
     Class A                  Touchstone Large   Millennium Large     Performance         Combined Pro
   Information                   Growth Cap         Cap Growth      Large Cap Growth         Forma
- ---------------------------------------------------------------------------------------------------------
Net Assets
                                                                              
Class A                          $33,843,198        $   355,316        $13,831,464        $48,029,978
Class B                               54,017            423,950                               477,967
Class C                            1,092,490            215,949                             1,308,439
Total Net Assets                  34,989,705            995,215         13,831,464         49,816,384
- ---------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share
Class A                          $      8.05        $      4.63        $     12.19        $     12.19
Class B                                 7.62               4.56                                 12.19
Class C                                 7.59               4.55                                 12.19
- ---------------------------------------------------------------------------------------------------------
Shares Outstanding
Class A                            4,202,127             76,781          1,134,468          3,939,924
Class B                                7,090             92,912                                39,210
Class C                              143,907             47,449                               107,337
Total Shares Outstanding           4,353,124            217,142          1,134,468          4,086,471
- ---------------------------------------------------------------------------------------------------------




DISSOLUTION OF THE PORTFOLIOS

     If the Plan is approved by the  Shareholders  of the  Portfolio  and of the
Millennium Portfolio and the Reorganization is completed,  the Portfolio and the
Millennium Portfolio will be dissolved as soon as practicable in accordance with
the   provisions   of   Delaware   law  and  the   Plan.   See   "The   Proposed
Transactions--Agreement and Proposed Plan of Reorganization".

NAVELLIER GROUP RECOMMENDATION


     The Portfolio  Trustees and  Millennium  Portfolio  Trustees have solicited
this  shareholder  vote to approve the  Reorganization  and  recommend  that the
Portfolio  Shareholders  and  Millennium  Portfolio  Shareholders  vote  FOR the
Reorganization  on the enclosed  WHITE proxy card.  The  Portfolio  Trustees and
Millennium  Portfolio  Trustees,  for the reasons mentioned herein (See "Reasons
For Proposed  Transactions"),  believe the  Reorganization  of the Portfolio and
Millennium Portfolio into the Acquiring Fund would result in cost savings, would
be in the best interests of the Portfolio  Shareholders and Millennium Portfolio
Shareholders and that their interests would not be diluted.


     The  Portfolio   Trustees  and  Millennium   Portfolio  Trustees  therefore
recommend  that the  Shareholders  of the Portfolio vote FOR Proposal No. 1 (the
proposal to merge the Portfolio and Millennium Portfolio into the Acquiring Fund
and the transactions contemplated thereby).

                          ADDITIONAL INFORMATION ABOUT
                THE ACQUIRING FUND AND THE ACQUIRING FUND SHARES


     Additional  information about the Acquiring Fund is included in the current
Prospectus of the Touchstone  Strategic  Trust,  dated August 1, 2003. A copy of
that  prospectus  has been  filed with the  Commission  and is  incorporated  by
reference  herein.  A Shareholder of the Portfolio or the  Millennium  Portfolio
will  receive  with  this  combined  prospectus/proxy  statement,  a copy of the
prospectus  for  Touchstone  Strategic  Trust.  Further  information  about  the
Acquiring  Fund is included  in the  Statement  of  Additional  Information  for
Touchstone  Strategic  Trust,  dated August 1, 2003. The Statement of Additional
Information  has been filed with the Commission and is incorporated by reference
herein.  Copies of that  Statement  of  Additional  Information  for  Touchstone
Strategic  Trust  may  be  obtained  without  charge  by  contacting  Touchstone
Investments toll-free at 1-800-543-0407.


                          ADDITIONAL INFORMATION ABOUT
                     THE PORTFOLIO AND THE PORTFOLIO SHARES


     Additional  information  about the  Portfolio  is  included  in the current
Prospectus of the Navellier Performance Funds, dated May 1, 2003. A copy of that
prospectus has been filed with the Commission and is  incorporated  by reference
herein.  Further information about the Portfolio is included in the Statement of
Additional  Information for The Navellier  Performance Funds, dated May 1, 2003,
which also has been filed with the Commission and is  incorporated  by reference
herein.  A copy of the  Statement of  Additional  Information  for The Navellier
Performance  Funds  may be  obtained  without  charge  by  contacting  Navellier
Management, Inc. at One East Liberty Street, Third Floor, Reno, Nevada 89501, or
by telephoning Navellier Management, Inc. toll-free at 1-800-887-8671.


          ADDITIONAL INFORMATION ABOUT THE MILLENNIUM PORTFOLIO AND THE
                           MILLENNIUM PORTFOLIO SHARES


     Additional  information  about the Millennium  Portfolio is included in the
current Prospectus of the Navellier  Millennium Funds, dated May 1, 2003. A copy
of that  prospectus has been filed with the Commission  and is  incorporated  by
reference herein. Further information about the Millennium Portfolio is included
in the Statement of Additional  Information for The Navellier  Millennium Funds,
dated  May 1,  2003,  which  also has been  filed  with  the  Commission  and is
incorporated  by  reference  herein.  A copy  of  the  Statement  of  Additional
Information for The Navellier Millennium Funds may be obtained without charge by
contacting Navellier  Management,  Inc. at One East Liberty Street, Third Floor,
Reno, Nevada 89501, or by telephoning  Navellier  Management,  Inc. toll-free at
1-800-887-8671.




                                  MISCELLANEOUS

AVAILABLE INFORMATION

     Touchstone  Strategic Trust is registered under the 1940 Act and is subject
to the  informational  requirements  of the Securities  Exchange Act of 1934, as
amended,  and the 1940 Act and, in accordance  therewith,  files reports,  proxy
materials and other information with the Commission.  The Navellier  Performance
Funds and the Navellier  Millennium  Funds are registered under the 1940 Act and
are required to file reports under the 1940 Act. Such reports,  proxy  materials
and other information can be inspected at the Securities and Exchange Commission
at 450 Fifth Street,  N.W.,  Washington,  DC 20549.  Copies of such material can
also be obtained from the Public  Reference  Branch,  Office of Consumer Affairs
and Information Services,  Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, DC 20539, at prescribed rates.

LEGAL MATTERS


     Certain legal matters in connection with the issuance of the Acquiring Fund
Shares will be passed upon by Sullivan & Worcester LLP.


FINANCIAL STATEMENTS AND EXPERTS

The financial  statements of the  Touchstone  Large Cap Growth Fund at March 31,
2003, and for the periods  indicated  therein,  included in the Company's Annual
Report and incorporated by reference  herein and in the Registration  Statement,
have been audited by Ernst & Young LLP,  independent  auditors,  as set forth in
their report  appearing  therein,  and are  incorporated  herein by reference in
reliance  upon such  report  given on the  authority  of such firm as experts in
accounting  and  auditing.  The  financial  statements  of  Navellier  Large Cap
Portfolio,  a series of Navellier  Performance  Funds,  and Navellier  Large Cap
Portfolio, a series of Navellier Millennium Funds, at December 31, 2002, and for
the periods  indicated  therein,  included in the  (Trusts')  Annual  Report and
incorporated by reference  herein and in the Registration  Statement,  have been
audited by Tait,  Weller & Baker,  independent  auditors,  as set forth in their
report appearing therein,  and are incorporated  herein by reference in reliance
upon such report given on the  authority  of such firm as experts in  accounting
and auditing.  Copies of these financial statements, as included in the SAI, may
be obtained without charge by contacting Touchstone Securities, Inc. at 221 East
Fourth Street, Suite 300, Cincinnati, Ohio 45202, or by telephoning toll-free at



1-800-543-0407,   for  the  Touchstone  audited  financial   statements  and  by
contacting Navellier Management,  Inc., at One East Liberty Street, Third Floor,
Reno, Nevada 89501, or by telephoning  Navellier  Management,  Inc. toll-free at
1-800-887-8671, for the Portfolio and or Millennium Portfolio financial
statements.


PROXY SOLICITATION

     Proxies will be solicited by mail and, if necessary to obtain the requisite
representation  of  Shareholders,  your  Trustees  also may  solicit  proxies by
telephone,  telegraph, facsimile and/or personal interview by representatives of
the Portfolio, Mr. Navellier, Navellier Management, Inc., employees of Navellier
Management, Inc., or their affiliates, and by representatives of any independent
proxy  solicitation  service  retained  for the  Meeting.  Louis  Navellier  and
Navellier Management, Inc., whose principal location is One East Liberty Street,
Third  Floor,  Reno,  Nevada  89501,  will bear the  costs of its  solicitation,
including  the costs such as the  preparation  and  mailing of the  notice,  the
combined  prospectus/proxy  statement,  and the proxy,  and the  solicitation of
proxies, including reimbursement to persons who forward proxy materials to their
clients,  and the expenses  connected with the  solicitation of these proxies in
person, by telephone, or by telegraph. Banks, brokers, and other persons holding
Portfolio  Shares  registered  in their names or in the names of their  nominees
will be reimbursed for their expenses incurred in sending proxy materials to and
obtaining proxies from the beneficial owners of such Portfolio Shares.

     Mr. Navellier, as sole owner of Navellier Management, Inc., has a financial
interest in the outcome of the vote because Navellier Management,  Inc. would be
investment  sub-advisor  to the  merged  Portfolio,  for which it would  receive
investment advisory fees.

REVOCATION OF PROXIES

     You may revoke your proxy: (i) at any time prior to the proxy's exercise by
written  notice to The Navellier  Performance  Funds,  One East Liberty  Street,
Third Floor,  Reno,  Nevada 89501 prior to the Meeting;  (ii) by the  subsequent
execution  and return of another  proxy prior to the Meeting;  or (iii) by being
present and voting in person at the Meeting and giving oral notice of revocation
to the Chairman of the Meeting.

NO DISSENTERS' RIGHTS OF APPRAISAL

     The  purpose  of  the  Meeting  is  to  vote  on  the   proposed   tax-free
Reorganization  of the Portfolio into the Acquiring  Fund, as described below in
greater detail. The Portfolio is a separate series of the Navellier  Performance
Funds.  The  Declaration  of  Trust  of the  Navellier  Performance  Funds  (the
"Declaration of Trust") does not entitle shareholders to appraisal rights (i.e.,
to demand the fair value of their  shares) in the event of a  reorganization  or
proposed merger.  Consequently,  the shareholders  will be bound by the terms of
the Plan, if the Plan is approved at the Meeting. Any Shareholder,  however, may
redeem his or her Portfolio  Shares at net asset value prior to the closing date
of the proposed Reorganization.



ADDITIONAL VOTING INFORMATION; VOTING OF PROXIES; ADJOURNMENT PROXY SOLICITATION

     Shareholders  of record of the  Portfolio  at the close of business on July
31, 2003 (the  "Record  Date") will be  entitled  to vote at the  Meeting.  Such
holders of shares of beneficial interest in the Portfolio  ("Portfolio  Shares")
are entitled to one vote for each Portfolio  Share held and to fractional  votes
for fractional Portfolio Shares held. A quorum for the Portfolio must be present
in person  or  represented  by Proxy  for the  transaction  of  business  at the
Meeting.  The holders of record of one-third of the Portfolio Shares outstanding
at the close of business on that Record Date present in person or represented by
proxy will  constitute  a quorum  for the  Meeting  of the  Shareholders  of the
Portfolio.  A  quorum  being  present,  the  approval  at  the  Meeting  by  the
shareholders  of the  Portfolio  for the  proposed  Reorganization  requires the
affirmative  vote of at least 67% of the  outstanding  shares  of the  Portfolio
present in person or represented by proxy at the Meeting if more than 50% of the
outstanding  shares of the  Portfolio  are present in person or  represented  by
proxy or more than 50% of the outstanding shares entitled to vote,  whichever is
less.

     If either (i) a quorum is not  present  at the  Meeting or (ii) a quorum is
present  but  sufficient  votes in favor of a matter  proposed at the Meeting (a
"Proposal"),  as set forth in the Notice of this  Meeting,  are not  received by
September  19, 2003,  or a date shortly  thereafter,  then the persons  named as
attorneys and proxies in the enclosed proxy  ("Proxies") may propose one or more
adjournments of the Meeting to permit further  solicitation of proxies. Any such
adjournment  will  require the  affirmative  vote of at least  one-third  of the
shares  present in person or by proxy.  The persons  named as Proxies  will vote
those  proxies that such persons are required to vote FOR such Proposal in favor
of such an adjournment and will vote those proxies  required to be voted AGAINST
such Proposal against such an adjournment.  A Shareholder vote may be taken on a
Proposal  in  this  combined  prospectus/proxy   statement  prior  to  any  such
adjournment  if  sufficient  votes  have  been  received  and  it  is  otherwise
appropriate.

     The individuals named as Proxies on the enclosed WHITE proxy card will vote
in accordance with your direction,  as indicated thereon,  if your proxy card is
received and is properly executed.  If you properly execute your WHITE proxy and
give no voting  instructions  with  respect to a  Proposal,  your shares will be
voted in favor of the Proposal. The duly-appointed Proxies, in their discretion,
may vote upon such other matters as may properly  come before the Meeting.  Your
Trustees are not aware of any other matters to come before the Meeting.

     Shares of beneficial  interest in the Portfolio held by brokerage  firms in
"street  name"  for the  benefit  of a  beneficial  owner  may be  voted  by the
brokerage firms rather than by the beneficial  owner unless the beneficial owner
directs the brokerage  firm in writing to vote the shares in a specified  manner
or executes a written  proxy.  Shares of beneficial  ownership held by brokerage
firms in "street name" for which the brokerage firm executes and returns proxies
will be counted as  present  for  purposes  of  determining  whether a quorum is
present. If the brokerage firm returns the proxy but does not give directions on
how to vote,  its shares will be counted as present for purposes of  determining
the number  present for a quorum and will be counted as votes for the  proposal.
If the brokerage  firms votes its beneficial  shares to abstain,  its beneficial
shares will be counted as present for purposes of  determining a quorum but will
not be counted for purposes of a vote for or against the Proposal.

     If a beneficial  owner executes and returns a proxy with no instructions as
to how to vote,  those shares of  beneficial  interest will count as present for
purposes of determining whether a quorum is present and will be counted as votes
for the proposal. If the beneficial owner returns the proxy and marks "abstain",
his/her beneficial shares will be counted as present for purposes of determining
a quorum but will not be counted as for or against the Proposal and will have no
effect on the vote regarding the Proposal.

     If a broker returns a "non-vote"  proxy,  indicating a lack of authority to
vote on the Plan,  then the  Portfolio  Shares  covered by such broker  non-vote
shall be deemed present at the Meeting for the purposes of determining a quorum,
but shall not be deemed to be  represented  at the Meeting  for the  purposes of
calculating  the number of Portfolio  Shares present in person or represented by
proxy at the Meeting  with  respect to the Plan or any other  Proposal  and will
have no effect on the vote regarding the Proposal.

     As of the Record  Date,  there were  outstanding  and  entitled to be voted
1,322,805.704  Portfolio  Shares.  As of the Record Date no shareholder held for
the benefit of others more than 5% of the  Portfolio.  Trustees  and officers of
The Navellier  Performance Funds own in the aggregate less than 1% of the shares
of the Portfolio.

     As more fully described in this combined  prospectus/proxy  statement,  the
Meeting has been called for the following purpose:



     PROPOSAL 1.

     To approve a proposed  Agreement and proposed Plan of  Reorganization  (the
     "Plan"),  whereby the  Portfolio  would  transfer  all of its assets to the
     Large Cap Growth Fund (the  "Acquiring  Fund") of the Touchstone  Strategic
     Trust in a tax-free  exchange  for  shares of  beneficial  interest  in the
     Acquiring Fund that would then be distributed  to the  shareholders  of the
     Portfolio.  Also,  as part of the Plan,  the  Navellier  Large  Cap  Growth
     Portfolio of The Navellier Millennium Funds ("Millennium  Portfolio") would
     transfer all of its assets to the Acquiring Fund in a tax-free exchange for
     shares of  beneficial  interest  in the  Acquiring  Fund that would then be
     distributed to the Shareholders of the Millennium Portfolio.  Also, as part
     of the Plan, the Acquiring  Fund would assume all valid  liabilities of the
     Portfolio and of the Millennium Portfolio.

     As  described  previously,  if holders of more than 50% of the  outstanding
shares of  record  are  present  in person  or by  proxy,  the  approval  by the
Portfolio of Proposal 1 at the Meeting requires the affirmative vote of at least
67% of the Portfolio  Shares  present in person or  represented  by proxy at the
Meeting or the vote of more than 50% of the outstanding shares entitled to vote,
whichever is less.

     MR. NAVELLIER AND THE OTHER TRUSTEES OF THE PORTFOLIO UNANIMOUSLY RECOMMEND
THAT THE PROPOSED REORGANIZATION DESCRIBED HEREIN BE "APPROVED."


                                 OTHER BUSINESS

     The Portfolio Trustees know of no business to be brought before the Meeting
other than the matters set forth in this  combined  prospectus/proxy  statement.
Should any other matter  requiring a vote of Shareholders  arise,  however,  the
Proxies will vote thereon  according to their best  judgment in the interests of
the Portfolio and of the Shareholders.

                                              By Louis G. Navellier
                                              ----------------------
                                              Trustee, The Navellier
                                              Performance Funds

One East Liberty Street, Third Floor
Reno, Nevada 89501
August 19, 2003



                                   APPENDIX A:


                      AGREEMENT AND PLAN OF REORGANIZATION


     THIS AGREEMENT AND PLAN OF  REORGANIZATION  (the "Agreement") is made as of
this 30th day of June, 2003, by and between THE NAVELLIER  MILLENNIUM FUNDS (the
"Millennium  Fund"),  a  Delaware  business  trust with its  principal  place of
business at One East  Liberty  Street,  Third Floor,  Reno,  Nevada  89501,  THE
NAVELLIER PERFORMANCE FUNDS (the "Performance Funds"), a Delaware business trust
with its principal  place of business at One East Liberty  Street,  Third Floor,
Reno,  Nevada 89501 and TOUCHSTONE  STRATEGIC  TRUST, a  Massachusetts  business
trust with its principal place of business at 221 East Fourth Street, Suite 300,
Cincinnati, Ohio 45202.

     This Agreement is intended to be and is adopted as a plan of reorganization
and  liquidation  within  the  meaning of  Section  368(a) of the United  States
Internal  Revenue  Code of 1986,  as amended (the  "Code"),  with respect to the
proposed  reorganizations  of the  NAVELLIER  LARGE CAP  GROWTH  PORTFOLIO  (the
"Portfolio"), which portfolio is a series of the Navellier Performance Funds and
the NAVELLIER  LARGE CAP GROWTH  PORTFOLIO (the  "Millennium  Portfolio")  which
portfolio is a series of the Navellier Millennium Funds),  pursuant to which the
Portfolio and the  Millennium  Portfolio  will be merged into and become part of
the Large Cap Growth Fund (the  "Acquiring  Fund") of the  Touchstone  Strategic
Trust (the "Reorganization"). Specifically, this Agreement is intended to be and
is adopted for the purpose of providing for the  Reorganization of the Portfolio
and the Millennium  Portfolio into the Acquiring Fund. The  Reorganization  will
consist of the transfer of all of the assets of the Portfolio and the Millennium
Portfolio to the Acquiring Fund in exchange  solely for (i) shares of beneficial
interest  in the  Acquiring  Fund (the  "Acquiring  Fund  Shares")  and (ii) the
assumption by the Acquiring  Fund of all valid  liabilities of the Portfolio and
of the Millennium Portfolio and the distribution of the Acquiring Fund Shares to
the  Shareholders  of the Portfolio and the of Millennium  Portfolio in complete
liquidation of the Portfolio and the Millennium  Portfolio,  as provided herein,
all upon the terms and conditions hereinafter set forth in this Agreement.

     WHEREAS,  the Performance Funds and the Millennium Funds and the Touchstone
Strategic  Trust  are each  open-end,  registered  investment  companies  of the
management  type and the Portfolio and the  Millennium  Portfolio own securities
which are assets of the  character in which the  Acquiring  Fund is permitted to
invest;

     WHEREAS,  the Trustees of the Portfolio and the Trustees of the  Millennium
Portfolio have each determined,  with respect to such  Reorganization,  that the
exchange  of all of the  assets  of the  Portfolio  and  all the  assets  of the
Millennium  Portfolio for Acquiring  Fund shares and the assumption of all valid
liabilities  of the Portfolio and of the  Millennium  Portfolio by the Acquiring
Fund is in the best interests of the Portfolio and the Millennium  Portfolio and
their  Shareholders  and that the interests of the existing  Shareholders of the
Portfolio and the Millennium  Portfolio would not be diluted as a result of this
transaction; and

     WHEREAS,  the purpose of the Reorganization is to combine the assets of the
Acquiring  Fund with those of the Portfolio and the  Millennium  Portfolio in an
attempt  to  achieve  greater  operating   economies  and  to  retain  Navellier
Management,  Inc.  as the  investment  sub-advisor  to manage  the assets of the
Acquiring Fund after the Reorganization;

     NOW,  THEREFORE,  in consideration of the premises and of the covenants and
agreements  hereinafter set forth,  the parties hereto covenant and agree,  with
respect to the Reorganization, as follows:



1.   THE  TRANSFER  OF THE  ASSETS  OF  THE  PORTFOLIO  AND  THE  ASSETS  OF THE
     MILLENNIUM  PORTFOLIO TO THE ACQUIRING  FUND IN EXCHANGE FOR ACQUIRING FUND
     SHARES, THE ASSUMPTION OF ALL VALID LIABILITIES OF THE PORTFOLIO AND OF THE
     MILLENNIUM  PORTFOLIO  BY THE  ACQUIRING  FUND AND THE  LIQUIDATION  OF THE
     PORTFOLIO AND THE MILLENNIUM PORTFOLIO

               1.1 For the  Reorganization,  the  closing  shall  take  place as
          provided  for in  paragraph  3.1  ("Closing")  and the  provisions  of
          paragraphs 1 through 8 of this Agreement  shall apply. At the Closing,
          the Portfolio and the  Millennium  Portfolio  agree to transfer all of
          their assets,  as set forth in paragraph  1.2, to the Acquiring  Fund,
          and the Acquiring Fund agrees in exchange therefore: (1) to deliver to
          the Portfolio and to the Millennium  Portfolio the number of Acquiring
          Fund Shares, including fractional Acquiring Fund Shares, determined by
          dividing the value of the  Portfolio's net assets and the value of the
          Millennium Portfolio's net assts each computed in the manner and as of
          the time and date set forth in paragraph 2.1 by the net asset value of
          one Acquiring Fund Share computed in the manner and as of the time and
          date  set  forth  in  paragraph  2.2;  and (ii) to  assume  all  valid
          liabilities of the Portfolio and of the Millennium  Portfolio,  as set
          forth in paragraph 1.3.

               1.2 The assets of the Portfolio and the assets of the  Millennium
          Portfolio to be acquired by the  Acquiring  Fund shall  consist of all
          property,   including,   without  limitation,  all  cash,  securities,
          interests, and dividends or interest receivable which are owned by the
          Portfolio  and owned by the  Millennium  Portfolio and any deferred or
          prepaid  expenses  shown as assets on the books of the Portfolio or on
          the books of the Millennium  Portfolio on the closing date provided in
          paragraph 3.1 (the "Closing Date").

               1.3 The Portfolio and the Millennium Portfolio will each endeavor
          to  discharge  all of their known valid  liabilities  and  obligations
          prior to the Closing Date.  The Acquiring  Fund shall assume all valid
          liabilities,  expenses,  costs,  charges  and  reserves  reflected  on
          unaudited statements of assets and liabilities of the Portfolio and of
          the  Millennium  Portfolio  prepared  by  the  administrators  of  the
          Acquiring Fund and the Portfolio and the Millennium  Portfolio,  as of
          the Valuation Date (as defined in paragraph  2.1), in accordance  with
          generally accepted accounting principles consistently applied from the
          prior audited period.

               1.4  Immediately  after the  transfer of assets  provided  for in
          paragraph  1.1, the Portfolio and the  Millennium  Portfolio will each
          distribute pro rata to their Shareholders of record,  determined as of
          immediately  after  the close of  business  on the  Closing  Date (the
          "Portfolio  Shareholders")  and (the "Millennium  Shareholders"),  the
          Acquiring Fund Shares  received by the Portfolio and by the Millennium
          Portfolio   pursuant  to  paragraph  1.1  and  will  each   completely
          liquidate. Such distributions and liquidations will be accomplished by



          the transfer of the Acquiring Fund Shares then credited to the account
          of the Portfolio and to the account of the Millennium Portfolio on the
          books of the Acquiring Fund to the share records of the Acquiring Fund
          in the  names of the  Portfolio  Shareholders  and in the names of the
          Millennium Portfolio  Shareholders and representing the respective pro
          rata number of the Acquiring  Fund Shares due such  Shareholders.  All
          issued and  outstanding  shares of the Portfolio and of the Millennium
          Portfolio  will  simultaneously  be  canceled  on  the  books  of  the
          Portfolio and of the  Millennium  Portfolio.  The Acquiring Fund shall
          not issue  certificates  representing  the  Acquiring  Fund  Shares in
          connection with such exchange. Ownership of Acquiring Fund Shares will
          be shown on the books of the Acquiring Fund's transfer agent.

2.   VALUATION

               2.1 The  value of the  Portfolio's  assets  and the  value of the
          Millennium  Portfolio's  assets to be acquired by the  Acquiring  Fund
          hereunder  shall be the net asset value of such assets  computed as of
          immediately after the close of business of the New York Stock Exchange
          on the Closing Date (such time and date being  hereinafter  called the
          "Valuation  Date"),  using the valuation  procedures for computing net
          asset  value  set  forth  in the  Portfolio's  and  in the  Millennium
          Portfolio's   then-current   prospectus  or  statement  of  additional
          information.

               2.2 The net asset value of an  Acquiring  Fund Share shall be the
          net asset value per share computed as of  immediately  after the close
          of business  of the New York Stock  Exchange  on the  Valuation  Date,
          using the valuation procedures for computing net asset value set forth
          in  the  Touchstone  Strategic  Trust's  then-current   prospectus  or
          statement of additional information.

               2.3  The  number  of  the  Acquiring  Fund  Shares  to be  issued
          (including  fractional shares, if any) in exchange for the Portfolio's
          assets and the  Millennium  Portfolio's  assets shall be determined by
          dividing  the  value of the net  assets of the  Portfolio  and the net
          assets of the  Acquiring  Fund  determined  using  the same  valuation
          procedures  referred  to in  paragraph  2.1 by the net asset  value of
          Performance  Large Cap  Growthdetermined  in accordance with paragraph
          2.2.

               2.4 All  computations  of value for the  Acquiring  Fund shall be
          made by Integrated Fund Services,  Inc.; all computations of value for
          the Portfolio and for the  Millennium  Portfolio  shall be made by FBR
          National Bank & Trust.

3.   CLOSING AND CLOSING DATE


               3.1 The Closing for the  Reorganization  shall be  September  22,
          2003 or such other date as the parties  may agree to in  writing.  All
          acts taking place at the Closing shall be




          deemed to take place  simultaneously as of immediately after the close
          of  business on the Closing  Date  unless  otherwise  agreed to by the
          parties. The close of business on the Closing Date shall be as of 4:00
          p.m.,  New York Time.  The Closing shall be held at the offices of the
          Acquiring Fund, 221 East Fourth Street,  Suite 300,  Cincinnati,  Ohio
          45202, or at such other time and/or place as the parties may agree.

               3.2 FBR National Bank & Trust,  Bethesda,  Maryland, as custodian
          for the Portfolio and for the Millennium  Portfolio (the "Custodian"),
          shall  deliver at the Closing a certificate  of an authorized  officer
          stating  that  each  of:  (i)  the   Portfolio's  and  the  Millennium
          Portfolio's  portfolio  securities,  cash,  and any other assets shall
          have been  delivered in proper form to the  Acquiring  Fund within two
          business days prior to or on the Closing Date;  and (ii) all necessary
          taxes,  including  all  applicable  Federal and state  stock  transfer
          stamps,  if any,  shall have been paid, or provision for payment shall
          have been made, in  conjunction  with the delivery of the  Portfolio's
          and the Millennium Portfolio's portfolio securities.

               3.3 FBR National Bank & Trust, (the "Transfer Agent"),  on behalf
          of the  Portfolio  and on behalf of the  Millennium  Portfolio,  shall
          deliver at the Closing a certificate of an authorized  officer stating
          that their  records  contain the names and  addresses of the Portfolio
          Shareholders  and of the  Millennium  Portfolio  Shareholders  and the
          number and percentage  ownership of  outstanding  shares owned by each
          such shareholder  immediately prior to the Closing. The Acquiring Fund
          by an authorized officer of Integrated Fund Services, Inc. shall issue
          and deliver a confirmation  evidencing the Acquiring Fund Shares to be
          credited on the Closing Date to the  Secretary of the Portfolio and to
          the  Secretary  of  the  Millennium   Portfolio  or  provide  evidence
          satisfactory  to the Portfolio and to the  Millennium  Portfolio  that
          such  Acquiring  Fund  Shares have been  credited  to the  Portfolio's
          account and to the Millennium  Portfolio's account on the books of the
          Acquiring Fund. At the Closing,  each party shall deliver to the other
          such bills of sales, checks, assignments,  share certificates, if any,
          receipts  or other  documents  as such other  party or its counsel may
          reasonably request.

4.   REPRESENTATIONS AND WARRANTIES

               4.1  The  Performance  Funds,  on its own  and on  behalf  of the
          Portfolio,  and the  Millennium  Funds on its own and on behalf of the
          Millennium  Portfolio  each  represents and warrants to the Touchstone
          Strategic Trust and the Acquiring Fund as follows:

               (a) The  Performance  Funds and the  Millennium  Funds are each a
          business trust duly organized,  validly existing, and in good standing
          under the laws of the State of Delaware;

               (b) The  Performance  Funds and the  Millennium  Funds are each a
          registered investment company classified as a



          management company of the open-end type, and their  registrations with
          the  Securities  and Exchange  Commission  (the  "Commission"),  as an
          investment  company  under  the  Investment  Company  Act of 1940,  as
          amended (the "1940 Act"), and the registration of their shares,  under
          the  Securities  Act of 1933,  as amended (the "1933 Act") are in full
          force and effect;

               (c)  Neither  the  Performance  Funds nor the  Portfolio  nor the
          Millennium  Funds  nor  the  Millennium   Portfolio  is  in,  and  the
          execution,  delivery and performance of this Agreement will not result
          in, a material  violation of the Performance  Funds' or the Millennium
          Funds'   Declarations  of  Trust  or  By-Laws  or  of  any  agreement,
          indenture,  instrument,  contract, lease or other undertaking to which
          the Performance  Funds or the Portfolio or the Millennium Funds or the
          Millennium Portfolio is a party or by which any of them are bound;

               (d)  Neither  the  Performance  Funds nor the  Portfolio  nor the
          Millennium  Funds  nor  the  Millennium  Portfolio  has  any  material
          contracts or other commitments  (other than this Agreement) which will
          be terminated with liability to them prior to the Closing Date;

               (e) Except as  otherwise  disclosed in writing to and accepted by
          the  Touchstone  Strategic  Trust or the  Acquiring  Fund, no material
          litigation or administrative  proceeding or investigation of or before
          any  court  or  governmental  body is  presently  pending  or to their
          knowledge threatened against the Performance Funds or the Portfolio or
          the  Millennium  Funds  or the  Millennium  Portfolio  or any of their
          properties or assets which, if adversely determined,  would materially
          and adversely affect their financial condition or the conduct of their
          business.  Neither the Portfolio or the Millennium  Portfolio knows of
          any facts  which  might  form the basis  for the  institution  of such
          proceedings and neither the Portfolio nor the Millennium  Portfolio is
          a party to or  subject  to the  provisions  of any  order,  decree  or
          judgment  of any  court or  governmental  body  which  materially  and
          adversely  affects the business or the ability of the Portfolio or the
          Millennium   Portfolio   to   consummate   the   transactions   herein
          contemplated;

               (f) The Statement of Assets and  Liabilities of the Portfolio and
          the Statement of Assets and  Liabilities of the  Millennium  Portfolio
          each at December 31, 2002 have been  audited by Tait,  Weller & Baker,
          independent accountants, and are in accordance with generally accepted
          accounting  principles   consistently  applied,  and  such  statements
          (copies of which have been  furnished  to the  Acquiring  Fund) fairly
          reflect  the  financial   conditions  of  the  Portfolio  and  of  the
          Millennium  Portfolio  as of such  date,  and there are no  contingent
          liabilities of the Portfolio or of the Millennium Portfolio as of such
          date not disclosed therein;

               (g) Since  December  31,  2002,  there have not been any material
          adverse  changes in the  Portfolio's or in the Millennium  Portfolio's
          financial condition, assets,



          liabilities or business  other than changes  occurring in the ordinary
          course of  business,  or any  incurrence  by the  Portfolio  or by the
          Millennium Portfolio of indebtedness  maturing more than one year from
          the date such indebtedness was incurred, except as otherwise disclosed
          to and  accepted  by the  Acquiring  Fund.  For the  purposes  of this
          subparagraph  (g),  a  decline  in net  asset  value  per share of the
          Portfolio or of the Millennium  Portfolio,  the discharge of Portfolio
          or of the  Millennium  Portfolio  liabilities,  or the  redemption  of
          Portfolio or  Millennium  Portfolio  shares by Portfolio or Millennium
          Portfolio Shareholders shall not constitute a material adverse change;

               (h) At the  Closing  Date,  all  material  Federal  and other tax
          returns  and reports of the  Millennium  Portfolio  and the  Portfolio
          required  by law to have been filed by such date or due after  request
          for  extension,  if any,  shall  have  been  filed  and are or will be
          correct,  and all  Federal and other taxes shown as due or required to
          be shown as due on said  returns and  reports  shall have been paid or
          provision  shall have been made for the  payment  thereof,  and to the
          best knowledge of the Millennium Portfolio and the Portfolio,  no such
          return is currently  under audit and no  assessment  has been asserted
          with respect to such returns;

               (i) For each taxable year of its operation, the Portfolio and the
          Millennium  Portfolio has met the  requirements of Subchapter M of the
          Code for qualification as a regulated  investment company and each has
          elected to be treated as such;

               (j) All issued and outstanding shares of the Portfolio and of the
          Millennium  Portfolio  are,  and at the Closing Date will be, duly and
          validly issued and outstanding,  fully paid and  non-assessable by the
          Portfolio  and by the  Millennium  Portfolio.  All of the  issued  and
          outstanding  shares of the Portfolio and of the  Millennium  Portfolio
          will,  at the  time of  Closing,  be held  by the  persons  and in the
          amounts set forth in the records of the Transfer  Agent,  on behalf of
          the Portfolio and on behalf of the Millennium Portfolio as provided in
          paragraph 3.3. Neither the Portfolio nor the Millennium Portfolio have
          outstanding any options,  warrants or other rights to subscribe for or
          to purchase any of their shares, nor is there outstanding any security
          convertible into any of their shares;

               (k) At the Closing Date,  both the  Portfolio and the  Millennium
          Portfolio will each have good and marketable  title to their assets to
          be  transferred  to the  Acquiring  Fund pursuant to paragraph 1.2 and
          full right, power and authority to sell, assign,  transfer and deliver
          such assets  hereunder and, upon delivery and payment for such assets,
          the Acquiring  Fund will acquire good and  marketable  title  thereto,
          subject to any  restrictions  as might arise under the 1933 Act, other
          than as disclosed to the Acquiring Fund;



               (l) The  execution,  delivery and  performance  of this Agreement
          will  have  been  duly  authorized  prior to the  Closing  Date by all
          necessary  action  on the  part  of the  Performance  Funds'  and  the
          Millennium  Funds'  Trustees  and,  subject  to  the  approval  of the
          Portfolio's   Shareholders   and   of   the   Millennium   Portfolio's
          Shareholders,  this  Agreement  will  constitute  a valid and  binding
          obligation  of the  Performance  Funds and of the Portfolio and of the
          Millennium  Funds  and of the  Millennium  Portfolio,  enforceable  in
          accordance with its terms, subject, as to enforcement,  to bankruptcy,
          insolvency,  reorganization,  moratorium and other laws relating to or
          affecting creditors' rights and to general equity principles;

               (m) The information to be furnished by the Performance  Funds and
          the Portfolio and by the Millennium Funds and the Millennium Portfolio
          for  use  in  registration  statements,   proxy  materials  and  other
          documents which may be necessary in connection  with the  transactions
          contemplated  hereby  shall be accurate  and  complete in all material
          respects  and  shall  comply in all  material  respects  with  Federal
          securities  and  other  laws  and  regulations  thereunder  applicable
          thereto; and

               (n) The  proxy  statements  of the  Performance  Funds and of the
          Millennium  Funds  (the  "Proxy  Statement")  to be  included  in  the
          Registration  Statement  referred  to in  paragraph  5.6  (other  than
          information therein that relates to the Touchstone Strategic Trust and
          the Acquiring  Fund) will, on the effective  date of the  Registration
          Statement and on the Closing Date, not contain any untrue statement of
          a material fact or omit to state a material fact required to be stated
          therein or necessary to make the statements  therein,  in light of the
          circumstances  under which such  statements  were made, not materially
          misleading.

               4.2 Touchstone  Strategic  Trust, on its own behalf and on behalf
          of the  Acquiring  Fund,  represents  and warrants to the  Performance
          Funds and the Portfolio and to the Millennium Funds and the Millennium
          Portfolio as follows:

               (a)  Touchstone   Strategic   Trust  is  a  business  trust  duly
          organized, validly existing and in good standing under the laws of the
          State of Massachusetts;

               (b) Touchstone Strategic Trust is a registered investment company
          classified  as a  management  company of the  open-end  type,  and its
          registration with the Commission,  as an investment  company under the
          1940 Act, and the registration of its shares,  under the 1933 Act, are
          in full force and effect;

               (c)  The  current   prospectus   and   statement  of   additional
          information  of  Touchstone  Strategic  Trust  conform in all material
          respects to the applicable  requirements  of the 1933 Act and the 1940
          Act and the rules and regulations of the Commission  thereunder and do
          not include any untrue  statement of a material  fact or omit to state
          any material fact  required to be stated  therein or necessary to make
          the statements therein, in light of the circumstances under which they
          were made, not materially misleading;



               (d) At the Closing Date,  the  Acquiring  Fund will have good and
          marketable title to the Acquiring Fund's assets;

               (e) Neither Touchstone  Strategic Trust nor the Acquiring Fund is
          in, and the execution, delivery and performance of this Agreement will
          not result in, a material  violation of Touchstone  Strategic  Trust's
          Declaration  of  Trust  or  By-Laws  or of any  agreement,  indenture,
          instrument,  contract,  lease or other undertaking to which Touchstone
          Strategic  Trust  or  the  Acquiring  Fund  is a  party  or  by  which
          Touchstone Strategic Trust or the Acquiring Fund are bound;

               (f)  No  material  litigation  or  administrative  proceeding  or
          investigation of or before any court or governmental body is presently
          pending  or  threatened  against  Touchstone  Strategic  Trust  or the
          Acquiring  Fund  or any of  their  properties  or  assets,  except  as
          previously  disclosed in writing to the  Portfolio  or the  Millennium
          Portfolio.  Neither Touchstone  Strategic Trust nor the Acquiring Fund
          knows of any facts which might form the basis for the  institution  of
          such  proceedings  and  neither  Touchstone  Strategic  Trust  nor the
          Acquiring  Fund is a party  to or  subject  to the  provisions  of any
          order,  decree or  judgment  of any court or  governmental  body which
          materially  and  adversely  affects  the  business  or the  ability of
          Touchstone  Strategic  Trust or the Acquiring  Fund to consummate  the
          transactions contemplated herein;

               (g) The Statement of Assets and Liabilities of the Acquiring Fund
          at March 31, 2003, audited by Ernst & Young LLP,  independentauditors,
          and a copy of which has been  furnished  to the  Portfolio  and to the
          Millennium  Portfolio,  fairly and  accurately  reflects the financial
          condition of the  Acquiring  Fund as of such date in  accordance  with
          generally accepted accounting principles consistently applied;

               (h) Since March 31, 2003, there has not been any material adverse
          change  in  the  Acquiring   Fund's   financial   condition,   assets,
          liabilities or business  other than changes  occurring in the ordinary
          course  of  business,  or any  incurrence  by the  Acquiring  Fund  of
          indebtedness   maturing   more  than  one  year  from  the  date  such
          indebtedness was incurred.  For the purposes of this subparagraph (h),
          a decline in net asset value per share of the  Acquiring  Fund shares,
          the  discharge of Acquiring  Fund  liabilities  or the  redemption  of
          Acquiring  Fund  shares  by  Acquiring  Fund  Shareholders,  shall not
          constitute a material adverse change;

               (i) At the  Closing  Date all  material  Federal  and  other  tax
          returns and reports of  Touchstone  Strategic  Trust and the Acquiring
          Fund  required  by law to have  been  filed by such  date or due after
          request for  extension,  if any, shall have been filed and are or will
          be  correct,  and all Federal and other taxes shown as due or required
          to be shown as due on said returns and reports shall have been paid or
          provision



          shall  have  been  made  for the  payment  thereof,  and,  to the best
          knowledge of Touchstone  Strategic  Trust and the  Acquiring  Fund, no
          such  return  is  currently  under  audit and no  assessment  has been
          asserted with respect to such returns;

               (j) For each taxable year of its  operation,  the Acquiring  Fund
          has met the requirements of Subchapter M of the Code for qualification
          as a  regulated  investment  company  and has elected to be treated as
          such;

               (k) All issued and outstanding  Acquiring Fund Shares are, and at
          the Closing  Date will be, duly and  validly  issued and  outstanding,
          fully paid and  non-assessable  by the Acquiring  Fund.  The Acquiring
          Fund does not have  outstanding any options,  warrants or other rights
          to subscribe  for or to purchase  any  Acquiring  Fund Shares,  nor is
          there  outstanding  any security  convertible  into any Acquiring Fund
          Shares;

               (l) The  execution,  delivery and  performance  of this Agreement
          will have  been  fully  authorized  prior to the  Closing  Date by all
          necessary  action,  if any, on the part of the Trustees of  Touchstone
          Strategic Trust and this Agreement will constitute a valid and binding
          obligation of the Acquiring Fund  enforceable  in accordance  with its
          terms,  subject,  as  to  enforcement,   to  bankruptcy,   insolvency,
          reorganization,  moratorium  and other laws  relating to or  affecting
          creditors' rights, and to general equity principles;

               (m)  The  Acquiring  Fund  Shares  to  be  issued  and  delivered
          (transferred  on the  Acquiring  Fund's books) to the Portfolio and to
          the   Millennium   Portfolio   for  the  accounts  of  the   Portfolio
          Shareholders  and  for  the  accounts  of  the  Millennium   Portfolio
          Shareholders,  pursuant to the terms of this  Agreement,  will, at the
          Closing  Date,  have  been duly  authorized  and,  when so issued  and
          delivered,  will be duly and validly issued Acquiring Fund Shares, and
          will be fully paid and non-assessable by the Acquiring Fund;

               (n) The information to be furnished by the Acquiring Fund for use
          in registration statements,  proxy materials and other documents which
          may be  necessary in  connection  with the  transactions  contemplated
          hereby shall be accurate  and  complete in all  material  respects and
          shall comply in all material  respects  with  Federal  securities  and
          other laws and regulations applicable thereto;

               (o)  The  Proxy  Statement  to be  included  in the  Registration
          Statement  (only insofar as it relates to Touchstone  Strategic  Trust
          and  the  Acquiring   Fund)  will,  on  the  effective   date  of  the
          Registration Statement and on the Closing Date, not contain any untrue
          statement of a material fact or omit to state a material fact required
          to be stated  therein or necessary to make the statement  therein,  in
          light of the circumstances  under which such statements were made, not
          materially misleading; and



               (p) Touchstone Strategic Trust and the Acquiring Fund each agrees
          to  use  all   reasonable   efforts  to  obtain  the   approvals   and
          authorizations  required by the 1933 Act, the 1940 Act and such of the
          state  blue sky or  securities  laws as may be  necessary  in order to
          continue their operations after the Closing Date.

5.   COVENANTS OF THE ACQUIRING FUND, THE PORTFOLIO AND THE MILLENNIUM PORTFOLIO

     The following  covenants of the Acquiring  Fund and of the Portfolio and of
the Millennium  Portfolio,  as applicable,  are made  respectively by Touchstone
Strategic Trust and by the Performance Funds and by the Millennium Funds:

          5.1 The Acquiring Fund and the Portfolio and the Millennium  Portfolio
     each will  operate its  business in the  ordinary  course  between the date
     hereof and the Closing Date, it being  understood that such ordinary course
     of business will include the declaration and payment of customary dividends
     and distributions and any other distribution that may be advisable.

          5.2 The  Portfolio  and the  Millennium  Portfolio  will  each  call a
     meeting of their  Shareholders  to consider and act upon this Agreement and
     to take all other action  necessary to obtain approval of the  transactions
     contemplated herein.

          5.3 The Portfolio and the Millennium  Portfolio each covenant that the
     Acquiring Fund Shares to be issued hereunder are not being acquired for the
     purpose of making any  distribution  thereof other than in accordance  with
     the terms of this Agreement.

          5.4 The Portfolio and the  Millennium  Portfolio  will each assist the
     Acquiring  Fund  in  obtaining  such  information  as  the  Acquiring  Fund
     reasonably  requests  concerning the beneficial  ownership of the shares of
     the Portfolio and of the Millennium Portfolio.

          5.5 Subject to the  provisions of this  Agreement,  the Acquiring Fund
     and the Portfolio and the Millennium  Portfolio will each take, or cause to
     be taken,  all actions and do, or cause to be done,  all things  reasonably
     necessary,  proper  or  advisable  to  consummate  and make  effective  the
     transactions contemplated by this Agreement.

          5.6 The Portfolio and the  Millennium  Portfolio will each provide the
     Acquiring Fund with information reasonably necessary for the preparation of
     a prospectus  (the  "Prospectus")  which will  include the Proxy  Statement
     referred to in  paragraph  4.1(n),  all to be  included  in a  Registration
     Statement on Form N-14 of the Touchstone Strategic Trust (the "Registration
     Statement"),  in compliance with the 1933 Act, the Securities  Exchange Act
     of 1934, as amended (the "1934 Act"),  and the 1940 Act, in connection with
     the meetings of the Portfolio Shareholders and the

     Millennium  Portfolio  Shareholders to consider  approval of this Agreement
     and the transactions contemplated herein (the "Meeting").

6.   CONDITIONS  PRECEDENT  TO  OBLIGATIONS  OF THE  PERFORMANCE  FUNDS  AND THE
     PORTFOLIO AND THE MILLENNIUM FUNDS AND THE MILLENNIUM PORTFOLIO



     The  obligations  of the  Performance  Funds  and  the  Portfolio  and  the
Millennium  Funds and the Millennium  Portfolio to consummate  the  transactions
provided for herein shall be subject,  at their election,  to the performance by
Touchstone  Strategic  Trust and the Acquiring Fund of all the obligations to be
performed by Touchstone  Strategic  Trust and the Acquiring Fund hereunder on or
before the Closing  Date and,  in addition  thereto,  to the  following  further
conditions:

          6.1 All representations  and warranties of Touchstone  Strategic Trust
     and the  Acquiring  Fund  contained  in this  Agreement  shall  be true and
     correct in all material  respects as of the date hereof and, except as they
     may be affected by the transactions  contemplated by this Agreement,  as of
     the Closing Date with the same force and effect as if made on and as of the
     Closing Date; and

          6.2 Touchstone Strategic Trust shall have delivered to the Performance
     Funds and to the  Millennium  Funds,  on the Closing  Date,  a  certificate
     executed in the name of Touchstone  Strategic Trust by Touchstone Strategic
     Trust's President and Treasurer,  in a form reasonably  satisfactory to the
     Performance  Funds and to the Millennium  Funds and dated as of the Closing
     Date,  to  the  effect  that  the  representations  and  warranties  of the
     Touchstone  Strategic  Trust and the Acquiring  Fund made in this Agreement
     are  true  and  correct  at and as of the  Closing  Date,  except  as these
     representations   and  warranties  may  be  affected  by  the  transactions
     contemplated  by this  Agreement and as to such other matters as Touchstone
     Strategic Trust shall reasonably request.

7.   CONDITIONS  PRECEDENT TO OBLIGATIONS OF TOUCHSTONE  STRATEGIC TRUST AND THE
     ACQUIRING FUND

     The  obligations  of Touchstone  Strategic  Trust and the Acquiring Fund to
complete  the  transactions  provided  for  herein  shall be  subject,  at their
election,  to the performance by the Performance  Funds and the Millennium Funds
and the Portfolio and the Millennium  Portfolio of all of the  obligations to be
performed  by them  hereunder  on or before the  Closing  Date and,  in addition
thereto, to the following conditions:

          7.1 All  representations  and warranties of the Performance  Funds and
     the  Millennium  Funds  and  the  Portfolio  and the  Millennium  Portfolio
     contained  in this  Agreement  shall be true and  correct  in all  material
     respects  as of the date hereof and,  except as these  representations  and
     warranties  may  be  affected  by the  transactions  contemplated  by  this
     Agreement,  as of the  Closing  Date,  with the same force and effect as if
     made on and as of the Closing Date;

          7.2 The  Performance  Funds and the  Millennium  Funds shall each have
     delivered to Touchstone  Strategic Trust  statements of the Portfolio's and
     of the Millennium  Portfolio's  assets and  liabilities,  as of the Closing
     Date,  each  certified by the  Treasurer of the  Performance  Funds and the
     Millennium Funds; and

          7.3 The  Performance  Funds and the  Millennium  Funds shall each have
     delivered to Touchstone Strategic Trust, on the Closing Date,  certificates
     executed in their  respective  names and in the  Portfolio's and Millennium
     Portfolio's names by the Performance  Funds' President and Treasurer and by
     the Millennium Funds' President and Treasurer, in



     form and substance  satisfactory to Touchstone Strategic Trust and dated as
     of the Closing Date, to the effect that the  representations and warranties
     of the Performance Funds and the Millennium Funds and the Portfolio and the
     Millennium  Portfolio,  with  respect  to the  Performance  Funds  and  the
     Millennium  Funds and the Portfolio and the  Millennium  Portfolio  made in
     this  Agreement are true are correct at and as of the Closing Date,  except
     as these representations and warranties may be affected by the transactions
     contemplated by this Agreement.

8.   FURTHER  CONDITIONS  PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
     PORTFOLIO AND THE MILLENNIUM PORTFOLIO

     If any of the  conditions  set forth  below do not  exist on or before  the
Closing Date,  with respect to the Portfolio or the Millennium  Portfolio or the
Acquiring Fund, then the other party to this Agreement shall, at its option, not
be required to consummate the transactions contemplated by this Agreement:

          8.1 The Agreement and the transactions  contemplated herein shall have
     been  approved  by the  requisite  vote of the  holders of the  outstanding
     shares  of  beneficial  interest  of the  Portfolio  and of the  Millennium
     Portfolio in  accordance  with the  provisions  of each of the  Performance
     Funds' and the  Millennium  Funds'  Declaration  of Trust and  By-Laws  and
     copies  of the  resolutions  evidencing  such  approvals  shall  have  been
     delivered to the Acquiring  Fund.  Notwithstanding  anything  herein to the
     contrary, neither Touchstone Strategic Trust nor the Acquiring Fund nor the
     Performance  Funds  nor the  Portfolio  nor the  Millennium  Funds  nor the
     Millennium  Portfolio may waive the  conditions set forth in this paragraph
     8.1;

          8.2 All consents of other parties and all other  consents,  orders and
     permits of Federal, state and local regulatory authorities deemed necessary
     by Touchstone  Strategic Trust or the  Performance  Funds or the Millennium
     Funds to permit consummation, in all material respects, of the transactions
     contemplated  hereby  shall have been  obtained,  except  where  failure to
     obtain  any such  consent,  order or permit  would not  involve a risk of a
     material  adverse  effect on the  assets or  properties  of the  Touchstone
     Strategic  Trust  or the  Acquiring  Fund or the  Performance  Funds or the
     Millennium  Funds or the Portfolio or the  Millennium  Portfolio,  provided
     that any party hereto may, for itself, waive any of such conditions;

          8.3 The  Registration  Statement shall have become effective under the
     1933 Act and no stop orders suspending the effectiveness thereof shall have
     been issued; and

          8.4 The  Selling  Fund shall have  declared  a dividend  or  dividends
     which,  together with all previous such dividends  shall have the effect of
     distributing  to the Selling Fund  Shareholders  all of the Selling  Fund's
     investment  company  taxable  income for all taxable  periods ending on the
     Closing Date (computed  without regard to any deduction for dividends paid)
     and all of the net capital gains realized in all taxable  periods ending on
     the Closing Date (after reduction for any capital loss carryforward).

          8.5 The Company and the Trust shall have received a favorable  opinion
     of Sullivan & Worcester LLP  substantially  to the effect that, for federal
     income tax purposes:



          (a) The transfer of all of the Selling Fund assets in exchange  solely
     for the Acquiring  Fund Shares and the  assumption by the Acquiring Fund of
     the  liabilities  of the Selling Fund followed by the  distribution  of the
     Acquiring Fund Shares to the Selling Fund  Shareholders  in dissolution and
     liquidation of the Selling Fund will constitute a  "reorganization"  within
     the meaning of Section 368(a)(1)(D) of the Code, and the Acquiring Fund and
     the  Selling  Fund will each be a "party to a  reorganization"  within  the
     meaning of Section 368(b) of the Code.

          (b) No gain or loss will be recognized by the Acquiring  Fund upon the
     receipt  of the  assets of the  Selling  Fund  solely in  exchange  for the
     Acquiring  Fund  Shares and the  assumption  by the  Acquiring  Fund of the
     liabilities of the Selling Fund.

          (c) No gain or loss will be  recognized  by the Selling  Fund upon the
     transfer of the Selling Fund assets to the  Acquiring  Fund in exchange for
     the Acquiring  Fund Shares and the  assumption by the Acquiring Fund of the
     liabilities of the Selling Fund or upon the distribution (whether actual or
     constructive) of the Acquiring Fund Shares to Selling Fund  Shareholders in
     exchange for their shares of the Selling Fund.

          (d)  No  gain  or  loss  will  be   recognized  by  the  Selling  Fund
     Shareholders  upon  the  exchange  of their  Selling  Fund  shares  for the
     Acquiring Fund Shares in liquidation of the Selling Fund.

          (e) The aggregate tax basis of the Acquiring  Fund Shares  received by
     each Selling Fund Shareholder  pursuant to the  Reorganization  will be the
     same as the  aggregate  tax basis of the  Selling  Fund shares held by such
     Selling Fund Shareholder  immediately prior to the Closing, and the holding
     period  of  the  Acquiring  Fund  Shares  received  by  each  Selling  Fund
     Shareholder  will  include the period  during which the Selling Fund shares
     exchanged therefor were held by such Selling Fund Shareholder (provided the
     Selling  Fund  shares  were  held  as  capital  assets  on the  date of the
     Closing).

          (f) The tax basis of the Selling Fund assets acquired by the Acquiring
     Fund will be the same as the tax basis of such assets to the  Selling  Fund
     immediately  prior to the Closing,  and the holding period of the assets of
     the Selling Fund in the hands of the Acquiring Fund will include the period
     during which those assets were held by the Selling Fund.

          8.6 The  Acquiring  Fund shall have  received from Ernst & Young LLP a
     letter addressed to the Acquiring Fund, in form and substance  satisfactory
     to the Acquiring Fund, to the effect that:

          (a) they are  independent  auditors  with  respect to the Selling Fund
     within the meaning of the 1933 Act and the applicable  published  rules and
     regulations thereunder;



          (b) on the basis of limited  procedures  agreed upon by the  Acquiring
     Fund and  described in such letter (but not an  examination  in  accordance
     with generally  accepted  auditing  standards),  the  Capitalization  Table
     appearing in the Registration Statement and Prospectus/Proxy  Statement has
     been  obtained from and is consistent  with the  accounting  records of the
     Selling Fund;

          (c) on the basis of limited  procedures  agreed upon by the  Acquiring
     Fund and  described in such letter (but not an  examination  in  accordance
     with  generally  accepted  auditing  standards),  the pro  forma  financial
     statements   that  are   included  in  the   Registration   Statement   and
     Prospectus/Proxy  Statement agree to the underlying  accounting  records of
     the Acquiring Fund and the Selling Fund or with written estimates  provided
     by each Fund's management, and were found to be mathematically correct; and

          (d) on the basis of limited  procedures  agreed upon by the  Acquiring
     Fund and  described in such letter (but not an  examination  in  accordance
     with  generally  accepted  auditing  standards),  the data  utilized in the
     calculations of the pro forma expense ratios  appearing in the Registration
     Statement and Prospectus/Proxy  Statement agree with underlying  accounting
     records of the Selling Fund or with written estimates by the Selling Fund's
     management and were found to be mathematically correct.

     In addition,  unless waived by the Acquiring Fund, the Acquiring Fund shall
     have  received  from Ernst & Young LLP a letter  addressed to the Acquiring
     Fund dated on the Closing Date, in form and substance  satisfactory  to the
     Acquiring  Fund,  to the  effect  that on the basis of  limited  procedures
     agreed upon by the  Acquiring  Fund (but not an  examination  in accordance
     with generally accepted auditing standards),  the net asset value per share
     of the Selling Fund as of the Valuation Date was computed and the valuation
     of the portfolio was consistent in the valuation practices of the Acquiring
     Fund.

          8.7 The Selling Fund shall have  received from Tait Weller & Baker LLP
     a letter addressed to the Selling Fund, in form and substance  satisfactory
     to the Selling Fund, to the effect that:

          (a) they are  independent  auditors with respect to the Acquiring Fund
     within the meaning of the 1933 Act and the applicable  published  rules and
     regulations thereunder;

          (b) they had performed  limited  procedures agreed upon by the Selling
     Fund and  described in such letter (but not an  examination  in  accordance
     with generally accepted auditing standards) which consisted of a reading of
     any unaudited pro forma financial  statements  included in the Registration
     Statement  and   Prospectus/Proxy   Statement,   and  making  inquiries  of
     appropriate officials of the Trust responsible for financial and accounting
     matters whether such unaudited pro forma financial  statements comply as to
     form in all material respects with the applicable  accounting  requirements
     of the 1933 Act and the published rules and regulations thereunder;

          (c) on the basis of limited procedures agreed upon by the Selling Fund
     and described in such letter (but not an  examination  in  accordance  with
     generally accepted auditing standards),  the Capitalization Table appearing
     in the Registration Statement and



     Prospectus/Proxy  Statement has been  obtained from and is consistent  with
     the accounting records of the Acquiring Fund; and

          (d) on the basis of limited procedures agreed upon by the Selling Fund
     (but not an examination  in accordance  with  generally  accepted  auditing
     standards),  the data utilized in the calculations of the pro forma expense
     ratios  appearing  in  the  Registration   Statement  and  Prospectus/Proxy
     Statement agree with underlying accounting records of the Acquiring Fund or
     with written estimates by the Acquiring Fund's management and were found to
     be mathematically correct.

          8.8 The change of the Acquiring Fund from a diversified  series of the
     Trust to a  non-diversified  series of the  Trust  upon  completion  of the
     Reorganization  shall  have  been  approved  by the  requisite  vote of the
     holders of the outstanding  shares of the Acquiring Fund in accordance with
     the  provisions  of the  Trust's  Agreement  and  Declaration  of Trust and
     Bylaws.

9.   BROKERAGE FEES AND EXPENSES

          9.1  Touchstone  Strategic  Trust  and the  Performance  Funds and the
     Millennium  Funds each represents and warrants to the others that there are
     no brokers or finders  entitled to receive any payments in connection  with
     the transactions provided for herein.

          9.2 Navellier  Management  Inc.  will bear the aggregate  expenses and
     costs  of  its  solicitation  of  this  Proxy  Solicitation  regarding  the
     Reorganization.

10.  ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

          10.1  Touchstone  Strategic  Trust and the  Performance  Funds and the
     Millennium  Funds  agree  that no  party  to this  Agreement  has  made any
     representation,  warranty  or covenant  not set forth  herein and that this
     Agreement constitutes the entire agreement between the parties.

          10.2 The  representations,  warranties and covenants contained in this
     Agreement,  or in any document  delivered  pursuant hereto or in connection
     herewith,  shall survive the consummation of the transactions  contemplated
     hereunder.

11.  TERMINATION

          This  Agreement  and  the  transactions  contemplated  hereby  may  be
     terminated and abandoned by any party by resolution of the party's Board of
     Trustees or Board of Trustees and resolution passed by the requisite number
     of  Shareholders  of that  party at any time prior to the  Closing  Date if
     circumstances  should  develop  that  make  proceeding  with the  Agreement
     inadvisable.

12.  WAIVER

          Touchstone   Strategic  Trust  and  the  Performance   Funds  and  the
     Millennium Funds, by mutual consent of their respective Boards of Trustees,
     may  waive  in  writing  any  condition  to  their  respective  obligations
     hereunder, except as provided herein.



13.  AMENDMENTS

          This Agreement may be amended, modified or supplemented in such manner
     as may be  mutually  agreed upon in writing by the  authorized  officers of
     Touchstone  Strategic  Trust and the  Performance  Funds and the Millennium
     Funds;  provided,  however,  that  following  the meetings of the Portfolio
     Shareholders and of the Millennium  Portfolio  Shareholders called pursuant
     to paragraph 5.2 of this  Agreement,  no such amendment may have the effect
     of changing the  provisions  for  determining  the number of Acquiring Fund
     Shares to be  issued to the  Portfolio  Shareholders  or to the  Millennium
     Portfolio  Shareholders  under  this  Agreement  to the  detriment  of such
     Shareholders without their further approval.

14.  NOTICES

          Any notice,  report,  statement or demand required or permitted by any
     provisions  of this  Agreement  shall be in  writing  and shall be given by
     prepaid  telegraph,  telecopy or certified  mail  addressed  to  Touchstone
     Strategic  Trust at 221 East Fourth  Street,  Suite 300,  Cincinnati,  Ohio
     45202,  or to the  Performance  Funds or the  Millennium  Funds at One East
     Liberty Street, Third Floor, Reno, Nevada 89501.

15.  HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY

               15.1  The  Article  and  paragraph  headings  contained  in  this
          Agreement are for reference  purposes only and shall not affect in any
          way the meaning or interpretation of this Agreement.

               15.2  This   Agreement   may  be   executed   in  any  number  of
          counterparts, each of which shall be deemed an original.

               15.3  This  Agreement  shall  be  governed  by and  construed  in
          accordance with the laws of the Commonwealth of Massachusetts.

               15.4 This  Agreement  shall bind and inure to the  benefit of the
          parties hereto and their  respective  successors  and assigns,  but no
          assignment  or  transfer  hereof  or  of  any  rights  or  obligations
          hereunder  shall be made by any party  without the written  consent of
          the other party.  Nothing  herein  expressed or implied is intended or
          shall be  construed  to  confer  upon or to give any  person,  firm or
          corporation,  other  than the  parties  hereto  and  their  respective
          successors  and assigns,  any rights or remedies under or by reason of
          this Agreement.

               15.5  It  is  expressly   agreed  that  the  obligations  of  the
          Performance Funds and of the Millennium Funds and of the Portfolio and
          of the Millennium Portfolio hereunder shall not be binding upon any of
          the Trustees, Shareholders, nominees, officers, agents or employees of
          the  Performance  Funds and of the Millennium  Funds  personally,  but
          shall bind only the Trust  property of the  Performance  Funds and the
          Millennium  Funds and the Portfolio and the Millennium  Portfolio,  as
          provided in the



          Declarations of Trust of the  Performance  Funds and of the Millennium
          Funds.  The execution and delivery by such officers of the Performance
          Funds  and of the  Millennium  Funds  shall not be deemed to have been
          made by any of them  individually or to impose any liability on any of
          them  personally,  but  shall  bind  only the  trust  property  of the
          Performance  Funds and of the  Millennium  Funds and the Portfolio and
          the Millennium  Portfolio as provided in the  Declarations of Trust of
          the Performance Funds and of the Millennium Funds.

               15.6  It  is  expressly   agreed  that  the  obligations  of  the
          Touchstone  Strategic Trust and the Acquiring Fund hereunder shall not
          be binding upon any of the Trustees, Shareholders, nominees, officers,
          agents or employees of  Touchstone  Strategic  Trust  personally,  but
          shall bind only the trust property of the Touchstone  Strategic  Trust
          and the Acquiring  Fund, as provided in Touchstone  Strategic  Trust's
          Declaration  of Trust.  The execution and delivery by such officers of
          Touchstone  Strategic  Trust  shall not be deemed to have been made by
          any of them  individually  or to impose any  liability  on any of them
          personally,  but shall bind only the trust  property of the Touchstone
          Strategic  Trust and the Acquiring Fund, as provided in the Touchstone
          Strategic Trust's Declaration of Trust.

     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President and attested by its Secretary.

Attest:                                 TOUCHSTONE STRATEGIC TRUST

By: /s/ Tina Hosking Bloom              By: /s/ Michael S. Spangler
    --------------------------              ----------------------------
        Secretary                           Vice President

Attest:                                 THE NAVELLIER MILLENNIUM FUNDS

By: /s/ Arjen Kuyper                    By: /s/ Louis Navellier
    --------------------------              ----------------------------
        Treasurer                           President

Attest:                                 THE NAVELLIER PERFORMANCE FUNDS

By: /s/ Arjen Kuyper                    By: /s/ Louis Navellier
    --------------------------              ----------------------------
        Treasurer                           President



                                      PROXY
                    THE NAVELLIER LARGE CAP GROWTH PORTFOLIO

                                       OF

                         THE NAVELLIER PERFORMANCE FUNDS

                      One East Liberty Street, Third Floor
                               Reno, Nevada 89501

                              --------------------


         PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS September 19, 2003


     THIS PROXY IS SOLICITED BY THE TRUSTEES OF THE NAVELLIER PERFORMANCE FUNDS,
for use at a special  meeting of the  shareholders  of The  Navellier  Large Cap
Growth  Portfolio  (the  "Portfolio"),  an investment  portfolio  offered by The
Navellier Performance Funds (the "Performance Funds") which meeting will be held
at 10:00 a.m.,  Pacific  Standard  Time, on September 19, 2003 at the offices of
The Navellier  Performance  Funds, One East Liber tyStreet,  Third Floor,  Reno,
Nevada 89501 (the "Meeting").

     The undersigned shareholder of the Portfolio, revoking any and all previous
proxies   heretofore   given   for   shares  of  the   Portfolio   held  by  the
undersigned("Shares"),   does  hereby   appoint   Louis   Navellier  and  Samuel
Kornhauser, and each and any of them, with full power of substitution to each to
be the attorneys and proxies of the undersigned (the  "Proxies"),  to attend the
Meeting of the  shareholders  of the Portfolio,  and to represent and direct the
voting  interests  represented by the undersigned as of the record date for said
Meeting for the Proposal specified below.

     This proxy, if properly  executed,  will be voted in the manner as directed
herein by the undersigned  shareholder.  Unless otherwise specified below in the
squares provided,  the undersigned's vote will be cast "FOR" the Proposal. If no
direction is made for the Proposal, this proxy will be voted "FOR" the Proposal.
In their  discretion,  the Proxies are authorized to transact and vote upon such
other  matters and  business as may come before the Meeting or any  adjournments
thereof.


                                                  Please mark    [ ]
                                                  your votes as  [X]
                                                  indicated in   [ ]
                                                  this example

Proposal 1     To approve a proposed  Agreement and Plan of Reorganization  (the
               "Plan"),  whereby the Navellier Large Cap Growth Portfolio of the
               Navellier  Performance  Funds (the "Portfolio") and the Navellier
               Large Cap Growth Portfolio of The Navellier Millennium Funds (the
               "Millennium Portfolio") would transfer all of their assets to the
               Large Cap Growth Fund, a portfolio  of the  Touchstone  Strategic
               Trust (the "Acquiring Fund") in exchange for shares of beneficial
               interest in the Acquiring  Fund that would then be distributed to
               the  shareholders of the Portfolio and to the Shareholders of the
               Millennium Portfolio pro rata. Also, as part of



               the Plan, the Acquiring  Fund would assume all valid  liabilities
               of the Portfolio and of the Millennium Portfolio.

                       FOR [ ]        AGAINST [ ]        ABSTAIN [ ]

     To avoid the expense of adjourning the Meeting to a subsequent date, please
return this proxy in the enclosed  self-addressed,  postage-paid envelope.  THIS
PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE NAVELLIER  PERFORMANCE FUNDS
WHICH RECOMMEND A VOTE FOR PROPOSAL 1.

          Dated     _______________, 2003

                    ________________________     _________________
                    Signature of Shareholder     Number of shares

                    ________________________     _________________
                    Signature of Shareholder     Number of shares

                    This proxy may be revoked by the  shareholder(s) at any time
                    prior to the special meeting.

NOTE:  Please sign exactly as your name appears hereon. If shares are registered
in more than one name, all registered  shareholders  should sign this proxy; but
if one  shareholder  signs,  that signature  binds the other  shareholder.  When
signing as an attorney, executor, administrator, agent, trustee, or guardian, or
custodian for a minor, please give full title as such. If a corporation,  please
sign in full corporate name by an authorized  person.  If a partnership,  please
sign in partnership name by an authorized person.



                                   APPENDIX B

                          INVESTMENT ADVISORY AGREEMENT

                           TOUCHSTONE Strategic Trust

     INVESTMENT  ADVISORY  AGREEMENT,  dated as of May 1, 2000, amended December
31, 2002, by and between  TOUCHSTONE  ADVISORS,  INC., an Ohio  corporation (the
"Advisor"),  and  TOUCHSTONE  STRATEGIC  TRUST, a  Massachusetts  business trust
created  pursuant to an Agreement and  Declaration  of Trust dated  November 18,
1982, as amended from time to time (the "Trust").

     WHEREAS, the Trust is an open-end diversified management investment company
registered  under the  Investment  Company Act of 1940,  as amended,  (the "1940
Act"); and

     WHEREAS,  shares of  beneficial  interest  in the Trust  are  divided  into
separate  series  (each,  along  with any  series  which  may in the  future  be
established, a "Fund"); and

     WHEREAS,  the Trust desires to avail itself of the  services,  information,
advice,  assistance  and  facilities  of an  investment  advisor  and to have an
investment  advisor  perform for it various  investment  advisory  and  research
services and other management services; and

     WHEREAS,  the  Advisor  is  an  investment  advisor  registered  under  the
Investment  Advisers Act of 1940, as amended,  and desires to provide investment
advisory services to the Trust;

     NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:

          1. EMPLOYMENT OF THE ADVISOR.  The Trust hereby employs the Advisor to
manage the investment and reinvestment of the assets of each Fund subject to the
control and  direction of the Trust's  Board of Trustees,  for the period on the
terms  hereinafter  set forth.  The Advisor hereby  accepts such  employment and
agrees  during such period to render the services and to assume the  obligations
herein set forth for the compensation herein provided. The Advisor shall for all
purposes  herein be deemed to be  independent  contractor  and shall,  except as
expressly  provided  or  authorized  (whether  herein  or  otherwise),  have  no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.

          2.  OBLIGATIONS  OF AND  SERVICES TO BE PROVIDED  BY THE  ADVISOR.  In
providing  the  services  and assuming the  obligations  set forth  herein,  the
Advisor may, at its expense,  employ one or more  sub-advisors for any Fund. Any
agreement between the Advisor and a sub-advisor shall be subject to the renewal,
termination  and  amendment  provisions  of  paragraph  10 hereof.  The  Advisor
undertakes  to  provide  the  following  services  and to assume  the  following
obligations:

          a)   The Advisor will manage the  investment and  reinvestment  of the
               assets  of each  Fund,  subject  to and in  accordance  with  the
               respective  investment  objectives  and policies of each Fund and
               any directions which the Trust's Board of Trustees may issue from
               time to time. In pursuance of



               the  foregoing,   the  Advisor  may  engage  separate  investment
               advisors  ("Sub-Advisor(s)")  to  make  all  determinations  with
               respect to the  investment  of the assets of each Fund, to effect
               the purchase and sale of  portfolio  securities  and to take such
               steps  as  may  be  necessary  to   implement   the  same.   Such
               determination and services by each Sub-Advisor shall also include
               determining the manner in which voting rights,  rights to consent
               to  corporate  action  and any  other  rights  pertaining  to the
               portfolio  securities shall be exercised.  The Advisor shall, and
               shall cause each  Sub-Advisor  to, render regular  reports to the
               Trust's Board of Trustees  concerning the Trust's and each Fund's
               investment activities.

          b)   The Advisor shall,  or shall cause the respective  Sub-Advisor(s)
               to place orders for the execution of all portfolio  transactions,
               in the name of the  respective  Fund and in  accordance  with the
               policies   with   respect   thereto  set  forth  in  the  Trust's
               registration statements under the 1940 Act and the Securities Act
               of 1933, as such registration statements may be amended from time
               to time.  In  connection  with the  placement  of orders  for the
               execution of portfolio transactions, the Advisor shall create and
               maintain (or cause the  Sub-Advisors  to create and maintain) all
               necessary  brokerage  records for each Fund,  which records shall
               comply with all applicable laws, rules and regulations, including
               but not limited to records  required by Section 31(a) of the 1940
               Act. All records  shall be the property of the Trust and shall be
               available for  inspection  and use by the Securities and Exchange
               Commission  (the "SEC"),  the Trust or any person retained by the
               Trust. Where applicable,  such records shall be maintained by the
               Advisor  (or  Sub-Advisor)  for  the  periods  and in the  places
               required by Rule 31a-2 under the 1940 Act.

          c)   In the  event  of  any  reorganization  or  other  change  in the
               Advisor, its investment principals, supervisors or members of its
               investment (or comparable) committee,  the Advisor shall give the
               Trust's Board of Trustees  written notice of such  reorganization
               or change  within a reasonable  time (but not later than 30 days)
               after such reorganization or change.

          d)   The Advisor shall bear its expenses of providing  services to the
               Trust  pursuant to this  Agreement  except  such  expenses as are
               undertaken by the Trust.  In addition,  the Advisor shall pay the
               salaries  and  fees,  if  any,  of  all  Trustees,  officers  and
               employees of the Trust who are affiliated  persons, as defined in
               Section 2(a)(3) of the 1940 Act, of the Advisor.



          e)   The  Advisor  will  manage,  or will  cause the  Sub-Advisors  to
               manage,  the Fund assets and the investment and  reinvestment  of
               such assets so as to comply with the  provisions  of the 1940 Act
               and with  Subchapter M of the Internal  Revenue Code of 1986,  as
               amended.

          3.  EXPENSES.  The Trust  shall  pay the  expenses  of its  operation,
including  but not  limited to (i) charges and  expenses  for Trust  accounting,
pricing  and  appraisal  services  and  related  overhead,  (ii) the charges and
expenses  of the  Trust's  auditors;  (iii)  the  charges  and  expenses  of any
custodian,  transfer agent, plan agent,  dividend disbursing agent and registrar
appointed by the Trust with respect to the Funds; (iv) brokers' commissions, and
issue and transfer taxes,  chargeable to the Trust in connection with securities
transactions  to which the Trust is a party;  (v) insurance  premiums,  interest
charges,  dues and fees for Trust membership in trade associations and all taxes
and fees payable by the Trust to federal,  state or other governmental agencies;
(vi) fees and expenses involved in registering and maintaining  registrations of
the Trust and/or shares of the Trust with the SEC,  state or blue sky securities
agencies and foreign  countries,  including the preparation of Prospectuses  and
Statements of Additional Information for filing with the SEC; (vii) all expenses
of meetings  of  Trustees  and of  shareholders  of the Trust and of  preparing,
printing  and  distributing  prospectuses,  notices,  proxy  statements  and all
reports  to  shareholders  and to  governmental  agencies;  (viii)  charges  and
expenses of legal  counsel to the Trust;  (ix)  compensation  of Trustees of the
Trust; and (x) interest on borrowed money, if any.

          4. COMPENSATION OF THE ADVISOR.

          a)   As compensation for the services rendered and obligations assumed
               hereunder  by the  Advisor,  the Trust  shall pay to the  Advisor
               monthly a fee that is equal on an annual basis to that percentage
               of the  average  daily  net  assets  of each  Fund  set  forth on
               Schedule 1 attached  hereto (and with respect to any future Fund,
               such  percentage  as the Trust and the  Advisor may agree to from
               time to time).  Such fee shall be computed and accrued daily.  If
               the Advisor serves as investment  advisor for less than the whole
               of any period  specified in this Section 4a, the  compensation to
               the Advisor shall be prorated.  For purposes of  calculating  the
               Advisor's fee, the daily value of each Fund's net assets shall be
               computed  by the same method as the Trust uses to compute the net
               asset value of that Fund.

          b)   The Advisor will pay all fees owing to each Sub-Advisor,  and the
               Trust shall not be  obligated to the  Sub-Advisors  in any manner
               with respect to the compensation of such Sub-Advisors.

          c)   The Advisor reserves the right to waive all or a part of its fee.

          5. ACTIVITIES OF THE ADVISOR. The services of the Advisor to the Trust
hereunder  are not to be  deemed  exclusive,  and the  Advisor  shall be free to
render similar services to others. It is understood that the Trustees and



officers  of  the  Trust  are  or  may  become  interested  in  the  Advisor  as
stockholders,  officers or otherwise,  and that stockholders and officers of the
Advisor  are or may  become  similarly  interested  in the  Trust,  and that the
Advisor may become interested in the Trust as a shareholder or otherwise.

          6. USE OF NAMES. The Trust will not use the name of the Advisor in any
prospectus,  sales  literature  or other  material  relating to the Trust in any
manner not approved prior thereto by the Advisor;  except that the Trust may use
such  name  in any  document  which  merely  refers  in  accurate  terms  to its
appointment  hereunder  or in any  situation  which is  required by the SEC or a
state securities  commission;  and provided further, that in no event shall such
approval be  unreasonably  withheld.  The  Advisor  will not use the name of the
Trust in any material  relating to the Advisor in any manner not approved  prior
thereto by the Trust;  except that the Advisor may use such name in any document
which  merely  refers  in  accurate  terms  to the  appointment  of the  Advisor
hereunder or in any situation which is required by the SEC or a state securities
commission.  In all other  cases,  the  parties may use such names to the extent
that the use is approved by the party  named,  it being  agreed that in no event
shall such approval be unreasonably withheld.

          The  Trustees of the Trust  acknowledge  that the Advisor has reserved
for itself the rights to the name  "Touchstone  Strategic Trust" (or any similar
names)  and that use by the  Trust of such  name  shall  continue  only with the
continuing  consent of the Advisor,  which consent may be withdrawn at any time,
effective immediately, upon written notice thereof to the Trust.

          7. LIMITATION OF LIABILITY OF THE ADVISOR.

          a)   Absent  willful  misfeasance,  bad faith,  gross  negligence,  or
               reckless disregard of obligations or duties hereunder on the part
               of the Advisor,  the Advisor shall not be subject to liability to
               the  Trust  or to any  shareholder  in any  Fund  for  any act or
               omission in the course of, or connected with,  rendering services
               hereunder  or  for  any  losses  that  may  be  sustained  in the
               purchase,  holding  or  sale  of any  security.  As  used in this
               Section 7, the term "Advisor" shall include Touchstone  Advisors,
               Inc. and/or any of its affiliates and the directors, officers and
               employees  of  Touchstone  Advisors,   Inc.  and/or  any  of  its
               affiliates.

          b)   The  Trust  will  indemnify  the  Advisor  against,  and  hold it
               harmless from, any and all losses, claims,  damages,  liabilities
               or expenses  (including  reasonable  counsel  fees and  expenses)
               resulting  from acts or omissions  of the Trust.  Indemnification
               shall be made only after: (i) a final decision on the merits by a
               court or other body before whom the  proceeding  was brought that
               the Trust  was  liable  for the  damages  claimed  or (ii) in the
               absence of such a decision, a reasonable determination based upon
               a review of the facts,  that the Trust was liable for the damages
               claimed, which determination shall be made by either (a) the vote
               of a  majority  of a quorum  of  Trustees  of the  Trust  who are
               neither  "interested  persons"  of the Trust nor  parties  to the
               proceeding



               ("disinterested  non-party Trustees") or (b) an independent legal
               counsel  satisfactory to the parties hereto,  whose determination
               shall be set forth in a written  opinion.  The  Advisor  shall be
               entitled to advances from the Trust for payment of the reasonable
               expenses incurred by it in connection with the matter as to which
               it is seeking  indemnification  in the manner and to the  fullest
               extent that would be permissible under the applicable  provisions
               of the General Corporation Law of Ohio. The Advisor shall provide
               to the Trust a written  affirmation of its good faith belief that
               the standard of conduct necessary for indemnification  under such
               law has  been met and a  written  undertaking  to repay  any such
               advance if it should  ultimately be determined  that the standard
               of conduct  has not been met.  In  addition,  at least one of the
               following  additional  conditions  shall be met:  (i) the Advisor
               shall provide security in form and amount acceptable to the Trust
               for its  undertaking;  (ii) the Trust is insured  against  losses
               arising by reason of the advance; or (iii) a majority of a quorum
               of the Trustees of the Trust,  the members of which  majority are
               disinterested non-party Trustees, or independent legal counsel in
               a written opinion,  shall have  determined,  based on a review of
               facts  readily  available to the Trust at the time the advance is
               proposed  to be made,  that there is reason to  believe  that the
               Advisor   will   ultimately   be   found   to  be   entitled   to
               indemnification.

          8. LIMITATION OF TRUST'S LIABILITY.  The Advisor  acknowledges that it
has received  notice of and accepts the limitations  upon the Trust's  liability
set forth in its  Declaration  of Trust.  The  Advisor  agrees  that the Trust's
obligations  hereunder  in any case  shall be  limited  to the  Trust and to its
assets and that the Advisor shall not seek  satisfaction  of any such obligation
from the  holders  of the  shares  of any Fund  nor from any  Trustee,  officer,
employee or agent of the Trust.

          9. FORCE MAJEURE. The Advisor shall not be liable for delays or errors
occurring  by reason of  circumstances  beyond its  control,  including  but not
limited  to acts of civil or  military  authority,  national  emergencies,  work
stoppages,  fire, flood, catastrophe,  acts of God, insurrection,  war, riot, or
failure of communication or power supply.  In the event of equipment  breakdowns
beyond its control,  the Advisor shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.

          10. RENEWAL, TERMINATION AND AMENDMENT.

          a)   This Agreement shall continue in effect, unless sooner terminated
               as hereinafter  provided,  for a period of one year from the date
               hereof and it shall continue  indefinitely  thereafter as to each
               Fund, provided that such continuance is specifically  approved by
               the parties hereto and, in addition, at least annually by (i) the
               vote of holders of a majority



               of the outstanding  voting  securities of the affected Fund or by
               vote of a majority of the Trust's  Board of Trustees  and (ii) by
               the vote of a majority  of the  Trustees  who are not  parties to
               this  Agreement or  interested  persons of the  Advisor,  cast in
               person  at a meeting  called  for the  purpose  of voting on such
               approval.

          b)   This Agreement may be terminated at any time, with respect to any
               Fund(s),  without payment of any penalty, by the Trust's Board of
               Trustees or by a vote of the majority of the  outstanding  voting
               securities  of the affected  Fund(s) upon 60 days' prior  written
               notice to the  Advisor  and by the  Advisor  upon 60 days'  prior
               written notice to the Trust.

          c)   This Agreement may be amended at any time by the parties  hereto,
               subject to  approval by the  Trust's  Board of  Trustees  and, if
               required by applicable SEC rules and  regulations,  a vote of the
               majority  of  the  outstanding  voting  securities  of  any  Fund
               affected  by  such  change.   This  Agreement   shall   terminate
               automatically in the event of its assignment.

          d)   The terms "assignment," "interested persons" and "majority of the
               outstanding  voting  securities" shall have the meaning set forth
               for such terms in the 1940 Act.

          11. SEVERABILITY.  If any provision of this Agreement shall be held or
made invalid by a court decision,  statute, rule or otherwise,  the remainder of
this Agreement shall not be affected thereby.

          12.  MISCELLANEOUS.  Each party agrees to perform such further actions
and execute such further  documents as are necessary to effectuate  the purposes
hereof.  This Agreement  shall be construed and enforced in accordance  with and
governed by the laws of the State of Ohio.  The captions in this  Agreement  are
included  for  convenience  only  and in no way  define  or  delimit  any of the
provisions hereof or otherwise affect their construction or effect.

          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be executed and delivered in their names and on their behalf by the undersigned,
thereunto  duly  authorized,  all as of the day and year  first  above  written.
Pursuant to the Trust's Agreement and Declaration of Trust, dated as of November
18, 1982,  the  obligations  of this  Agreement  are not binding upon any of the
Trustees  or  shareholders  of the Trust  individually,  but bind only the Trust
estate.

             TOUCHSTONE STRATEGIC TRUST

             By: /s/ Patrick T. Bannigan
                 -------------------------
                                                        Patrick T. Bannigan
                                                        President

             TOUCHSTONE ADVISORS, INC.

             By: /s/ Michael S. Spangler
                 -------------------------
                                                        Michael S. Spangler
                                                        Vice President



                                   SCHEDULE 1

LARGE CAP GROWTH FUND

The Fund pays the  Advisor a fee equal to the annual  rate of 0.75% on the first
$200  million of average  daily net  assets;  0.70% of the next $300  million of
average daily net assets; and 0.50% of such assets in excess of $500 million.

GROWTH OPPORTUNITIES FUND

The Fund pays the  Advisor a fee equal to the annual  rate of 1.00% on the first
$50  million  of  average  daily net  assets;  0.90% of the next $50  million of
average  daily net assets;  0.80% of the next $100 million of average  daily net
assets; and 0.75% of such assets in excess of $200 million.

International Equity Fund

The Fund pays the  Advisor a fee equal to the annual  rate of 0.95% on the first
$100  million of average  daily net  assets;  0.90% of the next $100  million of
average  daily net assets;  0.85% of the next $100 million of average  daily net
assets; and 0.80% of such assets in excess of $300 million.

Emerging Growth Fund

The Fund pays the  Advisor a fee equal to the  annual  rate of 0.80% of  average
daily net assets.

Enhanced 30 Fund

The Fund pays the  Advisor a fee equal to the annual  rate of 0.65% on the first
$100  million of average  daily net  assets;  0.60% of the next $100  million of
average  daily net assets;  0.55% of the next $100 million of average  daily net
assets; and 0.50% of such assets in excess of $300 million.

Value Plus Fund

The Fund pays the  Advisor a fee equal to the annual  rate of 0.75% on the first
$100  million of average  daily net  assets;  0.70% of the next $100  million of
average  daily net assets;  0.65% of the next $100 million of average  daily net
assets; and 0.60% of such assets in excess of $300 million.

Small Cap Growth Fund

The Fund pays the  Advisor a fee equal to the  annual  rate of 1.25% of  average
daily net assets.




                                   APPENDIX C

                                     FORM OF
                             SUB-ADVISORY AGREEMENT

                              LARGE CAP GROWTH FUND
                           TOUCHSTONE STRATEGIC TRUST


     This SUB-ADVISORY AGREEMENT is made as of ___________,  2003 by and between
TOUCHSTONE  ADVISORS,  INC., an Ohio corporation (the "Advisor"),  and NAVELLIER
MANAGEMENT, INC., a Delaware corporation (the "Sub-Advisor").

     WHEREAS,  the  Advisor  is  an  investment  advisor  registered  under  the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to an Agreement and  Declaration of Trust dated November 18, 1982 and registered
as an open-end  diversified  management  investment company under the Investment
Company Act of 1940 (the "1940 Act"), to provide investment advisory services to
the Growth Fund (the "Fund"); and

     WHEREAS, the Sub-Advisor also is an investment advisor registered under the
Investment Advisers Act of 1940, as amended; and

     WHEREAS,  the Advisor  desires to retain the Sub-Advisor to furnish it with
portfolio  management  services  in  connection  with the  Advisor's  investment
advisory  activities on behalf of the Fund,  and the  Sub-Advisor  is willing to
furnish such services to the Advisor and the Fund;

     NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:

     1.  EMPLOYMENT OF THE  SUB-ADVISOR.  In accordance  with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as  Exhibit A (the  "Advisory  Agreement"),  the  Advisor  hereby  appoints  the
Sub-Advisor  to manage the investment  and  reinvestment  of those assets of the
Fund allocated to the Sub-Advisor by the Advisor (the "Fund Assets"), subject to
the control and direction of the Advisor and the Trust's Board of Trustees,  for
the  period  and on the terms  hereinafter  set forth.  The  Sub-Advisor  hereby
accepts such employment and agrees during such period to render the services and
to perform the duties called for by this Agreement for the  compensation  herein
provided.  The  Sub-Advisor  shall at all times maintain its  registration as an
investment advisor under the Investment Advisers Act of 1940 and shall otherwise
comply in all material  respects with all applicable laws and regulations,  both
state and federal.  The  Sub-Advisor  shall for all purposes herein be deemed an
independent  contractor  and shall,  except as expressly  provided or authorized
(whether  herein or  otherwise),  have no authority to act for or represent  the
Trust in any way or otherwise be deemed an agent of the Trust or the Fund.

     2. DUTIES OF THE  SUB-ADVISOR.  The Sub-Advisor  will provide the following
services and undertake the following duties:

               a. The Sub-Advisor will manage the investment and reinvestment of
          the  assets  of  the  Fund,  subject  to and in  accordance  with  the
          investment  objectives,  policies and restrictions of the Fund and any
          directions which the Advisor or the Trust's Board of Trustees may give
          from time to time with  respect  to the Fund.  In  furtherance  of the
          foregoing, the



          Sub-Advisor  will  make  all   determinations   with  respect  to  the
          investment  of the  assets  of the Fund and the  purchase  and sale of
          portfolio  securities and shall take such steps as may be necessary or
          advisable to implement the same. The  Sub-Advisor  also will determine
          the manner in which  voting  rights,  rights to  consent to  corporate
          action and any other rights  pertaining  to the  portfolio  securities
          will be exercised.  The Sub-Advisor will render regular reports to the
          Trust's Board of Trustees and to the Advisor (or such other advisor or
          advisors as the Advisor shall engage to assist it in the evaluation of
          the performance and activities of the Sub-Advisor). Such reports shall
          be made in such  form and  manner  and with  respect  to such  matters
          regarding  the Fund and the  Sub-Advisor  as the Trust or the  Advisor
          shall from time to time request.

               b. The  Sub-Advisor  shall  provide  support to the Advisor  with
          respect to the  marketing of the Fund,  including  but not limited to:
          (i) permission to use the Sub-Advisor's name as provided in Section 5,
          (ii) permission to use the past performance and investment  history of
          the Sub-Advisor as the same is applicable to the Fund, (iii) access to
          the  individual(s)  responsible for day-to-day  management of the Fund
          for  marketing  conferences,   teleconferences  and  other  activities
          involving the promotion of the Fund, subject to the reasonable request
          of the Advisor,  (iv)  permission to use  biographical  and historical
          data of the Sub-Advisor and individual manager(s),  and (v) permission
          to use  the  names  of  clients  to  which  the  Sub-Advisor  provides
          investment management services, subject to any restrictions imposed by
          clients on the use of such names.

               c. The  Sub-Advisor  will, in the name of the Fund,  place orders
          for the execution of all portfolio transactions in accordance with the
          policies  with respect  thereto set forth in the Trust's  registration
          statements  under the 1940 Act and the Securities Act of 1933, as such
          registration  statements  may be in  effect  from  time  to  time.  In
          connection with the placement of orders for the execution of portfolio
          transactions,  the Sub-Advisor  will create and maintain all necessary
          brokerage  records of the Fund in accordance with all applicable laws,
          rules and  regulations,  including but not limited to records required
          by Section 31(a) of the 1940 Act. All records shall be the property of
          the  Trust  and  shall  be  available  for  inspection  and use by the
          Securities  and  Exchange  Commission  (the  "SEC"),  the Trust or any
          person retained by the Trust. Where applicable,  such records shall be
          maintained  by the Advisor for the periods and in the places  required
          by Rule 31a-2 under the 1940 Act. When placing orders with brokers and
          dealers,  the  Sub-Advisor's  primary objective shall be to obtain the
          most  favorable  price and execution  available  for the Fund,  and in
          placing such orders the  Sub-Advisor may consider a number of factors,
          including,  without limitation, the overall direct net economic result
          to the  Fund  (including  commissions,  which  may  not be the  lowest
          available  but  ordinarily  should  not be higher  than the  generally
          prevailing competitive range), the financial strength and stability of
          the broker, the efficiency with



          which the  transaction  will be  effected,  the  ability to effect the
          transaction   at  all  where  a  large  block  is  involved   and  the
          availability  of the  broker  or  dealer  to stand  ready  to  execute
          possibly  difficult  transactions  in the future.  Consistent with the
          Conduct Rules of the National Association of Securities Dealers, Inc.,
          and subject to seeking the most  favorable  price and  execution,  the
          Sub-Advisor may give consideration to sales of shares of the Fund as a
          factor in the  selection  of brokers and dealers to execute  portfolio
          transactions of the Fund. The Sub-Advisor is specifically  authorized,
          to the  extent  authorized  by  law  (including,  without  limitation,
          Section 28(e) of the Securities  Exchange Act of 1934, as amended (the
          "Exchange  Act")),  to pay a broker or dealer  who  provides  research
          services to the  Sub-Advisor  an amount of commission  for effecting a
          portfolio  transaction  in excess of the amount of commission  another
          broker or dealer would have charged for effecting such transaction, in
          recognition  of such  additional  research  services  rendered  by the
          broker or dealer, but only if the Sub-Advisor determines in good faith
          that the excess  commission  is reasonable in relation to the value of
          the brokerage and research  services provided by such broker or dealer
          viewed in terms of the  particular  transaction  or the  Sub-Advisor's
          overall  responsibilities with respect to discretionary  accounts that
          it  manages,  and that the Fund  derives or will  derive a  reasonably
          significant benefit from such research services.  The Sub-Advisor will
          present a written  report to the Board of  Trustees  of the Trust,  at
          least  quarterly,  indicating  total  brokerage  expenses,  actual  or
          imputed,  as well as the services  obtained in consideration  for such
          expenses, broken down by broker-dealer and containing such information
          as the Board of Trustees reasonably shall request.

               d. In the  event of any  reorganization  or other  change  in the
          Sub-Advisor, its investment principals,  supervisors or members of its
          investment (or comparable)  committee,  the Sub-Advisor shall give the
          Advisor  and the  Trust's  Board of  Trustees  written  notice of such
          reorganization  or change within a reasonable time (but not later than
          30 days) after such reorganization or change.

               e. The Sub-Advisor  will bear its expenses of providing  services
          to the Fund  pursuant to this  Agreement  except such  expenses as are
          undertaken by the Advisor or the Trust.

               f. The Sub-Advisor will manage the Fund assets and the investment
          and reinvestment of such assets so as to comply with the provisions of
          the 1940 Act and with  Subchapter  M of the  Internal  Revenue Code of
          1986, as amended.

     3. COMPENSATION OF THE SUB-ADVISOR.


               a. As  compensation  for the  services to be rendered  and duties
          undertaken  hereunder by the Sub-Advisor,  the Advisor will pay to the
          Sub-Advisor  a monthly  fee  equal on an annual  basis to 0.45% of the
          Fund's average daily net assets.



          Such fee shall be  computed  and  accrued  daily.  If the  Sub-Advisor
          serves  in such  capacity  for  less  than  the  whole  of any  period
          specified  in this  Section 3a, the  compensation  to the  Sub-Advisor
          shall be prorated.  For purposes of calculating the Sub-Advisor's fee,
          the daily value of the Fund's net assets shall be computed by the same
          method as the Trust  uses to compute  the net asset  value of the Fund
          for purposes of purchases and redemptions of shares thereof.


               b. The  Sub-Advisor  reserves the right to waive all or a part of
          its fees hereunder.

     4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor may
perform investment advisory services for various other clients,  including other
investment  companies.  The Sub-Advisor  will report to the Board of Trustees of
the Trust (at regular  quarterly  meetings and at such other times as such Board
of Trustees  reasonably shall request) (i) the financial condition and prospects
of the  Sub-Advisor,  (ii) the nature and amount of  transactions  affecting the
Fund that involve the  Sub-Advisor  and  affiliates  of the  Sub-Advisor,  (iii)
information  regarding any potential  conflicts of interest arising by reason of
its  continuing  provision  of  advisory  services  to the Fund and to its other
accounts,  and (iv)  such  other  information  as the  Board of  Trustees  shall
reasonably  request  regarding the Fund,  the Fund's  performance,  the services
provided by the  Sub-Advisor  to the Fund as compared to its other  accounts and
the plans of, and the capability of, the  Sub-Advisor  with respect to providing
future  services  to the Fund and its other  accounts.  At least  annually,  the
Sub-Advisor shall report to the Trustees the total number and type of such other
accounts and the  approximate  total asset value thereof (but not the identities
of the beneficial owners of such accounts).  The Sub-Advisor agrees to submit to
the Trust a statement  defining its policies  with respect to the  allocation of
business among the Fund and its other clients.

     It is understood that the Sub-Advisor may become interested in the Trust as
a shareholder or otherwise.

     The  Sub-Advisor  has  supplied to the Advisor and the Trust  copies of its
Form ADV with all exhibits and attachments  thereto (including the Sub-Advisor's
statement  of financial  condition)  and will  hereafter  supply to the Advisor,
promptly upon the preparation thereof,  copies of all amendments or restatements
of such document.

     5. USE OF NAMES.  Neither  the  Advisor nor the Trust shall use the name of
the Sub-Advisor in any prospectus,  sales literature or other material  relating
to the  Advisor  or the Trust in any  manner  not  approved  in  advance  by the
Sub-Advisor;  provided,  however,  that the Sub-Advisor will approve all uses of
its name which merely refer in accurate  terms to its  appointment  hereunder or
which are  required by the SEC or a state  securities  commission;  and provided
further,  that in no event shall such  approval be  unreasonably  withheld.  The
Sub-Advisor  shall not use the name of the Advisor or the Trust in any  material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case may be;  provided,  however,  that the Advisor and the
Trust shall each approve all uses of their  respective  names which merely refer
in accurate terms to the appointment of the  Sub-Advisor  hereunder or which are
required by the SEC or a state securities  commission;  and,  provided  further,
that in no event shall such approval be unreasonably withheld.



     6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR.  Absent willful misfeasance,
bad faith,  gross  negligence,  or reckless  disregard of  obligations or duties
hereunder on the part of the Sub-Advisor,  the Sub-Advisor  shall not be subject
to liability to the Advisor, the Trust or to any shareholder in the Fund for any
act or  omission  in the  course  of,  or  connected  with,  rendering  services
hereunder or for any losses that may be sustained  in the  purchase,  holding or
sale of any security.  As used in this Section 6, the term  "Sub-Advisor"  shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.

     7. LIMITATION OF TRUST'S  LIABILITY.  The Sub-Advisor  acknowledges that it
has received  notice of and accepts the limitations  upon the Trust's  liability
set forth in its  Declaration  of Trust.  The  Sub-Advisor  agrees  that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory  Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the  holders of shares of the Fund nor from any  Trustee,  officer,  employee or
agent of the Trust.

     8. FORCE MAJEURE.  The Sub-Advisor shall not be liable for delays or errors
occurring  by reason of  circumstances  beyond its  control,  including  but not
limited  to acts of civil or  military  authority,  national  emergencies,  work
stoppages,  fire, flood, catastrophe,  acts of God, insurrection,  war, riot, or
failure of communication or power supply.  In the event of equipment  breakdowns
beyond its control,  the  Sub-Advisor  shall take  reasonable  steps to minimize
service interruptions but shall have no liability with respect thereto.

     9. RENEWAL, TERMINATION AND AMENDMENT.

               a.  This  Agreement  shall  continue  in  effect,  unless  sooner
          terminated as hereinafter  provided for a period of two years from the
          date  hereof  and it shall  continue  thereafter  provided  that  such
          continuance is specifically  approved by the parties and, in addition,
          at least  annually by (i) the vote of the holders of a majority of the
          outstanding  voting  securities (as herein  defined) of the Fund or by
          vote of a majority  of the Trust's  Board of Trustees  and (ii) by the
          vote  of a  majority  of the  Trustees  who are  not  parties  to this
          Agreement  or  interested   persons  of  either  the  Advisor  or  the
          Sub-Advisor,  cast in person at a meeting  called  for the  purpose of
          voting on such approval.

               b. This Agreement may be terminated at any time,  without payment
          of any penalty,  (i) by the Advisor,  by the Trust's Board of Trustees
          or by a vote of the majority of the outstanding  voting  securities of
          the Fund,  in any such case upon not less than 60 days' prior  written
          notice to the Sub-Advisor  and (ii) by the  Sub-Advisor  upon not less
          than 60 days' prior written notice to the Advisor and the Trust.  This
          Agreement   shall  terminate   automatically   in  the  event  of  its
          assignment.

               c.  This  Agreement  may be  amended  at any time by the  parties
          hereto,  subject to approval by the Trust's  Board of Trustees and, if
          required  by  applicable  SEC  rules  and  regulations,  a vote of the
          majority of the outstanding  voting securities of the Fund affected by
          such change.



               d. The terms "assignment,"  "interested persons" and "majority of
          the outstanding  voting  securities"  shall have the meaning set forth
          for such terms in the 1940 Act.

     10. SEVERABILITY.  If any provision of this Agreement shall become or shall
be found to be invalid by a court  decision,  statute,  rule or  otherwise,  the
remainder of this Agreement shall not be affected thereby.

     11. NOTICE.  Any notices under this Agreement shall be in writing addressed
and delivered personally (or by telecopy) or mailed  postage-paid,  to the other
party at such address as such other party may designate in accordance  with this
paragraph  for the receipt of such  notice.  Until  further  notice to the other
party,  it is agreed  that the  address of the Trust and that of the Advisor for
this purpose shall be 221 East Fourth Street, Suite 300, Cincinnati,  Ohio 45202
and that the address of the Sub-Advisor shall be One East Liberty,  Third Floor,
Reno, Nevada 89501.

     12.  MISCELLANEOUS.  Each party agrees to perform such further  actions and
execute such  further  documents as are  necessary  to  effectuate  the purposes
hereof.  This Agreement  shall be construed and enforced in accordance  with and
governed by the laws of the State of Ohio.  The captions in this  Agreement  are
included  for  convenience  only  and in no way  define  or  delimit  any of the
provisions hereof or otherwise affect their construction or effect.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed and  delivered  in their names and on their behalf by the  undersigned,
thereunto duly authorized, all as of the day and year first above written.

                            TOUCHSTONE ADVISORS, INC.

                            By: ________________________________________________
                            Name: Patrick Bannigan
                            Title: President

                            NAVELLIER MANAGEMENT, INC.

                            By: ________________________________________________
                            Name: Louis G. Navellier
                            Title: President



                                   APPENDIX D

                              PLAN OF DISTRIBUTION
                           PURSUANT TO RULE 12b-1 FOR
                     CLASS A SHARES OF MULTIPLE CLASS SERIES
                         AND FOR SINGLE CLASS SERIES OF
                           COUNTRYWIDE STRATEGIC TRUST

     WHEREAS,  Countrywide  Strategic  Trust (the  "Trust"),  an  unincorporated
business trust organized under the laws of The Commonwealth of Massachusetts, is
an open-end  management  investment  company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and

     WHEREAS,  the Trust is authorized to issue an unlimited number of shares of
beneficial  interest  without par value (the  "Shares"),  which are divided into
separate Series of Shares; and

     WHEREAS,  the Trust issues shares of certain  Series in Sub-Series  (one of
which may be  designated  as Class A Shares),  whereas other Series will operate
with a single class of Shares,  which Shares will be considered  for purposes of
this Plan as Class A Shares; and

     WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested  persons  of the Trust (as  defined  in the 1940 Act) and who have no
direct or indirect  financial  interest in the  operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable  business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class A Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;

     NOW, THEREFORE,  the current Rule 12b-1 distribution plan of each Series is
hereby amended as it pertains to the Class A Shares of each Series in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:

     1. Distribution  Activities.  Subject to the supervision of the Trustees of
the Trust,  the Trust may,  directly  or  indirectly,  engage in any  activities
related to the distribution of Class A Shares, which activities may include, but
are not limited to, the following: (a) maintenance fees or other payments to the
Trust's  principal  underwriter  and to  securities  dealers  and others who are
engaged in the sale of Class A Shares and who may be  advising  shareholders  of
the Trust  regarding  the  purchase,  sale or retention  of Class A Shares;  (b)
expenses of maintaining  personnel  (including  personnel of organizations  with
which the Trust has entered into agreements  related to this Plan) who engage in
or  support  distribution  of Class A Shares or who render  shareholder  support
services not otherwise  provided by the Trust's transfer agent,  including,  but
not limited to, office space and equipment,  telephone  facilities and expenses,
answering  routine  inquiries  regarding  the  Trust,   processing   shareholder
transactions,  and providing  such other  shareholder  services as the Trust may
reasonably   request;   (c)  formulating  and   implementing  of  marketing  and
promotional  activities,  including,  but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
preparing,  printing and distributing sales literature; (e) preparing,  printing
and  distributing  prospectuses  and  statements of additional  information  and
reports of the Trust for recipients other than existing shareholders of the



Trust; and (f) obtaining such information,  analyses and reports with respect to
marketing and  promotional  activities as the Trust may, from time to time, deem
advisable. The Trust is authorized to engage in the activities listed above, and
in any other activities  related to the  distribution of Class A Shares,  either
directly  or  through  other  persons  with  which the Trust  has  entered  into
agreements related to this Plan.

     2. Maximum Expenditures.  The expenditures to be made pursuant to this Plan
and the basis upon  which  payment  of such  expenditures  will be made shall be
determined by the Trustees of the Trust,  but in no event may such  expenditures
exceed  in any  fiscal  year an  amount  calculated  at the  rate of .25% of the
average  daily net asset value of the Class A Shares of any Series of the Trust.
Such payments for  distribution  activities  may be made directly by the Class A
Shares or the Trust's investment adviser or principal underwriter may incur such
expenses and obtain reimbursement from the Class A Shares.

     3. Term and  Termination.  This Plan  shall  become  effective  on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall  continue  in effect for  successive
periods of one year  thereafter,  but only so long as each such  continuance  is
specifically  approved  by votes of a majority  of both (i) the  Trustees of the
Trust and (ii) the Rule 12b-1  Trustees,  cast in person at a meeting called for
the purpose of voting on such approval. This Plan may be terminated with respect
to any Series at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a  majority  (as  defined  in the 1940 Act) of the  outstanding  Class A
Shares of such Series of the Trust.  In the event this Plan is terminated by any
Series in accordance  with its terms,  the  obligations of the Class A Shares of
such Series to make payments to the Trust's  principal  underwriter  pursuant to
this Plan will cease and such Series  will not be required to make any  payments
for expenses incurred after the date of termination.

     4.  Amendments.  This Plan may not be amended with respect to any Series to
increase materially the amount of expenditures  provided for in Section 2 hereof
unless such  amendment  is approved by a vote of the majority (as defined in the
1940 Act) of the  outstanding  Class A Shares of such  Series,  and no  material
amendment to this Plan shall be made unless  approved in the manner provided for
annual renewal of this Plan in Section 3 hereof.

     5. Selection and Nomination of Trustees.  While this Plan is in effect, the
selection and nomination of Trustees who are not interested  persons (as defined
in the 1940  Act) of the  Trust  shall be  committed  to the  discretion  of the
Trustees who are not interested persons of the Trust.

     6.  Quarterly  Reports.  The  Treasurer  of the  Trust  and  the  principal
underwriter  shall  provide to the Trustees and the Trustees  shall  review,  at
least quarterly,  a written report of the amounts expended pursuant to this Plan
and any related  agreement,  the purposes for which such  expenditures were made
and the allocation of such expenditures as provided for in Section 7.

     7. Allocating Expenditures Between Classes. Only distribution  expenditures
properly attributable to the sale of a particular class of Shares may be used to
support the  distribution  fee charged to  shareholders of such class of Shares.
Distribution  expenses attributable to the sale of more than one class of Shares
of a Series will be  allocated  at least  annually to each class of Shares based
upon the ratio in which the sales of each class of Shares  bears to the sales of
all the Shares of such Series. For this purpose, Shares issued upon reinvestment
of dividends or distributions will not be considered sales.



     8.  Recordkeeping.  The Trust  shall  preserve  copies of this Plan and any
related  agreement  and all reports  made  pursuant  to Section 6 hereof,  for a
period of not less than six years from the date of this Plan,  the agreements or
such  reports,  as the case may be, the first two years in an easily  accessible
place.

     9.  Limitation of Liability.  A copy of the  Agreement and  Declaration  of
Trust  of the  Trust  is on file  with  the  Secretary  of The  Commonwealth  of
Massachusetts and notice is hereby given that this Plan is executed on behalf of
the  Trustees  of the  Trust  as  trustees  and not  individually  and  that the
obligations of this instrument are not binding upon the Trustees or shareholders
of the Trust  individually  but are binding only upon the assets and property of
the Trust.

IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the date
set forth below.

Dated: October 29, 1999

Attest:

/s/ Tina D. Hosking                 By: /s/ Robert H. Leshner
- ------------------------                --------------------------
Secretary                               President




                              PLAN OF DISTRIBUTION
                           PURSUANT TO RULE 12b-1 FOR
                  CLASS B SHARES OF TOUCHSTONE STRATEGIC TRUST

     WHEREAS,  Touchstone  Strategic  Trust  (the  "Trust"),  an  unincorporated
business trust organized under the laws of The Commonwealth of Massachusetts, is
an open-end  management  investment  company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and

     WHEREAS,  the Trust is authorized to issue an unlimited number of shares of
beneficial  interest  without par value (the  "Shares"),  which are divided into
separate Series of Shares; and

     WHEREAS,  the Trust issues shares of certain  Series in Sub-Series  (one of
which may be designated as Class B Shares); and

     WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested  persons  of the Trust (as  defined  in the 1940 Act) and who have no
direct or indirect  financial  interest in the  operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable  business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class B Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;

     NOW, THEREFORE,  the current Rule 12b-1 distribution plan of each Series is
hereby amended as it pertains to the Class B Shares of each Series in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:

     1. Distribution  Activities.  Subject to the supervision of the Trustees of
the Trust,  the Trust may,  directly  or  indirectly,  engage in any  activities
related to the distribution of Class B Shares, which activities may include, but
are not limited to, the following: (a) maintenance fees or other payments to the
Trust's  principal  underwriter  and to  securities  dealers  and others who are
engaged in the sale of Class B Shares and who may be  advising  shareholders  of
the Trust  regarding  the  purchase,  sale or retention  of Class B Shares;  (b)
expenses of maintaining  personnel  (including  personnel of organizations  with
which the Trust has entered into agreements  related to this Plan) who engage in
or  support  distribution  of Class B Shares or who render  shareholder  support
services not otherwise  provided by the Trust's transfer agent,  including,  but
not limited to, office space and equipment,  telephone  facilities and expenses,
answering  routine  inquiries  regarding  the  Trust,   processing   shareholder
transactions,  and providing  such other  shareholder  services as the Trust may
reasonably   request;   (c)  formulating  and   implementing  of  marketing  and
promotional  activities,  including,  but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
preparing,  printing and distributing sales literature; (e) preparing,  printing
and  distributing  prospectuses  and  statements of additional  information  and
reports of the Trust for  recipients  other than  existing  shareholders  of the
Trust; and (f) obtaining such information,  analyses and reports with respect to
marketing and  promotional  activities as the Trust may, from time to time, deem
advisable. The Trust is authorized to engage in the activities listed above, and
in any other activities  related to the  distribution of Class B Shares,  either
directly  or  through  other  persons  with  which the Trust  has  entered  into
agreements related to this Plan.

     2. Maximum Expenditures.  The expenditures to be made pursuant to Section 1
and the basis upon  which  payment  of such  expenditures  will be made shall be
determined by the Trustees of the Trust,  but in no event may such  expenditures
exceed  in any  fiscal  year an  amount  calculated  at the  rate of .75% of the
average  daily net asset value of the Class B Shares of any Series of the Trust.
Such payments for  distribution  activities  may be made directly by the Class B
Shares or the Trust's investment adviser or principal underwriter may incur such
expenses and obtain reimbursement from the Class B Shares.

     3.  Maintenance  Fee. In addition to the payments of compensation  provided
for in Section 2 and in order to further enhance the distribution of its Class B
Shares, the Trust shall pay the principal underwriter a maintenance fee, accrued
daily and paid  monthly,  in an amount  equal to an annual  rate of ..25% of the
daily net assets of the Class B Shares of the Trust.  When  requested  by and at
the  direction of the principal  underwriter,  the Trust shall pay a maintenance
fee to dealers  based on the amount of Class B Shares  sold by such  dealers and
remaining  outstanding for specified periods of time, if any,  determined by the
principal underwriter,  in amounts up to .25% per annum of the average daily net
assets of the Class B Shares of the Trust.  Any maintenance fees paid to dealers
shall  reduce  the   maintenance   fees  otherwise   payable  to  the  principal
underwriter.

     4. Term and  Termination.  This Plan  shall  become  effective  on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall  continue  in effect for  successive
periods of one year  thereafter,  but only so long as each such  continuance  is
specifically  approved  by votes of a majority  of both (i) the  Trustees of the
Trust and (ii) the Rule 12b-1  Trustees,  cast in person at a meeting called for
the purpose of voting on such approval. This Plan may be terminated with respect
to any Series at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a  majority  (as  defined  in the 1940 Act) of the  outstanding  Class B
Shares of such Series of the Trust.  In the event this Plan is terminated by any
Series in accordance  with its terms,  the  obligations of the Class B Shares of
such Series to make payments to the Trust's  principal  underwriter  pursuant to
this Plan will cease and such Series  will not be required to make any  payments
for expenses incurred after the date of termination.

     5.  Amendments.  This Plan may not be amended with respect to any Series to
increase materially the amount of expenditures  provided for in Sections 2 and 3
hereof  unless such  amendment is approved by a vote of the majority (as defined
in the 1940  Act) of the  outstanding  Class B  Shares  of such  Series,  and no
material  amendment  to this Plan shall be made  unless  approved  in the manner
provided for annual renewal of this Plan in Section 4 hereof.

     6. Selection and Nomination of Trustees.  While this Plan is in effect, the
selection and nomination of Trustees who are not interested  persons (as defined
in the 1940  Act) of the  Trust  shall be  committed  to the  discretion  of the
Trustees who are not interested persons of the Trust.

     7. Quarterly  Reports.  The principal  underwriter and the Treasurer of the
Trust shall  provide to the  Trustees and the Trustees  shall  review,  at least
quarterly,  a written report of the amounts  expended  pursuant to this Plan and
any related  agreement,  the purposes for which such  expenditures were made and
the allocation of such expenditures as provided for in Section 8.

     8. Allocating Expenditures Between Classes. Only distribution  expenditures
properly attributable to the sale of a particular class of Shares



may be used to support  the  distribution  fee charged to  shareholders  of such
class of Shares. Distribution expenses attributable to the sale of more than one
class of Shares of a Series will be allocated at least annually to each class of
Shares  based upon the ratio in which the sales of each class of Shares bears to
the sales of all the Shares of such Series. For this purpose, Shares issued upon
reinvestment of dividends or distributions will not be considered sales.

     9.  Recordkeeping.  The Trust  shall  preserve  copies of this Plan and any
related  agreement  and all reports  made  pursuant  to Section 7 hereof,  for a
period of not less than six years from the date of this Plan,  the agreements or
such  reports,  as the case may be, the first two years in an easily  accessible
place.

     10.  Limitation of Liability.  A copy of the Agreement and  Declaration  of
Trust  of the  Trust  is on file  with  the  Secretary  of The  Commonwealth  of
Massachusetts and notice is hereby given that this Plan is executed on behalf of
the  Trustees  of the  Trust  as  trustees  and not  individually  and  that the
obligations of this instrument are not binding upon the Trustees or shareholders
of the Trust  individually  but are binding only upon the assets and property of
the Trust.

     IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the
date set forth below.

Dated: May 1, 2001

Attest:

/s/ Tina D. Hosking                     By: /s/ Jill McGruder
- ----------------------                      ---------------------
Secretary                                   President



                              PLAN OF DISTRIBUTION
                           PURSUANT TO RULE 12b-1 FOR
                  CLASS C SHARES OF COUNTRYWIDE STRATEGIC TRUST

     WHEREAS,  Countrywide  Strategic  Trust (the  "Trust"),  an  unincorporated
business trust organized under the laws of The Commonwealth of Massachusetts, is
an open-end  management  investment  company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and

     WHEREAS,  the Trust is authorized to issue an unlimited number of shares of
beneficial  interest  without par value (the  "Shares"),  which are divided into
separate Series of Shares; and

     WHEREAS,  the Trust issues shares of certain  Series in Sub-Series  (one of
which may be designated as Class C Shares); and

     WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested  persons  of the Trust (as  defined  in the 1940 Act) and who have no
direct or indirect  financial  interest in the  operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable  business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class C Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;

     NOW, THEREFORE,  the current Rule 12b-1 distribution plan of each Series is
hereby amended as it pertains to the Class C Shares of each Series in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:

     1. Distribution  Activities.  Subject to the supervision of the Trustees of
the Trust,  the Trust may,  directly  or  indirectly,  engage in any  activities
related to the distribution of Class C Shares, which activities may include, but
are not limited to, the following: (a) maintenance fees or other payments to the
Trust's  principal  underwriter  and to  securities  dealers  and others who are
engaged in the sale of Class C Shares and who may be  advising  shareholders  of
the Trust  regarding  the  purchase,  sale or retention  of Class C Shares;  (b)
expenses of maintaining  personnel  (including  personnel of organizations  with
which the Trust has entered into agreements  related to this Plan) who engage in
or  support  distribution  of Class C Shares or who render  shareholder  support
services not otherwise  provided by the Trust's transfer agent,  including,  but
not limited to, office space and equipment,  telephone  facilities and expenses,
answering  routine  inquiries  regarding  the  Trust,   processing   shareholder
transactions,  and providing  such other  shareholder  services as the Trust may
reasonably   request;   (c)  formulating  and   implementing  of  marketing  and
promotional  activities,  including,  but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
preparing,  printing and distributing sales literature; (e) preparing,  printing
and  distributing  prospectuses  and  statements of additional  information  and
reports of the Trust for  recipients  other than  existing  shareholders  of the
Trust; and (f) obtaining such information,  analyses and reports with respect to
marketing and  promotional  activities as the Trust may, from time to time, deem
advisable. The Trust is authorized to engage in the activities listed above, and
in any other activities  related to the  distribution of Class C Shares,  either
directly  or  through  other  persons  with  which the Trust  has  entered  into
agreements related to this Plan.



     2. Maximum Expenditures.  The expenditures to be made pursuant to Section 1
and the basis upon  which  payment  of such  expenditures  will be made shall be
determined by the Trustees of the Trust,  but in no event may such  expenditures
exceed  in any  fiscal  year an  amount  calculated  at the  rate of .75% of the
average  daily net asset value of the Class C Shares of any Series of the Trust.
Such payments for  distribution  activities  may be made directly by the Class C
Shares or the Trust's investment adviser or principal underwriter may incur such
expenses and obtain reimbursement from the Class C Shares.

     3.  Maintenance  Fee. In addition to the payments of compensation  provided
for in Section 2 and in order to further enhance the distribution of its Class C
Shares, the Trust shall pay the principal underwriter a maintenance fee, accrued
daily and paid  monthly,  in an amount  equal to an annual  rate of ..25% of the
daily net assets of the Class C Shares of the Trust.  When  requested  by and at
the  direction of the principal  underwriter,  the Trust shall pay a maintenance
fee to dealers  based on the amount of Class C Shares  sold by such  dealers and
remaining  outstanding for specified periods of time, if any,  determined by the
principal underwriter,  in amounts up to .25% per annum of the average daily net
assets of the Class C Shares of the Trust.  Any maintenance fees paid to dealers
shall  reduce  the   maintenance   fees  otherwise   payable  to  the  principal
underwriter.

     4. Term and  Termination.  This Plan  shall  become  effective  on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall  continue  in effect for  successive
periods of one year  thereafter,  but only so long as each such  continuance  is
specifically  approved  by votes of a majority  of both (i) the  Trustees of the
Trust and (ii) the Rule 12b-1  Trustees,  cast in person at a meeting called for
the purpose of voting on such approval. This Plan may be terminated with respect
to any Series at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a  majority  (as  defined  in the 1940 Act) of the  outstanding  Class C
Shares of such Series of the Trust.  In the event this Plan is terminated by any
Series in accordance  with its terms,  the  obligations of the Class C Shares of
such Series to make payments to the Trust's  principal  underwriter  pursuant to
this Plan will cease and such Series  will not be required to make any  payments
for expenses incurred after the date of termination.

     5.  Amendments.  This Plan may not be amended with respect to any Series to
increase materially the amount of expenditures  provided for in Sections 2 and 3
hereof  unless such  amendment is approved by a vote of the majority (as defined
in the 1940  Act) of the  outstanding  Class C  Shares  of such  Series,  and no
material  amendment  to this Plan shall be made  unless  approved  in the manner
provided for annual renewal of this Plan in Section 4 hereof.

     6. Selection and Nomination of Trustees.  While this Plan is in effect, the
selection and nomination of Trustees who are not interested  persons (as defined
in the 1940  Act) of the  Trust  shall be  committed  to the  discretion  of the
Trustees who are not interested persons of the Trust.

     7. Quarterly  Reports.  The principal  underwriter and the Treasurer of the
Trust shall  provide to the  Trustees and the Trustees  shall  review,  at least
quarterly,  a written report of the amounts  expended  pursuant to this Plan and
any related  agreement,  the purposes for which such  expenditures were made and
the allocation of such expenditures as provided for in Section 8.

     8. Allocating Expenditures Between Classes. Only distribution  expenditures
properly attributable to the sale of a particular class of Shares may be used to
support the  distribution  fee charged to  shareholders of such class of Shares.
Distribution expenses attributable to the sale of more than one class of Shares



of a Series will be  allocated  at least  annually to each class of Shares based
upon the ratio in which the sales of each class of Shares  bears to the sales of
all the Shares of such Series. For this purpose, Shares issued upon reinvestment
of dividends or distributions will not be considered sales.

     9.  Recordkeeping.  The Trust  shall  preserve  copies of this Plan and any
related  agreement  and all reports  made  pursuant  to Section 7 hereof,  for a
period of not less than six years from the date of this Plan,  the agreements or
such  reports,  as the case may be, the first two years in an easily  accessible
place.

     10.  Limitation of Liability.  A copy of the Agreement and  Declaration  of
Trust  of the  Trust  is on file  with  the  Secretary  of The  Commonwealth  of
Massachusetts and notice is hereby given that this Plan is executed on behalf of
the  Trustees  of the  Trust  as  trustees  and not  individually  and  that the
obligations of this instrument are not binding upon the Trustees or shareholders
of the Trust  individually  but are binding only upon the assets and property of
the Trust.

     IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the
date set forth below.

Dated: October 29, 1999

Attest:

/s/ Tina D. Hosking                 By: /s/ Robert H. Leshner
- --------------------------              -------------------------
Secretary                               President



                                     PART B

                           TOUCHSTONE STRATEGIC TRUST
                           (THE LARGE CAP GROWTH FUND)


                       STATEMENT OF ADDITIONAL INFORMATION
                              DATED August 19, 2003

     This Statement of Additional Information, which is not a prospectus, should
be  read  in  conjunction  with  the  Combined  Prospectus/Proxy   Statement  of
Touchstone  Strategic Trust (the "Fund"),  dated August 19, 2003 for the special
meeting (the  "Meeting") of the  shareholders  of the Navellier Large Cap Growth
Portfolio (the "Portfolio") of the Navellier  Performance Funds, a copy of which
Prospectus/  Proxy Statement may be obtained,  without charge, by contacting the
Portfolio,  at their mailing address c/o Navellier  Securities  Corp.,  One East
Liberty, Third Floor, Reno, Nevada 89501; Tel: 1-800-887-8671. This Statement of
Additional  Information  contains additional and more detailed information about
the  operations  and activities of the Large Cap Growth Fund, a portfolio of the
Touchstone  Strategic  Trust  (the  "Acquiring  Fund")  and the  operations  and
activities of the Portfolio.


     The combined  Prospectus/Proxy  Statement  describes  certain  transactions
contemplated  by the  proposed  merger of the  Portfolio  and of the  Millennium
Portfolio into the Acquiring Fund (the  "Reorganization")  whereby the Acquiring
Fund would  acquire  all of the assets of the  Portfolio  and of the  Millennium
Portfolio in exchange solely for shares of beneficial  interest in the Acquiring
Fund and the assumption by the Acquiring Fund of all of the valid liabilities of
the Portfolio and of the Millennium Portfolio.



                      STATEMENT OF ADDITIONAL INFORMATION
                               TABLE OF CONTENTS


STATEMENT OF ADDITIONAL INFORMATION FOR TOUCHSTONE STRATEGIC
TRUST DATED AUGUST 1, 2003 (incorporated herein by reference).........

STATEMENT OF ADDITIONAL INFORMATION FOR THE NAVELLIER PERFORMANCE
FUNDS DATED MAY 1, 2003 (incorporated herein by reference)............

CURRENT AUDITED ANNUAL REPORT OF THE NAVELLIER PERFORMANCE FUNDS
AS OF DECEMBER 31, 2002 (incorporated herein by reference)............

Pro Forma Financial
Statements (incorporated herein by reference).........................




                           TOUCHSTONE STRATEGIC TRUST

                       STATEMENT OF ADDITIONAL INFORMATION

                                 August 1, 2003

                              Emerging Growth Fund
                                 Value Plus Fund
                                Enhanced 30 Fund
                              Large Cap Growth Fund
                            Growth Opportunities Fund
                              Small Cap Growth Fund

This Statement of Additional Information is not a prospectus.  It should be read
together with the Funds' Prospectuses dated August 1, 2003. The Funds' financial
statements  are  contained  in the  Annual  Report,  which  is  incorporated  by
reference into this Statement of Additional Information.  You may receive a copy
of a Fund's  Prospectus or most recent Annual and  Semiannual  Report by writing
the Trust at 221 East Fourth Street, Suite 300, Cincinnati,  Ohio 45202-4133, or
by calling the Trust nationwide toll-free 800-543-0407, in Cincinnati 362-4921.

                                       1


                       STATEMENT OF ADDITIONAL INFORMATION
                       -----------------------------------

                           TOUCHSTONE STRATEGIC TRUST
                        221 EAST FOURTH STREET, SUITE 300
                           CINCINNATI, OHIO 45202-4133

                                TABLE OF CONTENTS
                                                                            PAGE

THE TRUST......................................................................3

DEFINITIONS, POLICIES AND RISK CONSIDERATIONS..................................4

INVESTMENT RESTRICTIONS.......................................................27

TRUSTEES AND OFFICERS.........................................................31

THE INVESTMENT ADVISOR AND SUB-ADVISORS.......................................37

PROXY VOTING PROCEDURES.......................................................42

THE DISTRIBUTOR...............................................................44

DISTRIBUTION PLANS............................................................46

SECURITIES TRANSACTIONS.......................................................48

CODE OF ETHICS................................................................51

PORTFOLIO TURNOVER............................................................51

CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE..........................51

CHOOSING A SHARE CLASS........................................................52

OTHER PURCHASE INFORMATION....................................................57

TAXES.........................................................................60

REDEMPTION IN KIND............................................................63

HISTORICAL PERFORMANCE INFORMATION............................................63

PRINCIPAL SECURITY HOLDERS....................................................74

CUSTODIAN.....................................................................78

AUDITORS......................................................................78

TRANSFER, ACCOUNTING AND ADMINISTRATIVE AGENT.................................79

ANNUAL REPORT.................................................................80

APPENDIX......................................................................81

                                       2


THE TRUST
- ---------

Touchstone Strategic Trust (the "Trust"),  formerly Countrywide Strategic Trust,
an open-end,  diversified  management  investment  company,  was  organized as a
Massachusetts  business trust on November 18, 1982. The Trust  currently  offers
six series of shares to  investors:  the Large Cap  Growth  Fund  (formerly  the
Equity Fund), the Growth  Opportunities  Fund (formerly the Growth/Value  Fund),
the  Emerging  Growth  Fund,  the Value Plus Fund,  the Enhanced 30 Fund and the
Small Cap Growth Fund (referred to individually as a "Fund" and  collectively as
the "Funds"). Each Fund has its own investment goal and policies.

Pursuant to an Agreement and Plan of Reorganization, on May 1, 2000, each of the
Emerging  Growth  Fund and the  Value  Plus Fund  succeeded  to the  assets  and
liabilities  of  another  mutual  fund of the same name  that was an  investment
series of Touchstone  Series Trust. The investment goals,  strategies,  policies
and  restrictions  of each  Fund  and its  predecessor  fund  are  substantially
identical.  The financial  data and  information in this Statement of Additional
Information with respect to the Emerging Growth Fund and the Value Plus Fund for
periods ended prior to May 1, 2000 are for the predecessor funds.

Shares of each Fund have equal voting rights and liquidation  rights.  Each Fund
shall vote separately on matters submitted to a vote of the shareholders  except
in matters  where a vote of all series of the Trust in the aggregate is required
by the Investment Company Act of 1940, as amended (the "1940 Act") or otherwise.
When matters are  submitted to  shareholders  for a vote,  each  shareholder  is
entitled  to one vote  for each  full  share  owned  and  fractional  votes  for
fractional  shares owned.  The Trust does not normally  hold annual  meetings of
shareholders.  The Trustees  shall promptly call and give notice of a meeting of
shareholders  for the purpose of voting  upon the  removal of any  Trustee  when
requested to do so in writing by shareholders holding 10% or more of the Trust's
outstanding  shares.  The Trust will comply with the provisions of Section 16(c)
of the 1940 Act in order to facilitate communications among shareholders.

Each share of a Fund  represents an equal  proportionate  interest in the assets
and liabilities belonging to that Fund with each other share of that Fund and is
entitled to such dividends and  distributions out of the income belonging to the
Fund as are  declared  by the Trust.  The shares do not have  cumulative  voting
rights  or any  preemptive  or  conversion  rights,  and the  Trustees  have the
authority  from time to time to divide or combine  the shares of any Fund into a
greater  or lesser  number  of shares of that Fund so long as the  proportionate
beneficial  interest  in the  assets  belonging  to that Fund and the  rights of
shares of any other Fund are in no way affected. In case of any liquidation of a
Fund,  the  holders of shares of the Fund being  liquidated  will be entitled to
receive as a class a  distribution  out of the assets,  net of the  liabilities,
belonging  to that  Fund.  Expenses  attributable  to any Fund are borne by that
Fund. Any general expenses of the Trust not readily identifiable as belonging to
a particular  Fund are  allocated  by or under the  direction of the Trustees in
such manner as the Trustees determine to be fair and equitable.  Generally,  the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders.  No shareholder is liable to further calls or to assessment by the
Trust without his express consent.

                                       3


Class A shares,  Class B shares  and Class C shares  of the Funds  represent  an
interest in the same assets of such Fund, have the same rights and are identical
in all material respects except that (i) each class of shares may bear different
distribution  fees;  (ii) each  class of shares is subject  to  different  sales
charges; (iii) certain other class specific expenses will be borne solely by the
class to which such expenses are  attributable,  including  transfer  agent fees
attributable  to a  specific  class of shares,  printing  and  postage  expenses
related to preparing and  distributing  materials to current  shareholders  of a
specific class,  registration  fees incurred by a specific class of shares,  the
expenses  of  administrative  personnel  and  services  required  to support the
shareholders of a specific class, litigation or other legal expenses relating to
a class of shares,  Trustees'  fees or  expenses  incurred as a result of issues
relating to a specific class of shares and accounting fees and expenses relating
to a specific class of shares;  and (iv) each class has exclusive  voting rights
with respect to matters relating to its own distribution arrangements. The Board
of Trustees  may classify and  reclassify  the shares of a Fund into  additional
classes of shares at a future date.

Under  Massachusetts  law,  under  certain  circumstances,   shareholders  of  a
Massachusetts  business  trust could be deemed to have the same type of personal
liability for the  obligations  of the Trust as does a partner of a partnership.
However,  numerous investment  companies registered under the 1940 Act have been
formed  as  Massachusetts  business  trusts  and the  Trust  is not  aware of an
instance  where such  result has  occurred.  In  addition,  the Trust  Agreement
disclaims  shareholder  liability  for  acts or  obligations  of the  Trust  and
requires that notice of such disclaimer be given in each  agreement,  obligation
or instrument  entered into or executed by the Trust or the Trustees.  The Trust
Agreement  also provides for the  indemnification  out of the Trust property for
all  losses and  expenses  of any  shareholder  held  personally  liable for the
obligations  of the Trust.  Moreover,  it  provides  that the Trust  will,  upon
request,  assume the defense of any claim made against any  shareholder  for any
act or  obligation of the Trust and satisfy any judgment  thereon.  As a result,
and particularly  because the Trust assets are readily marketable and ordinarily
substantially   exceed  liabilities,   management  believes  that  the  risk  of
shareholder  liability is slight and limited to circumstances in which the Trust
itself would be unable to meet its  obligations.  Management  believes  that, in
view of the above, the risk of personal liability is remote.

DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
- ---------------------------------------------

Each Fund has its own investment goal,  strategies and related risks.  There can
be no assurance that a Fund's  investment  goal will be met. The investment goal
and  practices  of  each  Fund  (except  the  Growth   Opportunities  Fund)  are
nonfundamental  policies  that may be changed by the Board of  Trustees  without
shareholder  approval,  except in those instances where shareholder  approval is
expressly  required.  If  there  is  a  change  in  a  Fund's  investment  goal,
shareholders should consider whether the Fund remains an appropriate  investment
in  light  of  their  current  financial  position  and  needs.  The  investment
restrictions  of the Funds are  fundamental and can only be changed by vote of a
majority of the outstanding shares of the applicable Fund.

A more  detailed  discussion of some of the terms used and  investment  policies
described in the Prospectuses  (see  "Investment  Strategies and Risks") appears
below:

                                       4


FIXED-INCOME AND OTHER DEBT SECURITIES

Fixed-income and other debt instrument  securities include all bonds, high yield
or "junk"  bonds,  municipal  bonds,  debentures,  U.S.  Government  securities,
mortgage-related   securities  including  government  stripped  mortgage-related
securities,  zero coupon securities and custodial receipts.  The market value of
fixed-income  obligations  of the Funds will be affected  by general  changes in
interest  rates which will result in  increases or decreases in the value of the
obligations  held by the Funds.  The market value of the  obligations  held by a
Fund can be expected to vary inversely to changes in prevailing  interest rates.
As a  result,  shareholders  should  anticipate  that  the  market  value of the
obligations  held by the Fund generally would increase when prevailing  interest
rates are declining and generally will decrease when  prevailing  interest rates
are rising.  Shareholders  also should  recognize  that, in periods of declining
interest  rates, a Fund's yield will tend to be somewhat  higher than prevailing
market rates and, in periods of rising  interest rates, a Fund's yield will tend
to be somewhat lower.  Also, when interest rates are falling,  the inflow of net
new  money to a Fund  from the  continuous  sale of its  shares  will tend to be
invested  in  instruments  producing  lower  yields  than  the  balance  of  its
portfolio,  thereby  reducing  the Fund's  current  yield.  In periods of rising
interest rates,  the opposite can be expected to occur. In addition,  securities
in which a Fund may invest  may not yield as high a level of  current  income as
might  be  achieved  by  investing  in  securities  with  less  liquidity,  less
creditworthiness or longer maturities.

Ratings made  available by Standard & Poor's  Rating  Service  ("S&P"),  Moody's
Investors  Service,   Inc.  ("Moody's")  and  Fitch  Ratings  are  relative  and
subjective and are not absolute standards of quality. Although these ratings are
initial criteria for selection of portfolio investments, a Fund Sub-Advisor also
will make its own evaluation of these securities. Among the factors that will be
considered  are the  long-term  ability  of the  issuers  to pay  principal  and
interest and general economic trends.

Fixed-income  securities may be purchased on a when-issued  or  delayed-delivery
basis. See "When-Issued and Delayed-Delivery Securities" below.

COMMERCIAL PAPER. Commercial paper consists of short-term (usually from 1 to 270
days)  unsecured  promissory  notes issued by  corporations  in order to finance
their current operations.  A variable amount master demand note (which is a type
of  commercial  paper)  represents  a  direct  borrowing  arrangement  involving
periodically  fluctuating  rates of interest under a letter agreement  between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying  amounts.  For a description of commercial paper
ratings, see the Appendix.

MEDIUM AND LOWER RATED AND UNRATED  SECURITIES.  Securities  rated in the fourth
highest category by a rating organization  although considered investment grade,
may  possess  speculative  characteristics,  and  changes in  economic  or other
conditions are more likely to impair the ability of issuers of these  securities
to make interest and principal payments than is the case with respect to issuers
of higher grade bonds.

                                       5


Generally, medium or lower-rated securities and unrated securities of comparable
quality,  sometimes  referred to as "junk bonds,"  offer a higher  current yield
than is offered by higher rated  securities,  but also (i) will likely have some
quality  and  protective  characteristics  that,  in the  judgment of the rating
organizations,  are outweighed by large uncertainties or major risk exposures to
adverse  conditions and (ii) are  predominantly  speculative with respect to the
issuer's  capacity to pay interest and repay  principal in  accordance  with the
terms of the obligation. The yield of junk bonds will fluctuate over time.

The market values of certain of these  securities also tend to be more sensitive
to individual  corporate  developments  and changes in economic  conditions than
higher  quality  bonds.  In  addition,  medium and lower  rated  securities  and
comparable unrated securities  generally present a higher degree of credit risk.
The risk of loss  due to  default  by these  issuers  is  significantly  greater
because medium and lower-rated  securities and unrated  securities of comparable
quality  generally are unsecured and  frequently are  subordinated  to the prior
payment  of senior  indebtedness.  Since the risk of default is higher for lower
rated debt securities,  the Fund Sub-Advisor's  research and credit analysis are
an especially important part of managing securities of this type held by a Fund.
In light of these risks,  the Board of Trustees of the Trust has  instructed the
Fund Sub-Advisor,  in evaluating the creditworthiness of an issue, whether rated
or unrated,  to take various factors into  consideration,  which may include, as
applicable,  the  issuer's  financial  resources,  its  sensitivity  to economic
conditions and trends,  the operating  history of and the community  support for
the facility  financed by the issue, the ability of the issuer's  management and
regulatory matters.

In addition,  the market value of securities in  lower-rated  categories is more
volatile than that of higher quality securities, and the markets in which medium
and lower-rated or unrated  securities are traded are more limited than those in
which higher rated  securities are traded.  The existence of limited markets may
make it more difficult for the Funds to obtain  accurate  market  quotations for
purposes of valuing their respective portfolios and calculating their respective
net asset values. Moreover, the lack of a liquid trading market may restrict the
availability  of  securities  for the  Funds to  purchase  and may also have the
effect of limiting the ability of a Fund to sell  securities at their fair value
either to meet  redemption  requests  or to respond to changes in the economy or
the financial markets.

Lower-rated debt  obligations also present risks based on payment  expectations.
If an issuer calls the obligation for redemption, a Fund may have to replace the
security with a lower  yielding  security,  resulting in a decreased  return for
shareholders.  Also,  as the  principal  value of  bonds  moves  inversely  with
movements in interest  rates, in the event of rising interest rates the value of
the securities held by a Fund may decline relatively proportionately more than a
portfolio  consisting  of  higher  rated  securities.   If  a  Fund  experiences
unexpected  net  redemptions,  it may be forced to sell its higher  rated bonds,
resulting in a decline in the overall credit  quality of the securities  held by
the Fund and  increasing  the  exposure  of the Fund to the risks of lower rated
securities. Investments in zero coupon bonds may be more speculative and subject
to greater  fluctuations  in value due to changes in  interest  rates than bonds
that pay interest currently.

                                       6


Subsequent  to its purchase by a Fund,  an issue of  securities  may cease to be
rated or its rating may be reduced  below the minimum  required  for purchase by
the Fund.  Neither event will require sale of these  securities by the Fund, but
the Fund  Sub-Advisor  will consider this event in its  determination of whether
the Fund should continue to hold the securities.

While the market for high yield  corporate debt securities has been in existence
for many years and has weathered previous economic downturns, the 1980's brought
a dramatic  increase  in the use of such  securities  to fund  highly  leveraged
corporate  acquisitions  and  restructuring.  Past experience may not provide an
accurate  indication  of  future  performance  of the high  yield  bond  market,
especially during periods of economic recession. In fact, from 1989 to 1991, the
percentage of lower-rated  debt  securities  that  defaulted rose  significantly
above prior levels.

The market for  lower-rated  debt securities may be thinner and less active than
that for higher rated debt securities,  which can adversely affect the prices at
which the former are sold. If market  quotations are not available,  lower-rated
debt securities will be valued in accordance with procedures  established by the
Board of Trustees, including the use of outside pricing services. Judgment plays
a greater role in valuing high yield  corporate debt securities than is the case
for  securities  for which more external  sources for  quotations  and last sale
information is available. Adverse publicity and changing investor perception may
affect  the  ability of  outside  pricing  services  to value  lower-rated  debt
securities and the ability to dispose of these securities.

In  considering  investments  for a Fund, the Fund  Sub-Advisor  will attempt to
identify  those  issuers  of  high  yielding  debt  securities  whose  financial
condition is adequate to meet future obligations, has improved or is expected to
improve in the  future.  The Fund  Sub-Advisor's  analysis  focuses on  relative
values based on such factors as interest or dividend  coverage,  asset coverage,
earnings prospects and the experience and managerial strength of the issuer.

A Fund may  choose,  at its expense or in  conjunction  with  others,  to pursue
litigation  or  otherwise  exercise  its rights as a security  holder to seek to
protect the interest of security holders if it determines this to be in the best
interest of the Fund.

CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES AND TIME DEPOSITS. Certificates of
deposit are  receipts  issued by a  depository  institution  in exchange for the
deposit of funds. The issuer agrees to pay the amount deposited plus interest to
the  bearer  of the  receipt  on the  date  specified  on the  certificate.  The
certificate  usually can be traded in the  secondary  market  prior to maturity.
Bankers'  acceptances   typically  arise  from  short-term  credit  arrangements
designed  to  enable   businesses   to  obtain   funds  to  finance   commercial
transactions.  Generally,  an  acceptance  is a time draft drawn on a bank by an
exporter or an importer to obtain a stated  amount of funds to pay for  specific
merchandise.   The  draft  is  then  "accepted"  by  a  bank  that,  in  effect,
un-conditionally  guarantees  to pay the  face  value of the  instrument  on its
maturity  date.  The  acceptance  may then be held by the  accepting  bank as an
earning  asset or it may be sold in the  secondary  market at the going  rate of
discount for a specific maturity.  Although maturities for acceptances can be as
long as 270 days, most  acceptances  have maturities of six months or less. Time
deposits are non-negotiable  deposits  maintained in a banking institution for a
specified period of time at a stated interest rate. Investments in time deposits
maturing in more than seven

                                       7


days will be  subject  to the  SEC's  restrictions  that  limit  investments  in
illiquid securities to no more than 15% of the value of a Fund's net assets.

The  Growth  Opportunities  Fund may also  invest in  certificates  of  deposit,
bankers'  acceptances and time deposits  issued by foreign  branches of national
banks. Eurodollar certificates of deposit are negotiable U.S. dollar denominated
certificates  of deposit  issued by foreign  branches  of major U.S.  commercial
banks.  Eurodollar  bankers'  acceptances are U.S. dollar  denominated  bankers'
acceptances  "accepted"  by foreign  branches  of major U.S.  commercial  banks.
Investments in the obligations of foreign branches of U.S.  commercial banks may
be  subject  to  special  risks,   including   future   political  and  economic
developments,  imposition  of  withholding  taxes on  income,  establishment  of
exchange controls or other restrictions,  less governmental  supervision and the
lack of uniform  accounting,  auditing and financial  reporting  standards  that
might affect an investment adversely.

U.S. GOVERNMENT SECURITIES. U.S. Government securities are obligations issued or
guaranteed   by   the   U.S.   Government,   its   agencies,    authorities   or
instrumentalities. Some U.S. Government securities, such as U.S. Treasury bills,
Treasury notes and Treasury  bonds,  which differ only in their interest  rates,
maturities and times of issuance,  are supported by the full faith and credit of
the  United  States.  Others  are  supported  by: (i) the right of the issuer to
borrow from the U.S.  Treasury,  such as  securities  of the  Federal  Home Loan
Banks; (ii) the discretionary  authority of the U.S.  Government to purchase the
agency's  obligations,  such as securities of the FNMA; or (iii) only the credit
of the issuer, such as securities of the Student Loan Marketing Association.  No
assurance can be given that the U.S.  Government will provide  financial support
in the future to U.S. Government agencies, authorities or instrumentalities that
are not supported by the full faith and credit of the United States.

Securities  guaranteed as to principal and interest by the U.S. Government,  its
agencies, authorities or instrumentalities include: (i) securities for which the
payment of principal and interest is backed by an  irrevocable  letter of credit
issued  by  the  U.S.  Government  or  any  of  its  agencies,   authorities  or
instrumentalities;  and (ii)  participation  interests  in loans made to foreign
governments or other entities that are so guaranteed.  The secondary  market for
certain of these  participation  interests  is limited  and,  therefore,  may be
regarded as illiquid.

MORTGAGE-RELATED   SECURITIES.   There  are  several   risks   associated   with
mortgage-related  securities generally. One is that the monthly cash inflow from
the  underlying  loans  may  not be  sufficient  to  meet  the  monthly  payment
requirements  of the  mortgage-related  security.  Prepayment  of  principal  by
mortgagors  or mortgage  foreclosures  will  shorten the term of the  underlying
mortgage pool for a mortgage-related  security.  Early returns of principal will
affect the average life of the mortgage-related  securities remaining in a Fund.
The  occurrence  of mortgage  prepayments  is affected by factors  including the
level of interest rates,  general economic  conditions,  the location and age of
the mortgage and other social and demographic  conditions.  In periods of rising
interest rates,  the rate of prepayment tends to decrease,  thereby  lengthening
the  average  life  of a pool of  mortgage-related  securities.  Conversely,  in
periods of falling  interest  rates the rate of  prepayment  tends to  increase,
thereby  shortening the average life of a pool.  Reinvestment of prepayments may
occur at higher or lower  interest  rates  than the  original  investment,  thus
affecting the yield of a Fund.

                                       8


Because  prepayments  of  principal  generally  occur  when  interest  rates are
declining,  it is likely  that a Fund  will have to  reinvest  the  proceeds  of
prepayments  at  lower  interest  rates  than  those at which  the  assets  were
previously  invested.  If this  occurs,  a  Fund's  yield  will  correspondingly
decline. Thus,  mortgage-related  securities may have less potential for capital
appreciation  in  periods  of falling  interest  rates  than other  fixed-income
securities  of  comparable  maturity,  although  these  securities  may  have  a
comparable  risk of decline in market value in periods of rising interest rates.
To the extent that a Fund  purchases  mortgage-related  securities at a premium,
unscheduled  prepayments,  which are made at par, will result in a loss equal to
any unamortized premium.

CMOs are  obligations  fully  collateralized  by a  portfolio  of  mortgages  or
mortgage-related securities. Payments of principal and interest on the mortgages
are passed  through to the holders of the CMOs on the same  schedule as they are
received,  although  certain  classes of CMOs have  priority  over  others  with
respect to the receipt of prepayments on the mortgages.  Therefore, depending on
the type of CMOs in which a Fund  invests,  the  investment  may be subject to a
greater  or lesser  risk of  prepayment  than  other  types of  mortgage-related
securities.

Mortgage-related  securities may not be readily marketable. To the extent any of
these  securities  are  not  readily  marketable  in the  judgment  of the  Fund
Sub-Advisor, the Funds' restrictions on investments in illiquid instruments will
apply.

STRIPPED  MORTGAGE-RELATED  SECURITIES.  These  securities are either issued and
guaranteed,  or privately issued but  collateralized  by securities  issued,  by
GNMA, FNMA or FHLMC. These securities  represent  beneficial ownership interests
in  either  periodic  principal  distributions  ("principal-only")  or  interest
distributions ("interest-only") on mortgage-related certificates issued by GNMA,
FNMA or FHLMC,  as the case may be. The  certificates  underlying  the  stripped
mortgage-related  securities represent all or part of the beneficial interest in
pools of  mortgage  loans.  A Fund  will  invest  in  stripped  mortgage-related
securities in order to enhance yield or to benefit from anticipated appreciation
in value of the  securities  at times when its Fund  Sub-Advisor  believes  that
interest  rates will remain  stable or increase.  In periods of rising  interest
rates,  the  expected  increase  in  the  value  of  stripped   mortgage-related
securities may offset all or a portion of any decline in value of the securities
held by the Fund.

Investing in stripped  mortgage-related  securities  involves the risks normally
associated with investing in mortgage-related  securities. See "Mortgage-Related
Securities"  above.  In  addition,  the  yields on  stripped  mortgage-  related
securities are extremely sensitive to the prepayment  experience on the mortgage
loans underlying the certificates  collateralizing the securities.  If a decline
in the  level  of  prevailing  interest  rates  results  in a rate of  principal
prepayments  higher  than  anticipated,   distributions  of  principal  will  be
accelerated,  thereby reducing the yield to maturity on  interest-only  stripped
mortgage-related   securities   and   increasing   the  yield  to   maturity  on
principal-only   stripped   mortgage-related   securities.   Sufficiently   high
prepayment  rates  could  result  in a Fund not  fully  recovering  its  initial
investment in an interest-only stripped mortgage-related security. Under current
market   conditions,   the   Fund   expects   that   investments   in   stripped
mortgage-related  securities will consist primarily of interest-only securities.
Stripped mortgage-related securities are currently traded in an over-the-counter
market  maintained by several large  investment-banking  firms.  There can be no
assurance  that  the  Fund  will  be  able  to  affect  a  trade  of a  stripped
mortgage-related  security  at a time  when it  wishes  to do so.  The Fund will
acquire

                                       9


stripped  mortgage-related  securities  only  if  a  secondary  market  for  the
securities   exists   at  the  time  of   acquisition.   Except   for   stripped
mortgage-related  securities  based  on  fixed  rate  FNMA  and  FHLMC  mortgage
certificates  that meet certain liquidity  criteria  established by the Board of
Trustees, a Fund will treat government stripped mortgage-related  securities and
privately-issued  mortgage-related  securities  as  illiquid  and will limit its
investments in these securities,  together with other illiquid  investments,  to
not more than 15% of net assets.

The  Growth  Opportunities  Fund may also  purchase  Coupons  Under  Book  Entry
Safekeeping  ("CUBES"),  Treasury Receipts ("TRs"),  Treasury  Investment Growth
Receipts ("TIGRs") and Certificates of Accrual on Treasury Securities ("CATS").

STRIPS, CUBES,  TRs, TIGRs and CATS are sold as zero coupon  securities,  which
means that they are sold at a substantial discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security,  and such amortization will
constitute  the  income  earned  on the  security  for both  accounting  and tax
purposes.  Because of these features, these securities may be subject to greater
interest rate  volatility than interest paying U.S.  Treasury  obligations.  The
Growth  Opportunities  Fund will limit its investment in such instruments to 20%
of its total assets. STRIPS are Separately Traded Registered Interest and
Principal Securities.

ZERO  COUPON  SECURITIES.  Zero  coupon  U.S.  Government  securities  are  debt
obligations  that are issued or purchased at a  significant  discount  from face
value. The discount  approximates the total amount of interest the security will
accrue and compound over the period until  maturity or the  particular  interest
payment date at a rate of interest reflecting the market rate of the security at
the time of issuance. Zero coupon securities do not require the periodic payment
of interest.  These  investments  benefit the issuer by mitigating  its need for
cash to meet debt  service,  but also require a higher rate of return to attract
investors  who are  willing to defer  receipt  of cash.  These  investments  may
experience  greater volatility in market value than U.S.  Government  securities
that  make  regular  payments  of  interest.  A Fund  accrues  income  on  these
investments  for  tax  and  accounting  purposes,   which  is  distributable  to
shareholders and which,  because no cash is received at the time of accrual, may
require the  liquidation  of other  portfolio  securities  to satisfy the Fund's
distribution  obligations,  in which case the Fund will  forego the  purchase of
additional  income  producing  assets with these funds.  Zero coupon  securities
include STRIPS, that is, securities  underwritten by securities dealers or banks
that evidence ownership of future interest payments,  principal payments or both
on  certain  notes  or  bonds  issued  by the  U.S.  Government,  its  agencies,
authorities or  instrumentalities.  They also include CUBES, which are component
parts of U.S.  Treasury  bonds and  represent  scheduled  interest and principal
payments on the bonds.

CUSTODIAL RECEIPTS. Custodial receipts or certificates,  such as CATS, TIGRs and
Financial Corporation  certificates ("FICO Strips"), are securities underwritten
by  securities  dealers  or banks that  evidence  ownership  of future  interest
payments,  principal  payments or both on certain  notes or bonds  issued by the
U.S.   Government,   its  agencies,   authorities  or   instrumentalities.   The
underwriters  of these  certificates  or  receipts  purchase  a U.S.  Government
security and deposit the security in an irrevocable  trust or custodial  account
with a custodian bank, which then issues receipts or certificates  that evidence
ownership  of the periodic  unmatured  coupon  payments and the final  principal
payment on the U.S. Government security.  Custodial receipts evidencing

                                       10


specific coupon or principal  payments have the same general  attributes as zero
coupon U.S. Government securities, described above. Although typically under the
terms of a custodial  receipt a Fund is authorized to assert its rights directly
against  the issuer of the  underlying  obligation,  the Fund may be required to
assert  through  the  custodian  bank  such  rights  as may  exist  against  the
underlying issuer.  Thus, if the underlying issuer fails to pay principal and/or
interest when due, a Fund may be subject to delays,  expenses and risks that are
greater  than those that would have been  involved  if the Fund had  purchased a
direct obligation of the issuer. In addition,  if the trust or custodial account
in which the underlying  security has been  deposited  were  determined to be an
association taxable as a corporation, instead of a non-taxable entity, the yield
on the underlying security would be reduced in respect of any taxes paid.

LOANS AND OTHER DIRECT DEBT  INSTRUMENTS.  These are instruments in amounts owed
by a  corporate,  governmental  or other  borrower  to another  party.  They may
represent  amounts  owed to  lenders  or  lending  syndicates  (loans  and  loan
participations),  to  suppliers  of goods or  services  (trade  claims  or other
receivables) or to other parties.  Direct debt  instruments  purchased by a Fund
may have a maturity of any number of days or years, may be secured or unsecured,
and may be of any credit quality.  Direct debt  instruments  involve the risk of
loss  in the  case  of  default  or  insolvency  of the  borrower.  Direct  debt
instruments  may offer less legal  protection to a Fund in the event of fraud or
misrepresentation. In addition, loan participations involve a risk of insolvency
of the lending bank or other  financial  intermediary.  Direct debt  instruments
also may include standby  financing  commitments  that obligate a Fund to supply
additional  cash to the  borrower on demand at a time when a Fund would not have
otherwise done so, even if the borrower's  condition  makes it unlikely that the
amount will ever be repaid.

These instruments will be considered  illiquid securities and so will be limited
in accordance with the Funds' restrictions on illiquid securities.

ILLIQUID SECURITIES

Historically,   illiquid   securities  have  included   securities   subject  to
contractual  or  legal  restrictions  on  resale  because  they  have  not  been
registered  under the  Securities  Act of 1933,  as amended  (the  "1933  Act"),
securities that are otherwise not readily  marketable and repurchase  agreements
having a maturity  of longer  than  seven  days.  Securities  that have not been
registered  under  the 1933  Act are  referred  to as  "private  placements"  or
"restricted  securities"  and are  purchased  directly from the issuer or in the
secondary  market.  Investment  companies do not  typically  hold a  significant
amount of these restricted  securities or other illiquid  securities  because of
the potential for delays on resale and uncertainty in valuation.  Limitations on
resale may have an adverse effect on the  marketability of portfolio  securities
and an  investment  company  might be unable to dispose of  restricted  or other
illiquid   securities  promptly  or  at  reasonable  prices  and  might  thereby
experience  difficulty  satisfying  redemptions within seven days. An investment
company  might also have to  register  such  restricted  securities  in order to
dispose of them,  which would result in  additional  expense and delay.  Adverse
market  conditions could impede such a public offering of securities.  Each Fund
may not invest more than 15% of its net assets in  securities  that are illiquid
or otherwise not readily marketable.

                                       11


In recent years, however, a large institutional market has developed for certain
securities  that are not  registered  under the 1933 Act,  including  repurchase
agreements,  commercial  paper,  foreign  securities,  municipal  securities and
corporate  bonds and  notes.  Institutional  investors  depend  on an  efficient
institutional market in which the unregistered security can be readily resold or
on an issuer's ability to honor a demand for repayment.  The fact that there are
contractual or legal  restrictions on resale of such  investments to the general
public or to certain institutions may not be indicative of their liquidity.

The Securities and Exchange  Commission (the "SEC") has adopted Rule 144A, which
allows a broader  institutional  trading market for securities otherwise subject
to restriction on their resale to the general  public.  Rule 144A  establishes a
"safe harbor" from the  registration  requirements of the 1933 Act on resales of
certain securities to qualified  institutional  buyers. The Advisor  anticipates
that  the  market  for  certain  restricted  securities  such  as  institutional
commercial  paper will  expand  further as a result of this  regulation  and the
development  of automated  systems for the trading,  clearance and settlement of
unregistered  securities  of domestic  and foreign  issuers,  such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc.

A Fund  Sub-Advisor  will monitor the liquidity of Rule 144A  securities in each
Fund's  portfolio  under the  supervision of the Board of Trustees.  In reaching
liquidity decisions, the Fund Sub-Advisor will consider, among other things, the
following factors: (1) the frequency of trades and quotes for the security;  (2)
the number of dealers and other potential purchasers wishing to purchase or sell
the security;  (3) dealer  undertakings to make a market in the security and (4)
the nature of the security and of the marketplace  trades (e.g., the time needed
to dispose of the security, the method of soliciting offers and the mechanics of
the transfer).

A Fund may purchase  securities in the United States that are not registered for
sale under federal securities laws but which can be resold to institutions under
SEC Rule 144A or under an exemption  from such laws.  Provided  that a dealer or
institutional  trading  market  in  such  securities  exists,  these  restricted
securities or Rule 144A  securities  are treated as exempt from the Funds' limit
on illiquid  securities.  The Board of  Trustees  of the Trust,  with advice and
information from the respective Fund  Sub-Advisor,  will determine the liquidity
of restricted  securities or Rule 144A  securities by looking at factors such as
trading activity and the availability of reliable price information and, through
reports  from such Fund  Sub-Advisor,  the Board of  Trustees  of the Trust will
monitor trading activity in restricted  securities.  If institutional trading in
restricted  securities  or Rule  144A  securities  were  to  decline,  a  Fund's
illiquidity could increase and the Fund could be adversely affected.

A Fund may invest in commercial  paper issued in reliance on the exemption  from
registration  afforded by Section 4(2) of the 1933 Act.  Section 4(2) commercial
paper is  restricted as to  disposition  under  federal  securities  laws and is
generally sold to institutional investors who agree that they are purchasing the
paper for investment  purposes and not with a view to public  distribution.  Any
resale  by  the  purchaser  must  be  in an  exempt  transaction.  Section  4(2)
commercial paper is normally resold to other institutional  investors through or
with the  assistance  of the issuer or  investment  dealers who make a market in
Section 4(2) commercial  paper, thus providing  liquidity.  The Fund Sub-Advisor
believes  that  Section  4(2)  commercial

                                       12


paper and possibly  certain other  restricted  securities that meet the criteria
for liquidity  established  by the Trustees are quite  liquid.  The Fund intends
therefore,  to treat the  restricted  securities  which  meet the  criteria  for
liquidity established by the Trustees,  including Section 4(2) commercial paper,
as determined by the  Sub-Advisor,  as liquid and not subject to the  investment
limitation applicable to illiquid securities. In addition,  because Section 4(2)
commercial  paper is liquid,  the Fund does not intend to subject  such paper to
the limitation applicable to restricted securities.

No Fund will invest more than 10% of its total assets in  restricted  securities
(excluding Rule 144A securities).

FOREIGN SECURITIES

Investing in securities  issued by foreign  companies and  governments  involves
considerations  and potential  risks not typically  associated with investing in
obligations  issued  by the U.S.  Government  and  domestic  corporations.  Less
information  may be  available  about  foreign  companies  than  about  domestic
companies and foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards or to other regulatory  practices and
requirements comparable to those applicable to domestic companies. The values of
foreign  investments  are  affected  by changes in  currency  rates or  exchange
control regulations, restrictions or prohibitions on the repatriation of foreign
currencies,  application  of  foreign  tax laws,  including  withholding  taxes,
changes in  governmental  administration  or economic or monetary policy (in the
United States or abroad) or changed  circumstances  in dealings between nations.
Costs  are  also  incurred  in  connection  with  conversions   between  various
currencies.  In addition,  foreign  brokerage  commissions  and custody fees are
generally higher than those charged in the United States, and foreign securities
markets may be less  liquid,  more  volatile  and less  subject to  governmental
supervision than in the United States. Investments in foreign countries could be
affected  by  other  factors  not  present  in  the  United  States,   including
expropriation,  confiscatory  taxation,  lack of uniform accounting and auditing
standards and potential  difficulties in enforcing  contractual  obligations and
could be subject to extended clearance and settlement periods.

The Growth  Opportunities  Fund may invest up to 10% of its total  assets at the
time of purchase in the securities of foreign issuers.  The Emerging Growth Fund
may invest up to 20% of its total assets in securities of foreign issuers.

EMERGING MARKET  COUNTRIES.  Emerging market  countries are countries other than
Australia,  Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece,
Hong  Kong,  Ireland,  Italy,  Japan,  the  Netherlands,  New  Zealand,  Norway,
Portugal,  Singapore,  Spain,  Sweden,  Switzerland,  the United Kingdom and the
United  States.  When a Fund invests in  securities  of a company in an emerging
market  country,  it invests in securities  issued by a company that (i) has its
principal  trading market for its stock in an emerging market  country,  or (ii)
derives  at least  50% of its  revenues  or  profits  from  corporations  within
emerging market  countries or has at least 50% of its assets located in emerging
market  countries.  The  Emerging  Growth Fund may invest up to 10% of its total
assets in emerging market countries.

                                       13


Investments in securities of issuers based in  underdeveloped  countries  entail
all of the risks of investing in foreign  issuers  outlined in this section to a
heightened   degree.   These  heightened  risks  include:   (i)   expropriation,
confiscatory taxation, nationalization,  and less social, political and economic
stability;  (ii) the smaller size of the market for such securities and a low or
nonexistent  volume of trading,  resulting in a lack of  liquidity  and in price
volatility;  (iii)  certain  national  policies  which  may  restrict  a  Fund's
investment  opportunities  including  restrictions  on  investing  in issuers in
industries deemed sensitive to relevant national interests; and (iv) the absence
of developed  capital markets and legal structures  governing private or foreign
investment  and private  property  and the  possibility  that  recent  favorable
economic and political developments could be slowed or reversed by unanticipated
events.

CURRENCY EXCHANGE RATES. A Fund's share value may change  significantly when the
currencies,  other than the U.S.  dollar,  in which the Fund's  investments  are
denominated,  strengthen or weaken against the U.S.  dollar.  Currency  exchange
rates are generally determined by the forces of supply and demand in the foreign
exchange  markets and the relative merits of investments in different  countries
as seen from an international  perspective.  Currency exchange rates can also be
affected unpredictably by intervention by U.S. or foreign governments or central
banks or by currency controls or political  developments in the United States or
abroad.

ADRS, ADSS, EDRS AND CDRS.  American  Depository  Receipts ("ADRs") and American
Depository Shares ("ADSs") are U.S. dollar-denominated receipts typically issued
by domestic  banks or trust  companies  that  represent  the deposit  with those
entities  of  securities  of a  foreign  issuer.  They are  publicly  traded  on
exchanges or over-the-counter in the United States. European Depositary Receipts
("EDRs"),  which are sometimes  referred to as Continental  Depositary  Receipts
("CDRs"), may also be purchased by the Funds. EDRs and CDRs are generally issued
by  foreign  banks  and  evidence   ownership  of  either  foreign  or  domestic
securities. Certain institutions issuing ADRs, ADSs or EDRs may not be sponsored
by the issuer of the underlying foreign securities.  A non-sponsored  depository
may not provide the same shareholder  information that a sponsored depository is
required to provide under its  contractual  arrangements  with the issuer of the
underlying foreign securities.

OPTIONS

A Fund may write (sell), to a limited extent,  only covered call and put options
("covered  options")  in an attempt to increase  income.  However,  the Fund may
forgo the benefits of  appreciation  on securities sold or may pay more than the
market price on securities  acquired pursuant to call and put options written by
the Fund.

When a Fund writes a covered call option,  it gives the  purchaser of the option
the right to buy the  underlying  security at the price  specified in the option
(the  "exercise  price") by exercising  the option at any time during the option
period.  If the option expires  unexercised,  the Fund will realize income in an
amount equal to the premium  received  for writing the option.  If the option is
exercised, a decision over which the Fund has no control, the Fund must sell the
underlying

                                       14


security to the option holder at the exercise  price.  By writing a covered call
option, the Fund forgoes,  in exchange for the premium less the commission ("net
premium"),  the  opportunity to profit during the option period from an increase
in the market value of the underlying security above the exercise price.

When a Fund writes a covered put option,  it gives the  purchaser  of the option
the right to sell the underlying  security to the Fund at the specified exercise
price at any time during the option period.  If the option expires  unexercised,
the Fund will realize  income in the amount of the premium  received for writing
the option.  If the put option is exercised,  a decision over which the Fund has
no control,  the Fund must  purchase  the  underlying  security  from the option
holder at the  exercise  price.  By writing a covered put option,  the Fund,  in
exchange  for the net  premium  received,  accepts  the risk of a decline in the
market value of the underlying security below the exercise price.

A Fund may  terminate  its  obligation  as the writer of a call or put option by
purchasing an option with the same  exercise  price and  expiration  date as the
option  previously  written.  This  transaction  is called a  "closing  purchase
transaction."  Where the Fund cannot effect a closing purchase  transaction,  it
may be forced  to incur  brokerage  commissions  or dealer  spreads  in  selling
securities it receives or it may be forced to hold underlying  securities  until
an option is exercised or expires.

When a Fund writes an option, an amount equal to the net premium received by the
Fund is included in the liability  section of the Fund's Statement of Assets and
Liabilities  as a deferred  credit.  The amount of the  deferred  credit will be
subsequently  marked to market to reflect the current market value of the option
written.  The current market value of a traded option is the last sale price or,
in the absence of a sale,  the mean between the closing bid and asked price.  If
an option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction,  the Fund will realize a gain (or loss if the cost
of a closing purchase  transaction  exceeds the premium received when the option
was sold), and the deferred credit related to such option will be eliminated. If
a call option is  exercised,  the Fund will realize a gain or loss from the sale
of the underlying security and the proceeds of the sale will be increased by the
premium originally  received.  The writing of covered call options may be deemed
to  involve  the  pledge of the  securities  against  which the  option is being
written.

When a Fund writes a call option,  it will "cover" its obligation by segregating
the  underlying  security  on the books of the  Fund's  custodian  or by placing
liquid securities in a segregated  account at the Fund's custodian.  When a Fund
writes a put option, it will "cover" its obligation by placing liquid securities
in a segregated account at the Fund's custodian.

A Fund may  purchase  call and put  options  on any  securities  in which it may
invest.  The Fund would normally  purchase a call option in  anticipation  of an
increase in the market value of such  securities.  The purchase of a call option
would entitle the Fund, in exchange for the premium paid, to purchase a security
at a specified price during the option period.  The Fund would ordinarily have a
gain  if  the  value  of the  securities  increased  above  the  exercise  price
sufficiently  to cover the  premium  and  would  have a loss if the value of the
securities remained at or below the exercise price during the option period.

                                       15


A Fund would normally  purchase put options in  anticipation of a decline in the
market value of securities in its portfolio ("protective puts") or securities of
the type in which it is permitted to invest.  The purchase of a put option would
entitle the Fund, in exchange for the premium  paid,  to sell a security,  which
may or may not be held in the Fund's portfolio,  at a specified price during the
option period.  The purchase of protective  puts is designed merely to offset or
hedge against a decline in the market value of the Fund's portfolio  securities.
Put options also may be  purchased by the Fund for the purpose of  affirmatively
benefiting  from a decline  in the price of  securities  which the Fund does not
own. The Fund would  ordinarily  recognize a gain if the value of the securities
decreased  below the exercise price  sufficiently to cover the premium and would
recognize  a loss if the  value  of the  securities  remained  at or  above  the
exercise price. Gains and losses on the purchase of protective put options would
tend to be offset by countervailing changes in the value of underlying portfolio
securities.

The Funds have adopted certain other  nonfundamental  policies concerning option
transactions  that are discussed below. A Fund's  activities in options may also
be  restricted  by the  requirements  of the Internal  Revenue Code of 1986,  as
amended (the "Code"), for qualification as a regulated investment company.

The hours of trading  for  options on  securities  may not  conform to the hours
during which the underlying securities are traded. To the extent that the option
markets  close  before the markets for the  underlying  securities,  significant
price and rate  movements can take place in the  underlying  securities  markets
that cannot be reflected in the option markets.  It is impossible to predict the
volume of trading that may exist in such options,  and there can be no assurance
that viable exchange markets will develop or continue.

OPTIONS ON STOCKS. A Fund may write or purchase options on stocks. A call option
gives the  purchaser of the option the right to buy, and obligates the writer to
sell, the  underlying  stock at the exercise price at any time during the option
period.  Similarly,  a put option gives the purchaser of the option the right to
sell, and obligates the writer to buy the underlying stock at the exercise price
at any time during the option  period.  A covered  call  option with  respect to
which a Fund owns the underlying  stock sold by the Fund exposes the Fund during
the term of the option to possible loss of opportunity  to realize  appreciation
in the market price of the underlying stock or to possible  continued holding of
a stock which might otherwise have been sold to protect against  depreciation in
the market  price of the stock.  A covered put option sold by a Fund exposes the
Fund  during  the term of the  option  to a decline  in price of the  underlying
stock.

To close out a position when writing covered options, a Fund may make a "closing
purchase transaction" which involves purchasing an option on the same stock with
the  same  exercise  price  and  expiration  date  as the  option  which  it has
previously  written on the stock.  The Fund will  realize a profit or loss for a
closing purchase transaction if the amount paid to purchase an option is less or
more, as the case may be, than the amount  received  from the sale  thereof.  To
close out a position as a purchaser  of an option,  the Fund may make a "closing
sale transaction" which involves  liquidating the Fund's position by selling the
option previously purchased.

                                       16


OPTIONS ON SECURITIES INDEXES. Such options give the holder the right to receive
a cash  settlement  during  the term of the  option  based  upon the  difference
between the exercise price and the value of the index. Such options will be used
for the purposes described above under "Options on Securities" or, to the extent
allowed by law, as a substitute for investment in individual securities.

Options on securities  indexes  entail risks in addition to the risks of options
on  securities.  The absence of a liquid  secondary  market to close out options
positions  on  securities  indexes is more  likely to occur,  although  the Fund
generally  will only  purchase  or write such an option if the Fund  Sub-Advisor
believes the option can be closed out.

Use of options on securities  indexes also entails the risk that trading in such
options  may be  interrupted  if trading in certain  securities  included in the
index is  interrupted.  The Fund  will not  purchase  such  options  unless  the
respective Fund Sub-Advisor  believes the market is sufficiently  developed such
that the risk of trading in such  options is no greater than the risk of trading
in options on securities.

Price movements in a Fund's portfolio may not correlate precisely with movements
in the level of an index and,  therefore,  the use of options on indexes  cannot
serve as a  complete  hedge.  Because  options  on  securities  indexes  require
settlement in cash, the Fund  Sub-Advisor  may be forced to liquidate  portfolio
securities to meet settlement obligations.

When a Fund writes a put or call option on a securities  index it will cover the
position by placing  liquid  securities  in a segregated  asset account with the
Fund's custodian.

Options on securities  indexes are generally  similar to options on stock except
that the delivery  requirements  are  different.  Instead of giving the right to
take or make  delivery  of stock at a specified  price,  an option on a security
index gives the holders the right to receive a cash "exercise settlement amount"
equal to (a) the amount, if any, by which the fixed exercise price of the option
exceeds  (in the  case of a put) or is less  than  (in the  case of a call)  the
closing value of the underlying index on the date of the exercise, multiplied by
(b) a fixed "index multiplier." Receipt of this cash amount will depend upon the
closing level of the index upon which the option is based being greater than, in
the case of a call,  or less than,  in the case of a put, the exercise  price of
the option. The amount of cash received will be equal to such difference between
the closing price of the index and the exercise price of the option expressed in
dollars or a foreign currency, as the case may be, times a specified multiple.

The writer of the option is obligated,  in return for the premium  received,  to
make  delivery of this amount.  The writer may offset its position in securities
index options prior to expiration by entering into a closing  transaction  on an
exchange  or the option may expire  unexercised.  Because  the value of an index
option depends upon movements in the level of the index rather than the price of
a  particular  security,  whether the Fund will  realize a gain or loss from the
purchase or writing of options on an index  depends upon  movements in the level
of securities prices in the market generally or, in the case of certain indexes,
in an industry or market segment, rather than movements in price of a particular
security.  Accordingly,  successful use by

                                       17


a Fund of options on security indexes will be subject to the Fund  Sub-Advisor's
ability to predict correctly movement in the direction of that securities market
generally  or of a  particular  industry.  This  requires  different  skills and
techniques than predicting changes in the price of individual securities.

RELATED INVESTMENT  POLICIES. A Fund may purchase and write put and call options
on securities  indexes  listed on domestic and, in the case of those Funds which
may invest in foreign  securities,  on foreign  exchanges.  A  securities  index
fluctuates  with changes in the market values of the securities  included in the
index.

OPTIONS  ON FOREIGN  CURRENCIES.  Options  on  foreign  currencies  are used for
hedging  purposes  in a manner  similar to that in which  futures  contracts  on
foreign currencies,  or forward contracts,  are utilized. For example, a decline
in the dollar  value of a foreign  currency in which  portfolio  securities  are
denominated will reduce the dollar value of such securities, even if their value
in the foreign  currency  remains  constant.  In order to protect  against  such
diminutions  in the value of  portfolio  securities,  the Fund may  purchase put
options on the foreign  currency.  If the value of the currency does decline,  a
Fund will have the right to sell such currency for a fixed amount in dollars and
will thereby  offset,  in whole or in part,  the adverse effect on its portfolio
which otherwise would have resulted.

Conversely,  where a rise in the dollar value of a currency in which  securities
to be acquired are denominated is projected, thereby increasing the cost of such
securities,  the Fund may purchase  call options  thereon.  The purchase of such
options could offset,  at least partially,  the effects of the adverse movements
in  exchange  rates.  As in the case of other  types of  options,  however,  the
benefit to the Fund derived from purchases of foreign  currency  options will be
reduced by the amount of the premium and related transaction costs. In addition,
where  currency  exchange  rates do not move in the  direction  or to the extent
anticipated,  the Fund could sustain losses on transactions in foreign  currency
options  that would  require it to forego a portion  or all of the  benefits  of
advantageous changes in such rates.

Options  on  foreign  currencies  may be  written  for the same types of hedging
purposes. For example, where a Fund anticipates a decline in the dollar value of
foreign currency denominated  securities due to adverse fluctuations in exchange
rates, it could,  instead of purchasing a put option, write a call option on the
relevant currency.  If the expected decline occurs, the options will most likely
not be exercised,  and the diminution in value of portfolio  securities  will be
offset by the amount of the premium received.

Similarly,  instead of purchasing a call option to hedge against an  anticipated
increase in the dollar cost of securities to be acquired, the Fund could write a
put  option  on the  relevant  currency,  which,  if  rates  move in the  manner
projected,  will expire,  unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium.  As in the case of other types of options,
however, the writing of a foreign currency option will constitute only a partial
hedge up to the amount of the  premium,  and only if rates move in the  expected
direction.  If this does not occur,  the option  may be  exercised  and the Fund
would be required to purchase or sell the underlying currency at a loss that may
not be offset by the amount of the  premium.  Through  the writing of options on
foreign currencies, the Fund also may be required to forego all or a

                                       18


portion of the benefits that might  otherwise  have been obtained from favorable
movements in exchange rates.

The Funds may write  covered call options on foreign  currencies.  A call option
written  on a  foreign  currency  by a Fund is  "covered"  if the Fund  owns the
underlying foreign currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash consideration (or
for additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other foreign  currency held in its portfolio.  A
call option is also covered if the Fund has a call on the same foreign  currency
and in the same principal amount as the call written where the exercise price of
the  call  held (a) is equal  to or less  than  the  exercise  price of the call
written or (b) is greater  than the  exercise  price of the call  written if the
difference  is  maintained  by the  Fund  in cash  and  liquid  securities  in a
segregated account with its custodian.

The Funds may also write call options on foreign currencies that are not covered
for  cross-hedging  purposes.  A  call  option  on a  foreign  currency  is  for
cross-hedging  purposes if it is not covered, but is designed to provide a hedge
against a decline in the U.S.  dollar value of a security which the Fund owns or
has the right to acquire and which is denominated in the currency underlying the
option due to an adverse change in the exchange rate. In such circumstances, the
Fund  collateralizes  the option by maintaining in a segregated account with its
custodian, cash or liquid securities in an amount not less than the value of the
underlying foreign currency in U.S. dollars marked to market daily.

RELATED INVESTMENT POLICIES. Each Fund that may invest in foreign securities may
write  covered put and call options and purchase put and call options on foreign
currencies for the purpose of protecting against declines in the dollar value of
portfolio  securities and against  increases in the dollar cost of securities to
be acquired. The Fund may use options on currency to cross-hedge, which involves
writing  or  purchasing  options on one  currency  to hedge  against  changes in
exchange  rates for a different,  but related  currency.  As with other types of
options,  however,  the writing of an option on foreign currency will constitute
only a partial  hedge up to the  amount of the  premium  received,  and the Fund
could be  required to purchase or sell  foreign  currencies  at  disadvantageous
exchange rates,  thereby incurring losses.  The purchase of an option on foreign
currency may be used to hedge against  fluctuations  in exchange rates although,
in the event of exchange rate movements  adverse to the Fund's position,  it may
not forfeit the entire amount of the premium plus related  transaction costs. In
addition,  the  Fund  may  purchase  call  options  on  currency  when  the Fund
Sub-Advisor anticipates that the currency will appreciate in value.

There is no assurance that a liquid secondary market on an options exchange will
exist for any  particular  option,  or at any  particular  time.  If the Fund is
unable to effect a closing purchase  transaction with respect to covered options
it has  written,  the Fund will not be able to sell the  underlying  currency or
dispose  of  assets  held in a  segregated  account  until the  options  expire.
Similarly,  if the Fund is  unable to effect a  closing  sale  transaction  with
respect to options it has  purchased,  it would have to exercise  the options in
order to realize any profit and will incur  transaction  costs upon the purchase
or sale of underlying currency.  The Fund pays brokerage  commissions or spreads
in  connection  with  its  options  transactions.

                                       19


As in the case of forward  contracts,  certain options on foreign currencies are
traded  over-the-counter  and involve liquidity and credit risks that may not be
present in the case of  exchange-traded  currency  options.  A Fund's ability to
terminate over-the-counter options ("OTC Options") will be more limited than the
exchange-traded  options. It is also possible that broker-dealers  participating
in OTC Options transactions will not fulfill their obligations.  Until such time
as the staff of the SEC changes its position,  the Fund will treat purchased OTC
Options  and assets used to cover  written  OTC Options as illiquid  securities.
With  respect  to  options  written  with  primary  dealers  in U.S.  Government
securities pursuant to an agreement requiring a closing purchase  transaction at
a formula  price,  the amount of  illiquid  securities  may be  calculated  with
reference to the repurchase formula.

FORWARD CURRENCY CONTRACTS.  Because,  when investing in foreign  securities,  a
Fund buys and sells  securities  denominated  in currencies  other than the U.S.
dollar and receives  interest,  dividends and sale proceeds in currencies  other
than the U.S.  dollar,  such  Funds  from  time to time may enter  into  forward
currency transactions to convert to and from different foreign currencies and to
convert  foreign  currencies to and from the U.S.  dollar.  A Fund either enters
into these transactions on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency  exchange market or uses forward  currency  contracts to
purchase or sell foreign currencies.

A forward  currency  contract is an  obligation  by a Fund to purchase or sell a
specific  currency at a future date,  which may be any fixed number of days from
the date of the contract.  Forward currency contracts establish an exchange rate
at a future date.  These  contracts are  transferable  in the  interbank  market
conducted directly between currency traders (usually large commercial banks) and
their  customers.   A  forward  currency  contract   generally  has  no  deposit
requirement and is traded at a net price without commission. Each Fund maintains
with its  custodian a segregated  account of liquid  securities  in an amount at
least equal to its obligations  under each forward  currency  contract.  Neither
spot transactions nor forward currency contracts  eliminate  fluctuations in the
prices of the Fund's securities or in foreign exchange rates, or prevent loss if
the prices of these securities should decline.

A Fund may enter into foreign  currency  hedging  transactions  in an attempt to
protect against changes in foreign currency exchange rates between the trade and
settlement  dates of  specific  securities  transactions  or  changes in foreign
currency  exchange rates that would adversely affect a portfolio  position or an
anticipated  investment  position.  Since  consideration  of  the  prospect  for
currency  parities  will be  incorporated  into a Fund  Sub-Advisor's  long-term
investment  decisions,  a Fund will not  routinely  enter into foreign  currency
hedging  transactions with respect to security  transactions;  however, the Fund
Sub-Advisors  believe that it is important to have the flexibility to enter into
foreign currency hedging  transactions when they determine that the transactions
would be in a Fund's best interest. Although these transactions tend to minimize
the risk of loss due to a decline  in the value of the hedged  currency,  at the
same time they tend to limit any  potential  gain that might be realized  should
the value of the hedged currency  increase.  The precise matching of the forward
currency  contract  amounts and the value of the  securities  involved  will not
generally  be possible  because the future value of such  securities  in foreign
currencies will change as a consequence of market movements in the value of such
securities  between the date the forward  currency  contract is entered into and
the date it matures. The

                                       20


projection  of  currency  market  movements  is  extremely  difficult,  and  the
successful execution of a hedging strategy is highly uncertain.

While these  contracts  are not  presently  regulated by the  Commodity  Futures
Trading Commission (the "CFTC"),  the CFTC may in the future assert authority to
regulate forward currency contracts. In such event the Fund's ability to utilize
forward currency  contracts may be restricted.  Forward  currency  contracts may
reduce the potential gain from a positive change in the relationship between the
U.S. dollar and foreign currencies. Unanticipated changes in currency prices may
result in poorer  overall  performance  for the Fund than if it had not  entered
into such  contracts.  The use of forward  currency  contracts may not eliminate
fluctuations in the underlying U.S. dollar  equivalent value of the prices of or
rates of return on a Fund's foreign currency  denominated  portfolio  securities
and the use of such techniques will subject a Fund to certain risks.

The  matching of the  increase in value of a forward  currency  contract and the
decline in the U.S. dollar equivalent value of the foreign currency  denominated
asset  that is the  subject  of the  hedge  generally  will not be  precise.  In
addition, a Fund may not always be able to enter into forward currency contracts
at attractive prices and this will limit the Fund's ability to use such contract
to hedge or  cross-hedge  its  assets.  Also,  with  regard  to a Fund's  use of
cross-hedges, there can be no assurance that historical correlations between the
movements  of  certain  foreign  currencies  relative  to the U.S.  dollar  will
continue.  Thus, at any time poor correlation may exist between movements in the
exchange rates of the foreign  currencies  underlying a Fund's  cross-hedges and
the  movements  in the  exchange  rates of the foreign  currencies  in which the
Fund's assets that are the subject of such cross-hedges are denominated.

BORROWING AND LENDING

BORROWING.  The Funds may borrow  money from banks  (including  their  custodian
bank) or from other lenders to the extent  permitted  under  applicable law, for
temporary or emergency  purposes  and to meet  redemptions  and may pledge their
assets to secure such  borrowings.  The 1940 Act  requires the Funds to maintain
asset coverage of at least 300% for all such  borrowings,  and should such asset
coverage  at any time fall below  300%,  the Funds  would be  required to reduce
their  borrowings  within  three  days  to the  extent  necessary  to  meet  the
requirements  of the 1940 Act. To reduce  their  borrowings,  the Funds might be
required to sell securities at a time when it would be disadvantageous to do so.
In addition,  because interest on money borrowed is a Fund expense that it would
not  otherwise  incur,  the  Funds may have less net  investment  income  during
periods when its borrowings are  substantial.  The interest paid by the Funds on
borrowings may be more or less than the yield on the  securities  purchased with
borrowed funds, depending on prevailing market conditions.

A Fund will not make any borrowing that would cause its  outstanding  borrowings
to exceed  one-third  of the value of its total  assets.  As a matter of current
operating policy, the Emerging Growth Fund, the Enhanced 30 Fund, the Value Plus
Fund,  the Large Cap Growth  Fund and the Small Cap Growth  Fund each  intend to
borrow  money  only  as a  temporary  measure  for

                                       21


extraordinary or emergency  purposes.  This policy is not fundamental and may be
changed by the Board of Trustees without shareholder approval.

LENDING. By lending its securities, a Fund can increase its income by continuing
to receive interest on the loaned  securities as well as by either investing the
cash  collateral  in  short-term  securities  or obtaining  yield in the form of
interest  paid by the  borrower  when U.S.  Government  obligations  are used as
collateral.  There may be risks of delay in receiving  additional  collateral or
risks of delay in  recovery  of the  securities  or even  loss of  rights in the
collateral  should the borrower of the securities  fail  financially.  Each Fund
will adhere to the following  conditions whenever its securities are loaned: (i)
the Fund must  receive  at least  100  percent  cash  collateral  or  equivalent
securities  from the borrower;  (ii) the borrower must increase this  collateral
whenever the market value of the  securities  including  accrued  interest rises
above the level of the collateral;  (iii) the Fund must be able to terminate the
loan at any time; (iv) the Fund must receive reasonable interest on the loan, as
well as any dividends, interest or other distributions on the loaned securities,
and any increase in market value; (v) the Fund may pay only reasonable custodian
fees in  connection  with  the  loan;  and  (vi)  voting  rights  on the  loaned
securities may pass to the borrower; provided, however, that if a material event
adversely  affecting the investment occurs, the Board of Trustees must terminate
the loan and regain the right to vote the securities.

As a matter of current  operating  policy,  the Large Cap Growth Fund intends to
limit the amount of loans of portfolio securities to no more than 25% of its net
assets.  This policy may be changed by the Board of Trustees without shareholder
approval.

OTHER INVESTMENT POLICIES

SWAP  AGREEMENTS.  To help  enhance  the value of its  portfolio  or manage  its
exposure to different  types of  investments,  the Funds may enter into interest
rate,  currency and mortgage swap  agreements and may purchase and sell interest
rate "caps," "floors" and "collars."

In a typical  interest  rate swap  agreement,  one party  agrees to make regular
payments equal to a floating  interest rate on a specified amount (the "notional
principal  amount") in return for payments equal to a fixed interest rate on the
same amount for a specified period. If a swap agreement  provides for payment in
different  currencies,  the  parties  may also agree to  exchange  the  notional
principal  amount.  Mortgage swap  agreements  are similar to interest rate swap
agreements, except that notional principal amount is tied to a reference pool of
mortgages.  In a cap or floor, one party agrees, usually in return for a fee, to
make payments under particular  circumstances.  For example, the purchaser of an
interest  rate cap has the right to receive  payments  to the extent a specified
interest rate exceeds an agreed  level;  the purchaser of an interest rate floor
has the right to receive payments to the extent a specified  interest rate falls
below an agreed level.  A collar  entitles the purchaser to receive  payments to
the extent a specified interest rate falls outside an agreed range.

Swap agreements may involve leverage and may be highly volatile. Swap agreements
may have a considerable  impact on a Fund's  performance,  depending on how they
are used.  Swap  agreements  involve  risks  depending  upon the  other  party's
creditworthiness  and ability to

                                       22


perform,  as judged by the Fund  Sub-Advisor,  as well as the Fund's  ability to
terminate  its  swap  agreements  or  reduce  its  exposure  through  offsetting
transactions.  All swap  agreements are considered as illiquid  securities  and,
therefore,  will  be  limited,  along  with  all  of  a  Fund's  other  illiquid
securities, to 15% of that Fund's net assets.

WHEN-ISSUED   AND   DELAYED-DELIVERY   SECURITIES.   To  secure   prices  deemed
advantageous  at  a  particular  time,  a  Fund  may  purchase  securities  on a
when-issued or delayed-delivery  basis, in which case delivery of the securities
occurs  beyond the normal  settlement  period;  payment  for or  delivery of the
securities  would be made  prior to the  reciprocal  delivery  or payment by the
other  party  to  the  transaction.  A  Fund  will  enter  into  when-issued  or
delayed-delivery  transactions  for the purpose of acquiring  securities and not
for the purpose of  leverage.  When-issued  securities  purchased  by a Fund may
include securities purchased on a "when, as and if issued" basis under which the
issuance of the securities depends on the occurrence of a subsequent event, such
as approval of a merger, corporate reorganization or debt restructuring.

Securities  purchased  on a when issued or  delayed-delivery  basis may expose a
Fund to risk because the securities may experience  fluctuations  in value prior
to their  actual  delivery.  The Fund does not accrue  income with  respect to a
when-issued  or  delayed-delivery  security  prior to its stated  delivery date.
Purchasing securities on a when-issued or delayed-delivery basis can involve the
additional  risk that the yield  available in the market when the delivery takes
place may be higher than that obtained in the transaction itself.

REPURCHASE  AGREEMENTS.  Repurchase  agreements are transactions by which a Fund
purchases a security and  simultaneously  commits to resell that security to the
seller at an agreed upon time and price,  thereby  determining  the yield during
the term of the agreement.  In the event of a bankruptcy or other default of the
seller  of a  repurchase  agreement,  a Fund  could  experience  both  delays in
liquidating the underlying security and losses. To minimize these possibilities,
each Fund intends to enter into  repurchase  agreements only with its Custodian,
with banks having  assets in excess of $10 billion and with  broker-dealers  who
are recognized as primary dealers in U.S. Government  obligations by the Federal
Reserve Bank of New York. The Funds will enter into  repurchase  agreements that
are  collateralized by U.S.  Government  obligations.  Collateral for repurchase
agreements is held in  safekeeping  in the  customer-only  account of the Funds'
Custodian  at the  Federal  Reserve  Bank.  At the  time  a Fund  enters  into a
repurchase agreement,  the value of the collateral,  including accrued interest,
will equal or exceed the value of the repurchase agreement and, in the case of a
repurchase agreement exceeding one day, the seller agrees to maintain sufficient
collateral so that the value of the  underlying  collateral,  including  accrued
interest,  will at all  times  equal  or  exceed  the  value  of the  repurchase
agreement.

REVERSE  REPURCHASE  AGREEMENTS  AND  FORWARD  ROLL  TRANSACTIONS.  In a reverse
repurchase  agreement a Fund agrees to sell  portfolio  securities  to financial
institutions  such as  banks  and  broker-dealers  and to  repurchase  them at a
mutually  agreed date and price.  Forward roll  transactions  are  equivalent to
reverse repurchase agreements but involve mortgage-backed securities and involve
a repurchase of a substantially  similar  security.  At the time the Fund enters
into a reverse repurchase agreement or forward roll transaction it will place in
a segregated custodial account cash or liquid securities having a value equal to
the repurchase price, including accrued interest.  Reverse repurchase agreements
and forward  roll  transactions  involve  the risk that the market  value of the
securities sold by the Fund may decline below the repurchase price

                                       23


of the securities.  Reverse repurchase  agreements and forward roll transactions
are considered to be borrowings by a Fund.

TEMPORARY INVESTMENTS.  For temporary defensive purposes during periods when the
Fund Sub-Advisor  believes,  in consultation with the Advisor, that pursuing the
Fund's basic investment  strategy may be inconsistent with the best interests of
its  shareholders,  a Fund may invest its assets  without limit in the following
money market instruments: securities issued or guaranteed by the U.S. Government
or its agencies or  instrumentalities  (including those purchased in the form of
custodial  receipts),  repurchase  agreements,  certificates of deposit,  master
notes,  time  deposits and bankers'  acceptances  issued by banks or savings and
loan associations  having assets of at least $500 million as of the end of their
most recent fiscal year and high quality commercial paper.

A Fund also may hold a portion of its assets in money market instruments or cash
in amounts designed to pay expenses, to meet anticipated  redemptions or pending
investments  in  accordance  with its  objectives  and  policies.  Any temporary
investments may be purchased on a when-issued basis.

CONVERTIBLE SECURITIES.  Convertible securities may offer higher income than the
common stocks into which they are convertible  and include  fixed-income or zero
coupon debt  securities,  which may be  converted  or  exchanged  at a stated or
determinable  exchange ratio into  underlying  shares of common stock.  Prior to
their conversion,  convertible  securities may have  characteristics  similar to
both  non-convertible  debt securities and equity securities.  While convertible
securities  generally offer lower yields than non-convertible debt securities of
similar quality, their prices may reflect changes in the value of the underlying
common stock.  Convertible  securities entail less credit risk than the issuer's
common stock.

ASSET COVERAGE.  To assure that a Fund's use of futures and related options,  as
well  as  when-issued  and  delayed-delivery   transactions,   forward  currency
contracts and swap transactions,  are not used to achieve  investment  leverage,
the Fund  will  cover  such  transactions,  as  required  under  applicable  SEC
interpretations, either by owning the underlying securities or by establishing a
segregated account with its custodian  containing liquid securities in an amount
at all times equal to or exceeding the Fund's  commitment  with respect to these
instruments or contracts.

WARRANTS AND RIGHTS.  Warrants are options to purchase  equity  securities  at a
specified price and are valid for a specific time period.  Rights are similar to
warrants,  but normally have a short duration and are  distributed by the issuer
to its shareholders.  A Fund may purchase warrants and rights,  provided that no
Fund  presently  intends to invest more than 5% of its net assets at the time of
purchase  in  warrants  and rights  other than those that have been  acquired in
units or attached to other securities.

SHORT-TERM  TRADING.  Short-term trading involves the selling of securities held
for a short time,  ranging from several months to less than a day. The object of
such  short-term  trading is to increase the potential for capital  appreciation
and/or  income of the Fund in order to take  advantage  of what the  Sub-Advisor
believes are changes in market, industry or individual

                                       24


company conditions or outlook. Any such trading would increase the turnover rate
of a Fund and its transaction costs.

VARIABLE AND FLOATING RATE SECURITIES. The Growth Opportunities Fund may acquire
variable  and  floating  rate  securities,  subject  to  the  Fund's  investment
objective,  policies and  restrictions.  A variable  rate  security is one whose
terms provide for the  readjustment of its interest rate on set dates and which,
upon such  readjustment,  can reasonably be expected to have a market value that
approximates  its par value. A floating rate security is one whose terms provide
for the  readjustment  of its interest rate  whenever a specified  interest rate
changes  and which,  at any time,  can  reasonably  be expected to have a market
value that approximates its par value.

DERIVATIVES. A Fund may invest in various instruments that are commonly known as
derivatives.  Generally, a derivative is a financial  arrangement,  the value of
which is based on, or "derived" from, a traditional  security,  asset, or market
index.  Some   "derivatives"   such  as  certain   mortgage-related   and  other
asset-backed securities are in many respects like any other investment, although
they may be more volatile or less liquid than more  traditional debt securities.
There are, in fact,  many different types of derivatives and many different ways
to use them. There is a range of risks  associated with those uses.  Futures and
options are commonly used for traditional hedging purposes to attempt to protect
a Fund from exposure to changing interest rates,  securities prices, or currency
exchange  rates and as a low cost  method of gaining  exposure  to a  particular
securities market without investing directly in those securities.  However, some
derivatives  are used for  leverage,  which  tends to magnify  the effects of an
instrument's  price changes as market conditions  change.  Leverage involves the
use of a small amount of money to control a large  amount of  financial  assets,
and can in some  circumstances,  lead to significant  losses. A Fund Sub-Advisor
will use derivatives only in circumstances  where the Fund Sub-Advisor  believes
they offer the most economic means of improving the  risk/reward  profile of the
Fund.  Derivatives  will not be used to increase  portfolio risk above the level
that  could be  achieved  using only  traditional  investment  securities  or to
acquire exposure to changes in the value of assets or indexes that by themselves
would not be purchased  for the Fund.  The use of  derivatives  for  non-hedging
purposes may be considered speculative.

INITIAL PUBLIC  OFFERINGS  ("IPOS").  The Emerging Growth Fund and the Small Cap
Growth Fund may invest in IPOs.  An IPO  presents the risk that the market value
of IPO shares will fluctuate  considerably due to factors such as the absence of
a prior public market,  unseasoned trading, the small number of shares available
for trading and limited information about the issuer. The purchase of IPO shares
may involve high  transactions  costs. IPO shares are subject to market risk and
liquidity risk. When a Fund's asset base is small, a significant  portion of the
Fund's  performance  could be attributable to investments in IPOs,  because such
investments would have a magnified impact on the Fund. As the Fund's asset grow,
the effect of the Fund's investments in IPOs on the Fund's performance  probably
will decline,  which could reduce the Fund's  performance.  Because of the price
volatility of IPO shares,  a Fund may choose to hold IPO shares for a very short
period  of  time.  This  may  increase  the  turnover  of a Fund and may lead to
increased  expenses to the Fund, such as commissions  and transaction  costs. By
selling IPO  shares,  the Fund may realize  taxable  gains it will  subsequently
distribute  to  shareholders.  In  addition,  the  market  for IPO shares can be
speculative  and/or inactive for extended periods of time. There is no assurance
that the Fund will be able to  obtain  allocable  portions  of IPO  shares.

                                       25


The limited number of shares available for trading in some IPOs may make it more
difficult for the Fund to buy or sell  significant  amounts of shares without an
unfavorable impact on prevailing prices. Investors in IPO shares can be affected
by  substantial  dilution in the value of their  shares,  by sales of additional
shares and by  concentration  of control in existing  management  and  principal
shareholders.

The Fund's  investments in IPO shares may include the securities of "unseasoned"
companies (companies with less than three years of continuous operations), which
present  risks  considerably  greater  than  common  stocks of more  established
companies.  These  companies  may have  limited  operating  histories  and their
prospects for profitability may be uncertain. These companies may be involved in
new and evolving  businesses and may be vulnerable to competition and changes in
technology,  markets and economic conditions.  They may be more dependent on key
managers and third parties and may have limited products.

SENIOR  SECURITIES.  As a matter of  current  operating  policy,  the  following
activities  will not be considered to be issuing senior  securities with respect
to the Funds:
     1.   Collateral arrangements in connection with any type of option, futures
          contract, forward contract or swap.
     2.   Collateral  arrangements  in  connection  with  initial and  variation
          margin.
     3.   A pledge,  mortgage or  hypothecation of a Fund's assets to secure its
          borrowings.
     4.   A pledge of a Fund's assets to secure letters of credit solely for the
          purpose of participating in a captive  insurance  company sponsored by
          the Investment Company Institute.

MAJORITY.  As  used  in this  Statement  of  Additional  Information,  the  term
"majority"  of the  outstanding  shares of the Trust (or of any Fund)  means the
lesser  of (1)  67% or more  of the  outstanding  shares  of the  Trust  (or the
applicable  Fund)  present at a meeting,  if the holders of more than 50% of the
outstanding  shares  of the  Trust  (or the  applicable  Fund)  are  present  or
represented  at such meeting or (2) more than 50% of the  outstanding  shares of
the Trust (or the applicable Fund).

RATING SERVICES

The ratings of nationally recognized statistical rating organizations  represent
their opinions as to the quality of the securities  that they undertake to rate.
It should be emphasized,  however,  that ratings are relative and subjective and
are not absolute  standards of quality.  Although  these  ratings are an initial
criterion for selection of portfolio  investments,  each Fund  Sub-Advisor  also
makes its own evaluation of these securities,  subject to review by the Board of
Trustees of the Trust.  After  purchase by a Fund, an obligation may cease to be
rated or its rating may be reduced  below the minimum  required  for purchase by
the Fund.  Neither event would require a Fund to eliminate the  obligation  from
its  portfolio,  but a Fund  Sub-Advisor  will  consider  such an  event  in its
determination  of  whether a Fund  should  continue  to hold the  obligation.  A
description of the ratings used herein and in the Funds' Prospectus is set forth
in the Appendix to this Statement of Additional Information.

                                       26


INVESTMENT RESTRICTIONS
- -----------------------

The Trust has adopted certain  fundamental  investment  limitations  designed to
reduce the risk of an  investment  in the Funds.  These  limitations  may not be
changed with respect to any Fund without the  affirmative  note of a majority of
the outstanding shares of that Fund.

THE FUNDAMENTAL LIMITATIONS APPLICABLE TO THE FUNDS ARE:

     1.   BORROWING  MONEY.  The Funds may not  engage  in  borrowing  except as
          permitted by the Investment Company Act of 1940, any rule,  regulation
          or order under the Act or any SEC staff interpretation of the Act.

     2.   UNDERWRITING.  (VALUE PLUS FUND,  ENHANCED  30 FUND,  LARGE CAP GROWTH
          FUND, GROWTH  OPPORTUNITIES FUND AND SMALL CAP GROWTH FUND). The Funds
          may not underwrite  securities issued by other persons,  except to the
          extent that, in connection  with the sale or  disposition of portfolio
          securities,  a Fund may be deemed to be an  underwriter  under certain
          federal  securities  laws or in connection  with  investments in other
          investment companies.

          (EMERGING GROWTH FUND). The Fund may not underwrite  securities issued
          by other  persons,  except to the extent that, in connection  with the
          sale or disposition of portfolio securities, the Fund may be deemed to
          be an underwriter under certain federal securities laws.

     3.   LOANS.  The Funds may not make loans to other  persons  except  that a
          Fund may (1)  engage  in  repurchase  agreements,  (2) lend  portfolio
          securities,  (3) purchase  debt  securities,  (4) purchase  commercial
          paper, and (5) enter into any other lending  arrangement  permitted by
          the  Investment  Company Act of 1940,  any rule,  regulation  or order
          under the Act or any SEC staff interpretation of the Act.

     4.   REAL  ESTATE.  The Funds may not  purchase or sell real estate  except
          that a Fund may (1) hold and sell real estate  acquired as a result of
          the Fund's  ownership of securities or other  instruments (2) purchase
          or sell  securities  or other  instruments  backed  by real  estate or
          interests  in real  estate  and (3)  purchase  or sell  securities  of
          entities or  investment  vehicles,  including  real estate  investment
          trusts that invest,  deal or otherwise  engage in transactions in real
          estate or interests in real estate.

     5.   COMMODITIES.  The Funds may not purchase or sell physical  commodities
          except that a Fund may (1) hold and sell physical commodities acquired
          as  a  result  of  the  Fund's   ownership  of   securities  or  other
          instruments,  (2)  purchase or sell  securities  or other  instruments
          backed by physical commodities,  (3) purchase or sell options, and (4)
          purchase or sell futures contracts.

                                       27


     6.   CONCENTRATION   OF  INVESTMENTS.   The  Funds  may  not  purchase  the
          securities of an issuer (other than securities issued or guaranteed by
          the United States Government,  its agencies or its  instrumentalities)
          if, as a result,  more than 25% of the Fund's  total  assets  would be
          invested in the  securities  of  companies  whose  principal  business
          activities are in the same industry.

     7.   SENIOR SECURITIES. The Funds may not issue senior securities except as
          permitted by the Investment Company Act of 1940, any rule,  regulation
          or order under the Act or any SEC staff interpretation of the Act.

ADDITIONAL  RESTRICTIONS.  The Trust,  on behalf of each Fund,  has  adopted the
following  additional  restrictions  as a matter of  "operating  policy."  These
restrictions are changeable by the Board of Trustees without shareholder vote.

THE FOLLOWING INVESTMENT LIMITATIONS FOR THE VALUE PLUS FUND AND THE ENHANCED 30
FUND ARE NONFUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL:

     1.   BORROWING  MONEY.  A Fund will not  borrow  money  (including  through
          reverse repurchase  agreements or forward roll transactions  involving
          mortgage-backed  securities or similar  investment  techniques entered
          into for  leveraging  purposes),  except  that the Fund may borrow for
          temporary  or  emergency  purposes  up to  10% of  its  total  assets;
          provided,  however,  that no Fund  may  purchase  any  security  while
          outstanding borrowings exceed 5%;

     2.   PLEDGING.  A Fund will not  pledge,  mortgage or  hypothecate  for any
          purpose in excess of 10% of the Fund's total  assets  (taken at market
          value),  provided that collateral arrangements with respect to options
          and  futures,  including  deposits of initial  deposit  and  variation
          margin, and reverse repurchase  agreements are not considered a pledge
          of assets for purposes of this restriction;

     3.   MARGIN PURCHASES. A Fund will not purchase any security or evidence of
          interest therein on margin,  except that such short-term credit as may
          be necessary  for the  clearance of purchases  and sales of securities
          may be  obtained  and except  that  deposits  of initial  deposit  and
          variation  margin  may  be  made  in  connection  with  the  purchase,
          ownership, holding or sale of futures;

     4.   SELLING  SECURITIES.  A Fund will not sell any security  which it does
          not own unless by virtue of its  ownership of other  securities it has
          at the time of sale a right to obtain  securities,  without payment of
          further consideration, equivalent in kind and amount to the securities
          sold and provided that if such right is  conditional  the sale is made
          upon the same conditions;

     5.   INVESTING  FOR  CONTROL.  A Fund will not  invest  for the  purpose of
          exercising control or management;

                                       28


     6.   ILLIQUID  SECURITIES.  A Fund will not invest more than 15% of its net
          assets  (taken at the greater of cost or market  value) in  securities
          that are  illiquid  or not readily  marketable  (defined as a security
          that cannot be sold in the  ordinary  course of business  within seven
          days at  approximately  the  value at which  the Fund has  valued  the
          security)  not  including  (a) Rule  144A  securities  that  have been
          determined to be liquid by the Board of Trustees;  and (b)  commercial
          paper  that is sold  under  section  4(2) of the 1933 Act which is not
          traded flat or in default as to interest or  principal  and either (i)
          is  rated  in  one of the  two  highest  categories  by at  least  two
          nationally recognized  statistical rating organizations and the Fund's
          Board of Trustees has determined the commercial paper to be liquid; or
          (ii) is rated in one of the two highest  categories by one  nationally
          recognized  statistical rating agency and the Fund's Board of Trustees
          has determined that the commercial paper is equivalent  quality and is
          liquid;

     7.   RESTRICTED  SECURITIES.  A Fund will not  invest  more than 10% of its
          total assets in securities  that are restricted from being sold to the
          public without  registration  under the 1933 Act (other than Rule 144A
          Securities deemed liquid by the Fund's Board of Trustees);

     8.   SECURITIES OF ONE ISSUER.  A Fund will not purchase  securities of any
          issuer if such  purchase at the time  thereof  would cause the Fund to
          hold more  than 10% of any class of  securities  of such  issuer,  for
          which purposes all  indebtedness of an issuer shall be deemed a single
          class and all  preferred  stock of an issuer  shall be deemed a single
          class, except that futures or option contracts shall not be subject to
          this restriction;

     9.   SHORT  SALES.  A Fund  will not make  short  sales  of  securities  or
          maintain a short  position,  unless at all times when a short position
          is open it owns an  equal  amount  of such  securities  or  securities
          convertible  into or  exchangeable,  without  payment  of any  further
          consideration,  for  securities  of the same issue and equal in amount
          to, the  securities  sold  short,  and unless not more than 10% of the
          Fund's  net  assets  (taken at market  value) is  represented  by such
          securities,  or securities  convertible  into or exchangeable for such
          securities,  at any one time (the Funds have no current  intention  to
          engage in short selling);

     10.  PURCHASE  OF PUTS AND CALLS.  A Fund will not  purchase  puts,  calls,
          straddles,  spreads and any  combination  thereof if by reason thereof
          the  value of the  Fund's  aggregate  investment  in such  classes  of
          securities will exceed 5% of its total assets;

      11.WRITING  OF PUTS AND  CALLS.  A Fund will not  write  puts and calls on
         securities  unless each of the  following  conditions  are met: (a) the
         security  underlying the put or call is within the investment  policies
         of the Fund and the  option is issued  by the OCC,  except  for put and
         call  options  issued  by  non-U.S.  entities  or  listed  on  non-U.S.
         securities or  commodities  exchanges;  (b) the aggregate  value of the
         obligations  underlying the puts  determined as of the date the options
         are sold  shall  not  exceed  50% of the  Fund's  net  assets;  (c) the
         securities subject to the exercise of the call written by the Fund must
         be owned by the Fund at the time the call is sold and must  continue to
         be owned by the Fund

                                       29


          until  the  call  has  been  exercised,  has  lapsed,  or the Fund has
          purchased  a  closing  call,  and such  purchase  has been  confirmed,
          thereby  extinguishing  the Fund's  obligation  to deliver  securities
          pursuant  to  the  call  it has  sold;  and  (d) at the  time a put is
          written,  the Fund establishes a segregated account with its custodian
          consisting of cash or liquid  securities  equal in value to the amount
          the Fund  will be  obligated  to pay upon  exercise  of the put  (this
          account must be maintained until the put is exercised, has expired, or
          the Fund  has  purchased  a  closing  put,  which is a put of the same
          series as the one previously written).

     12.  PUTS AND CALLS ON FUTURES. A Fund will not buy and sell puts and calls
          on securities,  stock index futures or options on stock index futures,
          or  financial  futures or options on  financial  futures  unless  such
          options are written by other  persons  and: (a) the options or futures
          are  offered   through  the   facilities  of  a  national   securities
          association  or are listed on a  national  securities  or  commodities
          exchange,  except for put and call options issued by non-U.S. entities
          or listed on non-U.S.  securities or  commodities  exchanges;  (b) the
          aggregate premiums paid on all such options which are held at any time
          do not  exceed  20% of the  Fund's  total  net  assets;  and  (c)  the
          aggregate  margin  deposits  required  on all such  futures or options
          thereon held at any time do not exceed 5% of the Fund's total assets.

THE FOLLOWING INVESTMENT LIMITATIONS FOR THE LARGE CAP GROWTH FUND AND THE SMALL
CAP  GROWTH  FUND ARE  NONFUNDAMENTAL  AND MAY BE  CHANGED  WITHOUT  SHAREHOLDER
APPROVAL:

     1.   LARGE  CAP  GROWTH   FUND  80%   INVESTMENT   POLICY.   Under   normal
          circumstances,  the  Fund  will  invest  at  least  80% of its  assets
          (defined as net assets plus the amount of any borrowing for investment
          purposes) in a  diversified  portfolio  of common  stocks of large cap
          companies.

     2.   SMALL  CAP  GROWTH   FUND  80%   INVESTMENT   POLICY.   Under   normal
          circumstances,  the  Fund  will  invest  at  least  80% of its  assets
          (defined as net assets plus the amount of any borrowing for investment
          purposes) in equity securities of small cap companies.

Shareholders  of the  applicable  Fund will be  provided  with at least 60 days'
prior  notice of any  change to either of these  policies.  The  notice  will be
provided in a separate  written document  containing the following,  or similar,
statement,  in boldface type:  "Important  Notice Regarding Change in Investment
Policy." The  statement  will also appear on the envelope in which the notice is
delivered,  unless the notice is delivered  separately from other communications
to the shareholder.

THE  FOLLOWING   INVESTMENT   LIMITATION   FOR  THE  EMERGING   GROWTH  FUND  IS
NONFUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL:

         1. BORROWING  MONEY.  The Emerging  Growth Fund intends to borrow money
         only as a temporary measure for extraordinary or emergency purposes. In
         addition, the Fund may engage in reverse repurchase agreements, forward
         roll  transactions  involving   mortgage-

                                       30


          backed securities or other investment  techniques entered into for the
          purpose of leverage.

THE  FOLLOWING  INVESTMENT  LIMITATIONS  FOR THE GROWTH  OPPORTUNITIES  FUND ARE
NONFUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL:

          1. ILLIQUID  INVESTMENTS.  The Fund will not purchase  securities  for
          which  there are legal or  contractual  restrictions  on resale or for
          which no readily  available  market  exists (or engage in a repurchase
          agreement  maturing in more than seven days) if, as a result  thereof,
          more than 15% of the value of its net assets would be invested in such
          securities.

          2.  MARGIN  PURCHASES.  The  Fund  will  not  purchase  securities  or
          evidences of interest  thereon on  "margin."  This  limitation  is not
          applicable to short-term credit obtained by the Fund for the clearance
          of purchases  and sales or  redemption  of securities or to the extent
          necessary to engage in  transactions  described in the  Prospectus and
          Statement of Additional Information involving margin purchases.

          3. SHORT SALES. The Fund will not make short sales of securities.

With respect to the percentages  adopted by the Trust as maximum  limitations on
the Funds'  investment  policies  and  restrictions,  an excess  above the fixed
percentage (except for the percentage  limitations  relative to the borrowing of
money or investing in illiquid securities) will not be a violation of the policy
or  restriction  unless the excess  results  immediately  and directly  from the
acquisition of any security or the action taken.

TRUSTEES AND OFFICERS
- ---------------------

The following is a list of the Trustees and executive officers of the Trust, the
length of time served,  principal  occupations  for the past 5 years,  number of
funds overseen in the Touchstone Funds and other directorships held.

                                       31




- --------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES1:
- --------------------------------------------------------------------------------------------------------------------------------
                                        TERM OF                                                    NUMBER OF
                                        OFFICE2                                                      FUNDS
                                          AND                                                      OVERSEEN
      NAME             POSITION(S)      LENGTH                                                      IN THE          OTHER
    ADDRESS             HELD WITH       OF TIME        PRINCIPAL OCCUPATION(S) DURING PAST 5      TOUCHSTONE    DIRECTORSHIPS
      AGE                 TRUST         SERVED                        YEARS                         FUNDS3          HELD4
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Jill T. McGruder         Trustee       Until           President and a director of IFS                 29      Director of
Touchstone                             retirement      Financial Services, Inc. (a holding                     LaRosa's (a
Advisors, Inc.                         at age 75       company), Touchstone Advisors, Inc. (the                restaurant chain).
221 East Fourth Street                 or until        Trust's investment advisor) and
Cincinnati, OH                         she resigns     Touchstone Securities, Inc. (the Trust's
Age: 47                                or is           distributor).  She is Senior Vice
                                       removed         President of The Western and Southern
                                                       Life Insurance Company and a director of
                                       Trustee         Capital Analysts Incorporated (a
                                       since 1999      registered investment advisor and
                                                       broker-dealer), Integrated Fund
                                                       Services, Inc. (the Trust's
                                                       administrator and transfer agent) and
                                                       IFS Fund Distributors, Inc. (a
                                                       registered broker-dealer). She is also
                                                       President and a director of IFS Agency
                                                       Services, Inc. (an insurance agency),
                                                       IFS Insurance Agency, Inc. and Fort
                                                       Washington Brokerage Services, Inc. (a
                                                       registered broker-dealer). She was
                                                       President of Touchstone Tax-Free Trust,
                                                       Touchstone Investment Trust, Touchstone
                                                       Variable Series Trust and Touchstone
                                                       Strategic Trust until 2002.
- --------------------------------------------------------------------------------------------------------------------------------
John F. Barrett          Trustee       Until           Chairman of the Board, President and              29    Director of The
The Western and                        retirement      Chief Executive Officer of The Western                  Andersons Inc. (an
Southern Life                          at age 75       and Southern Life Insurance Company and                 agribusiness and
Insurance Company                      or until        Western-Southern Life Assurance                         retailing
400 Broadway                           he resigns      Company; Director and Vice Chairman of                  company),
Cincinnati, OH                         or is           Columbus Life Insurance Company;                        Convergys
Age: 53                                removed         Director of Eagle Realty Group, Inc.,                   Corporation (a
                                                       and Chairman of Fort Washington                         provider of
                                       Trustee         Investment Advisors, Inc.                               integrated billing
                                       since 2002                                                              solutions,
                                                                                                               customer care
                                                                                                               services and
                                                                                                               employee care
                                                                                                               services) and
                                                                                                               Fifth Third
                                                                                                               Bancorp.
- --------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT
TRUSTEES:
- --------------------------------------------------------------------------------------------------------------------------------
J. Leland Brewster II    Trustee       Until           Retired Senior Partner of Frost Brown           29      Director of
5155 Ivyfarm Road                      retirement      Todd LLC (a law firm).                                  Consolidated
Cincinnati, OH                         in 2005 or                                                              Health Services,
Age: 74                                until he                                                                Inc.
                                       resigns or
                                       is removed

                                       Trustee
                                       since 2000
- --------------------------------------------------------------------------------------------------------------------------------
William O. Coleman       Trustee       Until           Retired Vice President of The Procter &         29      Director of
c/o Touchstone                         retirement      Gamble Company.  A Trustee of The                       LCA-Vision (a
Advisors, Inc.                         at age 75       Procter & Gamble Profit Sharing Plan and                laser vision
221 East Fourth Street                 or until        The Procter & Gamble Employee Stock                     correction
Cincinnati, OH                         he resigns      Ownership Plan.                                         company) and
Age: 73                                or is                                                                   Millennium
                                       removed                                                                 Bancorp.

                                       Trustee
                                       since 1999
- --------------------------------------------------------------------------------------------------------------------------------

                                       32


- --------------------------------------------------------------------------------------------------------------------------------
Phillip R. Cox           Trustee       Until           President and Chief Executive Officer of        29      Director of the
105 East Fourth Street                 retirement      Cox Financial Corp. (a financial                        Federal Reserve
Cincinnati, OH                         at age 75       services company).                                      Bank of Cleveland;
Age: 55                                or until                                                                Broadwing, Inc. (a
                                       he resigns                                                              communications
                                       or is                                                                   company); and
                                       removed                                                                 Cinergy
                                                                                                               Corporation (a
                                       Trustee                                                                 utility company).
                                       since 1999
- --------------------------------------------------------------------------------------------------------------------------------
H. Jerome Lerner         Trustee       Until           Principal of HJL Enterprises (a                 29      None
4700 Smith Road                        retirement      privately held investment company);
Cincinnati, OH                         at age 75       Chairman of Crane Electronics, Inc. (a
Age: 64                                or until        manufacturer of electronic connectors).
                                       he resigns
                                       or is
                                       removed

                                       Trustee
                                       since 1989
- --------------------------------------------------------------------------------------------------------------------------------
Oscar P. Robertson       Trustee       Until           President of Orchem, Inc. (a chemical           29      Director of
621 Tusculum Avenue                    retirement      specialties distributor), Orpack Stone                  Countrywide Credit
Cincinnati, OH                         at age 75       Corporation (a corrugated box                           Industries, Inc.
Age: 64                                or until        manufacturer) and ORDMS (a solution
                                       he resigns      planning firm).
                                       or is
                                       removed

                                       Trustee
                                       since 1995
- --------------------------------------------------------------------------------------------------------------------------------
Robert E.                Trustee       Until           Retired Partner of KPMG LLP (a certified        29      Trustee of Good
Stautberg                              retirement      public accounting firm).  He is Vice                    Samaritan
4815 Drake Road                        at age 75       President of St. Xavier High School.                    Hospital, Bethesda
Cincinnati, OH                         or until                                                                Hospital and
Age: 68                                he resigns                                                              Tri-Health, Inc.
                                       or is
                                       removed

                                       Trustee
                                       since 1999
- --------------------------------------------------------------------------------------------------------------------------------
John P. Zanotti          Trustee       Until           CEO and Chairman of Avaton, Inc. (a             29      None
5400 Waring Drive                      retirement      wireless entertainment company).  CEO
Cincinnati, OH                         at age 75       and Chairman of Astrum Digital
Age: 54                                or until        Information (an information monitoring
                                       he resigns      company) from 2000 until 2001; President
                                       or is           of Great American Life Insurance Company
                                       removed         from 1999 until 2000; A Director of
                                                       Chiquita Brands International, Inc.
                                       Trustee         until2000; Senior Executive of American
                                       since 2002      Financial Group, Inc. (a financial
                                                       services company) from 1996 until 1999.
- --------------------------------------------------------------------------------------------------------------------------------


1    Ms. McGruder, as President and a director of Touchstone Advisors, Inc., the
     Trust's investment advisor,  and Touchstone  Securities,  Inc., the Trust's
     distributor,  is an "interested  person" of the Trust within the meaning of
     Section 2(a)(19) of the 1940 Act. Mr. Barrett, as President and Chairman of
     The Western and Southern Life Insurance Company and  Western-Southern  Life
     Assurance  Company,  parent  companies  of  Touchstone  Advisors,  Inc. and
     Touchstone  Securities,  Inc., and Chairman of Fort  Washington  Investment
     Advisors, Inc., a Trust sub-advisor, is an "interested person" of the Trust
     within the meaning of Section 2(a)(19) of the 1940 Act.

2    Each Trustee is elected to serve until the age of 75 or after five years of
     service,  whichever  is  greater,  or until he sooner  dies,  resigns or is
     removed.

3    The  Touchstone  Funds  consist of six  series of the Trust,  six series of
     Touchstone  Tax-Free Trust,  six series of Touchstone  Investment Trust and
     eleven variable annuity series of Touchstone Variable Series Trust.

4    Each Trustee is also a Trustee of  Touchstone  Tax-Free  Trust,  Touchstone
     Investment Trust and Touchstone Variable Series Trust.

                                       33




- --------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
OFFICERS:
- --------------------------------------------------------------------------------------------------------------------------------
                                         TERM OF                                                    NUMBER OF
                                          OFFICE                                                      FUNDS
                                           AND                                                      OVERSEEN
      NAME               POSITION        LENGTH OF                                                   IN THE         OTHER
    ADDRESS              HELD WITH         TIME        PRINCIPAL OCCUPATION(S) DURING PAST 5       TOUCHSTONE   DIRECTORSHIPS
      AGE                  TRUST1         SERVED                      YEARS                          FUNDS2          HELD
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Patrick T. Bannigan      President     Until he        Senior Vice President of Touchstone             29      None
Touchstone                             sooner dies,    Advisors, Inc. and Touchstone
Advisors, Inc.                         resigns, is     Securities,  Inc.; Senior Vice President
221 East Fourth                        removed or      of Evergreen Investment Services until
Street                                 becomes         March 2002.
Cincinnati, OH                         disqualified
Age: 37
                                       President
                                       since 2002
- --------------------------------------------------------------------------------------------------------------------------------
Michael S. Spangler      Vice          Until he        Vice  President of Touchstone  Advisors,        29      None
Touchstone               President     sooner dies,    Inc. and  Touchstone  Securities,  Inc.;
Advisors, Inc.                         resigns, is     Vice  President of Evergreen  Investment
221 East Fourth                        removed or      Services until July 2002.
Street                                 becomes
Cincinnati, OH                         disqualified
Age: 36
                                       Vice
                                       President
                                       since 2002
- --------------------------------------------------------------------------------------------------------------------------------
Brian E. Hirsch      Vice              Until he        Director of Compliance of Fort                  29        None
Touchstone           President         sooner dies,    Washington Brokerage Services, Inc.
Advisors, Inc.                         resigns, is     Chief Compliance Officer of Puglisi &
221 East Fourth                        removed or      Co. from May 2001 until August 2002;
Street                                 becomes         Vice President - Compliance of Palisade
Cincinnati, OH                         disqualified    Capital Management from June 1997 until
Age: 46                                                January 2000.
                                       Vice
                                       President
                                       since 2003
- --------------------------------------------------------------------------------------------------------------------------------
Terrie A.            Controller        Until she       Senior Vice President, Chief Financial          29        None
Wiedenheft                             sooner dies,    Officer and Treasurer of Integrated
Touchstone                             resigns, is     Fund Services, Inc., IFS Fund
Advisors, Inc.                         removed or      Distributors, Inc. and Fort Washington
221 East Fourth                        becomes         Brokerage Services, Inc. She is Chief
Street                                 disqualified    Financial Officer of IFS Financial
Cincinnati, OH                                         Services, Inc., Touchstone Advisors,
Age: 40                                Controller      Inc. and Touchstone Securities, Inc.
                                       since 2000      and Assistant Treasurer of Fort
                                                       Washington Investment Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Scott A. Englehart       Treasurer     Until he        President of Integrated Fund Services,          29        None
Integrated Fund                        sooner dies,    Inc. and IFS Fund Distributors, Inc.
Services, Inc.                         resigns, is     From 1998 until 2000, he was a
221 East Fourth                        removed or      Director, Transfer Agency and Mutual
Street                                 becomes         Fund Distribution for Nationwide
Cincinnati, OH                         disqualified    Advisory Services, Inc.
Age: 40
                                       Treasurer
                                       since 2000
- --------------------------------------------------------------------------------------------------------------------------------

                                       34


- --------------------------------------------------------------------------------------------------------------------------------
Tina H. Bloom            Secretary     Until she       Vice President - Managing Attorney of           29        None
Integrated Fund                        sooner dies,    Integrated Fund Services, Inc. and IFS
Services, Inc.                         resigns, is     Fund Distributors, Inc.
221 East Fourth                        removed or
Street                                 becomes
Cincinnati, OH                         disqualified
Age: 34
                                       Secretary
                                       since 1999
- --------------------------------------------------------------------------------------------------------------------------------


1    Each officer also holds the same office with Touchstone  Investment  Trust,
     Touchstone Tax-Free Trust and Touchstone Variable Series Trust.
2    The  Touchstone  Funds  consist of six  series of the Trust,  six series of
     Touchstone  Tax-Free Trust,  six series of Touchstone  Investment Trust and
     eleven variable annuity series of Touchstone Variable Series Trust.


TRUSTEE OWNERSHIP IN THE TOUCHSTONE FUNDS

The following table reflects the Trustees' beneficial ownership in the Trust and
the Touchstone Funds as of December 31, 2002:

                                                 AGGREGATE DOLLAR
                           DOLLAR RANGE OF       RANGE OF EQUITY
                        EQUITY SECURITIES IN      SECURITIES IN
                               TRUST              THE TOUCHSTONE
                                                     FUNDS 1

John F. Barrett               $1 - $10,000           $1 - $10,000
J. Leland Brewster II    $10,001 - $50,000      $10,001 - $50,000
William O. Coleman       $10,001 - $50,000      $10,001 - $50,000
Phillip R. Cox                  None                   None
H. Jerome Lerner                None               Over $100,000
Jill T. McGruder         $10,001 - $50,000      $50,001 - $100,000
Oscar P. Robertson          Over $100,000          Over $100,000
Robert E. Stautberg      $10,001 - $50,000      $10,001 - $50,000
John P. Zanotti              $ 1 - $10,000           $1 - $10,000

1    The  Touchstone  Funds  consists of six series of the Trust,  six series of
     Touchstone  Tax-Free Trust,  six series of Touchstone  Investment Trust and
     eleven variable annuity series of Touchstone Variable Series Trust.

TRUSTEE COMPENSATION

 The following  table shows the  compensation  paid to the Trustees by the Trust
and the aggregate  compensation  paid by the Touchstone  Funds during the fiscal
year ended March 31, 2003.

                                       35

                                             DEFERRED          AGGREGATE
                           COMPENSATION      COMPENSATION      COMPENSATION FROM
                           FROM              ACCRUED           THE TOUCHSTONE
NAME                       TRUST             FROM TRUST 1      FUNDS 2
- ----                       -----             ------------      -------
John F. Barrett            $    0            $    0            $     0
J. Leland Brewster II      $1,726            $3,462            $20,300
William O. Coleman         $5,687            $    0            $22,300
Philip R. Cox              $5,687            $    0            $22,300
H. Jerome Lerner           $5,562            $    0            $21,800
Jill T. McGruder           $    0            $    0            $     0
Oscar P. Robertson         $1,700            $2,612            $17,250
Robert E. Stautberg        $1,869            $3,818            $22,300
John P. Zanotti            $  494            $1,381            $ 7,800

1    Effective January 1, 2001, the Trustees who are not "interested persons" of
     the Trust,  as defined in the 1940 Act (the  "Independent  Trustees"),  are
     eligible to  participate in the Touchstone  Trustee  Deferred  Compensation
     Plan that allows the  Independent  Trustees to defer  payment of a specific
     amount  of their  Trustee  compensation,  subject  to a  minimum  quarterly
     reduction of $1,000. The total amount of deferred  compensation  accrued by
     the  Independent  Trustees from the  Touchstone  Family of Funds during the
     fiscal year ended March 31,  2003 is as  follows:  J. Leland  Brewster II -
     $13,848,  Oscar P.  Robertson - $10,448,  Robert E. Stautberg - $15,271 and
     John P. Zanotti - $5,525.

2    The  Touchstone  Funds  consist of six  series of the Trust,  six series of
     Touchstone  Tax-Free Trust,  six series of Touchstone  Investment Trust and
     eleven variable annuity series of Touchstone Variable Series Trust.

Effective  January 1,  2003,  each  Independent  Trustee  receives  a  quarterly
retainer of $3,000 and a fee of $3,000 for each Board meeting attended in person
and $300 for attendance by telephone.  Each Committee  member  receives a fee of
$1,000 for each committee  meeting attended in person and $300 for attendance by
telephone.  The lead Trustee and Committee  Chairmen  receive an additional $500
quarterly  retainer.  All fees are split  equally  among the  Trust,  Touchstone
Tax-Free  Trust,  Touchstone  Investment  Trust and Touchstone  Variable  Series
Trust.

STANDING COMMITTEES OF THE BOARD

The Board of Trustees is responsible  for overseeing the operations of the Trust
in accordance with the provisions of the 1940 Act and other  applicable laws and
the  Trust's  Declaration  of Trust.  The Board has  established  the  following
committees  to assist in its  oversight  functions.  Each  Committee is composed
entirely of Independent Trustees.

AUDIT COMMITTEE. Messrs. Brewster, Lerner and Stautberg are members of the Audit
Committee.  The Audit  Committee  is  responsible  for  overseeing  the  Trust's
accounting and financial  reporting  policies,  practices and internal controls.
During the fiscal  year ended  March 31,  2003,  the Audit  Committee  held four
meetings.

                                       36


VALUATION  COMMITTEE.  Messrs.  Coleman,  Cox and  Robertson  are members of the
Valuation  Committee.  The Valuation  Committee is  responsible  for  overseeing
procedures  for  valuing  securities  held by the  Trust and  responding  to any
pricing issues that may arise.  During the fiscal year ended March 31, 2003, the
Valuation Committee held four meetings.

NOMINATING COMMITTEE.  Messrs. Brewster,  Coleman, Cox and Stautberg are members
of the  Nominating  Committee.  The  Nominating  Committee  is  responsible  for
selecting candidates to serve on the Board and its operating committees.  During
the fiscal year ended March 31, 2003, the Nominating Committee held one meeting.
The Nominating Committee does not consider nominees recommended by shareholders.

THE INVESTMENT ADVISOR AND SUB-ADVISORS
- ---------------------------------------

THE INVESTMENT ADVISOR. Touchstone Advisors, Inc. (the "Advisor"), is the Funds'
investment  manager.  The Advisor is a wholly owned  subsidiary of IFS Financial
Services,  Inc.,  which is a wholly owned  subsidiary of  Western-Southern  Life
Assurance  Company.  Western-Southern  Life Assurance  Company is a wholly owned
subsidiary of The Western and Southern Life Insurance Company.  Ms. McGruder may
be deemed to be an affiliate of the Advisor because of her position as President
and Director of the Advisor. Mr. Barrett may be deemed to be an affiliate of the
Advisor  because of his  position as  President  and Chairman of The Western and
Southern Life Insurance  Company and  Western-Southern  Life Assurance  Company,
parent companies of the Advisor. Ms. McGruder and Mr. Barrett, by reason of such
affiliations, may directly or indirectly receive benefits from the advisory fees
paid to the Advisor.

Under the terms of the investment  advisory  agreement between the Trust and the
Advisor, the Advisor appoints and supervises each Fund Sub-Advisor,  reviews and
evaluates the performance of the Fund Sub-Advisors and determines whether or not
a Fund's  Sub-Advisor  should be  replaced.  The  Advisor  furnishes  at its own
expense all  facilities  and personnel  necessary in connection  with  providing
these services.  Each Fund pays the Advisor a fee computed and accrued daily and
paid monthly at an annual rate as shown below:



                             
Emerging Growth Fund            0.80% of average daily net assets

Value Plus Fund                 0.75% on the  first  $100  million  of average daily net assets
                                0.70% from $100 million to $200 million of average daily net assets
                                0.65% from $200 million to $300 million of average daily net assets
                                0.60% thereafter

Enhanced 30 Fund                0.65% on the first $100 million of average daily net assets
                                0.60% from $100 million to $200 million of average daily net assets
                                0.55% from $200 million to $300 million of average daily net assets
                                0.50% thereafter

Large Cap Growth Fund           0.75% on the first $200 million of average daily net assets
                                0.70% from $200 million to $500 million of average daily net assets
                                0.50% thereafter

                                       37


Growth Opportunities Fund       1.00% on the first $50 million of average daily net assets
                                .90% from $50  million to $100  million of average daily net assets
                                .80% from $100  million to $200 million of average daily net assets
                                .75% thereafter

Small Cap Growth Fund           1.25% of average daily net assets


Set forth below are the  advisory  fees  incurred  by the Funds  during the last
three fiscal  periods.  The Advisor has  contractually  agreed to waive fees and
reimburse certain expenses, as set forth in the footnotes below:

                                           FISCAL PERIOD ENDED
                               3-31         3-31          3-31         12-31
                               2003         2002          2001          2000
                               ----         ----          ----         -----
Emerging Growth Fund(1)     $2,176,150   $  848,897   $   46,242*   $  135,631
Value Plus Fund(2)             480,547      598,523       95,925*      324,524
Large Cap Growth Fund(3)       329,499      513,141      445,595
Growth Opportunities Fund    1,104,328    1,365,095    1,349,398
Enhanced 30 Fund(4)             54,485       48,307       45,042
Small Cap Growth Fund(5)        86,494

 * Represents period from January 1, 2001 until March 31, 2001.

(1)  Pursuant to a Sponsor  Agreement  between  the  Advisor and the Trust,  the
     Advisor waived fees and/or reimbursed the Fund $697,087,  $212,462, $23,370
     and $113,774 for the fiscal  periods ended March 31, 2003,  March 31, 2002,
     March 31, 2001 and December 31, 2000, respectively.
(2)  Pursuant to a Sponsor  Agreement  between  the  Advisor and the Trust,  the
     Advisor waived fees and/or reimbursed the Fund $226,146,  $199,296, $36,416
     and $92,399 for the fiscal periods ended March 31, 2003, March 31, 2002,
     March 31, 2001 and December 31, 2000, respectively.
(3)  Pursuant to a written  contract  between  the  Advisor  and the Trust,  the
     Advisor waived fees and/or  reimbursed the Fund $68,675 and $37,249 for the
     fiscal years ended March 31, 2003 and 2002, respectively.
(4)  Pursuant to a Sponsor  Agreement  between  the  Advisor and the Trust,  the
     Advisor  waived fees and/or  reimbursed  the Fund  $281,855,  $171,790  and
     $75,716  for the  fiscal  periods  ended  March  31,  2003,  2002 and 2001,
     respectively.
(5)  Pursuant to a Sponsor  Agreement  between  the  Advisor and the Trust,  the
     Advisor  waived  fees  and/or  reimbursed  the Fund  $97,022 for the fiscal
     period ended March 31, 2003.

Pursuant to a written  contract  between the Advisor and the Trust,  the Advisor
has agreed to waive  advisory fees and  reimburse  expenses in order to maintain
expense  limitations of the Large Cap Growth Fund as follows:  1.30% for Class A
shares,  2.43% for Class B shares  and 2.51% for Class C shares.  These  expense
limitations will remain in effect until at least March 31, 2004.

Pursuant to a Sponsor  Agreement  between the Advisor and the Trust, the Advisor
has been retained to provide certain management and supervisory  services to the
Emerging  Growth Fund,

                                       38


the Value  Plus Fund,  the  Enhanced  30 Fund and the Small Cap  Growth  Fund in
exchange  for the  payment of a sponsor fee by the Funds equal to an annual rate
of 0.20% of a Fund's  average daily net assets.  The Advisor has agreed to waive
its fees and reimburse expenses in order to limit each Fund's annual expenses as
follows:  Emerging Growth Fund - 1.50% for Class A shares, 2.25% for Class B and
Class C shares;  Value  Plus Fund - 1.30% for Class A shares,  2.05% for Class B
and Class C shares; Enhanced 30 Fund - 1.00% for Class A shares, 1.75% for Class
B and Class C shares;  Small Cap Growth  Fund - 1.95% for Class A shares,  2.70%
for Class B and Class C shares.  The fee waivers and  expense  limitations  will
remain in effect until at least March 31, 2004.

The Funds shall pay the expenses of their  operation,  including but not limited
to (i) charges and expenses for accounting,  pricing and appraisal  services and
related overhead,  (ii) the charges and expenses of auditors;  (iii) the charges
and expenses of any custodian,  transfer agent, plan agent,  dividend disbursing
agent, registrar and administrative agent appointed by the Trust with respect to
the Funds; (iv) brokers' commissions, and issue and transfer taxes chargeable to
the Funds in connection with securities transactions to which a Fund is a party;
(v) insurance premiums,  interest charges, dues and fees for membership in trade
associations  and all  taxes  and  fees  payable  to  federal,  state  or  other
governmental  agencies;  (vi) fees and  expenses  involved  in  registering  and
maintaining  registrations  of the  Funds  with  the  SEC,  state  or  blue  sky
securities  agencies  and  foreign  countries,   including  the  preparation  of
Prospectuses  and Statements of Additional  Information for filing with the SEC;
(vii) all expenses of meetings of Trustees and of  shareholders of the Trust and
of preparing, printing and distributing prospectuses,  notices, proxy statements
and all reports to shareholders and to governmental agencies; (viii) charges and
expenses of legal  counsel to the Trust;  (ix)  compensation  of Trustees of the
Trust; and (x) interest on borrowed money, if any. The compensation and expenses
of any officer,  Trustee or employee of the Trust who is an affiliated person of
the Advisor is paid by the Advisor.

By its terms, the Funds' investment  advisory agreement will remain in force for
an  initial  period of two years and from year to year  thereafter,  subject  to
annual  approval by (a) the Board of Trustees or (b) a vote of the majority of a
Fund's outstanding voting securities;  provided that in either event continuance
is also approved by a majority of the  Independent  Trustees,  by a vote cast in
person at a meeting called for the purpose of voting such approval.

In determining  whether to approve the  continuation of the investment  advisory
agreement for the Emerging Growth Fund,  Value Plus Fund, Large Cap Growth Fund,
Enhanced 30 Fund and Growth Opportunities Fund, the Board of Trustees requested,
and  the  Advisor  furnished,  information  necessary  for  a  majority  of  the
Independent  Trustees  to make the  determination  that the  continuance  of the
advisory agreement is in the best interests of the Funds and their shareholders.
Specifically,  the Board was provided (1) industry data comparing  advisory fees
and  expense  ratios  of  comparable  investment   companies,   (2)  comparative
performance  information  and (3) the Advisor's  revenues and costs of providing
services to the Funds.  The Board  compared the advisory  fees and total expense
ratios for the Funds with the industry  median  advisory fees and expense ratios
in their  respective  investment  categories and found the advisory fees paid by
the Funds were reasonable and appropriate under all facts and circumstances. The
Board  noted the Funds'  performance  results  during the  twelve  months  ended
September 30, 2002.  The Board also  considered the effect of each Fund's growth
and size on its

                                       39


performance  and  expenses.  The  Board  further  noted  that  the  Advisor  has
consistently  waived advisory fees and reimbursed  expenses for various Funds as
necessary to reduce their operating  expenses to targeted levels. The Board also
took into consideration the financial condition and profitability of the Advisor
and  the  direct  and  indirect   benefits  derived  by  the  Advisor  from  its
relationship  with the Funds.  The Board also  considered the level and depth of
knowledge of the Advisor. It discussed the Advisor's effectiveness in monitoring
the  performance  of the  Sub-Advisors  and  its  timeliness  in  responding  to
performance issues.

In  determining to approve the Small Cap Growth Fund's  advisory  agreement with
the Advisor, the Board of Trustees was provided information comparing the Fund's
advisory  fees and total  expense  ratio with the ratios of other  small  growth
funds.  The Board found the advisory fees proposed for the Fund were  reasonable
and appropriate under all facts and circumstances.  The Board also noted that it
had previously been provided financial  information on the Advisor and took into
consideration  the financial  condition and  profitability  of the Advisor.  The
Board considered the direct and indirect  benefits expected to be derived by the
Advisor from its relationship with the Fund. The Board also considered the level
and  depth of  knowledge  of the  Advisor  and the  Advisor's  effectiveness  in
monitoring the performance of its  sub-advisors and its timeliness in responding
to performance issues.

The Funds' investment advisory agreement may be terminated at any time, on sixty
days'  written  notice,  without  the  payment of any  penalty,  by the Board of
Trustees,  by a vote of the majority of a Fund's  outstanding voting securities,
or by the Advisor. The investment advisory agreement automatically terminates in
the  event  of its  assignment,  as  defined  by the  1940  Act  and  the  rules
thereunder.

THE  SUB-ADVISORS.  The  Advisor  has  retained  one or more  sub-advisors  (the
"Sub-Advisor") to serve as the discretionary portfolio manager of each Fund. The
Sub-Advisor selects the portfolio securities for investment by a Fund, purchases
and sells  securities  of a Fund and  places  orders for the  execution  of such
portfolio  transactions,  subject  to the  general  supervision  of the Board of
Trustees and the Advisor.  The Sub-Advisor  receives a fee from the Advisor that
is paid  monthly at an annual rate of a Fund's  average  daily net assets as set
forth below.



EMERGING GROWTH FUND
                                                
TCW Investment Management Company                  0.50% of average daily net assets

Westfield Capital Management Company, LLC          0.50% on the first $50 million of average net assets
                                                   0.45% on the next $100 million of net assets
                                                   0.40% thereafter

VALUE PLUS FUND
Fort Washington Investment Advisors, Inc.          0.45% on the first $100 million of average net assets
                                                   0.40% on the next $100 million of net assets
                                                   0.35% on the next $100 million of net assets
                                                   0.30% thereafter

                                       40


LARGE CAP GROWTH FUND
Fort Washington Investment Advisors, Inc.          0.45% on the first $200 million of average net assets
                                                   0.40% on the next $300 million of net assets
                                                   0.20% thereafter
ENHANCED 30 FUND*
Todd Investment Advisors, Inc.                     0.40% on the first $100 million of average net assets
                                                   0.35% on the next $100 million of net assets
                                                   0.30% on the next $100 million of net assets
                                                   0.25% thereafter


*    Effective September 1, 2002, Todd Investment Advisors, Inc. has voluntarily
     agreed  to waive a  portion  of its  sub-advisory  fee and will  receive  a
     sub-advisory fee of .25% of average daily net assets.



GROWTH OPPORTUNITIES FUND
                                                
Mastrapasqua Asset Management, Inc.                0.60% on the first $50 million of average net assets
                                                   0.50% on the next $50 million of net assets
                                                   0.40% on the next $100 million of net assets
                                                   0.35% thereafter

SMALL CAP GROWTH FUND**
Bjurman, Barry & Associates                        0.90% of average daily net assets
Longwood Investment Advisors, Inc.                 0.85% of average daily net assets


**   The  Advisor  has   allocated  to  Longwood   Investment   Advisors,   Inc.
responsibility  for managing  approximately  70% of the Small Cap Growth  Fund's
assets and has allocated to Bjurman, Barry & Associates responsibility for
managing approximately 30% of the Fund's assets. These allocations may be larger
or smaller at various times, but the Advisor will not reallocate the Fund's
assets between Sub-Advisors to reduce these differences in size until the assets
vary from the percentages above by approximately 10% or more of the Fund's
average daily net assets for a period of 3 consecutive months. In such event,
the Advisor may, but is not obligated to, reallocate assets among the
Sub-Advisors to provide for a more equal distribution of the Fund's assets.

The services  provided by the  Sub-Advisors  are paid for wholly by the Advisor.
The compensation of any officer,  director or employee of the Sub-Advisor who is
rendering services to a Fund is paid by the Sub-Advisor.

The employment of each  Sub-Advisor will remain in force for an initial two year
period and from year to year  thereafter,  subject to annual approval by (a) the
Board of Trustees or (b) a vote of the majority of a Fund's  outstanding  voting
securities;  provided  that in either event  continuance  is also  approved by a
majority  of the  Independent  Trustees,  by a vote  cast in person at a meeting
called  for  the  purpose  of  voting  such  approval.  The  employment  of  the
Sub-Advisor  may be  terminated  at any time,  on sixty  days'  written  notice,
without the payment of any  penalty,  by the Board of  Trustees,  by a vote of a
majority of a Fund's outstanding voting  securities,  by the Advisor,  or by the
Sub-Advisor.  Each Sub-Advisory  Agreement will

                                       41


automatically  terminate in the event of its assignment,  as defined by the 1940
Act and the rules thereunder. In determining whether to approve the continuation
of  the  Funds'   sub-advisory   agreements,   the  Board  compared  the  Funds'
sub-advisory fees with the industry median sub-advisory fees in their respective
investment  categories  and found the  sub-advisory  fees  were  reasonable  and
appropriate.  The Board also considered the Funds' performance during the twelve
months ended  September 30, 2002 and noted that it reviews on a quarterly  basis
detailed information about the Funds' performance results, portfolio composition
and investment strategies.  The Board considered the Sub-Advisors' level of
knowledge, investment style and level of compliance.

In  determining to approve the  sub-advisory  agreements  with Bjurman,  Barry &
Associates and Longwood Investment Advisors, Inc. for the Small Cap Growth Fund,
the Board of Trustees considered detailed  information  presented by the Advisor
regarding its sub-advisor selection process,  including the criteria used by the
Advisor to select a  sub-advisor.  The Board was  provided  information  on each
Sub-Advisor's  performance,  as compared to the  performance of the Russell 2000
Index and the Russell 2000 Growth Index. The Board was also provided information
about  each  Sub-Advisor's  level  of  knowledge,  investment  style,  level  of
compliance and operations.  The Board also considered the amount of sub-advisory
fees to be paid to each Sub-Advisor.  After considering the information provided
about the  Sub-Advisors and relying on the expertise of the Advisor in selecting
sub-advisors,  the Board of  Trustees  determined  that the  appointment  of the
Sub-Advisors  is in the best  interests  of the  Small Cap  Growth  Fund and its
shareholders.

The SEC has granted an  exemptive  order that  permits the Trust or the Advisor,
under certain  circumstances,  to select or change Sub-Advisors,  enter into new
sub-advisory  agreements or amend existing sub-advisory agreements without first
obtaining shareholder  approval.  Shareholders of a Fund will be notified of any
changes in its Fund Sub-Advisor.

PROXY VOTING PROCEDURES
- -----------------------

Each Sub-Advisor has adopted policies and procedures for voting proxies relating
to portfolio securities held by the Funds, including procedures used when a vote
presents a conflict between the interests of a Fund's  shareholders and those of
the Sub-Advisor or its affiliates.  Listed below is a summary of the Sub-Advisor
proxy voting procedures:

TCW INVESTMENT  MANAGEMENT COMPANY, INC. TCW has adopted proxy voting guidelines
on issues involving board of directors, proxy contests, auditors,  miscellaneous
governance provisions,  capital structure,  mergers and corporate restructuring,
mutual fund proxies and social and  environmental  issues.  When voting proxies,
TCW's foremost  concern is that all decisions be made solely in the interests of
the  client  and  with  the  goal  of  maximizing  the  value  of  the  client's
investments. The voting guidelines identify certain voting matters that will be
decided on a case-by-case basis.  Proposals that are to be decided on a case-by-
case basis are typically  referred to the  portfolio managers, who will exercise
their best judgment to vote proxies in a manner that will  enhance the economic
value of a client's assets, keeping in mind the best interest of the beneficial
owners. The portfolio managers may, in their discretion, take into account  the
recommendations of TCW management,  the Proxy Committee and/or outside services.
The following are examples of TCW's voting position on certain matters:

o Votes on director nominees are made on a case-by-case basis, examining factors
  such as composition of the board and key board committees, attendance at board
  meetings, corporate goverance provisions and takeover activity, long-term
  company performance relative to a market index, directors' investment in the
  company, whether the chariman is also serving as CEO and whether a retired CEO
  sits on the board.

o TCW will vote against proposals that provide that directors may be removed
  only for cause

o TCW will vote against proposals to eliminate cumulative voting

o TCW will vote for shareholder proposals that ask a company to submit its
  poison pill for shareholder ratification

o TCW will review proposals to increase tha number of authorized shares of
  common stock on a case-by-case basis.

o Votes with respect to executive and director compensation plans are determined
  on a case-by-case basis

o Votes on mergers and acquisitions are considered on a case-by-case basis,
  taking into account anticipated financial and operating benefits, offer price,
  prospectus of the combined companies, how the deal was negotiated, changes in
  corporate goverance and impact on shareholder rights.

If a potential  conflict of interest arises, the primary means by which TCW will
avoid a conflict is by casting such votes solely in the interests of its clients
and in the interests of

                                       42


maximizing  the value of their  portfolio  holdings.  If a conflict  of interest
arises  and the proxy vote is  predetermined,  TCW will vote  accordingly.  If a
conflict of interest arises and there is no  predetermined  vote, TCW will refer
the vote to an outside service for its  consideration  in the event the client's
relationship  is determined to be material to TCW. If TCW  identifies a conflict
of interest  between a portfolio  manager and an issuer  soliciting  proxy votes
from TCW clients, the Proxy Committee will cast the vote.

WESTFIELD CAPITAL  MANAGEMENT  COMPANY,  INC.  Westfield's policy is to vote all
proxies in the best interest of its clients as investors in accordance  with its
fiduciary  obligations and applicable law.  Westfield has a proxy voting
committee composed of individuals from the investment committee, operations
staff and compliance department.  The proxy committee is responsible for setting
general policy as to porxies.  Westfield  maintains  written voting
guidelines setting forth the voting positions  determined by its Proxy Committee
on those issues  believed most likely to arise day to day.  These issues include
board-approved   proposals  (election  of  directors,   executive  compensation,
capitalization,   acquisitions,   mergers,   reorganizations  and  anti-takeover
measures) and shareholder  proposals.  Westfield will vote proxies in accordance
with these  guidelines,  subject to two exceptions:  1) if the portfolio manager
believes  that  following  the  guidelines  would  not be in the  clients'  best
interests  and 2) for clients with plan assets  subject to ERISA,  Westfield may
accept  instructions  to vote proxies in  accordance  with AFL-CIO  proxy voting
guidelines  except when voting in accordance  with AFL-CIO  guidelines  would be
inconsistent  with ERISA.  The following are examples of Westfield's voting
position on specific matters:

o Westfield will withhold votes for the entire board of directors if the board
  does not have a majority of independent directors or the board does not have
  a nominating, audit and compensation committee composed solely of independent
  directors.

o Westfield will vote on a case-by-case basis board approved proposals relating
  to executive compensation.  Westfield may vote against executive compensation
  proposals where compensation is excessive by reasonable corporate standards
  or where a company fails to provide transparent disclosure of executive
  compensation.

o Westfield will vote against board proposals to adopt anti-takeover measures
  such as a shareholder rights plan, supermajority voting provisions, adoption
  of fair price provisions, issuance of blank check preferred stock and the
  creation of a separate class of stock with disparate voting rights, except
  Westfield will vote on a case-by-case basis poison pill proposals and
  proposals to adopt fair price provisions.

If a conflict of  interest  should  arise when voting proxies  of  an  issuer
that  has  a  significant  business  relationship  with Westfield,  Westfield
will vote proxies based solely on the investment merits of the proposal.

FORT WASHINGTON INVESTMENT ADVISORS, INC. Fort Washington's policy to to vote
proxies in the best interests of its clients at all times.  Fort Washington has
adopted procedures that it believes are reasonably designed to ensure that
proxies are voted in the best interests of clients in accordance with its
fiduciary duties and SEC rules governing investment advisers.
Reflecting a basic investment philospohy that good management is shareholder
focused, proxy votes will generally be cast in support of management on routine
corporate matters and in support of any management proposal that is plainly in
the interest of all shareholders.  Specifically, proxy votes generally will be
cast in favor of proposals that:

   o maintain or strengthen the shared interests of stockholders and management;
   o increase shareholder value; and
   o maintain or increase shareholder rights generally.

Proxy votes will generally be cast against proposals having the opposite efffect
of the above.  Where Fort Washington perceives that a management proposal, if
approved, would tend to limit or reduce the market value of the company's
securities, it will generally vote against it.  Fort Washington generally
supports shareholder rights and recapitalization measures undertaken
unilaterally by boards of directors properly exercising their responsibilities
and authority, unless such measures could have the effect of reducing
shareholder rights or potential shareholder value.  In cases where shareholder
proposals challenge such actions, Fort Washington's voting position will
generally favor not interfering with the directors' proper function in the
interest of all shareholders.

Fort Washington may delegate its responsibilities under its proxy voting
procedures to a third party, provided that Fort Washington retains final
authority and fiduciary responsibility for proxy voting.

Fort Washington will review each proxy to assess the extent, if any, to which
there may be a material conflict between it and the interests of its clients. If
Fort Washington determines that a potential conflict may exist, it will be
reported to the Proxy Voting Committee. The Proxy Voting Committee is authorized
to resolve any conflict in a manner that is in the collective best interests of
its clients(excluding any clients that may have a potential conflict). The Proxy
Voting Committee may resolve a potential conflict in any of the following
manners:

   o If the proposal is specifically addressed in the proxy voting procedures,
     Fort Washington may vote the proxy in accordance with these policies,
     provided that such pre-determined policy involves little discretion on
     Fort Washington's part;

   o Fort Washington may disclose the potential conflict to its clients and
     obtain a consent of a majority in interest of its clients before voting in
     the manner approved by a majority in interest of its clients;

   o Fort Washington may engage an independent third-party to determine how the
     proxy should be voted; or

   o Fort Washington may establish an ethical wall or other informational
     barriers between the person involved in the potential conflict and the
     persons making the voting decision in order to insulate the potential
     conflict from the decision maker.

TODD  INVESTMENT  ADVISORS,  INC.  Todd  will  vote  proxies  solely in the best
long-term  interests of a client. Todd has adopted guidelines on key issues such
as election of directors, stock incentive plans, expensing of options, severance
agreements,  takeover  provisions,  and social and  environmental  issues. Todd
employs Institutional Shareholder Services ("ISS") to help it analyze particular
issues.  The following are examples of Todd's position on specific matters:

o Todd will generally vote for proposals seeking to end the staggered election
  of directors and prefers that all directors be elected annually.

o Todd will generally support proposals requiring a majority of independent
  directors on the board.

o Todd prefers to see the separation of Chairman and CEO positions

o Todd prefers that all incumbent directors own company stock

o Todd prefers that all stock incentive plans be limited to restricted stock or
  other truly long-term incentive plans, but recognizes that short-term
  incentive plans do have a place in providing key executives with a balanced
  compensation program

o Todd supports proposals requiring the expensing of options

If a conflict of interest should arise, Todd will inform its Executive Committee
of the conflict and notify the shareholder why Todd's  vote may differ from the
shareholder's  request. Todd will consider a shareholder's request but will vote
only  for  what it  believes  will  best  advance  the  long-term  interests  of
shareholders.

                                       43

MASTRAPASQUA ASSET MANAGEMENT,  INC.  Mastrapasqua's proxy voting decisions will
be  made  solely  in the  best  interests  of the  client.  In  voting  proxies,
Mastrapasqua  is required to consider those factors that may affect the value of
the client's  investment and may not  subordinate  the interest of the client to
unrelated  objectives.  Mastrapasqua  has adopted  guidelines for voting proxies
with  respect to  routine  issues,  such as board of  directors,  proxy  contest
defenses,  auditors,  acquisitions  and  mergers,  shareholder  rights,  capital
structure,  executive  and director  compensation  and social and  environmental
issues, and its compliance officer will vote routine issues according to these
guidelines. Non-routine issues will be voted  according to  recommendations
received  from the research department.  The following are examples of
Mastrapasqua's policies on specific matters:

o Mastrapasqua will evaluate directors fairly and objectively, rewarding them
  for significant contributions and holding them ultimately accountable to
  shareholders for corporate performance.  Mastrapasqua will vote for directors
  on a case-by-case basis.

o Mastrapasqua will vote against proposals to eliminate cumulative voting

o Mastrapasqua will vote for shareholder proposals that ask a company to submit
  its poison pill for shareholder ratification

o Mastrapasqua will vote against proposals that provide that directors may be
  removed only for cause and for proposals that permit shareholders to elect
  directors to fill vacancies

o Votes on mergers and acquisitions are considered on a case-by-case basis,
  taking into account the impact of the merger on shareholder value, the
  anticipated financial and operating benefits, the offering price, the
  financial viability of the combined companies as a single entity, whether the
  deal was made in good faith, the changes in corporate goverance and their
  impact on shareholder rights and the impact on community stakeholders and
  employees in both workforces.

If a material conflict should arise between Mastrapasqua's interest
and that of its clients,  Mastrapasqua  will vote the proxies in accordance with
the  recommendation  of the research  analyst and portfolio  manager.  A written
record will be maintained describing the conflict of interest, the resolution of
the conflict and an  explanation  of how the vote taken was in the client's best
interest.

BJURMAN, BARRY & ASSOCIATES. Bjurman uses a third party service provider, ISS,
to vote all client proxies.  The proxy voting guidelines adopted by Bjurman are
provided by ISS. The voting process involves an assessment which results in
voting in agreement with company management and/or varying ISS recommendations.
Management and ISS recommendations may be identical.  In the event Bjurman votes
against ISS recommendations, documentation must be prepared to describe the
basis for such a decision.  Bjurman has adopted proxy voting recommendations on
issues involving board of directors,  proxy contest defenses,  auditors,  tender
offer  defenses,   miscellaneous   governance  provisions,   capital  structure,
executive and director compensation, mergers and corporate restructuring, mutual
fund proxies and social and environmental issues.  The following are examples
of Bjurman's policies on specific matters:

o Votes on director nominations will be made on a case-by-case basis examining
  factors such as long-term corporate performance relative to a market index,
  composition of board and keyboard committees, nominee's attendance at
  meetings, nominee's investment in the company, whether a retired CEO sits on
  the board and whether the chairman is also serving as CEO.

o Bjurman will vote against proposals that provide that directors may be removed
  only for cause and for proposals giving shareholder's the ability to remove
  directors with or without cause.

o Bjurman will vote for shareholder proposals that ask a company to submit its
  poison pills for shareholder ratification

o Bjurman will vote on a case-by-case basis proposals to increase the number of
  shares of common stock authorized for issue and will vote against proposed
  common stock authorizations that increase the existing authorization by more
  than 100% unless a clear need for the excess shares is presented by the
  company.

Bjurman's proxy voting policy does not  demonstrate a conflict of interest
regarding  clients' best interests since  votes are in  accordance  with a
pre-determined  policy  based  upon the recommendations  of ISS.  The proxy
voting guidelines are not  exhaustive and do not include all potential  voting
issues.  Because proxy issues and the circumstances of individual companies are
so varied, there may be instances when Bjurman may not vote in strict adherence
to these guidelines.

LONGWOOD INVESTMENT ADVISORS, INC. Longwood's proxy voting policy and procedures
are designed to ensure that  Longwood  votes proxies in the best interest of its
clients and to prevent and detect fraudulent,  deceptive or manipulative acts by
Longwood  and its  advisory  affiliates.  Longwood's  policy  is to vote  client
proxies in the interest of maximizing  shareholder  value. To that end,
Longwood will vote in a way that it believes, consistent with its fiduciary
duty, will cause the value of the issue to increase the most or decline the
least. Longwood has contracted with The Investor Responsibility Research Center
("IRRC") to assist it in the proxy voting process.  Accordingly, IRRC shall be a
source of proxy voting research and also maintain the documentation to
substantiate the manner in which Longwood votes proxies.  In general, Longwood
will support management if management's position appears reasonable, is not
detrimental to the long-term equity ownership of the corporation and reflects
consideration of the impact of societal values and attitudes on the long-term
viability of the corporation.  The position of management on any resolution will
typically not be supported if it:

o Would enrich management excessively.

o Would entrench incumbent officers or members of the board of directors.

o Would not reflect consideration of short and long-term costs and gains,
  including effects on the basic human rights of its employees and goodwill both
  in the U.S. and foreign countries in which the company operates.

o Would result in unreasonable costs.

o Would disadvantage the corporation relative to other corporations.

o Would oppose a proposal to have the shareholders approve the selection of an
  independent auditor.

o Would not support equal and fair employment practices for all employees.

If Longwood detects a conflict of interest  with respect to voting of client
proxies,  such  conflict will be addressed by The Investor  Responsibility
Research  Center  (IRRC),  or another independent third party, to vote proxies
that involve such conflict. Any vote cast by IRRC is binding and may not be
overridden by Longwood.

THE DISTRIBUTOR
- ---------------

Touchstone Securities, Inc. ("Touchstone"),  221 East Fourth Street, Cincinnati,
Ohio  45202,  is the  principal  distributor  of the  Trust  and,  as such,  the
exclusive  agent  for  distribution  of shares of the  Funds.  Touchstone  is an
affiliate of the Advisor by reason of common ownership.  Touchstone is obligated
to sell the shares on a best efforts basis only against  purchase orders for the
shares. Shares of the Funds are offered to the public on a continuous basis.

Touchstone currently allows concessions to dealers who sell shares of the Funds.
Touchstone  receives  that portion of the sales charge that is not  reallowed to
the  dealers  who sell shares of a Fund.  Touchstone  retains  the entire  sales
charge on all direct  initial  investments  in a Fund and on all  investments in
accounts  with no designated  dealer of record.

                                       44


For the fiscal year ended March 31, 2003, the aggregate underwriting commissions
on sales  of the  Trust's  shares  were  $1,501,520  of  which  Touchstone  paid
$1,200,478 to unaffiliated broker-dealers in the selling network, earned $89,601
as a broker-dealer in the selling network and retained  $211,441 in underwriting
commissions.

For the fiscal year ended March 31, 2002, the aggregate underwriting commissions
on sales  of the  Trust's  shares  were  $1,989,963  of  which  Touchstone  paid
$1,589,175  to  unaffiliated  broker-dealers  in  the  selling  network,  earned
$113,826 as a  broker-dealer  in the selling  network and  retained  $286,962 in
underwriting commissions.

For the fiscal year ended March 31, 2001, the aggregate underwriting commissions
on sales of the Trust's shares were $981,892 of which  Touchstone  paid $862,036
to  unaffiliated  broker-dealers  in the selling  network,  earned  $36,113 as a
broker-dealer  in the  selling  network  and  retained  $83,743 in  underwriting
commissions.

Touchstone retains the contingent deferred sales charge on redemptions of shares
of the Funds that are subject to a contingent  deferred  sales  charge.  For the
fiscal  period  ended March 31, 2003,  Touchstone  collected  $113,872,  $8,535,
$21,126,  $307,  $1,268  and  $1,009 of  contingent  deferred  sales  charges on
redemptions  of Class B and  Class C shares of the  Emerging  Growth  Fund,  the
Enhanced 30 Fund, the Growth  Opportunities Fund, the Large Cap Growth Fund, the
Small Cap Growth Fund and the Value Plus Fund, respectively.

For the fiscal year ended March 31, 2002, Touchstone collected $8,376,  $17,296,
$91, $541 and $246 of contingent  deferred sales charges on redemptions of Class
B and Class C shares of the Emerging Growth Fund, the Growth Opportunities Fund,
the Large Cap  Growth  Fund,  the  Enhanced  30 Fund and the  Value  Plus  Fund,
respectively.

For the fiscal  period  ended  March 31,  2001,  Touchstone  collected  $49,040,
$16,103,  $141 and $1,744 of contingent deferred sales charges on redemptions of
Class C shares of the Emerging Growth Fund, the Growth  Opportunities  Fund, the
Large Cap Growth Fund and the Value Plus Fund, respectively.

Ms.  McGruder  may be deemed to be an  affiliate  of  Touchstone  because of her
position as President and Director of  Touchstone.  Mr. Barrett may be deemed to
be an affiliate of Touchstone  because of his position as President and Chairman
of The Western and Southern Life  Insurance  Company and  Western-Southern  Life
Assurance Company, parent companies of Touchstone. Ms. McGruder and Mr. Barrett,
by reason of such affiliations, may directly or indirectly receive benefits from
the underwriting fees paid to Touchstone.

The Funds may compensate dealers, including Touchstone and its affiliates, based
on the  average  balance  of all  accounts  in the Funds for which the dealer is
designated as the party responsible for the account.  See  "Distribution  Plans"
below.

                                       45


DISTRIBUTION PLANS
- ------------------

CLASS A SHARES.  The Funds have  adopted a plan of  distribution  (the  "Class A
Plan") pursuant to Rule 12b-1 under the 1940 Act which permits a Fund to pay for
expenses incurred in the distribution and promotion of its shares, including but
not  limited  to,  the  printing  of  prospectuses,   statements  of  additional
information  and reports used for sales  purposes,  advertisements,  expenses of
preparation  and printing of sales  literature,  promotion,  marketing and sales
expenses, and other  distribution-related  expenses,  including any distribution
fees paid to securities  dealers or other firms who have executed a distribution
or service agreement with Touchstone.  The Class A Plan expressly limits payment
of the  distribution  expenses  listed  above in any fiscal year to a maximum of
..25% of the average  daily net assets of Class A shares of a Fund.  Unreimbursed
expenses will not be carried over from year to year.

For the fiscal period ended March 31, 2003,  the aggregate  distribution-related
expenditures  of the Large Cap Growth Fund, the Growth  Opportunities  Fund, the
Emerging  Growth Fund,  the Value Plus Fund,  the Enhanced 30 Fund and the Small
Cap  Growth  Fund  under  the Class A Plan were  $106,686,  $224,636,  $402,099,
$154,689, $17,934 and $14,237, respectively. All payments were to broker-dealers
and others for the sale or retention of assets.

CLASS B SHARES. The Funds have also adopted a plan of distribution (the "Class B
Plan") with respect to the Class B shares of a Fund.  The Class B Plan  provides
for two categories of payments. First, the Class B Plan provides for the payment
to  Touchstone  of an account  maintenance  fee, in an amount equal to an annual
rate of .25% of the average daily net assets of the Class B shares, which may be
paid to other  dealers  based on the  average  value of Class B shares  owned by
clients of such dealers.  In addition,  a Fund may pay up to an additional  .75%
per annum of the daily net assets of the Class B shares for expenses incurred in
the  distribution  and promotion of the shares,  including  prospectus costs for
prospective  shareholders,   costs  of  responding  to  prospective  shareholder
inquiries,  payments to brokers and  dealers  for selling and  assisting  in the
distribution of Class B shares, costs of advertising and promotion and any other
expenses  related  to the  distribution  of the  Class  B  shares.  Unreimbursed
expenditures  will not be  carried  over from  year to year.  The Funds may make
payments to dealers  and other  persons in an amount up to .75% per annum of the
average value of Class B shares owned by their clients,  in addition to the .25%
account maintenance fee described above.

For the fiscal period ended March 31, 2003,  the aggregate  distribution-related
expenditures  of the Large Cap Growth Fund, the Growth  Opportunities  Fund, the
Emerging  Growth Fund,  the Value Plus Fund,  the Enhanced 30 Fund and the Small
Cap Growth  Fund under the Class B Plan were $498,  $26,878,  $225,930,  $3,053,
$8,939 and $3,602, respectively.  All payments were to broker-dealers and others
for the sale and retention of assets.

CLASS C SHARES. The Funds have also adopted a plan of distribution (the "Class C
Plan") with respect to the Class C shares of a Fund.  The Class C Plan  provides
for two categories of payments. First, the Class C Plan provides for the payment
to  Touchstone  of an account  maintenance  fee, in an amount equal to an annual
rate of .25% of the average daily net assets of the Class C shares, which may be
paid to other  dealers  based on the  average  value of Class C shares  owned by
clients of such dealers.  In addition,  a Fund may pay up to an additional  .75%

                                       46


per annum of the daily net assets of the Class C shares for expenses incurred in
the  distribution  and promotion of the shares,  including  prospectus costs for
prospective  shareholders,   costs  of  responding  to  prospective  shareholder
inquiries,  payments to brokers and  dealers  for selling and  assisting  in the
distribution of Class C shares, costs of advertising and promotion and any other
expenses  related  to the  distribution  of the  Class  C  shares.  Unreimbursed
expenditures  will not be  carried  over from  year to year.  The Funds may make
payments to dealers  and other  persons in an amount up to .75% per annum of the
average value of Class C shares owned by their clients,  in addition to the .25%
account maintenance fee described above.

For the fiscal period ended March 31, 2003,  the aggregate  distribution-related
expenditures  of the Large Cap Growth Fund, the Growth  Opportunities  Fund, the
Emerging  Growth Fund,  the Value Plus Fund,  the Enhanced 30 Fund and the Small
Cap  Growth  Fund  under  the  Class C Plan were  $12,090,  $268,187,  $885,859,
$18,920,  $9,130 and $8,646,  respectively.  All payments were to broker-dealers
and others for the sale and retention of assets.

GENERAL  INFORMATION.  Agreements  implementing  the Plans (the  "Implementation
Agreements"), including agreements with dealers wherein such dealers agree for a
fee to act as agents for the sale of the Funds' shares,  are in writing and have
been approved by the Board of Trustees.  All payments made pursuant to the Plans
are made in accordance with written agreements.

The  continuance  of  the  Plans  and  the  Implementation  Agreements  must  be
specifically  approved  at  least  annually  by a vote of the  Trust's  Board of
Trustees  and by a vote  of the  Independent  Trustees  who  have no  direct  or
indirect financial  interest in the Plans or any  Implementation  Agreement at a
meeting  called  for the  purpose of voting on such  continuance.  A Plan may be
terminated at any time by a vote of a majority of the Independent Trustees or by
a vote of the holders of a majority of the  outstanding  shares of a Fund or the
applicable class of a Fund. In the event a Plan is terminated in accordance with
its  terms,  the  affected  Fund (or  class)  will not be  required  to make any
payments for expenses  incurred by Touchstone  after the  termination  date. The
Implementation Agreement terminates automatically in the event of its assignment
and may be  terminated  at any time by a vote of a majority  of the  Independent
Trustees or by a vote of the holders of a majority of the outstanding  shares of
a Fund (or the applicable class) on not more than 60 days' written notice to any
other  party to the  Implementation  Agreement.  The Plans may not be amended to
increase materially the amount to be spent for distribution  without shareholder
approval. All material amendments to the Plans must be approved by a vote of the
Trust's Board of Trustees and by a vote of the Independent Trustees.

In  approving  the Plans,  the  Trustees  determined,  in the  exercise of their
business judgment and in light of their fiduciary duties as Trustees, that there
is a  reasonable  likelihood  that the Plans  will  benefit  the Funds and their
shareholders.  The Board of Trustees  believes  that  expenditure  of the Funds'
assets for distribution  expenses under the Plans should assist in the growth of
the Funds which will benefit each Fund and its  shareholders  through  increased
economies  of  scale,   greater   investment   flexibility,   greater  portfolio
diversification and less chance of disruption of planned investment  strategies.
The Plans will be renewed only if the Trustees make a similar  determination for
each subsequent  year of the Plans.  There can be no assurance that the benefits
anticipated from the expenditure of the Funds' assets for  distribution  will be
realized. While the

                                       47


Plans are in effect,  all amounts  spent by the Funds  pursuant to the Plans and
the purposes for which such expenditures were made must be reported quarterly to
the Board of Trustees for its review.  Distribution expenses attributable to the
sale of more  than one class of  shares  of a Fund  will be  allocated  at least
annually to each class of shares based upon the ratio in which the sales of each
class of shares  bears to the sales of all the shares of the Fund.  In addition,
the selection and nomination of those Trustees who are not interested persons of
the Trust are committed to the  discretion of the  Independent  Trustees  during
such period.

Jill T. McGruder and John F. Barrett, as interested persons of the Trust, may be
deemed  to have a  financial  interest  in the  operation  of the  Plans and the
Implementation Agreements.

SECURITIES TRANSACTIONS
- -----------------------

Decisions to buy and sell securities for the Funds and the placing of the Funds'
securities transactions and negotiation of commission rates where applicable are
made by the  Sub-Advisors and are subject to review by the Advisor and the Board
of Trustees. In the purchase and sale of portfolio securities, the Sub-Advisor's
primary objective will be to obtain the most favorable price and execution for a
Fund, taking into account such factors as the overall direct net economic result
to the Fund (including  commissions,  which may not be the lowest  available but
ordinarily  should  not be  higher  than the  generally  prevailing  competitive
range),  the financial strength and stability of the broker, the efficiency with
which the transaction will be effected, the ability to effect the transaction at
all where a large block is involved and the availability of the broker or dealer
to stand ready to execute possibly difficult transactions in the future.

Set forth below are the  brokerage  commissions  paid by the Funds  during their
three most recent fiscal periods:

- --------------------------------------------------------------------------------
     NAME OF FUND                  PERIOD          AMOUNT OF
                                   ENDED          COMMISSIONS
- --------------------------------------------------------------------------------
Large Cap Growth Fund             3-31-03         $  138,228
- --------------------------------------------------------------------------------
Large Cap Growth Fund             3-31-02            170,679
- --------------------------------------------------------------------------------
Large Cap Growth Fund             3-31-01             98,179
- --------------------------------------------------------------------------------
Growth Opportunities Fund         3-31-03            177,061
- --------------------------------------------------------------------------------
Growth Opportunities Fund         3-31-02            229,827
- --------------------------------------------------------------------------------
Growth Opportunities Fund         3-31-01            147,414
- --------------------------------------------------------------------------------
Enhanced 30 Fund                  3-31-03             12,631
- --------------------------------------------------------------------------------
Enhanced 30 Fund                  3-31-02              6,342
- --------------------------------------------------------------------------------
Enhanced 30 Fund                  3-31-01              6,967
- --------------------------------------------------------------------------------
Emerging Growth Fund              3-31-03          1,154,702
- --------------------------------------------------------------------------------
Emerging Growth Fund              3-31-02            484,748
- --------------------------------------------------------------------------------
Emerging Growth Fund              3-31-01             13,443
- --------------------------------------------------------------------------------
Value Plus Fund                   3-31-03            164,914
- --------------------------------------------------------------------------------
Value Plus Fund                   3-31-02            166,029
- --------------------------------------------------------------------------------
Value Plus Fund                   3-31-01             26,341
- --------------------------------------------------------------------------------
Small Cap Growth Fund             3-31-03            112,858
- --------------------------------------------------------------------------------

                                       48


The higher commissions paid by the Enhanced 30 Fund during the fiscal year ended
March 31, 2003 are due to higher turnover rates.

Each  Sub-Advisor  is  specifically  authorized  to pay a  broker  who  provides
research  services to the  Sub-Advisor  an amount of commission  for effecting a
portfolio transaction in excess of the amount of commission another broker would
have charged for effecting such  transaction,  in recognition of such additional
research services rendered by the broker or dealer,  but only if the Sub-Advisor
determines in good faith that the excess commission is reasonable in relation to
the value of the  brokerage  and  research  services  provided by such broker or
dealer  viewed  in  terms of the  particular  transaction  or the  Sub-Advisor's
overall responsibilities with respect to discretionary accounts that it manages,
and that the Fund derives or will derive a reasonably  significant  benefit from
such research services.

During  the  fiscal  period  ended  March 31,  2003,  the  amount  of  brokerage
transactions  and related  commissions  for the Funds directed to brokers due to
research services provided were as follows:

                               BROKERAGE        BROKERAGE
                               TRANSACTIONS     COMMISSIONS
                               DIRECTED TO      FROM
                               RESEARCH         RESEARCH
                               --------         --------

Large Cap Growth Fund          $18,500,178      $ 27,454
Growth Opportunities Fund      $58,820,196      $126,504
Emerging Growth Fund           $18,992,740      $ 46,845
Value Plus Fund                $30,272,299      $ 49,144
Small Cap Growth Fund          $ 3,625,704      $ 10,886

Research services include securities and economic analyses,  reports on issuers'
financial  conditions and future  business  prospects,  newsletters and opinions
relating to interest  trends,  general advice on the relative merits of possible
investment  securities for the Funds and  statistical  services and  information
with respect to the  availability  of  securities  or  purchasers  or sellers of
securities.   Although  this   information  is  useful  to  the  Funds  and  the
Sub-Advisors,  it is not  possible  to  place a  dollar  value  on it.  Research
services   furnished  by  brokers   through  whom  a  Fund  effects   securities
transactions may be used by the Sub-Advisor in servicing all of its accounts and
not all such services may be used by the Sub-Advisor in connection with a Fund.

In order to reduce total  operating  expenses,  the Funds may apply a portion of
their  brokerage  commission  dollars  to  offset  custody  expenses  through  a
Commission  Share Program offered by Brown Brothers  Harriman & Co., the Trust's
Custodian. The Funds have no obligation to deal with any broker or dealer in the
execution of securities  transactions.  However, the Funds may effect securities
transactions that are executed on a national securities exchange or transactions
in the  over-the-counter  market  conducted on an agency basis.  A Fund will not
effect any brokerage transactions in its portfolio securities with an affiliated
broker if such transactions would be unfair or unreasonable to its shareholders.
Over-the-counter  transactions  will be

                                       49


placed either  directly  with  principal  market makers or with  broker-dealers.
Although  the  Funds do not  anticipate  any  ongoing  arrangements  with  other
brokerage  firms,  brokerage  business may be transacted  from time to time with
other firms. Affiliated  broker-dealers of the Trust will not receive reciprocal
brokerage business as a result of the brokerage business transacted by the Funds
with other brokers.

Deutsche  Bank may be deemed to be an  affiliate  of the Trust  because it is an
affiliate of Deutsche  Investment  Management  Americas Inc., a sub-advisor  for
Touchstone  Variable  Series  Trust.  Listed  below  is  information  about  the
brokerage commissions paid to Deutsche Bank during the fiscal period ended March
31, 2003.

                                                                   Percentage
                                  Amount           Percentage     of Aggregate
                                    of            of Aggregate    Transactions
                                Commissions     Commissions Paid    Effected
                                -----------     ----------------    --------
Emerging Growth Fund              $   992             .09%            .06%
Growth Opportunities Fund         $13,210             7.5%             10%
Small Cap Growth Fund             $ 2,786             2.5%            2.8%

Consistent  with the conduct  rules of the National  Association  of  Securities
Dealers,  Inc.,  and such other policies as the Board of Trustees may determine,
the Fund  Sub-Advisors  may consider sales of shares of the Trust as a factor in
the selection of  broker-dealers  to execute  portfolio  transactions.  The Fund
Sub-Advisors  will make such  allocations if commissions are comparable to those
charged by nonaffiliated, qualified broker-dealers for similar services.

In certain  instances  there may be  securities  that are suitable for a Fund as
well as for one or more of the  respective  Fund  Sub-Advisor's  other  clients.
Investment decisions for a Fund and for the Fund Sub-Advisor's 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
clients are selling  that same  security.  Some  simultaneous  transactions  are
inevitable  when  several  clients  receive  investment  advice  from  the  same
investment  advisor,  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 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 a Fund is  concerned.
However,  it is  believed  that the ability of a Fund to  participate  in volume
transactions will produce better executions for the Fund.

During the fiscal period ended March 31, 2003, the Funds  acquired  common stock
of the Trust's regular broker-dealers as follows:

                                       50




- --------------------------------------------------------------------------------------------------------------
                                                                               NUMBER OF SHARES  MARKET VALUE
           FUND                               BROKER-DEALER                       AT 3-31-03      AT 3-31-03
- --------------------------------------------------------------------------------------------------------------
                                                                                         
Growth Opportunities Fund        Merrill Lynch & Co. Inc.                           74,000        $2,619,600
Growth Opportunities Fund        Wells Fargo & Co.                                  60,000        $2,699,400
Enhanced 30 Fund                 Citigroup, Inc. (Salomon, Smith Barney)             7,516        $  258,926
Value Plus Fund                  Lehman Brothers Holdings                           17,185        $  992,434
Value Plus Fund                  Citigroup, Inc. (Salomon, Smith Barney)            22,912        $  789,318
Small Cap Growth Fund            Raymond James Financial, Inc.                      21,750        $  562,673
- --------------------------------------------------------------------------------------------------------------


CODE OF ETHICS
- --------------

The Trust, the Advisor, the Sub-Advisors and Touchstone have each adopted a Code
of Ethics under Rule 17j-1 of the 1940 Act that permits Fund personnel to invest
in securities for their own accounts.  The Code of Ethics adopted by each of the
Trust,  Advisor,  the  Sub-Advisor and Touchstone is on public file with, and is
available from, the SEC.

PORTFOLIO TURNOVER
- ------------------

A Fund's  portfolio  turnover  rate is  calculated  by  dividing  the  lesser of
purchases  or sales of portfolio  securities  for the fiscal year by the monthly
average of the value of the  portfolio  securities  owned by the Fund during the
fiscal year. High portfolio turnover involves  correspondingly greater brokerage
commissions  and other  transaction  costs,  which will be borne directly by the
Fund. High turnover may result in a Fund  recognizing  greater amounts of income
and  capital  gains,  which would  increase  the amount of  commissions.  A 100%
turnover  rate  would  occur  if all of the  Fund's  portfolio  securities  were
replaced  once within a one-year  period.  The rate of portfolio  turnover  will
depend upon market and other conditions,  and will not be a limiting factor when
the  Sub-Advisor  believes that portfolio  changes are  appropriate.  A Fund may
engage in active trading to achieve its investment  goals and, as a result,  may
have substantial portfolio turnover.

CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
- ----------------------------------------------------

The share price or net asset value  ("NAV") and the public  offering  price (NAV
plus  applicable  sales  load) of shares of the Funds are  determined  as of the
close  of the  regular  session  of  trading  on the  New  York  Stock  Exchange
(currently 4:00 p.m., Eastern time), on each day the Trust is open for business.
The Trust is open for  business on every day except  Saturdays,  Sundays and the
following  holidays:  New Year's Day,  Martin Luther King, Jr. Day,  President's
Day, Good Friday,  Memorial Day,  Independence Day, Labor Day,  Thanksgiving and
Christmas.  The Trust may also be open for business on other days in which there
is sufficient  trading in a Fund's  portfolio  securities  that its NAV might be
materially  affected.  Securities  held by a Fund  may be  primarily  listed  on
foreign  exchanges  or traded in foreign  markets that are open on days (such as
Saturdays and U.S.  holidays)  when the New York Stock  Exchange is not open for
business. As a result the NAV of a Fund may be significantly affected by trading
on days  when  the  Trust is not open for  business.  For a  description  of the
methods used to determine  the share price and the public  offering  price,  see
"Pricing of Fund Shares" in the Prospectuses.

                                       51


CHOOSING A SHARE CLASS
- ----------------------

Each Fund offers three  classes of shares:  Class A, Class B and Class C shares.
Each class  represents an interest in the same portfolio of investments  and has
the same rights,  but differs primarily in sales loads and distribution  expense
amounts.  Before choosing a class, you should consider the following factors, as
well as any other relevant facts and circumstances:

The  decision as to which class of shares is more  beneficial  to you depends on
the amount of your  investment,  the intended  length of your investment and the
quality and scope of the value-added services provided by financial advisors who
may work with a  particular  sales  load  structure  as  compensation  for their
services.  If you qualify for reduced front-end sales charges or, in the case of
purchases of $1 million or more, no initial  sales charge,  you may find Class A
shares  attractive.  Moreover,  Class A shares  are  subject  to  lower  ongoing
expenses than Class B or Class C shares over the term of the  investment.  As an
alternative, Class B and Class C shares are sold without an initial sales charge
so the entire  purchase price is immediately  invested in a Fund. Any investment
return on these  investments  may be  partially  or wholly  offset by the higher
annual expenses.  However,  because a Fund's future returns cannot be predicted,
there can be no assurance that this would be the case.

When determining which class of shares to purchase, you may want to consider the
services  provided by your financial  advisor and the  compensation  provided to
these  financial  advisors  under each share class.  Touchstone  works with many
experienced  and qualified  financial  advisors  throughout the country that may
provide valuable  assistance to you through ongoing education,  asset allocation
programs,  personalized  financial  planning  reviews or other services vital to
your long-term success.  Touchstone believes that these value-added services can
greatly  benefit  you  through  market  cycles  and will work  with your  chosen
financial advisor.

Finally,  you should consider the effect of the contingent deferred sales charge
("CDSC")  and  any  conversion  rights  of each  class  in the  context  of your
investment  timeline.  For example,  Class C shares are  generally  subject to a
significantly  lower CDSC upon redemption than Class B shares,  however,  unlike
Class B shares,  they do not convert to Class A shares after a stated  period of
time. Class C shares,  therefore, are subject to a 1.00% annual 12b-1 fee for an
indefinite  period of time,  while Class B shares will convert to Class A shares
after  approximately eight years and will be subject to only a .25% annual 12b-1
fee. Thus, Class B shares may be more attractive than Class C shares if you have
a longer-term  investment  outlook.  On the other hand, if you are unsure of the
length of time you intend to invest or the conversion  feature is not attractive
to you, you may wish to elect Class C shares.

Below is a chart  comparing the sales charges and 12b-1 fees  applicable to each
class of shares:

                                       52




CLASS    SALES CHARGE                             12B-1 FEE          CONVERSION FEATURE
- -----------------------------------------------------------------------------------------
                                                           
A       Maximum of 5.75% initial sales charge       0.25%           None
        reduced for purchases of $50,000 and
        over; shares sold without an initial sales
        charge may be subject to a 1.00% CDSC
        during 1st year if a commission was paid
        to a dealer

B       Maximum 5.00% CDSC during 1st               1.00%          Class B  Shares
        year, which decreases incrementally                        automatically convert
        and is 0 after 6 years                                     to Class A shares after
                                                                   approximately 8 years

C       1.00% CDSC during 1st year                  1.00%          None
- -----------------------------------------------------------------------------------------


If you are investing $1 million or more, it is generally more beneficial for you
to buy Class A shares because there is no front-end  sales charge and the annual
expenses are lower.

CLASS A SHARES

Class A shares  are sold at NAV plus an initial  sales  charge.  In some  cases,
reduced  initial  sales  charges  for the  purchase  of  Class A  shares  may be
available, as described below. Investments of $1 million or more are not subject
to a sales  charge at the time of purchase but may be subject to a CDSC of 1.00%
on  redemptions  made within 1 year after  purchase if a commission  was paid by
Touchstone  to a  participating  unaffiliated  dealer.  Class A shares  are also
subject to an annual 12b-1  distribution  fee of up to .25% of a Fund's  average
daily net assets allocable to Class A shares.

The following table illustrates the current initial sales charge breakpoints for
the purchase of Class A shares:



                                             Sales              Sales              Dealer
                                             Charge as          Charge as %        Reallowance
                                             % of Offering      of Net Amount      as % of Net
                                             Price              Invested           Amount Invested
                                             -------------      -------------      ---------------
                                                                               
Less than $50,000                                 5.75%             6.10%               5.00%
$50,000 but less than $100,000                    4.50              4.71                3.75
$100,000 but less than $250,000                   3.50              3.63                2.75
$250,000 but less than $500,000                   2.95              3.04                2.25
$500,000 but less than $1,000,000                 2.25              2.30                1.75
$1,000,000 or more                                None              None


The following table shows the initial sales charge  breakpoints for the purchase
of Class A shares of the Large Cap Growth Fund and the Growth Opportunities Fund
for accounts opened before August 1, 1999:

                                       53





                                             Sales              Sales              Dealer
                                             Charge as          Charge as %        Reallowance
                                             % of Offering      of Net Amount      as % of Net
                                             Price              Amount Invested    Amount Invested
                                             -------------      ---------------    ---------------
                                                                                
Less than $100,000                               4.00%               4.17%               3.60%
$100,000 but less than $250,000                  3.50                3.63                3.30
$250,000 but less than $500,000                  2.50                2.56                2.30
$500,000 but less than $1,000,000                2.00                2.04                1.80
$1,000,000 or more                               None                None


The following table shows the initial sales charge  breakpoints for the purchase
of Class A shares  of the  Emerging  Growth  Fund and the  Value  Plus  Fund for
accounts opened before May 1, 2000:



                                             Sales              Sales              Dealer
                                             Charge as          Charge as %        Reallowance
                                             % of Offering      of Net Amount      as % of Net
                                             Price              Amount Invested    Amount Invested
                                             -------------      ---------------    ---------------
                                                                                

Less than $50,000                                5.75%               6.10%               5.00%
$50,000 but less than $100,000                   4.50                4.71                3.75
$100,000 but less than $250,000                  3.50                3.63                2.75
$250,000 but less than $500,000                  2.50                2.56                2.00
$500,000 but less than $1,000,000                2.00                2.04                1.60
$1,000,000 or more                               None                None


Under certain circumstances, Touchstone may increase or decrease the reallowance
to  selected  dealers.  In  addition  to  the  compensation  otherwise  paid  to
securities dealers,  Touchstone may from time to time pay from its own resources
additional  cash bonuses or other  incentives to selected  dealers in connection
with the sale of  shares  of the  Funds.  On some  occasions,  such  bonuses  or
incentives may be conditioned upon the sale of a specified minimum dollar amount
of the shares of a Fund  and/or  other funds in the  Touchstone  Family of Funds
during a  specific  period of time.  Such  bonuses  or  incentives  may  include
financial  assistance  to  dealers  in  connection  with  conferences,  sales or
training  programs for their  employees,  seminars for the public,  advertising,
sales campaigns and other dealer-sponsored programs or events.

For  initial  purchases  of Class A shares of $1 million or more and  subsequent
purchases further increasing the size of the account, participating unaffiliated
dealers will receive first year  compensation  of up to 1.00% of such  purchases
from  Touchstone.  In determining a dealer's  eligibility  for such  commission,
purchases  of Class A shares  of the  Funds may be  aggregated  with  concurrent
purchases  of Class A shares of other funds in the  Touchstone  Family of Funds.
Dealers should contact Touchstone for more information on the calculation of the
dealer's commission in the case of combined purchases.

An  exchange  from other  Touchstone  Funds will not  qualify for payment of the
dealer's commission unless the exchange is from a Touchstone Fund with assets as
to which a dealer's  commission or similar payment has not been previously paid.
No commission  will be paid if the purchase  represents  the  reinvestment  of a
redemption  from a Fund made during the previous  twelve months.  Redemptions of
Class A shares may result in the imposition of a CDSC if the dealer's commission
described in this  paragraph  was paid in  connection  with the purchase of such
shares. See "CDSC for Certain Purchases of Class A Shares" below.

                                       54


REDUCED SALES CHARGE.  You may use the Right of Accumulation to combine the cost
or current  NAV  (whichever  is higher) of your  existing  Class A shares of any
Touchstone  Fund  sold  with a sales  charge  with  the  amount  of any  current
purchases  of Class A shares in order to take  advantage  of the  reduced  sales
charges  set  forth in the  tables  above.  Purchases  of Class A shares  of any
Touchstone  load  fund  under a Letter of Intent  may also be  eligible  for the
reduced sales charges.  The minimum initial  investment under a Letter of Intent
is $10,000.  You should  contact the transfer  agent for  information  about the
Right of Accumulation and Letter of Intent.

CDSC FOR CERTAIN  PURCHASES  OF CLASS A SHARES.  A CDSC is imposed  upon certain
redemptions  of Class A shares of the Funds (or  shares  into which such Class A
shares were exchanged)  purchased at NAV in amounts totaling $1 million or more,
if the dealer's commission described above was paid by Touchstone and the shares
are redeemed within one year from the date of purchase. The CDSC will be paid to
Touchstone  and will be equal to the commission  percentage  paid at the time of
purchase  as applied to the lesser of (1) the NAV at the time of purchase of the
Class A shares being redeemed, or (2) the NAV of such Class A shares at the time
of redemption.  If a purchase of Class A shares is subject to the CDSC, you will
be notified on the  confirmation  you receive for your purchase.  Redemptions of
such  Class A shares of the Funds held for at least one year will not be subject
to the CDSC.

CLASS B SHARES

Class B shares of the Funds are sold at NAV  without  an initial  sales  charge.
Class B shares are subject to a CDSC if you redeem Class B shares within 6 years
of their purchase.  The CDSC will be a percentage of the dollar amount of shares
redeemed and will be assessed on an amount equal to the lesser of (1) the NAV at
the time of purchase  of the Class B shares  being  redeemed,  or (2) the NAV of
such Class B shares being redeemed.  A CDSC will not be imposed upon redemptions
of Class B shares held for at least six years.  The amount of sales  charge will
depend  on how long you have  held your  shares,  as set forth in the  following
table:

YEAR SINCE                               CDSC AS A
PURCHASE                                 % OF AMOUNT
PAYMENT MADE                             SUBJECT TO CHARGE
- ----------------------------------------------------------
First                                         5.00%
Second                                        4.00%
Third                                         3.00%
Fourth                                        2.00%
Fifth                                         1.00%
Sixth                                         1.00%
Seventh and thereafter*                       None

*    Class B shares will automatically convert to Class A shares after they have
     been held for approximately 8 years.

Class B shares  are  subject  to an annual  12b-1 fee of up to 1.00% of a Fund's
average daily net

                                       55


assets  allocable to Class B shares.  Touchstone  intends to pay a commission of
4.00% of the  purchase  amount to your broker at the time you  purchase  Class B
shares.

CLASS C SHARES

Class C shares are sold at NAV,  without an initial sales charge and are subject
to a CDSC of 1.00% on  redemptions  of Class C shares  made  within  one year of
their  purchase.  The CDSC will be a percentage  of the dollar  amount of shares
redeemed and will be assessed on an amount equal to the lesser of (1) the NAV at
the time of purchase  of the Class C shares  being  redeemed,  or (2) the NAV of
such Class C shares being redeemed.  A CDSC will not be imposed upon redemptions
of Class C shares  held for at least one year.  Class C shares are subject to an
annual 12b-1 fee of up to 1.00% of a Fund's  average daily net assets  allocable
to  Class C  shares.  Touchstone  intends  to pay a  commission  of 1.00% of the
purchase amount to your broker at the time you purchase Class C shares.

ADDITIONAL INFORMATION ON THE CDSC

The CDSC is waived under the following circumstances:

o    Any  partial or  complete  redemption  following  death or  disability  (as
     defined in the Internal  Revenue Code) of a shareholder  (including one who
     owns the shares  with his or her spouse as a joint  tenant  with  rights of
     survivorship)  from an account in which the  deceased or disabled is named.
     Touchstone  may  require  documentation  prior  to  waiver  of the  charge,
     including death certificates, physicians' certificates, etc.

o    Redemptions from a systematic withdrawal plan. If the systematic withdrawal
     plan is based on a fixed  dollar  amount or number  of  shares,  systematic
     withdrawal  redemptions  are  limited  to no more than 10% of your  account
     value or number  of shares  per  year,  as of the date the  transfer  agent
     receives  your request.  If the  systematic  withdrawal  plan is based on a
     fixed  percentage of your account value,  each  redemption is limited to an
     amount that would not exceed 10% of your annual  account  value at the time
     of withdrawal.

o    Redemptions  from  retirement  plans  qualified  under  Section  401 of the
     Internal Revenue Code. The CDSC will be waived for benefit payments made by
     Touchstone  directly to plan  participants.  Benefit payments will include,
     but  are  not  limited  to,  payments  resulting  from  death,  disability,
     retirement,  separation from service,  required minimum  distributions  (as
     described   under  IRC  Section   401(a)(9)),   in-service   distributions,
     hardships,  loans and qualified  domestic relations orders. The CDSC waiver
     will not apply in the event of  termination  of the plan or transfer of the
     plan to another financial institution.

All sales charges imposed on redemptions are paid to Touchstone.  In determining
whether the CDSC is payable,  it is assumed  that shares not subject to the CDSC
are the first  redeemed  followed by other shares held for the longest period of
time. The CDSC will not be imposed upon shares representing reinvested dividends
or capital gains distributions, or upon amounts representing share appreciation.

                                       56


The following example will illustrate the operation of the CDSC. Assume that you
open an account and  purchase  1,000 shares at $10 per share and that six months
later the NAV per share is $12 and,  during  such  time,  you have  acquired  50
additional  shares through  reinvestment of  distributions.  If at such time you
should redeem 450 shares (proceeds of $5,400),  50 shares will not be subject to
the charge because of dividend  reinvestment.  With respect to the remaining 400
shares, the charge is applied only to the original cost of $10 per share and not
to the  increase  in  NAV  of $2 per  share.  Therefore,  $4,000  of the  $5,400
redemption proceeds will pay the charge. At the rate of 5.00%, the CDSC would be
$200 for redemptions of Class B shares.  At the rate of 1.00%, the CDSC would be
$40 for  redemptions  of Class C shares.  In  determining  whether  an amount is
available for redemption without incurring a deferred sales charge, the purchase
payments made for all shares in your account are aggregated.

The  following  example will  illustrate  the  operation of the CDSC for Class B
shares.  Assume that you open an account and  purchase  1,000  shares at $10 per
share and that  twenty-eight  months later the NAV per share is $14 and,  during
such time, you have acquired (a) 150 additional  shares through  reinvestment of
distributions  and (b) 500 shares through  purchases at $11 per share during the
second  year.  If at such time you  should  redeem  1,450  shares  (proceeds  of
$20,300),  150 shares  will not be subject  to the  charge  because of  dividend
reinvestment.  With respect to the remaining 1,300 shares, the charge is applied
only to the (a)  original  cost of $10 per share for the first 1,000  shares and
not to the increase in NAV of $4 per share and (b) to the  original  cost of $11
per  share  for the next 300  shares  and not to the  increase  in NAV of $3 per
share.  Therefore,  $18,200  of the  $20,300  redemption  proceeds  will pay the
charge.  The  redemption  of the first 1,000  shares is in the third year of the
CDSC schedule and will be charged at the rate of 3.00%,  or $300. The redemption
of the next 300 shares is in the second  year of the CDSC  schedule  and will be
charged at the rate of 4.00%, or $132. After this transaction is completed,  the
account has 200 shares remaining with an initial purchase value of $11 per share
and these shares are in the second year of the CDSC schedule.

OTHER PURCHASE INFORMATION
- --------------------------

Additional  information  with  respect to certain  types of purchases of Class A
shares of the Funds is set forth below.

AGGREGATION.  Sales  charge  discounts  are  available  for  certain  aggregated
investments. Investments which may be aggregated include those made by you, your
spouse and your  children  under the age of 21, if all  parties  are  purchasing
shares for their own  accounts,  which may include  purchases  through  employee
benefit plans such as an IRA,  individual-type 403(b) plan or single-participant
Keogh-type plan or by a business  solely  controlled by these  individuals  (for
example,  the  individuals  own the  entire  business)  or by a trust  (or other
fiduciary  arrangement) solely for the benefit of these individuals.  Individual
purchases  by  trustees  or  other  fiduciaries  may also be  aggregated  if the
investments are: (1) for a single trust estate or fiduciary  account,  including
an employee  benefit plan other than those described  above; (2) made for two or
more employee  benefit plans of a single employer or of affiliated  employers as
defined in the 1940 Act, other than employee  benefit plans described  above; or
(3) for a common trust fund or other pooled account not specifically  formed for
the purpose of accumulating Fund shares. Purchases

                                       57


made for  nominee  or street  name  accounts  (securities  held in the name of a
dealer  or  another  nominee  such as a bank  trust  department  instead  of the
customer) may not be aggregated  with those made for other  accounts and may not
be  aggregated  with other  nominee or street  name  accounts  unless  otherwise
qualified as described above.

CONCURRENT  PURCHASES.  To qualify for a reduced sales  charge,  you may combine
concurrent  purchases of Class A shares of two or more  Touchstone  funds (other
than a money market fund). For example,  if you  concurrently  invest $25,000 in
Class A shares of one Fund and  $25,000 in Class A shares of another  Fund,  the
sales charge would be reduced to reflect a $50,000 purchase.

RIGHT OF ACCUMULATION.  A purchaser of Class A shares of a Fund has the right to
combine the cost or current NAV  (whichever  is higher) of his existing  Class A
shares  of the load  funds  distributed  by  Touchstone  with the  amount of his
current  purchases in order to take  advantage of the reduced  sales charges set
forth in the table in the Prospectuses.  The purchaser or his dealer must notify
the transfer agent that an investment  qualifies for a reduced sales charge. The
reduced charge will be granted upon confirmation of the purchaser's  holdings by
the transfer agent.

A purchaser includes an individual and his immediate family members,  purchasing
shares for his or their own account; or a trustee or other fiduciary  purchasing
shares for a single  fiduciary  account  although more than one  beneficiary  is
involved;  or employees of a common  employer,  provided that economies of scale
are realized through remittances from a single source and quarterly confirmation
of such purchases;  or an organized group,  provided that the purchases are made
through a central  administration,  or a single dealer,  or by other means which
result in economy of sales effort or expense (the "Purchaser").

LETTER OF  INTENT.  The  reduced  sales  charges  set forth in the tables in the
Prospectus  may also be available  to any  Purchaser of Class A shares of a Fund
who submits a Letter of Intent to the transfer  agent.  The Letter must state an
intention to invest within a thirteen-month period in Class A shares of any load
fund distributed by Touchstone a specified  amount,  which, if made at one time,
would qualify for a reduced  sales  charge.  A Letter of Intent may be submitted
with a purchase at the beginning of the  thirteen-month  period or within ninety
days of the first purchase under the Letter of Intent.  Upon  acceptance of this
Letter,  the Purchaser  becomes eligible for the reduced sales charge applicable
to the level of  investment  covered  by such  Letter of Intent as if the entire
amount were invested in a single transaction.

The Letter of Intent is not a binding  obligation  on the Purchaser to purchase,
or the Trust to sell, the full amount indicated.  During the term of a Letter of
Intent,  shares representing 5% of the intended purchase will be held in escrow.
These shares will be released upon the completion of the intended investment. If
the Letter of Intent is not  completed  during the  thirteen-month  period,  the
applicable sales charge will be adjusted by the redemption of sufficient  shares
held in escrow,  depending upon the amount actually purchased during the period.
The minimum initial investment under a Letter of Intent is $10,000.

A ninety-day  backdating  period can be used to include earlier purchases at the
Purchaser's  cost  (without  a  retroactive  downward  adjustment  of the  sales
charge). The thirteen-month period

                                       58


would then begin on the date of the first purchase during the ninety-day period.
No retroactive  adjustment will be made if purchases exceed the amount indicated
in the Letter of Intent.  The  Purchaser  or his dealer must notify the transfer
agent that an investment is being made pursuant to an executed Letter of Intent.

WAIVER  OF SALES  CHARGE.  Sales  charges  do not  apply to  shares of the Funds
purchased:
1.   By  registered  representatives  or other  employees  (and their  immediate
     family members) of  broker/dealers,  banks or other financial  institutions
     having agreements with Touchstone.
2.   By any  director,  officer or other  employee (and their  immediate  family
     members) of The Western and Southern Life  Insurance  Company or any of its
     affiliates or any portfolio advisor or service provider to the Trust.
3.   By clients of any  investment  advisor or  financial  planner  who has made
     appropriate arrangements with the Trust or Touchstone.
4.   In accounts as to which a  broker-dealer  charges an asset  management fee,
     provided the broker-dealer has an agreement with Touchstone.
5.   As part of certain  promotional  programs  established  by the Fund  and/or
     Touchstone.
6.   By one or more members of a group of persons engaged in a common  business,
     profession, civic or charitable endeavor or other activity and retirees and
     immediate  family members of such persons  pursuant to a marketing  program
     between Touchstone and such group.
7.   By banks, bank trust departments, savings and loan associations and federal
     and state credit unions.
8.   Through Processing Organizations described in the Prospectus.
9.   As part of an employee benefit plan having more than 25 eligible  employees
     or a minimum of $250,000 invested in the Funds.
10.  As  part of an  employee  benefit  plan  that  is  provided  administrative
     services by a  third-party  administrator  that has entered  into a special
     service arrangement with Touchstone.

Immediate family members are defined as the spouse, parents,  siblings,  natural
or  adopted   children,   mother-in-law,   father-in-law,   brother-in-law   and
sister-in-law of a director,  officer or employee. The term "employee" is deemed
to include current and retired employees.

Exemptions  must be qualified in advance by Touchstone.  Your financial  advisor
should call Touchstone for more information.

WAIVER OF MINIMUM INVESTMENT REQUIREMENTS. The minimum and subsequent investment
requirements for purchases in the Funds may not apply to:
1.   Any  director,  officer  or other  employee  (and  their  immediate  family
     members) of The Western and Southern Life  Insurance  Company or any of its
     affiliates or any portfolio advisor or service provider to the Trust.
2.   Any  employee  benefit plan that is provided  administrative  services by a
     third-party   administrator   that  has  entered  into  a  special  service
     arrangement with Touchstone.

EXCHANGES.  Exchanges may be subject to certain  limitations  and are subject to
the Touchstone Funds' policies concerning excessive trading practices, which are
policies  designed  to protect  Funds and their  shareholders  from the  harmful
effect of frequent exchanges.

                                       59


The Funds may restrict or refuse purchases or exchanges by market timers and may
restrict or refuse  purchases or exchanges by a shareholder  who fails to comply
with the  restrictions  set forth below. You may be considered a market timer if
you have (i)  requested an exchange or redemption  out of any of the  Touchstone
Funds  within two weeks of an earlier  purchase or  exchange  request out of any
Fund, or (ii) made more than two exchanges within a rolling 90 day period.

Upon the Fund's  restriction or refusal of a purchase or exchange as a result of
excessive  exchanging  or market  timing,  written  notification  of the  Fund's
policies on these issues will be sent to the  shareholder's  agent and/or to the
broker-dealer  firm of record for any account  deemed to be market timing by the
Funds. If an account has no such agent or  broker-dealer,  written  notification
will be sent directly to the shareholder.

OTHER INFORMATION. The Trust does not impose a front-end sales charge or imposes
a reduced  sales charge in  connection  with  purchases of shares of a Fund made
under  the  reinvestment  privilege,   purchases  through  exchanges  and  other
purchases  which  qualify for a reduced sales load as described  herein  because
such purchases require minimal sales effort by Touchstone. Purchases made at NAV
may be made for investment only, and the shares may not be resold except through
redemption by or on behalf of the Trust.

TAXES
- -----

The Trust intends to qualify  annually and to elect that each Fund be treated as
a regulated investment company under the Code.

To qualify as a  regulated  investment  company,  each Fund  must,  among  other
things:  (a) derive in each  taxable  year at least 90% of its gross income from
dividends,  interest,  payments with respect to securities  loans and gains from
the sale or other  disposition  of stock,  securities  or foreign  currencies or
other  income  derived  with respect to its business of investing in such stock,
securities or currencies; (b) diversify its holdings so that, at the end of each
quarter of the taxable year,  (i) at least 50% of the market value of the Fund's
assets is  represented  by cash and cash  items  (including  receivables),  U.S.
Government  securities,  the securities of other regulated  investment companies
and other  securities,  with such other securities of any one issuer limited for
the purposes of this  calculation  to an amount not greater than 5% of the value
of the Fund's total assets and not greater  than 10% of the  outstanding  voting
securities  of such  issuer and (ii) not more than 25% of the value of its total
assets  is  invested  in the  securities  of any one  issuer  (other  than  U.S.
Government   securities  or  the  securities  of  other   regulated   investment
companies);  and (c) distribute at least 90% of its investment  company  taxable
income  (which  includes,  among  other  items,  dividends,   interest  and  net
short-term  capital gains in excess of net long-term capital losses) and its net
tax-exempt interest income, if any, each taxable year.

As a regulated investment company, each Fund will not be subject to U.S. federal
income tax on its investment  company  taxable income and net capital gains (the
excess of net long-term  capital gains over net short-term  capital losses),  if
any, that it distributes to shareholders.  The Fund intends to distribute to its
shareholders,  at least annually,  substantially  all of its investment  company
taxable income and net capital gains.  Amounts not distributed on a timely basis
in

                                       60


accordance  with a  calendar  year  distribution  requirement  are  subject to a
nondeductible  4% excise tax. To prevent  imposition of the excise tax, the Fund
must distribute  during each calendar year an amount equal to the sum of: (1) at
least 98% of its ordinary  income (not taking into account any capital  gains or
losses) for the calendar  year;  (2) at least 98% of its capital gains in excess
of its capital losses (adjusted for certain  ordinary  losses,  as prescribed by
the Code) for the one-year period ending on October 31 of the calendar year; and
(3) any  ordinary  income  and  capital  gains for  previous  years that was not
distributed  during  those  years.  A  distribution  will be  treated as paid on
December  31 of the  current  calendar  year if it is  declared  by the  Fund in
October, November or December with a record date in such a month and paid by the
Fund during January of the following  calendar year. Such  distributions will be
taxable to  shareholders  in the calendar  year in which the  distributions  are
declared, rather than the calendar year in which the distributions are received.
To  prevent  application  of the  excise  tax,  the  Fund  intends  to make  its
distributions in accordance with the calendar year distribution requirement.

A Fund's  net  realized  capital  gains  from  securities  transactions  will be
distributed  only  after  reducing  such  gains by the  amount of any  available
capital loss carryforwards.  Capital losses may be carried forward to offset any
capital gains for eight years, after which any undeducted capital loss remaining
is lost as a  deduction.  As of March 31,  2003,  the  Funds  had the  following
capital loss carryforwards for federal income tax purposes:

                                                AMOUNT          EXPIRATION DATE
- --------------------------------------------------------------------------------
Emerging Growth Fund                         $24,155,186        March 31, 2011

Growth Opportunities Fund                      2,005,441        March 31, 2009
                                              22,448,509        March 31, 2010
                                              21,975,058        March 31, 2011

Large Cap Growth Fund                         12,172,049        March 31, 2010
                                              19,119,045        March 31, 2011

Enhanced 30 Fund                                  99,480        March 31, 2009
                                                  24,780        March 31, 2010
                                                 414,728        March 31, 2011

Value Plus Fund                                  209,088        March 31, 2009
                                               5,826,294        March 31, 2011

Small Cap Growth Fund                             41,322        March 31, 2011
- --------------------------------------------------------------------------------
Each Fund shareholder will receive,  if appropriate,  various written notices at
the end of the calendar  year as to the federal  income  status of his dividends
and distributions that were received from the Fund during the year. Shareholders
should consult their tax advisors as to any state and local taxes that may apply
to these dividends and distributions.

                                       61


FOREIGN TAXES. Tax conventions  between certain  countries and the United States
may reduce or eliminate such taxes.  It is impossible to determine the effective
rate of foreign tax in advance since the amount of each applicable Fund's assets
to be invested in various countries will vary. If the Fund is liable for foreign
taxes, and if more than 50% of the value of the Fund's total assets at the close
of its taxable year consists of stocks or securities of foreign corporations, it
may make an election pursuant to which certain foreign taxes paid by it would be
treated as having been paid directly by  shareholders  of the entities,  such as
the  corresponding  Fund,  which have  invested  in the Fund.  Pursuant  to such
election, the amount of foreign taxes paid will be included in the income of the
corresponding Fund's shareholders, and such Fund shareholders (except tax-exempt
shareholders)  may,  subject to certain  limitations,  claim  either a credit or
deduction for the taxes.  Each such Fund  shareholder will be notified after the
close of the Fund's  taxable  year  whether  the  foreign  taxes paid will "pass
through"  for that year and, if so, such  notification  will  designate  (a) the
shareholder's portion of the foreign taxes paid to each such country and (b) the
portion which  represents  income derived from sources within each such country.
The amount of foreign  taxes for which a  shareholder  may claim a credit in any
year will generally be subject to a separate  limitation  for "passive  income,"
which  includes,  among other items of income,  dividends,  interest and certain
foreign  currency gains.  Because capital gains realized by the Fund on the sale
of foreign  securities  will be treated as  U.S.-source  income,  the  available
credit of foreign  taxes paid with  respect to such gains may be  restricted  by
this limitation.

DISTRIBUTIONS.  Dividends  paid out of the  Fund's  investment  company  taxable
income will be taxable to U.S. shareholders, other than corporations, at the
qualified  dividend income rate of 15%, or 5% for lower  income  levels and may
qualify for the  corporate dividends-received  deduction,  to the extent derived
from qualified dividend income.  Distributions of net capital gains, if any,
designated as capital gain dividends  are taxable as long-term  capital  gains,
regardless of how long the shareholder has held the Fund's shares, and are not
eligible  for  the dividends-received  deduction.  Shareholders receiving
distributions in the form of additional shares, rather than cash, generally will
have a cost basis in each such  share  equal to the NAV of a share of the Fund
on the  reinvestment  date. Shareholders  will be  notified  annually  as to the
U.S.  federal tax status of distributions.

SALE OF SHARES.  Any gain or loss  realized  by a  shareholder  upon the sale or
other  disposition of any shares of a Fund, or upon receipt of a distribution in
complete  liquidation of a Fund,  generally will be a capital gain or loss which
will be long-term or  short-term,  generally  depending  upon the  shareholder's
holding  period for the shares.  Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced  (including  shares
acquired  pursuant to a dividend  reinvestment  plan) within a period of 61 days
beginning 30 days before and ending 30 days after  disposition of the shares. In
such a case,  the basis of the shares  acquired  will be adjusted to reflect the
disallowed  loss.  Any loss realized by a shareholder  on a disposition  of Fund
shares  held by the  shareholder  for six  months or less will be  treated  as a
long-term  capital loss to the extent of any  distributions of net capital gains
received by the shareholder with respect to such shares.

TIMING  OF  INVESTMENT.  At the  time of a  shareholder's  purchase  of a Fund's
shares,  a portion of the  purchase  price may be  attributable  to  realized or
unrealized  appreciation in the Fund's

                                       62


portfolio or undistributed taxable income of the Fund. Consequently,  subsequent
distributions by the Fund with respect to these shares from such appreciation or
income may be taxable to such shareholder  even if the NAV of the  shareholder's
shares is, as a result of the  distributions,  reduced  below the  shareholder's
cost for such shares and the distributions  economically represent a return of a
portion of the investment.

FOREIGN WITHHOLDING TAXES. Income received by a Fund from sources within foreign
countries  may be  subject  to  withholding  and  other  taxes  imposed  by such
countries.

BACKUP  WITHHOLDING.  A Fund may be required to withhold U.S. federal income tax
on all taxable  distributions  payable to  shareholders  who fail to provide the
Fund with  their  correct  taxpayer  identification  number or to make  required
certifications,  or who have been notified by the Internal  Revenue Service that
they are subject to backup withholding.  The current  backup-withholding rate is
28%. Corporate shareholders and certain other shareholders specified in the Code
generally are exempt from such backup withholding.  Backup withholding is not an
additional tax. Any amounts withheld may be credited  against the  shareholder's
U.S. federal income tax liability.

FOREIGN  SHAREHOLDERS.  The tax  consequences  to a  foreign  shareholder  of an
investment  in a Fund may be  different  from those  described  herein.  Foreign
shareholders  are advised to consult  their own tax advisors with respect to the
particular tax consequences to them of an investment in a Fund.

OTHER  TAXATION.  Shareholders  may be subject to state and local taxes on their
Fund  distributions.  Shareholders are advised to consult their own tax advisors
with respect to the  particular tax  consequences  to them of an investment in a
Fund.

REDEMPTION IN KIND
- ------------------

Under  unusual  circumstances,  when the Board of Trustees  deems it in the best
interests  of a  Fund's  shareholders,  the Fund may  make  payment  for  shares
repurchased  or redeemed in whole or in part in  securities of the Fund taken at
current value. Should payment be made in securities,  the redeeming  shareholder
will generally  incur  brokerage  costs in converting  such  securities to cash.
Portfolio  securities  that are issued in an in-kind  redemption will be readily
marketable.  The Trust has filed an irrevocable election with the SEC under Rule
18f-1 of the 1940 Act  wherein the Funds are  committed  to pay  redemptions  in
cash,  rather than in kind, to any  shareholder  of record of a Fund who redeems
during any ninety day  period,  the lesser of  $250,000 or 1% of a Fund's NAV at
the beginning of such period.

HISTORICAL PERFORMANCE INFORMATION
- ----------------------------------

From time to time, the Funds may advertise average annual total return.  Average
annual total return  quotations  will be computed by finding the average  annual
compounded  rates of return over 1, 5 and 10 year  periods that would equate the
initial  amount  invested  to the  ending  redeemable  value,  according  to the
following formula:

                                       63


                                P(1 + T)^n = ERV
Where:
P =   a hypothetical initial payment of $1,000
T =   average annual total return
n =   number of years
ERV = ending  redeemable  value of a  hypothetical  $1,000  payment  made at the
      beginning  of the 1, 5 and 10  year  periods  at the end of the 1, 5 or 10
      year periods (or fractional portion thereof)

The  calculation of average annual total return assumes the  reinvestment of all
dividends  and  distributions  and the  deduction of the current  maximum  sales
charge from the initial  $1,000  payment.  If a Fund has been in existence  less
than one,  five or ten  years,  the time  period  since the date of the  initial
public offering of shares will be substituted for the periods stated.

THE AVERAGE  ANNUAL TOTAL  RETURNS OF THE FUNDS FOR THE PERIODS  ENDED MARCH 31,
2003 ARE AS FOLLOWS:

Large Cap Growth Fund (Class A)
- -------------------------------
1 Year                                        -37.51%
5 Years                                       -13.68%
Since inception (8-2-93)                        0.30%

Large Cap Growth Fund (Class B)
- -------------------------------
1 Year                                        -37.25%
Since inception (5-1-01)                      -28.01%

Large Cap Growth Fund (Class C)
- -------------------------------
1 Year                                        -34.26%
5 Years                                       -13.60%
Since inception (6-7-93)                        0.01%

Growth Opportunities Fund (Class A)
- -----------------------------------
1 Year                                        -34.16%
5 Years                                        -1.96%
Since inception (9-29-95)                       6.34%

Growth Opportunities Fund (Class B)
- -----------------------------------
1 Year                                        -34.51%
Since inception (5-1-01)                      -29.49%

Growth Opportunities Fund (Class C)
- -----------------------------------
1 Year                                        -31.55%
Since inception (8-2-99)                      -10.54%

                                       64


Enhanced 30 Fund (Class A)
- --------------------------
1 Year                                        -30.43%
Since inception (5-1-00)                      -14.51%

Enhanced 30 Fund (Class B)
- --------------------------
1 Year                                        -29.63%
Since inception (5-1-01)                      -18.34%

Enhanced 30 Fund (Class C)
- --------------------------
1 Year                                        -26.32%
Since inception (5-16-00)                     -13.22%

Emerging Growth Fund (Class A)
- ------------------------------
1 Year                                        -32.04%
5 Years                                         5.08%
Since inception (10-3-94)                      11.79%

Emerging Growth Fund (Class B)
- ------------------------------
1 Year                                        -33.09%
Since inception (5-1-01)                      -14.24%

Emerging Growth Fund (Class C)
- ------------------------------
1 Year                                        -30.27%
5 Years                                         5.05%
Since inception (10-3-94)*                     11.29%

Value Plus Fund (Class A)
- -------------------------
1 Year                                        -32.69%
Since inception (5-1-98)                       -4.21%

Value Plus Fund (Class B)
- -------------------------
1 Year                                        -31.87%
Since inception (5-1-01)                      -20.33%

Value Plus Fund (Class C)
- -------------------------
1 Year                                        -29.08%
Since inception (5-1-98)*                     - 3.93%

*    Date reflects inception of the predecessor. The predecessor was a series of
     Select Advisors Trust C that was reorganized into Touchstone  Series Trust,
     the Funds' previous Trust, on December 31, 1998.

Each Fund may also advertise total return (a  "nonstandardized  quotation") that
is calculated  differently from average annual total return.  A  nonstandardized
quotation  of  total  return  may be a  cumulative  return  which  measures  the
percentage  change in the value of an account between

                                       65


the  beginning  and end of a period,  assuming no activity in the account  other
than reinvestment of dividends and capital gains distributions. This computation
does not include the effect of the applicable sales charge,  which, if included,
would reduce total return.

The total returns of the Large Cap Growth Fund,  the Growth  Opportunities  Fund
and the Enhanced 30 Fund as  calculated  in this manner for each of the last ten
fiscal periods (or since inception) are as follows:




                             LARGE CAP                                 GROWTH                                ENHANCED
                            GROWTH FUND                          OPPORTUNITIES FUND                          30 FUND
                  Class A     Class B       Class C      Class A      Class B      Class C      Class A      Class B      Class C
                  ------------------------------------------------------------------------------------------------------------------
Period Ended
- ------------
                                                                                               
March 31, 1994    - 2.63%(1)                 -2.91%(2)
March 31, 1995    + 8.07%                    +7.32%
March 31, 1996    +27.90%                   +26.90%      +14.50%(3)
March 31, 1997    +11.82%                   +11.01%      +12.77%
March 31, 1998    +42.74%                   +41.63%      +36.73%
March 31, 1999    +14.30%                   +13.03%      +29.89%
March 31, 2000    +20.60%                   +19.24%      +88.88%                   +76.52%(4)
March 31, 2001    -41.73%                   -42.39%      -38.42%                   -38.89%      -10.57%(5)                -11.12%(6)
March 31, 2002     -4.57%      -15.07%(7)    -5.66%       -8.96%      -21.81%(7)    -9.93%        3.86%       -3.60%(7)     3.00%
March 31, 2003    -33.69%      -34.63%      -34.26%      -30.14%      -31.78%      -31.55%      -26.19%      -26.70%      -26.32%


(1)  From date of initial public offering on August 2, 1993
(2)  From date of initial public offering on June 7, 1993
(3)  From date of initial public offering on September 29, 1995
(4)  From date of initial public offering on August 1, 1999
(5)  From date of initial public offering on May 1, 2000
(6)  From date of initial public offering on May 16, 2000
(7)  From date of initial public offering on May 1, 2001

The  total  returns  of the  Emerging  Growth  Fund and the  Value  Plus Fund as
calculated  in this  manner  for each of the last ten fiscal  periods  (or since
inception) are as follows:



                            EMERGING GROWTH FUND                       VALUE PLUS FUND
                    Class A(1)  Class B(3)    Class C(1)    Class A(2)   Class B(3)  Class C(2)
                    ---------------------------------------------------------------------------
Period Ended
- ------------
                                                                    
December 31, 1994      2.72%                     2.52%
December 31, 1995     22.56%                    21.15%
December 31, 1996     10.56%                     9.67%
December 31, 1997     32.20%                    30.67%
December 31, 1998      2.57%                     1.95%         4.29%                    2.60%
December 31, 1999     45.85%                    44.86%        15.51%                   14.24%
December 31, 2000     25.92%                    24.58%        1.91%                     1.87%
March 31, 2001        -4.95%                    -5.91%        -0.74%                   -0.89%
March 31, 2002        22.72%       11.35%       22.09%         2.34%      -5.01%        1.60%
March 31, 2003       -27.90%      -30.34%      -30.27%        28.59%     -29.05%      -29.08%


(1)  From date of initial public offering on October 3, 1994
(2)  From  date of  initial  public  offering  on May 1,  1998

                                       66


(3)  From date of initial public offering on May 1, 2001

A nonstandardized quotation may also indicate average annual compounded rates of
return  without  including  the effect of the  applicable  sales  charge or over
periods other than those specified for average annual total return.

THE AVERAGE ANNUAL  COMPOUNDED  RATES OF RETURN FOR THE FUNDS  (EXCLUDING  SALES
CHARGES) FOR THE PERIODS ENDED MARCH 31, 2003 ARE AS FOLLOWS:

Large Cap Growth Fund (Class A)
- -------------------------------
1 Year                                   -33.69%
3 Years                                  -28.29%
5 Years                                  -12.66%
Since inception (8-2-93)                   0.91%

Large Cap Growth Fund (Class B)
- -------------------------------
1 Year                                   -34.63%
Since inception (5-1-01)                 -26.46%

Large Cap Growth Fund (Class C)
- -------------------------------
1 Year                                   -34.26%
3 Years                                  -29.04%
5 Years                                  -13.60%
Since inception (6-7-93)                   0.01%

Growth Opportunities Fund (Class A)
- -----------------------------------
1 Year                                   -30.14%
3 Years                                  -26.84%
5 Years                                   -0.80%
Since inception (9-29-95)                  7.18%

Growth Opportunities Fund (Class B)
- -----------------------------------
1 Year                                   -31.78%
Since inception (5-1-01)                 -27.98%

Growth Opportunities Fund (Class C)
- -----------------------------------
1 Year                                   -31.55%
3 Years                                  -27.77%
Since inception (8-1-99)                 -10.54%

Enhanced 30 Fund (Class A)
- --------------------------
1 Year                                   -26.19%
Since inception (5-1-00)                 -12.73%

Enhanced 30 Fund (Class B)
- --------------------------
1 Year                                   -26.70%
Since inception (5-1-01)                 -16.59%

                                       67


Enhanced 30 Fund (Class C)
- --------------------------
1 Year                                   -26.32%
Since inception (5-16-00)                -13.22%

Emerging Growth Fund (Class A)
- ------------------------------
1 Year                                   -27.90%
3 Years                                   -5.61%
5 Years                                    6.33%
Since inception (10-3-94)                 12.57%

Emerging Growth Fund (Class B)
- ------------------------------
1 Year                                   -30.34%
Since inception (5-1-01)                 -12.43%

Emerging Growth Fund (Class C)
- ------------------------------
1 Year                                   -30.27%
3 Years                                   -7.13%
5 Years                                    5.05%
Since inception (10-3-94)*                11.29%

Value Plus Fund (Class A)
- -------------------------
1 Year                                   -28.59%
3 Years                                  -10.15%
Since inception (5-1-98)                  -3.05%

Value Plus Fund (Class B)
- -------------------------
1 Year                                   -29.05%
Since inception (5-1-01)                 -18.62%

Value Plus Fund (Class C)
- -------------------------
1 Year                                   -29.08%
3 Years                                  -10.62%
Since inception (5-1-98)*                 -3.93%

*    Date reflects inception of the predecessor.

A  nonstandardized  quotation of total return will always be  accompanied by the
Fund's average annual total return as described above.

                                       68


The  Funds  may   advertise   average   annual   total  return  after  taxes  on
distributions.  Average annual total return after taxes on distributions will be
computed by finding the average annual  compounded rates of return over 1, 5 and
10 year  periods  that would  equate the initial  amount  invested to the ending
value, according to the following formula:

     P(1+T)^n=ATV
                 D

Where:
P    = a hypothetical initial payment of $1,000.
T    = average annual total return (after taxes on distributions).
n    = number of years.
ATV  = ending value of a  hypothetical  $1,000  payment made at the beginning of
   D   the 1-,  5-, or  10-year  periods  at the end of the 1-,  5-, or  10-year
       periods (or fractional  portion),  after taxes on fund  distributions but
       not after taxes on redemption.

The  calculation  of average  annual total  return after taxes on  distributions
assumes the reinvestment of all dividends and distributions,  less the taxes due
on such distributions. The calculation also assumes the deduction of the current
maximum sales charge from the initial $1,000  payment.  If a Fund (or class) has
been in existence  less than one,  five or ten years,  the time period since the
date of the  initial  public  offering  of shares  will be  substituted  for the
periods stated.

THE AVERAGE  ANNUAL  RETURNS OF THE FUNDS AFTER TAXES ON  DISTRIBUTIONS  FOR THE
PERIODS ENDED MARCH 31, 2003 ARE AS FOLLOWS:

Large Cap Growth Fund (Class A)
- -------------------------------
1 Year                                   -37.51%
5 Years                                  -14.36%
Since inception (8-2-93)                  -0.52%

Large Cap Growth Fund (Class B)
- -------------------------------
1 Year                                   -37.25%
Since inception (5-1-01)                 -28.01%

Large Cap Growth Fund (Class C)
- -------------------------------
1 Year                                   -34.26%
5 Years                                  -14.28%
Since inception (6-7-93)                  -0.66%

Growth Opportunities Fund (Class A)
- -----------------------------------
1 Year                                   -34.16%
5 Years                                   -2.83%
Since inception (9-29-95)                  5.46%

                                       69


Growth Opportunities Fund (Class B)
- -----------------------------------
1 Year                                   -34.51%
Since inception (5-1-01)                 -29.49%

Growth Opportunities Fund (Class C)
- -----------------------------------
1 Year                                   -31.55%
Since inception (8-2-99)                 -10.68%

Enhanced 30 Fund (Class A)
- --------------------------
1 Year                                   -30.72%
Since inception (5-1-00)                 -14.76%

Enhanced 30 Fund (Class B)
- --------------------------
1 Year                                   -29.64%
Since inception (5-1-01)                 -18.40%

Enhanced 30 Fund (Class C)
- --------------------------
1 Year                                   -26.35%
Since inception (5-16-00)  -13.27%

Emerging Growth Fund (Class A)
- ------------------------------
1 Year                                   -32.37%
5 Years                                    2.55%
Since inception (10-3-94)                  8.98%

Emerging Growth Fund (Class B)
- ------------------------------
1 Year                                   -33.46%
Since inception (5-1-01)                 -14.52%

Emerging Growth Fund (Class C)
- ------------------------------
1 Year                                   -30.64%
5 Years                                    2.26%
Since inception (10-3-94)*                 8.56%

Value Plus Fund (Class A)
- -------------------------
1 Year                                   -32.84%
Since inception (5-1-98)                  -4.89%

Value Plus Fund (Class B)
- -------------------------
1 Year                                   -32.03%
Since inception (5-1-01)                 -20.43%

Value Plus Fund (Class C)
- -------------------------
1 Year                                   -29.08%
Since inception (5-1-98)*                 -4.50%

*    Date reflects inception of the predecessor.

                                       70


The Funds may advertise average annual total return after taxes on distributions
and  redemption.  Average annual total return after taxes on  distributions  and
redemption  will be computed by finding the average annual  compounded  rates of
return  over 1, 5 and 10 year  periods  that  would  equate the  initial  amount
invested to the ending value, according to the following formula:

P(1+T)^n=ATV
            DR
Where:
P     = a hypothetical initial payment of $1,000.
T     = average   annual  total  return  (after  taxes  on   distributions   and
        redemption).
n     = number of years.
ATV   = ending value of a  hypothetical  $1,000 payment made at the beginning of
   DR   the 1-,  5-, or  10-year  periods  at the end of the 1-,  5-, or 10-year
        periods (or fractional  portion),  after taxes on fund distributions and
        redemption.

The calculation of average annual total return after taxes on distributions  and
redemption assumes the reinvestment of all dividends and distributions, less the
taxes due on such  distributions.  The calculation also assumes the deduction of
the current  maximum sales charge from the initial $1,000  payment.  If the Fund
(or  class) has been in  existence  less than one,  five or ten years,  the time
period  since  the  date  of the  initial  public  offering  of  shares  will be
substituted for the periods stated.

THE AVERAGE ANNUAL TOTAL RETURN FOR THE FUNDS AFTER TAXES ON  DISTRIBUTIONS  AND
REDEMPTION FOR THE PERIODS ENDED MARCH 31, 2003 ARE AS FOLLOWS:

Large Cap Growth Fund (Class A)
- -------------------------------
1 Year                                   -23.03%
5 Years                                   -9.53%
Since inception (8-2-93)                   0.53%

Large Cap Growth Fund (Class B)
- -------------------------------
1 Year                                   -22.87%
Since inception (5-1-01)                 -21.67%

Large Cap Growth Fund (Class C)
- -------------------------------
1 Year                                   -21.04%
5 Years                                   -9.42%
Since inception (6-7-93)                   0.40%

Growth Opportunities Fund (Class A)
- -----------------------------------
1 Year                                   -20.98%
5 Years                                   -1.45%
Since inception (9-29-95)                  5.27%

                                       71


Growth Opportunities Fund (Class B)
- -----------------------------------
1 Year                                   -21.19%
Since inception (5-1-01)                 -22.77%

Growth Opportunities Fund (Class C)
- -----------------------------------
1 Year                                   -19.37%
Since inception (8-2-99)                  -8.16%

Enhanced 30 Fund (Class A)
- --------------------------
1 Year                                   -18.67%
Since inception (5-1-00)                 -11.34%

Enhanced 30 Fund (Class B)
- --------------------------
1 Year                                   -18.19%
Since inception (5-1-01)                 -14.41%

Enhanced 30 Fund (Class C)
- --------------------------
1 Year                                   -16.16%
Since inception (5-16-00)                -10.30%

Emerging Growth Fund (Class A)
- ------------------------------
1 Year                                   -19.64%
5 Years                                    3.17%
Since inception (10-3-94)                  8.64%

Emerging Growth Fund (Class B)
- ------------------------------
1 Year                                   -20.28%
Since inception (5-1-01)                 -11.32%

Emerging Growth Fund (Class C)
- ------------------------------
1 Year                                   -18.55%
5 Years                                    3.12%
Since inception (10-3-94)*                 8.36%

Value Plus Fund (Class A)
- -------------------------
1 Year                                   -20.07%
Since inception (5-1-98)                  -3.30%

Value Plus Fund (Class B)
- -------------------------
1 Year                                   -19.56%
Since inception (5-1-01)                 -15.95%

Value Plus Fund (Class C)
- -------------------------
1 Year                                   -17.85%
Since inception (5-1-98)*                 -3.02%

                                       72


* Date reflects inception of the predecessor.

From time to time,  the Funds may advertise  their yield.  A yield  quotation is
based on a 30-day (or one month)  period and is  computed  by  dividing  the net
investment  income per share  earned  during the period by the maximum  offering
price  per  share on the  last day of the  period,  according  to the  following
formula:

                           Yield = 2[(a-b/cd +1)^6 -1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares  outstanding  during the period that were
    entitled to receive dividends
d = the maximum offering price per share on the last day of the period

Solely for the purpose of computing  yield,  dividend  income is  recognized  by
accruing 1/360 of the stated  dividend rate of the security each day that a Fund
owns the security.  Generally, interest earned (for the purpose of "a" above) on
debt  obligations  is  computed  by  reference  to the yield to maturity of each
obligation  held based on the market value of the obligation  (including  actual
accrued interest) at the close of business on the last business day prior to the
start of the 30-day (or one month)  period for which yield is being  calculated,
or, with respect to obligations  purchased  during the month, the purchase price
(plus actual accrued interest).

Performance  quotations are based on historical earnings and are not intended to
indicate future performance.  Average annual total return and yield are computed
separately  for Class A, Class B and Class C shares of the  Funds.  The yield of
Class A shares is  expected  to be higher  than the yield of Class B and Class C
shares  due to the  higher  distribution  fees  imposed  on Class B and  Class C
shares.

To help  investors  better  evaluate how an  investment  in a Fund might satisfy
their investment objective,  advertisements regarding a Fund may discuss various
measures of Fund  performance,  including  current  performance  ratings  and/or
rankings  appearing in financial  magazines,  newspapers and publications  which
track mutual fund performance.  Advertisements may also compare Fund performance
to performance as reported by other investments, indices and averages.

When  advertising  current ratings or rankings,  the Funds may use the following
publications to discuss or compare Fund performance:

Lipper  Mutual  Fund  Performance  Analysis  measures  total  return and average
current  yield for the mutual fund  industry  and ranks  individual  mutual fund
performance   over  specified  time  periods   assuming   reinvestment   of  all
distributions, exclusive of sales charges.

                                       73


Morningstar,  Inc.,  an  independent  rating  service,  is the  publisher of the
bi-weekly  Mutual  Fund  Values.  Mutual  Fund  Values  rates  more  than  1,000
NASDAQ-listed  mutual  funds of all  types,  according  to  their  risk-adjusted
returns.  The maximum  rating is five stars and ratings  are  effective  for two
weeks.

In addition, a Fund may also use comparative performance information of relevant
indices, including the following:

The Dow Jones  Industrial  Average  is a  measurement  of general  market  price
movement for 30 widely held stocks.

The S&P 500 Index is a widely recognized unmanaged index that measures the stock
performance  of 500  large  and  medium  sized  companies  and is often  used to
indicate the performance of the overall stock market.

The S&P Barra Value Index is a capitalization-weighted index comprised of stocks
of the S&P 500 with low price-to-book ratios relative to the S&P 500 as a whole.
Each company of the S&P 500 is assigned to either the S&P 500 Value Index or the
S&P 500 Growth Index so that the sum of the indices reflects the total S&P 500.

The Russell 1000 Growth Index  measures the  performance  of those  Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.

The Russell 1000 Value Index  measures  the  performance  of those  Russell 1000
companies with lower price-to-book ratios and lower forecasted growth values.

The Russell 2000 Index is an unmanaged index of small cap performance.

The Russell 2000 Growth Index  measures the  performance  of those  Russell 2000
companies with higher price-to-book ratios and higher forecasted growth values.

The Russell 2500 Index measures the performance of the 2,500 smallest  companies
in the  Russell  3000 Index,  which  represents  approximately  17% of the total
market capitalization of the Russell 3000 Index.

In assessing such  comparisons  of  performance an investor  should keep in mind
that the composition of the investments in the reported  indices and averages is
not identical to a Fund's portfolio,  that the averages are generally  unmanaged
and that the items  included in the  calculations  of such  averages  may not be
identical to the formula used by the Funds to calculate  their  performance.  In
addition,  there can be no assurance that a Fund will continue this  performance
as compared to such other averages.

PRINCIPAL SECURITY HOLDERS
- --------------------------

As of July 3, 2003, the following  shareholders  held over 5% of the outstanding
shares of a Fund (or class):

                                       74




- -----------------------------------------------------------------------------------------------
FUND                                  SHAREHOLDER                                    % OF CLASS
- -----------------------------------------------------------------------------------------------
                                                                               
Large Cap Growth Fund -               Fifth Third Bank - RPS                         46.31%
Class A                               MD 1090BB
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Western and Southern Life Insurance Company    15.78%
Class A                               400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Western-Southern Life Assurance                10.02%
Class A                               Company
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Western and Southern Life Insurance             9.81%
Class A                               Company
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               A.G. Edwards & Sons Inc. Custodian             10.20%
Class B                               FBO A Customer's Account
                                      23133 Brookdale Street
                                      St. Clair Shores, MI
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               A.G. Edwards & Sons Inc. Custodian             10.20%
Class B                               FBO A Customer's Account
                                      23133 Brookdale Street
                                      St. Clair Shores, MI
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Donaldson Lufkin & Jenrette                     8.50%
Class B                               FBO A Customer's Account
                                      P.O. Box 2052
                                      Jersey City, NJ
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Glen M. Hanson                                  6.64%
Class B                               6 Keating Drive
                                      Cold Spring, KY
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Charles J. Summerville                          8.93%
Class B                               2052 Clarence Avenue
                                      Lakewood, OH
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Pershing LLC*                                  28.10%
Class B                               P.O. Box 2052
                                      Jersey  City, NJ
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Wells Fargo Investments LLC                     6.66%
Class B                               608 Second Avenue South
                                      Minneapolis, MN
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Donaldson Lufkin & Jenrette                    12.37%
Class C                               P.O. Box 2052
                                      Jersey City, NJ
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Brian G. McElheny                               5.75%
Class C                               207 W. Jackson
                                      Carbondale, IL
- -----------------------------------------------------------------------------------------------
Large Cap Growth Fund -               Haley Stone Supply Inc.                         5.81%
Class C                               1085 Collins Court
                                      Oakland, MI
- -----------------------------------------------------------------------------------------------
Growth Opportunities Fund -           Fidelity Investments Institutional             18.79%
Class A                               100 Magellan Way KW1C
                                      Covington, KY
- -----------------------------------------------------------------------------------------------

                                       75


- -----------------------------------------------------------------------------------------------
Growth Opportunities Fund -           Fifth Third Bank - RPS                          5.05%
Class A                               MD 1090BB
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Growth Opportunities Fund -           National Financial Services Corp.               5.20%
Class A                               For Benefit of a Customer's Account
                                      P.O. Box 370
                                      New York, NY
- -----------------------------------------------------------------------------------------------
Growth Opportunities Fund -           National Financial Services Corp.               6.21%
Class A                               For Benefit of a Customer's Account
                                      1 Wall Street
                                      New York, NY
- -----------------------------------------------------------------------------------------------
Emerging Growth Fund-Class A          Merrill Lynch, Pierce Fenner & Smith           17.62%
                                      Incorporated
                                      For the Sole Benefit of its Customers
                                      4800 Deer Lake Drive East
                                      Jacksonville, FL
- -----------------------------------------------------------------------------------------------
Emerging Growth Fund-Class A          Fifth Third Bank - RPS                         6.16%
                                      MD 1090BB
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Emerging Growth Fund-Class B          Merrill Lynch, Pierce Fenner & Smith           15.21%
                                      Incorporated
                                      For the Sole Benefit of its Customers
                                      4800 Deer Lake Drive East
                                      Jacksonville, FL
- -----------------------------------------------------------------------------------------------
Emerging Growth Fund-Class C          Merrill Lynch, Pierce Fenner & Smith           38.50%
                                      Incorporated
                                      For the Sole Benefit of its Customers
                                      4800 Deer Lake Drive East
                                      Jacksonville, FL
- -----------------------------------------------------------------------------------------------
Enhanced 30 Fund-Class A              The Western & Southern Life Insurance Company  19.84%
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Enhanced 30 Fund-Class A              The Western & Southern Life Insurance          54.68%
                                      Company*
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Enhanced 30 Fund-Class B              Merrill Lynch, Pierce Fenner & Smith           16.06%
                                      Incorporated
                                      For the Sole Benefit of its Customers
                                      4800 Deer Lake Drive East
                                      Jacksonville, FL
- -----------------------------------------------------------------------------------------------
Enhanced 30 Fund-Class C              Brenda L. Andreas                               5.41%
                                      406 Red Barn Road
                                      Willow Grove, PA
- -----------------------------------------------------------------------------------------------
Enhanced 30 Fund-Class C              Merrill Lynch, Pierce Fenner & Smith           20.21%
                                      Incorporated
                                      For the Sole Benefit of its Customers
                                      4800 Deer Lake Drive East
                                      Jacksonville, FL
- -----------------------------------------------------------------------------------------------
Enhanced 30 Fund-Class C              Stifel Nicolaus & Co. Inc.                      7.05%
                                      501 North Broadway
                                      St. Louis, MO
- -----------------------------------------------------------------------------------------------

                                       76


- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class A               Columbus Life Insurance Company                22.42%
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class A               Fifth Third Bank - RPS                         21.93%
                                      MD 1090BB
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class A               NFSC FEBO                                       5.27%
                                      P.O. Box 370
                                      New York, NY
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class A               NFSC FEBO                                       7.27%
                                      1 Wall Street
                                      New York, NY
- -----------------------------------------------------------------------------------------------
 Value Plus Fund-Class A              The Western & Southern Life Insurance Co.      19.85%
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class B               Donald P. Morgan                                5.73%
                                      3716 S Three Mile Road
                                      Bay City, MI
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class B               Mikey N. Goolsby                                5.77%
                                      266 County Road 461A
                                      Brazoria, TX
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class B               Scott & Stringfellow Inc.                       5.09%
                                      909 East Main Street
                                      Richmond, VA
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class B               Francis H. Ehlmann                              6.09%
                                      3221 Bowman Ridge
                                      Saint Charles, MO
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class B               Donaldson, Lufkin & Jenrette                    5.68%
                                      FBO A Customer's Account
                                      P.O. Box 2052
                                      Jersey City, NJ
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class B               Donaldson, Lufkin &                            8.29%
                                      Jenrette FBO A
                                      Customer's Account
                                      P.O. Box 2052
                                      Jersey City, NJ
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class B               PaineWebber                                    6.37%
                                      For the Benefit of its Customers
                                      P.O. Box 3321
                                      Weehawken, NJ
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class C               The Western & Southern Life Insurance Company  13.52%
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Value Plus Fund-Class C               Western-Southern Life Insurance                 9.52%
                                      Company
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------

                                       77


- -----------------------------------------------------------------------------------------------
Small Cap Growth Fund-Class A         Merrill Lynch, Pierce Fenner & Smith            5.99%
                                      Incorporated
                                      For the Sole Benefit of its Customers
                                      4800 Deer Lake Drive East
                                      Jacksonville, FL
- -----------------------------------------------------------------------------------------------
Small Cap Growth Fund-Class A         SEI Private Trust Company                       9.56%
                                      c/o Irwin Union
                                      One Freedom Valley Drive
                                      Oaks, PA
- -----------------------------------------------------------------------------------------------
Small Cap Growth Fund-Class A         Western & Southern Life*                       25.75%
                                      400 Broadway MS 80
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Small Cap Growth Fund-Class A         The Western & Southern Life Insurance Co.      20.03%
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Small Cap Growth Fund-Class A         The Western & Southern Life Assurance Co.      11.45%
                                      400 Broadway
                                      Cincinnati, OH
- -----------------------------------------------------------------------------------------------
Small Cap Growth Fund-Class B         First Southwest Company FBO                     5.93%
                                      325 N St Paul, Suite 800
                                      Dallas, TX
- -----------------------------------------------------------------------------------------------
Small Cap Growth Fund-Class B         Merrill Lynch, Pierce Fenner & Smith           17.11%
                                      Incorporated
                                      For the Sole Benefit of its Customers
                                      4800 Deer Lake Drive East
                                      Jacksonville, FL
- -----------------------------------------------------------------------------------------------
Small Cap Growth Fund-Class C         Merrill Lynch, Pierce Fenner & Smith           56.16%
                                      Incorporated
                                      For the Sole Benefit of its Customers
                                      4800 Deer Lake Drive East
                                      Jacksonville, FL
- -----------------------------------------------------------------------------------------------


*May be deemed to  control a Fund (or class) by virtue of the fact that it owned
of record more than 25% of the outstanding shares as of July 3, 2003.

As of July 3, 2003,  the  Trustees and officers of the Trust as a group owned of
record or beneficially  less than 1% of the outstanding  shares of the Trust and
of each Fund (or class thereof).

CUSTODIAN
- ---------

Brown Brothers Harriman & Co., 140 Broadway, New York, New York 10005, serves as
the Trust's custodian.  Brown Brothers Harriman acts as the Trust's  depository,
safe keeps its portfolio securities, collects all income and other payments with
respect  thereto,  disburses  funds  as  instructed  and  maintains  records  in
connection with its duties.

AUDITORS
- --------

The firm of Ernst & Young LLP, 250 East Fifth Street, Cincinnati, Ohio, has been
selected as independent  auditors for the Trust for fiscal year ending March 31,
2004.  Ernst  & Young  LLP  will  perform  an  audit  of the  Trust's  financial
statements for its fiscal year end and advise the Trust as to certain accounting
matters.

                                       78


TRANSFER, ACCOUNTING AND ADMINISTRATIVE AGENT
- ---------------------------------------------

TRANSFER  AGENT.  The Trust's  transfer agent,  Integrated  Fund Services,  Inc.
("Integrated"),  221 East Fourth Street,  Cincinnati,  Ohio 45202, maintains the
records  of  each  shareholder's   account,   answers  shareholders'   inquiries
concerning  their  accounts,  processes  purchases and redemptions of the Funds'
shares,  acts as dividend and  distribution  disbursing agent and performs other
shareholder  service  functions.  For providing  transfer agent and  shareholder
services to the Trust,  Integrated  receives a monthly per account fee from each
Fund, plus out of-pocket expenses.  Integrated is an affiliate of the Advisor by
reason of common ownership.

ACCOUNTING  AND  PRICING  AGENT.  Integrated  provides  accounting  and  pricing
services to the Trust.  For calculating  daily NAV per share and maintaining all
necessary  books and records to enable  Integrated  to perform its duties,  each
Fund  pays  Integrated  a fee  based  on  the  asset  size  of  the  Fund,  plus
out-of-pocket  expenses.  The  Funds  also  pay the  costs  of  outside  pricing
services.

Prior to March 17, 2002,  Investors Bank & Trust Company provided accounting and
pricing and  administrative  services to the Emerging  Growth Fund and the Value
Plus Fund. Set forth below are the accounting and pricing fees paid by the Funds
during the stated fiscal periods:

                                         3-31-03     3-31-02      12-31-00
                                         -------     -------      --------

Emerging Growth Fund                    $ 66,234    $196,006*    $ 83,161*
Value Plus Fund                           52,782     147,233*      98,093*

                                         3-31-03     3-31-02      3-31-01
                                         -------     -------      -------

Enhanced 30 Fund                        $ 45,750    $ 47,000     $ 32,000
Large Cap Growth                          47,250      52,000       41,000
Growth Opportunities Fund                 56,750      59,000       46,000
Small Cap Growth Fund                     19,169

*    Represents  a unified  fee that  includes  accounting,  administration  and
     custody fees.

ADMINISTRATIVE AGENT.  Integrated also provides  administrative  services to the
Funds. These administrative  services include supplying  non-investment  related
statistical  and  research  data,  internal  regulatory   compliance   services,
executive  and  administrative  services,  supervising  the  preparation  of tax
returns,  reports to shareholders of the Funds,  reports to and filings with the
SEC and state securities commissions, and materials for meetings of the Board of
Trustees.  For the  performance  of these  administrative  services,  Integrated
receives a monthly  fee from each Fund based on its  average  daily net  assets,
plus out-of-pocket  expenses.  The fees paid for administrative  services by the
Funds for the  fiscal  year  ended  March  31,  2003 are set  forth  below.  The
administrative  fees paid by the Emerging Growth Fund and Value Plus Fund during
prior fiscal years are reflected in the  accounting and pricing fee chart above.
The  Enhanced 30 Fund,  the Large Cap Growth  Fund and the Growth  Opportunities
Fund did not began paying administrative fees until August 1, 2002.

                                       79

                                         3-31-03
                                         -------
Emerging Growth Fund                    $151,466
Value Plus Fund                           37,217
Enhanced 30 Fund                           3,025
Large Cap Growth Fund                     13,745
Growth Opportunities Fund                 41,073
Small Cap Growth Fund                      3,806

ANNUAL REPORT
- -------------

The  Trust's  financial  statements  as of March 31,  2003 appear in the Trust's
annual  report,  which  is  incorporated  by  reference  herein.  The  financial
statements were audited by Ernst & Young LLP.

                                       80


                                    APPENDIX
                        BOND AND COMMERCIAL PAPER RATINGS

     Set forth below are descriptions of the ratings of Moody's,  S&P and Fitch,
which  represent  their opinions as to the quality of the securities  which they
undertake to rate. It should be emphasized,  however,  that ratings are relative
and subjective and are not absolute standards of quality.

                              MOODY'S BOND RATINGS

Aaa. Bonds that are rated Aaa are judged to be the best quality.  They carry the
     smallest degree of investment  risk and are generally  referred to as "gilt
     edged."  Interest  payments are protected by a large or by an exceptionally
     stable  margin  and  principal  is  secure.  While the  various  protective
     elements are likely to change,  such changes as can be visualized  are most
     unlikely to impair the fundamentally strong position of such issues.

Aa.  Bonds that are rated Aa are judged to be of high quality by all  standards.
     Together  with the Aaa group  they  comprise  what are  generally  known as
     high-grade  bonds. They are rated lower than the best bonds because margins
     of protection may not be as large as in Aaa securities or  fluctuations  of
     protective  elements  may be of  greater  amplitude  or there  may be other
     elements present which make the long-term risks appear somewhat larger than
     in Aaa securities.

A.   Bonds that are rated A possess many favorable investment attributes and are
     to be considered as upper medium grade obligations. Factors giving security
     to  principal  and interest are  considered  adequate,  but elements may be
     present  which  suggest a  susceptibility  to  impairment  sometime  in the
     future.

Baa. Bonds that are rated Baa are considered as medium grade obligations,  i.e.,
     they are neither highly protected nor poorly secured. Interest payments and
     principal  security appear adequate for the present but certain  protective
     elements may be lacking or may be  characteristically  unreliable  over any
     great   length   of  time.   Such   bonds   lack   outstanding   investment
     characteristics and in fact have speculative characteristics as well.

Ba.  Bonds  that are rated Ba are  judged to have  speculative  elements;  their
     future  cannot be  considered  as well  assured.  Often the  protection  of
     interest and  principal  payments may be very moderate and thereby not well
     safeguarded during both good and bad times over the future.  Uncertainty of
     position characterizes bonds in this class.

B.   Bonds  that are  rated B  generally  lack  characteristics  of a  desirable
     investment.  Assurance of interest and principal payments or of maintenance
     of other terms of the contract over any long period of time may be small.

                                       81


Caa. Bonds  that are  rated  Caa are of poor  standing.  Such  issues  may be in
     default  or there  may be  present  elements  of  danger  with  respect  to
     principal or interest.

Ca.  Bonds that are rated Ca represent  obligations  that are  speculative  in a
     high  degree.  Such  issues  are  often in  default  or have  other  marked
     shortcomings.

C.   Bonds that are rated C are the lowest  rated class of bonds,  and issues so
     rated can be regarded as having  extremely poor prospects of ever attaining
     any real investment standing.

                               S&P'S BOND RATINGS

AAA. Bonds rated AAA have the highest  rating  assigned by S&P.  Capacity to pay
     interest and repay principal is extremely strong.

AA.  Bonds  rated AA have a very  strong  capacity  to pay  interest  and  repay
     principal and differ from higher rated issues only in a small degree.

A.   Bonds rated A have a strong  capacity to pay interest  and repay  principal
     although  they are  somewhat  more  susceptible  to the adverse  effects of
     changes in circumstances and economic  conditions than bonds in the highest
     rated categories.

BBB. Bonds rated BBB are regarded as having an adequate capacity to pay interest
     and repay  principal.  Whereas they normally  exhibit  adequate  protection
     parameters,  adverse economic conditions or changing circumstances are more
     likely to lead to a weakened  capacity to pay interest and repay  principal
     for bonds in this category than in higher rated categories.

     BB, B, CCC, CC and C. Bonds rated BB, B, CCC,  CC, and C are  regarded,  on
balance,  as predominantly  speculative with respect to capacity to pay interest
and  repay  principal  in  accordance  with  the  terms of this  obligation.  BB
indicates  the  lowest  degree  of  speculation  and C  the  highest  degree  of
speculation.  While such bonds will  likely  have some  quality  and  protective
characteristics,  they are  outweighed  by  large  uncertainties  of major  risk
exposures to adverse conditions.

D.   Bonds rated D are in default,  and payment of interest and/or  repayment of
     principal is in arrears.

     Plus (+) or Minus (-).  The  ratings  from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative  standing within the major
rating categories.

NR.  Not rated.

                                       82


                                 FITCH RATINGS:

     AAA - "AAA ratings denote the lowest  expectation of credit risk.  They are
assigned only in cases of  exceptionally  strong  capacity for timely payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events."

     AA - "AA  ratings  denote a very  low  expectation  of  credit  risk.  They
indicate  strong  capacity  for timely  payment of financial  commitments.  This
capacity is not significantly vulnerable to foreseeable events."

     A - "A ratings  denote a low  expectation  of credit risk. The capacity for
timely payment of financial commitments is considered strong. This capacity may,
nevertheless,  be more  vulnerable  to changes in  circumstances  or in economic
conditions than is the case for higher ratings."

     BBB - "BBB ratings  indicate that there is currently a low  expectation  of
credit risk. Capacity for timely payment of financial  commitments is considered
adequate,  but adverse changes in circumstances  and in economic  conditions are
more  likely  to impair  this  capacity.  This is the  lowest  investment  grade
category."

    BB - "BB  ratings  indicate  that  there is a  possibility  of  credit  risk
developing,  particularly  as the result of adverse  economic  change over time;
however,  business or financial alternatives may be available to allow financial
commitments  to be met.  Securities  rated in this  category are not  investment
grade."

    B - "B ratings  indicate  that  significant  credit risk is  present,  but a
limited margin of safety remains. Financial commitments are currently being met;
however,  capacity  for  continued  payment  is  contingent  upon  a  sustained,
favorable business and economic environment."

   CCC, CC, C - "Default is a real  possibility.  Capacity for meeting financial
commitments is solely  reliant upon  sustained,  favorable  business or economic
developments.  A 'CC'  rating  indicates  that  default  of  some  kind  appears
probable. 'C' ratings signal imminent default."

   DDD, DD and D -  "Securities  are not  meeting  current  obligations  and are
extremely  speculative.  'DDD' designates the highest  potential for recovery of
amounts  outstanding  on any  securities  involved.  For  U.S.  corporates,  for
example,  'DD' indicates  expected recovery of 50%-90% of such outstanding,  and
'D' the lowest recovery potential, i.e. below 50%."

UNRATED.  Where no rating has been assigned or where a rating has been suspended
or withdrawn, it may be for reasons unrelated to the quality of the issue.

     Should no rating be assigned, the reason may be one of the following:

     1.   An application for rating was not received or accepted.

                                       83


     2.   The  issue or issuer  belongs  to a group of  securities  that are not
          rated as a matter of policy.

     3.   There is a lack of essential data pertaining to the issue or issuer.

     4.   The  issue  was  privately  placed,  in which  case the  rating is not
          published in Moody's publications.

     Suspension or withdrawal may occur if new and material circumstances arise,
the  effect  of which  preclude  satisfactory  analysis;  if there is no  longer
available  reasonable  up-to-date  data to permit a judgment to be formed;  if a
bond is called for redemption; or for other reasons.

     Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment  attributes are designated by the symbols Aa-1,
A-1, Baa-1, Ba-1 and B-1.

                         S&P'S COMMERCIAL PAPER RATINGS

A.   S& P's  commercial  paper rating is a current  opinion of the likelihood of
     timely  payment of debt  having an  original  maturity  of no more than 365
     days. Ratings are graded into several categories,  ranging from "A" for the
     highest-quality  obligations to "D" for the lowest. These categories are as
     follows:

     A-1  This designation  indicates that the degree of safety regarding timely
          payment is strong. Those issues determined to possess extremely strong
          safety characteristics are denoted with a plus sign (+) designation.
     A-2  Capacity  for  timely  payment  on  issues  with this  designation  is
          satisfactory. However, the relative degree of safety is not as high as
          for issues designated "A-1."
     A-3  Issues carrying this designation have an adequate  capacity for timely
          payment.  The are, however,  more vulnerable to the adverse effects of
          changes  in  circumstances   than  obligations   carrying  the  higher
          designations.
     B    Issues rated "B" are regarded as having only speculative  capacity for
          timely payment.
     C    This rating is assigned to short-term debt obligations with a doubtful
          capacity for payment.
     D    Debt rated "D" is in payment default.  The "D" rating category is used
          when interest payments or principal  payments are not made on the date
          due, even if the applicable  grace period has not expired,  unless S&P
          believes such payments will be made during such grace period.

                                       84


                        MOODY'S COMMERCIAL PAPER RATINGS

     Issuers rated Prime-1 (or related supporting  institutions) have a superior
capacity for repayment of short-term promissory  obligations.  Prime-1 repayment
capacity will normally be evidenced by the  following  characteristics:  leading
market positions in well-established  industries;  high rates of return on funds
employed;  conservative capitalization structures with moderate reliance on debt
and  ample  asset  protection;  broad  margins  in  earnings  coverage  of fixed
financial charges and high internal cash generation;  well-established access to
a range of financial markets and assured sources of alternate liquidity.

     Issuers rated Prime-2 (or related  supporting  institutions)  have a strong
capacity for repayment of short-term promissory obligations.  This will normally
be evidenced by many of the characteristics  cited above but to a lesser degree.
Earnings  trends and  coverage  ratios,  while  sound,  will be more  subject to
variation. Capitalization characteristics,  while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

     Issuers  rated  Prime-3  (or  related  supporting   institutions)  have  an
acceptable  capacity for repayment of  short-term  promissory  obligations.  The
effect  of  industry   characteristics   and  market  composition  may  be  more
pronounced.  Variability in earnings and  profitability may result in changes in
the level of debt  protection  measurements  and the  requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.

                         MOODY'S CORPORATE NOTE RATINGS

MIG-1     "Notes  which are rated  MIG-1 are  judged to be of the best  quality.
          There is present strong protection by established cash flows, superior
          liquidity support or demonstrated broad-based access to the market for
          refinancing."

MIG-2     "Notes which are rated MIG-2 are judged to be of high quality. Margins
          of  protection  are ample  although  not so large as in the  preceding
          group."

                          S&P'S CORPORATE NOTE RATINGS

SP-1      "Debt rated SP-1 has very strong or strong  capacity to pay  principal
          and interest.  Those issues determined to possess  overwhelming safety
          characteristics will be given a plus (+) designation."

SP-2      "Debt  rated  SP-2 has  satisfactory  capacity  to pay  principal  and
          interest."

SP-3      "Debt  rated  SP-3  has  speculative  capacity  to pay  principal  and
          interest."

                                       85




                         THE NAVELLIER PERFORMANCE FUNDS

                       STATEMENT OF ADDITIONAL INFORMATION


                                DATED MAY 1, 2003



         This Statement of Additional Information, which is not a prospectus,
should be read in conjunction with the Prospectus of The Navellier Performance
Funds (the "Fund"), dated May 1, 2003, the Prospectus of the Aggressive Small
Cap Equity Portfolio of the Navellier Performance Funds dated May 1, 2003 and
the Prospectus and Statement of Additional Information for the Class I shares of
the Navellier Mid Cap Growth Portfolio of The Navellier Performance Funds dated
May 1, 2003; copies of which Prospectuses and Statement of Additional
Information may be obtained, without charge, by contacting the Fund, at its
mailing address c/o Navellier Securities, Corp., One East Liberty, Third Floor,
Reno, Nevada 89501; Tel: 1-800-887-8671.




                                TABLE OF CONTENTS

                                                                    
GENERAL INFORMATION AND HISTORY......................................   3

INVESTMENT OBJECTIVES AND POLICIES...................................   3

TRUSTEES AND OFFICERS OF THE FUND....................................  10

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..................  12

THE INVESTMENT ADVISER, DISTRIBUTOR,
 CUSTODIAN AND TRANSFER AGENT........................................  12

BROKERAGE ALLOCATION AND OTHER PRACTICES.............................  17

CAPITAL STOCK AND OTHER SECURITIES...................................  19

PURCHASE, REDEMPTION, AND PRICING OF SHARES..........................  20

TAXES................................................................  23

UNDERWRITERS.........................................................  25

CALCULATION OF PERFORMANCE DATA......................................  26

FINANCIAL STATEMENTS.................................................  26

APPENDIX.............................................................


                                       2





                         GENERAL INFORMATION AND HISTORY

         The Fund is a business trust company organized under the laws of the
State of Delaware on October 17, 1995.

                       INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT OBJECTIVE OF THE NAVELLIER AGGRESSIVE GROWTH PORTFOLIO

         The investment objective of the Navellier Aggressive Growth Portfolio
is to achieve long-term growth of capital primarily through investments in
stocks of companies with appreciation potential.

         The Navellier Aggressive Growth Portfolio is a non-diversified
Portfolio, which means it may invest a larger than normal percentage of its
total assets in the equity (including convertible debt) securities of any one
company or companies which the Investment Adviser believes represents an
opportunity for significant capital appreciation. The Investment Adviser will
not invest more than 10% of the Portfolio's assets in the securities of any
single company or 25% or more of the Portfolio's assets in securities issued by
companies in any one industry. Since the Investment Adviser can invest more of
the Portfolio's assets in the stock of a single company, this Portfolio should
be considered to offer greater potential for capital appreciation as well as
greater risk of loss due to the potential increased investment of assets in a
single company. This Portfolio, because of its non-diversification, also poses a
greater potential for volatility. This Portfolio should not be considered
suitable for investors seeking current income. This Portfolio may invest its
assets in the securities of a broad range of companies without restriction on
their capitalization. Under normal circumstances, the Aggressive Growth
Portfolio will invest at least 80% of its total assets in securities of
companies. However, that projected minimum percentage could be lowered during
adverse market conditions or for defensive purposes and is not a fundamental
policy of the Portfolio. Securities of issuers include, but are not limited to,
common and preferred stock, and convertible preferred stocks that are
convertible into common stock. While this Portfolio intends to operate as a
non-diversified open end management investment company for the purposes of the
1940 Act, it also intends to qualify as a regulated investment company under the
Internal Revenue Code ("Code"). As a non-diversified investment company under
the 1940 Act, the Fund may invest more than 5% and up to 25% of its assets in
the securities of any one issuer at the time of purchase. However, for purposes
of the Internal Revenue Code, as of the last day of any fiscal quarter, this
Portfolio may not have more than 25% of its total assets invested in any one
issuer, and, with respect to 50% of its total assets, the Portfolio may not have
more than 5% of its total assets invested in any one issuer, nor may it own more
than 10% of the outstanding voting securities of any one issuer. These
limitations do not apply to investments in securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities or the securities of
investment companies that qualify as regulated investment companies under the
Code.

         Investors in the Aggressive Growth Portfolio pay no initial sales
charge (load) but do pay an annual 0.25% fee ("12b-1 fee") which over a period
of years could result in higher overall expenses than payment of an initial
sales load.

INVESTMENT OBJECTIVE OF THE NAVELLIER MID CAP GROWTH PORTFOLIO

         The Investment Objective of the Mid Cap Growth Portfolio is to achieve
long-term growth of capital primarily through investment in mid cap companies
with appreciation potential. The Mid Cap Growth Portfolio invests in equity
securities traded in all United States markets including dollar denominated
foreign securities traded in United States markets. It is a diversified
portfolio, meaning it limits its investment in the securities of any single
company (issuer) to a maximum of 5% of the Portfolio assets and further limits
its investments to less than 25% of the Portfolio's assets in any one industry
group. The Mid Cap Growth Portfolio seeks long-term capital appreciation through
investments in securities of mid cap companies (companies with market
capitalization of between $2 billion and $10 billion) which the Investment
Adviser feels are undervalued in the marketplace. Investors in the Mid Cap
Growth Portfolio pay no initial sales charge (load) but do pay an annual 0.25%
fee ("12b-1 fee") which over a period of years could result in higher overall
expenses than payment of an initial sales load. Navellier Management, Inc. is
the Investment Adviser for the Mid Cap Growth Portfolio. Navellier Securities
Corp. is the principal distributor for the Mid Cap Growth Portfolio's shares.
This Portfolio should not be considered suitable for investors seeking current
income.

INVESTMENT OBJECTIVE OF THE NAVELLIER AGGRESSIVE MICRO CAP PORTFOLIO

         The Investment Objective of the Navellier Aggressive Micro Cap
Portfolio is to achieve long-term growth of capital primarily through investment
in companies with appreciation potential. The Aggressive Micro Cap Portfolio
invests in equity securities traded in the United States securities markets of
domestic issuers and of foreign issuers. The sole objective of the Aggressive
Micro Cap Portfolio will be to seek to achieve long-term growth of capital
primarily through investments in securities of micro cap companies

                                       3



(companies with market capitalization of less than $1 billion) with appreciation
potential. There can be no assurance that the Portfolio will achieve its
investment objectives. The Portfolio's investment objectives may not be changed
without shareholder approval. This Portfolio should not be considered suitable
for investors seeking current income. Investors in this Portfolio pay no initial
sales charge but do pay an annual 0.25% fee ("12b-1 fee") which over a period of
years could result in higher overall expenses than payment of an initial sales
charge.

INVESTMENT OBJECTIVE OF THE NAVELLIER SMALL CAP VALUE PORTFOLIO

         The Investment Objective of the Small Cap Value Portfolio is to achieve
long-term growth of capital primarily through investment in small cap companies
which the Investment Adviser believes are undervalued and which the Investment
Adviser believes have appreciation potential. This Portfolio seeks to achieve
its investment objective by investing in equities of small cap issuers with
superior fundamentals, including but not limited to, high dividend yields, and
positive quarterly earnings changes and other value type screens. The Small Cap
Value Portfolio invests in equity securities traded in all United States markets
including dollar denominated foreign securities traded in United States markets.
It is a diversified portfolio, meaning it limits its investment in the
securities of any single company (issuer) to a maximum of 5% of the Portfolio
assets and further limits its investments to less than 25% of the Portfolio's
assets in any one industry group. The Small Cap Value Portfolio seeks long-term
capital appreciation through investments in securities of small cap companies
(companies with market capitalization of less than $2 billion) which the
Investment Adviser feels are undervalued in the marketplace. Investors in the
Small Cap Value Portfolio pay no initial sales charge (load) but do pay an
annual 0.25% fee ("12b-1 fee") which over a period of years could result in
higher overall expenses than payment of an initial sales load. Navellier
Management, Inc. is the Investment Adviser for the Small Cap Value Portfolio.
Navellier Securities Corp. is the principal distributor for the Small Cap Value
Portfolio's shares. This Portfolio should not be considered suitable for
investors seeking current income.

INVESTMENT OBJECTIVE OF THE NAVELLIER LARGE CAP GROWTH PORTFOLIO

         The investment objective of the Navellier Large Cap Growth Portfolio is
to achieve long-term growth of capital primarily through investments in stocks
of companies with appreciation potential.

         The Navellier Large Cap Growth Portfolio is a non-diversified
Portfolio, which means it may invest a larger than normal percentage of its
total assets in the equity (including convertible debt) securities of any one
company or companies which the Investment Adviser believes represents an
opportunity for significant capital appreciation. The Investment Adviser will
not invest more than 10% of the Portfolio's assets in the securities of any
single company or 25% or more of the Portfolio's assets in securities issued by
companies in any one industry. Since the Investment Adviser can invest more of
the Portfolio's assets in the stock of a single company, this Portfolio should
be considered to offer greater potential for capital appreciation as well as
greater risk of loss due to the potential increased investment of assets in a
single company. This Portfolio, because of its non-diversification, also poses a
greater potential for volatility. This Portfolio should not be considered
suitable for investors seeking current income. This Portfolio may invest its
assets in the securities of a broad range of companies with market
capitalization in excess of five billion dollars. Under normal circumstances,
this Portfolio will invest at least 80% of its total assets in securities of
companies with market capitalizations in excess of $5 Billion. However, that
projected minimum percentage could be lowered during adverse market conditions
or for defensive purposes and is not a fundamental policy of the Portfolio.
Securities of issuers include, but are not limited to, common and preferred
stock, and convertible preferred stocks that are convertible into common stock.
While this Portfolio intends to operate as a non-diversified open end management
investment company for the purposes of the 1940 Act, it also intends to qualify
as a regulated investment company under the Internal Revenue Code ("Code"). As a
non-diversified investment company under the 1940 Act, this Portfolio may invest
more than 5% and up to 25% of its assets in the securities of any one issuer at
the time of purchase. However, for purposes of the Internal Revenue Code, as of
the last day of any fiscal quarter, this Portfolio may not have more than 25% of
its total assets invested in any one issuer, and, with respect to 50% of its
total assets, this Portfolio may not have more than 5% of its total assets
invested in any one issuer, nor may it own more than 10% of the outstanding
voting securities of any one issuer. These limitations do not apply to
investments in securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities or the securities of investment companies that
qualify as regulated investment companies under the Code.

         Investors in the Navellier Large Cap Growth Portfolio pay no initial
sales charge but do pay an annual 0.25% fee ("12b-1 fee") which over a period of
years could result in higher overall expenses than payment of an initial sales
charge.

         The investment objective of the Navellier Large Cap Value Portfolio is
to achieve a long-term increase in capital, primarily through investments in
stocks of large cap companies which the Investment Adviser believes are
undervalued.

                                        4



         The Large Cap Value Portfolio invests in equity securities traded in
all United States markets, including dollar-denominated foreign securities
traded in the United States markets. It is a diversified portfolio, meaning it
limits its investment in the securities of any single company (issuer) to a
maximum of 5% of the Portfolio assets and further limits its investments to less
than 25% of the Portfolio's assets in any one industry group. The Large Cap
Value Portfolio seeks long-term capital appreciation through investments in
securities of large cap companies (companies with market capitalization of over
$5 billion) which the Investment Adviser feels are undervalued in the
marketplace. Investors in the Large Cap Value Portfolio pay no initial sales
charge (load) but do pay an annual 0.25% fee ("12b-1 fee") which over a period
of years could result in higher overall expenses than payment of an initial
sales load. Navellier Management, Inc. is the Investment Adviser for the Large
Cap Value Portfolio. Navellier Securities Corp. is the principal distributor for
the Large Cap Value Portfolio's shares. This Portfolio should not be considered
suitable for investors seeking current income.

INVESTMENT OBJECTIVE OF THE NAVELLIER AGGRESSIVE SMALL CAP EQUITY PORTFOLIO

         The Investment Objective of the Navellier Aggressive Small Cap Equity
Portfolio is to achieve long-term growth of capital primarily through investment
in small cap companies with appreciation potential. The Aggressive Small Cap
Equity Portfolio invests in equity securities traded in the United States
securities markets of domestic issuers and of foreign issuers. The sole
objective of the Aggressive Small Cap Equity Portfolio will be to seek to
achieve long-term growth of capital primarily through investments in securities
of small cap companies (companies with market capitalization of less than $2
billion) with appreciation potential. There can be no assurance that the
Portfolio will achieve its investment objectives. The Portfolio's investment
objectives may not be changed without shareholder approval. This Portfolio
should not be considered suitable for investors seeking current income.
Investors in this Portfolio pay an annual 0.25% 12b-1 fee which over a period of
years could result in higher overall expenses than payment of an initial sales
charge.

OTHER INVESTMENTS

         While under normal circumstances each of the Portfolios will invest at
least 80% of its total assets in equity securities, each of the Portfolios may,
for temporary defensive purposes or to maintain cash or cash equivalents to meet
anticipated redemptions, also invest in debt securities and money market funds
if, in the opinion of the Investment Adviser, such investment will further the
cash needs or temporary defensive needs of the Portfolio. In addition, when the
Investment Adviser feels that market or other conditions warrant it, for
temporary defensive purposes, each Portfolio may retain cash or invest all or
any portion of its assets in cash equivalents, including money market mutual
funds. Under normal conditions, a Portfolio's holdings in non-equity securities
should not exceed 20% of the total assets of the Portfolio. If a Portfolio's
assets, or a portion thereof, are retained in cash or money market funds or
money market mutual funds, such holdings will, in all probability, be deposited
in interest-bearing or money market accounts or money market mutual funds such
as the Fund for Government Investors, an unaffiliated money market mutual fund.
FBR National Bank & Trust is the Fund's Transfer Agent and Custodian. Cash
deposits by the Fund in interest bearing instruments administered by FBR
National Bank & Trust ("Transfer Agent") will only be deposited with the
Transfer Agent if its interest rates, terms, and security are equal to or better
than could be received by depositing such cash with another savings institution.
Money market mutual fund investments have no FDIC protection. Deposits in FBR
National Bank & Trust interest bearing, non money market mutual fund deposit
accounts have only $100,000 protection. Money market mutual fund investment
products are not insured by the FDIC. They are not deposits. Nor are they any
other obligation of, or guaranteed by, any bank or bank affiliate and involve
investment risks, including possible loss of the principal amount invested.

         It is anticipated that, for each of the Portfolios, all of their
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 by Standard &
Poor's Corporation (AAA, AA, A, BBB; securities which are rated BBB/Baa have
speculative characteristics). 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 Portfolio has invested drops
below investment grade, the Portfolio will promptly dispose of such investment.
When interest rates go up, the market value of debt securities generally goes
down and long-term debt securities tend to be more volatile than short term debt
securities.

         In determining the types of companies which will be suitable for
investment by the Aggressive Growth Portfolio, the Mid Cap Growth Portfolio, the
Aggressive Small Cap Portfolio, the Small Cap Value Portfolio, the Large Cap
Growth Portfolio, the Large Cap Value Portfolio, and the Aggressive Small Cap
Equity Portfolio, the Investment Adviser will screen over 9,000 stocks and will
take into account various factors and base its stock selection on its own model
portfolio theory concepts. Each Portfolio invests primarily in what the
Investment Adviser believes are undervalued common stocks believed to have
long-term appreciation potential. Stocks are

                                       5



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 or increased value. There are no limitations on
the Aggressive Growth Portfolio or the Large Cap Growth Portfolio as to the
type, operating history, or dividend paying record of companies or industries in
which these two Portfolios may invest; the principal criteria for investment is
that the securities provide opportunities for capital growth. The Mid Cap Growth
Portfolio invests at least 80% of its total assets in equity securities of
companies defined as Mid Cap (companies with capitalization of between $2
billion and $10 Billion). The Aggressive Micro Cap Portfolio invests at least
80% of its total assets in equity securities of companies defined as micro cap
(companies with capitalization of less than $1 Billion.) The Small Cap Value
Portfolio and the Aggressive Small Cap Equity Portfolio invest at least 80% of
their total assets in equity securities of companies defined as small cap
(companies with capitalization of less than $2 Billion). The Large Cap Growth
Portfolio and the Large Cap Value Portfolio invest at least 80% of their total
assets in equity securities of companies defined as large cap (companies with
capitalization over $5 Billion). These Portfolios will invest up to 100% of
their capital in equity securities selected for their growth or value potential.
The Investment Adviser will typically (but not always) purchase common stocks of
issuers which have records of profitability and strong earnings momentum. When
selecting such stocks for investment by the Portfolios, the issuers may be
lesser known companies moving from a lower to a higher market share position
within their industry groups rather than the largest and best known companies in
such groups. The Investment Adviser, when investing for the Aggressive Growth
Portfolio, the Large Cap Growth Portfolio and the Large Cap Value Portfolio may
also purchase common stocks of well known, highly researched, large companies if
the Investment Adviser believes such common stocks offer opportunity for
long-term capital appreciation.

LACK OF OPERATING HISTORY AND EXPERIENCE

         The Aggressive Growth Portfolio went effective December 28, 1995 and
has over five years of operations. The Mid Cap Growth Portfolio and the
Aggressive Micro Cap Portfolio both went effective November 26, 1996 (however
The Aggressive Micro Cap Portfolio was not actively marketed to the public until
March 17, 1997). The Large Cap Growth, The Small Cap Value, and The Large Cap
Value Portfolios are all investment company portfolios which went effective
December 18, 1997. The Aggressive Small Cap Equity Portfolio was originally
organized as an investment company under The Navellier Series Fund which went
effective April 1, 1994. The Investment Adviser was organized on May 28, 1993.
Although the Investment Adviser 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 Adviser
still has overall responsibility for the administration of each of the
Portfolios and oversees the administrative services performed by others as well
as servicing customer's needs and, along with each Portfolio's Trustees, is
responsible for the selection of such agents and their oversight. The Investment
Adviser also has overall responsibility for the selection of securities for
investment for each of the Portfolios. The Investment Adviser has a consulting
agreement with Robert Barnes, Ph.D, whereby Mr. Barnes provides analysis and
consults with the Investment Adviser regarding large cap equity securities as
possible investments for The Large Cap Growth Portfolio.


         Louis Navellier, the owner of the Investment Adviser, is also the owner
of another investment advisory firm, Navellier & Associates Inc., which
presently manages over $3.0 billion in investor funds. Louis Navellier, the
owner of the Investment Adviser, is also the owner of another investment
advisory firm, Navellier Fund Management, Inc., and owns 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 Adviser
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
Adviser 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 one or more of the Portfolios of the Fund not being able to
purchase or sell all shares which Investment Adviser 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 Adviser will be trading on behalf of the various Portfolios of the
Fund in some or all of the same securities at the same time that Navellier &
Associates Inc., Navellier Fund Management, Inc. 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 Adviser 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 Adviser 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,


                                       6



which could adversely affect the performance of the various Portfolios. While
the Investment Adviser 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 any Portfolio of the Fund involves certain
speculative considerations. There can be no assurance that any of the
Portfolios' objectives will be achieved or that the value of the investment will
increase. An investment in shares of the Aggressive Growth Portfolio and/or the
Large Cap Growth Portfolio may also involve a higher degree of risk than an
investment in shares of a more traditional open-end diversified investment
company because the Aggressive Growth Portfolio and the Large Cap Growth
Portfolio may each invest up to 10% of its assets in the securities of any
single issuer and up to 25% of its assets in the securities of any single
industry, thereby potentially creating greater volatility or increasing the
chance of losses. As non-diversified investment Portfolios, the Aggressive
Growth Portfolio and the Large Cap Growth Portfolio may each be subject to
greater fluctuation in the total market value of such Portfolio, and economic,
political or regulatory developments may have a greater impact on the value of
these Portfolios than would be the case if these Portfolios were diversified
among a greater number of issuers. All Portfolios intend to comply with the
diversification and other requirements applicable to regulated investment
companies under the Internal Revenue Code.


         As part of a merger of the Aggressive Small Cap Equity Portfolio of the
Navellier Series Fund ("Series Portfolio") into the Aggressive Small Cap Equity
Portfolio of this Fund ("Performance Portfolio"), the Performance Portfolio has
agreed to accept all assets and to assume all valid liabilities of the Series
Portfolio. There were approximately $70 million in assets transferred to the
Performance Portfolio. Two of the former Trustees of the Navellier Series
Fund, which was merged into the Aggressive Small Cap Equity Portfolio
("Portfolio") on July 24, 1998 have sued to recover from the Portfolio
approximately $4 million in alleged attorneys fees and costs, in connection with
a class action lawsuit filed against them by shareholders of the Portfolio. They
now claim those fees and costs total $6 million. The U.S. District Court has
ruled that they are entitled to be paid their reasonable attorneys fees and
costs that were not paid by the Portfolio's insurer. A trial will be held
shortly to determine the amount if any. The amount could range from a nominal
amount to $6 million or more. The current Trustees of the Navellier Performance
Funds (the "Fund") and the legal counsel to the Fund do not believe that there
is merit to their claim and that their right to any fees may be reversed on
appeal. When the Trustees claim was $3.5 million, Navellier Management Inc.
agreed to pay the amount of fees and costs ultimately awarded, however, the
amount of Navellier Management's payment was not to exceed the amount of the net
assets of the Portfolio at the time of the final determination. The possibility
still does exist that the Portfolio which presently has assets of $7,500,000 may
be liable for some or all of the $6 million in attorneys fees and costs the
former Trustees claim. However, if such claim is ultimately determined by a
court to be valid, only the assets of the Portfolio would be subject to such
claim and not the assets of any other Portfolio of the Fund.


         INVESTMENT POLICIES The investment objectives and policies of each
Portfolio are described in the "Investment Objectives and Policies" section of
the Prospectus. The following general policies supplement the information
contained in that section of the Prospectus. Also following are other types of
investments in which the various Portfolios may invest.

         CERTIFICATES OF DEPOSIT Certificates of deposit are generally
short-term, interest-bearing, negotiable certificates issued by banks or savings
and loan associations 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

                                       7





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 borrow from the
Treasury, while still others are supported only by the credit of the
instrumentality.

         STOCK INDEX FUTURES A stock index futures contract (an "Index Future")
is a contract to buy an integral number of units of the relevant index at a
specified future date at a price agreed upon when the contract is made. A unit
is the value at a given time of the relevant index.

INVESTING IN SECURITIES OF FOREIGN ISSUERS

         Investments in foreign securities (those which are traded principally
in markets outside of the United States), 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. Furthermore, issuers of
foreign securities are subject to different, and often less comprehensive,
accounting, reporting and disclosure requirements than domestic issuers. The
laws of some foreign countries may limit a Fund's ability to invest in
securities of certain issuers located in those countries. The securities of some
foreign issuers and securities traded principally in foreign securities markets
are less liquid and at times more volatile than securities of comparable U.S.
issuers and securities traded principally in U.S. securities markets. Foreign
brokerage commissions and other fees are also generally higher than those
charged in the United States. There are also special tax considerations which
apply to securities of foreign issuers and securities traded principally in
foreign securities markets.

         The risks of investing in foreign securities may be intensified in the
case of investments in emerging markets or countries with limited or developing
capital markets. Prices of securities of companies in emerging markets can be
significantly more volatile than prices of securities of companies in the more
developed nations of the world, reflecting the greater uncertainties of
investing in less developed markets and economies. In particular, countries with
emerging markets may have relatively unstable governments, present the risk of
nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of property
rights than more developed countries. The economies of countries with emerging
markets may be predominantly based on only a few industries or dependent on
revenues from particular commodities or on international aid or development
assistance, may be highly vulnerable to changes in local or global trade
conditions, and may suffer from extreme and volatile debt burdens or inflation
rates. Local securities markets may trade a small number of securities and may
be unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of substantial holdings difficult or impossible at
times. Consequently, securities of issuers located in countries with emerging
markets may have limited marketability and may be subject to more abrupt or
erratic price movements. Also, such local markets typically offer less
regulatory protections for investors.

         While to some extent the risks to the Fund of investing in foreign
securities may be limited, since each Portfolio may not invest

                                       8



more than 15% of its net asset value in such securities and each Portfolio of
the Fund may only invest in foreign securities which are traded in the United
States securities markets, the risks nonetheless exist.

         The Investment 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 Objectives and Policies section of this Prospectus
and for the International Equity Portfolio, will use the criteria described in
the Investment Objectives and Policies for the International Equity Portfolio
described in this Prospectus.

         INVESTMENT RESTRICTIONS The Fund's fundamental policies as they affect
a Portfolio cannot be changed without the approval of a vote of a majority of
the outstanding securities of such Portfolio. A proposed change in fundamental
policy or investment objective will be deemed to have been effectively acted
upon with respect to any Portfolio if a majority of the outstanding voting
securities of that Portfolio 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 of the Portfolio, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy or (b)
more than 50% of the outstanding shares of the Portfolio. For purposes of the
following restrictions (except the percentage restrictions on borrowing and
illiquid securities -- which percentage must be complied with) 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
Portfolio.

         The following investment restrictions are fundamental policies of the
Fund with respect to all Portfolios (unless otherwise specified below) and may
not be changed except as described above. The various Portfolios of the Fund
except as otherwise specified herein may not:

         1. Purchase any securities on margin; PROVIDED, HOWEVER; that the
Portfolios of the Fund may obtain short-term credit as may be necessary for the
clearance of purchases and sales of securities.

         2. 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.

         3. Make securities loans, except that the Fund may make loans of the
portfolio securities of any Portfolio, 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 such Portfolio.

         4. 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 Portfolio.

         5. 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 in such activities.

         6. Purchase securities of companies for the purpose of exercising
management or control.

         7. Participate in a joint or joint and several trading account in
securities.

         8. Issue senior securities or borrow money, except that the Fund may
(i) borrow money only from banks for any Portfolio 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) of such Portfolio, and (ii) borrow money only from banks for
any Portfolio 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 of that Portfolio with respect to
which the borrowing has been made. As an operating policy, no Portfolio may
invest in portfolio securities while the amount of borrowing of the Portfolio
exceeds 5% of the total assets of such Portfolio.

         9. Pledge, mortgage, or hypothecate the assets of any Portfolio to an
extent greater than 10% of the total assets of such Portfolio to secure
borrowings made pursuant to the provisions of Item 8 above.

         10. Purchase for any Portfolio "restricted securities" (as defined in
Rule 144(a)(3) of the Securities Act of 1933), if, as a result of

                                       9


\
such purchase, more than 10% of the net assets (taken at market value) of such
Portfolio 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.

         11. Invest more than 10% of the Aggressive Growth Portfolio's or of the
Large Cap Growth Portfolio's assets in the securities of any single company or
25% or more of any portfolio's total assets in a single industry; invest more
than 5% of the assets of the Mid Cap Growth Portfolio, the Aggressive Micro Cap
Portfolio, the Small Cap Value Portfolio and the Large Cap Value Portfolio in
securities of any single issuer.

         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 8
above.


         PORTFOLIO TURNOVER Each Portfolio has a different expected annual rate
of portfolio turnover which 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 Portfolio'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 Portfolio, including brokerage
commission expenses, dealer mark-ups, and other transaction costs on the sale of
securities, which must be borne directly by the Portfolio. 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 Portfolio's shares and
by requirements, which enable the Fund to receive certain favorable tax
treatment. The portfolio turnover rate for the Navellier Aggressive Micro Cap
Portfolio for the period January 1, 2002 through December 31, 2002 was
166.67%. The portfolio turnover rate for the Navellier Small Cap Value Portfolio
for the period January 1, 2002 through December 31, 2002 was 270.70%. The
portfolio turnover rate for the Navellier Large Cap Growth Portfolio for the
period January 1, 2002 through December 31, 2002 was 114.83%. The portfolio
turnover rate for the Navellier Aggressive Growth Portfolio for the period
January 1, 2002 through December 31, 2002 was 517.16%. The portfolio turnover
rate for the Navellier Mid Cap Growth Portfolio for the period January 1, 2002
through December 31, 2002 was 170.25%. The portfolio turnover rate for the
Navellier Aggressive Small Cap Equity Portfolio for the period January 1, 2002
through December 31, 2002 was 266.63%. The portfolio turnover rate for Navellier
Large Cap Value Portfolio for the year ended December 31, 2002 was 342.85%. The
Fund will attempt to limit the annual portfolio turnover rate of each Portfolio
to 300% or less, however, this rate may be exceeded if in the Investment
Adviser's discretion securities are or should be sold or purchased in order to
attempt to increase the Portfolio's performance. In Wisconsin for the year ended
December 31, 2002 annual portfolio turnover rate of 300% or more is considered a
speculative activity and under Wisconsin statutes could involve relatively
greater risks or costs to the Fund.


         TRUSTEES AND OFFICERS OF THE FUND

         The Fund's Board of Trustees directs the business and affairs of each
Portfolio of the Fund as well as supervises the Investment Adviser, Distributor,
Transfer Agent and Custodian, as described below.


    The following information, as of December 31, 2002, is provided with respect
to each trustee and officer of the Fund:





                                 POSITION(S) HELD WITH                        PRINCIPAL OCCUPATION(S)
 NAME AND ADDRESS            REGISTRANT AND ITS AFFILIATES                    DURING PAST FIVE YEARS
 ----------------       ----------------------------------------    -----------------------------------------
                                                              
Louis Navellier(1)      Trustee and President of The Navellier      Mr. Navellier is and has been the CEO and
45                      Performance Funds. Mr. Navellier is also    President of Navellier & Associates Inc.,
One East Liberty        the CEO, President, Secretary, and          an investment management company since
Third Floor             Treasurer of Navellier Management, Inc.,    1988; CEO and President of Navellier
Reno, NV 89501          a Delaware corporation which is the         Management, Inc.,an investment management
                        Investment Adviser to the Fund. Mr.         company since May 10, 1993; CEO and
                        Navellier is also CEO, President,           President of Navellier International
                        Secretary, and Treasurer of Navellier       Management, Inc., an investment
                        Securities Corp., the principal             management company, since May 10, 1993;
                        underwriter of the Fund's shares.           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
                                                                    editor of MPT Review from August 1987 to
                                                                    the present and was publisher and editor
                                                                    of the predecessor investment advisory
                                                                    newsletter



                                       10








                                 POSITION(S) HELD WITH                        PRINCIPAL OCCUPATION(S)
 NAME AND ADDRESS            REGISTRANT AND ITS AFFILIATES                    DURING PAST FIVE YEARS
 ----------------          ------------------------------------        -----------------------------------------
                                                                 
                                                                       OTC Insight, which he began in 1980 and
                                                                       wrote through July 1987; a Trustee of
                                                                       The Navellier Millennium Funds, a mutual
                                                                       fund family since 1998.

Arnold Langsen(2)          Trustee (however, Professor Langsen is      Professor Langsen is currently retired.
83                         the President and a shareholder of The      He was Professor Emeritus of Financial
2206 - 209th Place N.E.    Langsen Group, Inc. of California, which    Economics, School of Business,
Sammamish, WA 98074        corporation provides consulting services    California State University at Hayward
                           to Navellier & Associates Inc.)             (1973-1992); Visiting Professor,
                                                                       Financial Economics, University of
                                                                       California at Berkeley (1984-1987).

Barry Sander               Trustee                                     Currently retired as of December 1,
54                                                                     1998, formerly he was the President and
1835 Ashland Mine Road                                                 CEO of Ursa Major Inc., a stencil
Ashland, OR 97520                                                      manufacturing firm and had been for the
                                                                       past nine years.

Joel Rossman               Trustee                                     Currently owner of a photo framing
53                                                                     manufacturing company. Formerly
2921 California                                                        he was President and CEO of
San Francisco, CA 94115                                                Personal Stamp Exchange, Inc., a
                                                                       manufacturer, designer and distributor
                                                                       of rubber stamp products. He had been
                                                                       President and CEO of Personal Stamp
                                                                       Exchange for the preceding 10 years.

Jacques Delacroix          Trustee                                     Professor of Business Administration,
60                                                                     Leavy School of Business, Santa Clara
519 Chestnut Street                                                    University (1983-present)
Santa Cruz, CA 95060

Arjen Kuyper(1)            Treasurer                                   Mr. Kuyper is COO of Navellier &
46                                                                     Associates, Inc. and has been since
One East Liberty                                                       September 1, 1998. Prior to that he was
Third Floor                                                            operations manager for Navellier &
Reno, NV 89501                                                         Associates, Inc. since 1992 and
                                                                       operations manager for Navellier
                                                                       Management, Inc. and for Navellier
                                                                       Securities Corp., since 1993.


















                                       11









- ----------

(1) This person is an interested person affiliated with the Investment Adviser.

(2) This person, although technically not an interested person affiliated with
    the Investment Adviser, does own a company which provides consulting
    services to Navellier & Associates Inc., a company owned by Louis Navellier.

                                    OFFICERS

         The officers of the Fund are affiliated with the Investment Adviser and
receive no salary or fee from the Fund. The Fund's disinterested Trustees are
each compensated by the Fund with an annual fee, payable quarterly (calculated
at an annualized rate), of $12,500. The Trustees' fees may be adjusted according
to increased responsibilities if the Fund's assets exceed one billion dollars.
In addition, each disinterested Trustee receives reimbursement for actual
expenses of attendance at Board of Trustees meetings.

         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 Adviser), (d) affiliated person of an affiliate or principal
underwriter of the Fund, or (e) all Trustees and officers of the Fund as a
group.

         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.




                               REMUNERATION TABLE
- -----------------------------------------------------------------------
                                                            AGGREGATE
                                                           REMUNERATION
                                                              FROM
                                                          REGISTRANT AND
                                                           FUND COMPLEX
                                                          FOR THE FISCAL
                              CAPACITY IN WHICH             YEAR ENDED
        NAME                REMUNERATION RECEIVED        DECEMBER 31, 2002
                                                         -----------------
                                                   
Louis G. Navellier             Trustee, President,         $      0.00
                            Chief Executive Officer,
                               and Treasurer
Barry Sander                      Trustee                  $ 12,948.96
Arnold Langsen                    Trustee                    13,214.08
Joel Rossman                      Trustee                  $ 12,500.00
Jacques Delacroix                 Trustee                  $ 12,527.90




OFFICERS' AND DIRECTORS' OWNERSHIP OF FUND SHARES



         As of December 31, 2002 the dollar range of equity securities owned by
each Director in the Fund and the fund complex was as follows:



<Table>
<Caption>
                          DOLLAR RANGE OF    AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL
                         EQUITY SECURITIES      REGISTERED INVESTMENT COMPANIES OVERSEEN BY
                            IN THE FUND          DIRECTOR IN FAMILY OF INVESTMENT COMPANIES*
                         ----------------    --------------------------------------------------
                                       
Louis G. Navellier         Over $100,000                       Over $100,000
Barry Sander                   None                                 None
Arnold Langsen                 None                                 None
Joel Rossman                   None                                 None
Jacques Delacroix         $10,001-$50,000                     $10,001-$50,000
Arjen Kuyper              $10,001-$50,000                     $10,001-$50,000
</Table>



* "Family of Investment Companies" consists of all mutual funds advised by
Navellier Management, Inc.



         CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

         Louis Navellier is not a control person of the Fund or of any
Portfolio.

                      THE INVESTMENT ADVISER, DISTRIBUTOR,
                          CUSTODIAN AND TRANSFER AGENT

THE INVESTMENT ADVISER

         Navellier Management, Inc. acts as the Investment Adviser to each of
the seven existing Portfolios of the Fund. Navellier Management, Inc. is the
Investment Adviser to the Navellier Large Cap Growth Portfolio and has a
consulting agreement with Robert Barnes, Ph.D. for analysis regarding large cap
stocks. (See discussion below.) The Investment Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940. The Investment
Adviser is responsible for selecting the securities which will constitute the
pool of securities which will be selected for investment for each Portfolio.
Pursuant to a separate Administrative Services Agreement, the Investment Adviser
provides each Portfolio of the Fund with certain administrative services,
including

                                       12



accounting and bookkeeping services and supervising the Custodian's and Transfer
Agent's activities and each Portfolio's compliance with its reporting
obligations. The Investment Adviser may contract (and pay for out of its own
resources including the administrative fee it receives) for the performance of
such services to the Custodian, Transfer Agent, or others, and may retain all of
its 0.25% administrative services fee or may share some or all of its fee with
such other person(s). The Investment Adviser also provides each Portfolio of the
Fund with a continuous investment program based on its investment research and
management with respect to all securities and investments. The Investment
Adviser will determine from time to time what securities and other investments
will be selected to be purchased, retained, or sold by the various portfolios of
the Fund.

         The Investment Adviser is owned and controlled by its sole shareholder,
Louis G. Navellier (a 100% stockholder). Louis G. Navellier is an affiliated
person of the Fund and is also the sole owner of the Distributor, Navellier
Securities Corp. Louis Navellier is also the sole shareholder of Navellier &
Associates Inc. (See the Statement of Additional Information.) Navellier &
Associates, Inc. is registered as an investment adviser with the Securities and
Exchange Commission. Louis Navellier is, and has been, in the business of
rendering investment advisory services to significant pools of capital since
1987.

CONSULTANT

         Robert Barnes, Ph.D., is a consultant to Navellier Management, Inc. in
the management of the Navellier Large Cap Growth Portfolio. Mr. Barnes has over
25 years experience as a trader and business analyst. He has authored twelve
books and many articles on quantitative trading methods. He has developed
customized computer programs for trading strategies and portfolio management. He
is qualified as a mathematician and statistician for modeling, forecasting and
simulating investment, government and other industry operations. He has acted as
liaison between programmers and traders for investment companies. He has
developed theories on price behavior, risk/reward statistics, derivatives,
arbitrage strategies, forecasting functions and forensic techniques. Mr. Barnes
earned his B.S. in mathematics with a minor in Economics at Rensselaer
Polytechnic Institute and his M.S. in mathematics at Lehigh University. He
taught price discovery modeling strategies and portfolio management at The New
School from 1981--1985.

         Mr. Barnes' investment approach is comprised of a two part trading
style: 1) selection and 2) timing of entry and exit of stock positions. He
selects stocks for trade by examining their growth rates in past trends,
choosing those that have exhibited superior performance in the past in order to
maximize return for the portfolio. He then uses a number of timing methods in
order to enter and exit positions for those chosen stocks. These timing methods
are continuously updated and optimized in order to maximize return and to reduce
risk (by variation of timing points and diversifying across many stocks) in the
portfolio.

         For information regarding the Fund's expenses and the fees paid to the
Investment Adviser see "Expenses of the Fund".

         (a) THE INVESTMENT ADVISER

         The offices of the Investment Adviser (Navellier Management, Inc.) are
located at One East Liberty, Third Floor, Reno, Nevada 89501. The Investment
Adviser began operations in May 1993 and advises this Fund, The Navellier
Millennium Funds and acts as subadviser to The Growth + Value Portfolio of the
ING Fund (formerly named the Pilgrim Fund).

         (i) The following individuals own the enumerated shares of outstanding
stock of the Investment Adviser and, as a result, maintain control over the
Investment Adviser:



                              SHARES OF OUTSTANDING STOCK        PERCENTAGE OF
       NAME                   OF THE INVESTMENT ADVISER        OUTSTANDING SHARES
- ----------------------        ---------------------------      ------------------
                                                         
Louis G. Navellier                    1,000                           100%


         (ii) The following individuals are affiliated with the Fund, the
Investment Adviser, and the Distributor in the following capacities:



        NAME                                        POSITION
- ------------------     ------------------------------------------------------------------------------
                    
Louis G. Navellier     Trustee and President of The Navellier Series Fund; Director, CEO, President,
                       Secretary, and Treasurer of Navellier Management, Inc.,; Director, President,
                       CEO, Secretary, and Treasurer of Navellier Securities Corp.; one of the
                       Portfolio Managers of the Aggressive Growth Portfolio, the Mid Cap Growth
                       Portfolio, the Aggressive Micro Cap Portfolio, the Large Cap Growth Portfolio,
                       the Large Cap Value Portfolio, the Small Cap Value Portfolio and the
                       Aggressive Small Cap Equity Portfolio.


                                       13




                    
Alan Alpers            One of the Portfolio Managers of the Aggressive Growth Portfolio, the Mid Cap
                       Growth Portfolio, the Aggressive Micro Cap Portfolio, the Large Cap Growth
                       Portfolio, the Large Cap Value Portfolio, the Small Cap Value Portfolio and
                       the Aggressive Small Cap Equity Portfolio.

Robert Barnes, Ph.D.   Consultant to Navellier Management, Inc., the Investment Adviser for the Large
                       Cap Growth Portfolio of The Navellier Performance Funds.

Arjen Kuyper           Treasurer of The Navellier Performance Funds.


         (iii) The management fees payable to the Investment Adviser under the
terms of the Investment Advisory Agreements (the "Advisory Agreements") between
the Investment Adviser and the Fund are payable monthly and are based upon 0.84%
of the average daily net assets of the Aggressive Growth Portfolio, the Mid Cap
Growth Portfolio, the Aggressive Micro Cap Portfolio, the Small Cap Value
Portfolio, the Large Cap Growth Portfolio and the Aggressive Small Cap Equity
Portfolio. The management fee payable to the Investment Adviser under the terms
of the Advisory Agreement applicable to the Large Cap Value Portfolio is 0.75%
of that Portfolio's average daily net assets. The Investment Adviser has the
right, but not the obligation, to waive any portion or all of its management
fee, from time to time.

         The Investment Adviser also pays Robert Barnes a consulting fee for
consulting services and analysis of large cap securities in connection with the
Large Cap Growth Portfolio. Investment Adviser pays Mr. Barnes an annual fee of
0.11% of the average daily net assets of the Large Cap Growth Portfolio. Such
consulting fee is paid by the Investment Adviser and is not paid by the Fund or
by the Large Cap Growth Portfolio.

         Navellier Management, Inc. was paid investment advisory fees for the
following Portfolios in the following amounts for the following fiscal years:



                                                       
Navellier Aggressive Growth Portfolio
2002                                                      $   469,643.00

Navellier Mid Cap Growth Portfolio
2002                                                      $ 1,436,452.00

Navellier Aggressive Micro Cap Portfolio
2002                                                      $   104,681.00

Navellier Aggressive Small Cap Equity Portfolio
2002                                                      $    99,363.00

Navellier Small Cap Value Portfolio
2002                                                      $    54,359.00

Navellier Large Cap Growth Portfolio
2002                                                      $   135,879.00

Navellier Large Cap Value Portfolio
2002                                                      $     6,792.00



         The Investment Adviser has agreed to waive reimbursement of all or a
portion of the expenses advanced by it on behalf of the following portfolios for
the following years if total operating expenses exceed the following amounts:




           PORTFOLIO                     EXPENSE LIMIT        YEAR(S)
- -------------------------------------    -------------        -------
                                                        
Aggressive Growth Portfolio                  1.49%             2003



                                       14





                                                         
Mid Cap Growth Portfolio                     1.34%             2003
Mid Cap Growth Portfolio - I Shares          0.99%             2003
Aggressive Micro Cap Portfolio               1.49%             2003
Small Cap Value Portfolio                    1.49%             2003
Large Cap Growth Portfolio                   1.49%             2003
Large Cap Value Portfolio                    1.40%             2003
Aggressive Small Cap Equity Portfolio        1.49%             2003




         The Adviser has agreed to limit the total normal expenses of each
Portfolio to 1.49% of average annual net assets, except for the Large Cap Value
Portfolio, Mid Cap Growth Portfolio - Regular Class and the Mid Cap Growth
Portfolio - I Class which are limited to 1.40%, 1.34% and 0.99%, respectively.
In order to maintain the expense limitation, the Adviser paid certain operating
expenses on a net basis of the Aggressive Growth Portfolio, the Mid Cap Growth
Portfolio, the Aggressive Micro Cap Portfolio, the Small Cap Value Portfolio,
the Large Cap Growth Portfolio, the Large Cap Value Portfolio and the Aggressive
Small Cap Equity Portfolio totaling $108,403, $260,815, $91,806, $102,666,
$113,766, $101,520 and $117,635, respectively.


         Expenses not expressly assumed by the Investment Adviser under the
Advisory Agreement are paid by the Fund. The Advisory Agreements list examples
of expenses paid by the Fund for the account of the applicable Portfolio, 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 Investment 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, (ii) resulting from
reckless disregard by it of its obligations and duties under the Advisory
Agreement, or (iii) a loss for which the Investment Adviser would not be
permitted to be indemnified under the Federal Securities laws.

         (iv) Pursuant to an Administrative Services Agreement, the Investment
Adviser receives an annual fee of .25% of the value of the assets under
management 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 Investment Adviser
remains responsible for the performance of its obligations under the
Administrative Services Agreement. The Investment Adviser has an agreement with
FBR National Bank & Trust (successor in interest to Rushmore Trust & Savings,
FSB), to perform, in addition to custodian and transfer agent services, some or
all administrative services and may contract in the future with other persons or
entities to perform some or all of its administrative services. All of these
contracted services are and will be paid for by the Investment Adviser out of
its fees or assets.

         In exchange for its services under the Administrative Services
Agreement, the Fund reimburses the Investment Adviser for certain expenses
incurred by the Investment Adviser in connection therewith but does not
reimburse Investment Adviser (over the amount of 0.25% annual Administrative
Services Fee) to reimburse it for fees Investment Adviser pays to others for
administrative services. The agreement also allows Investment Adviser to pay to
its delegate part or all of such fees and reimbursable expense payments incurred
by it or its delegate.

         The Investment Advisory Agreements permit the Investment Adviser to act
as investment adviser for any other person, firm, or corporation, and designates
the Investment Adviser as the owner of the name "Navellier" or any use or
derivation of the word Navellier. If the Investment 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 Investment Adviser's option,
be withdrawn.

         The Investment Adviser advanced the Fund's organizational expenses
which were $55,080. The Fund has agreed to reimburse the Investment Adviser for
the organizational and other expenses it advances, without interest, on a date
or dates to be chosen at the sole discretion of Navellier Management, Inc., or
the Investment Adviser can elect to waive reimbursement of some or all of such
advances. No Portfolio shall be responsible for the reimbursement of more than
its proportionate share of expenses.

         (b) THE DISTRIBUTOR

         The Fund's Distributor is Navellier Securities Corp., a Delaware
Corporation organized and incorporated on May 10, 1993. Navellier Securities
Corp. is registered as a broker-dealer with the Securities Exchange Commission
and National Association of Securities Dealers and the various states in which
this Fund's securities will be offered for sale by Distributor and will be
registered

                                       15



with such agencies and governments before any Fund shares are sold by it. The
Fund's shares will be continuously distributed by Navellier Securities Corp.
(the "Distributor") located at One East Liberty, Third Floor, Reno, Nevada
89501, pursuant to a Distribution Agreement, dated October 17, 1995. 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 any payments made to its registered representatives as well as
the cost in excess of the 12b-1 fee (discussed below under "Distribution Plan")
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.

DISTRIBUTION PLANS

         THE AGGRESSIVE GROWTH PORTFOLIO DISTRIBUTION PLAN


         The Aggressive Growth Portfolio has adopted a Plan pursuant to Rule
12b-1 under the 1940 Act (the "Plan"), whereby it reimburses Distributor or
others in an amount up to 0.25% per annum of the average daily net assets of the
Aggressive Growth Portfolio for expenses incurred for the promotion and
distribution of the shares of such Portfolio of the Fund, including, but not
limited to, the printing of prospectuses, statements of additional information
and reports used for sales purposes, expenses (including personnel of
Distributor) of preparation of sales literature and related expenses,
advertisements and other distribution-related expenses, including a prorated
portion of Distributor's overhead expenses attributable to the distribution of
such Portfolio Fund shares. Such payments are made monthly. The 12b-1 fee
includes, in addition to promotional activities, amounts the Aggressive Growth
Portfolio may pay to Distributor or others as a service fee to reimburse such
parties for personal services provided to shareholders of the Aggressive Growth
Portfolio and/or the maintenance of shareholder accounts. The total amount of
12b-1 fees paid for such personal services and promotional services shall not
exceed 0.25% per year of the average daily net assets of the Aggressive Growth
Portfolio. The Distributor can keep all of said 12b-1 fees it receives to the
extent it is not required to pay others for such services. Such Rule 12b-1 fees
are made pursuant to the distribution plan(s) and distribution agreements
entered into between such service providers and Distributor or the Fund
directly. Payments in excess of reimbursable expenses under the plan in any year
must be refunded. The Rule 12b-1 expenses and fees in excess of 0.25% per year
of the Aggressive Growth Portfolio's average net assets that otherwise qualify
for payment may not be carried forward into successive annual periods. The Plan
also covers payments by certain parties to the extent such payments are deemed
to be for the financing of any activity primarily intended to result in the sale
of shares issued by the Aggressive Growth Portfolio within the context of Rule
12b-1. The Distributor was paid $139,778 for the Aggressive Growth Portfolio in
12b-1 fees during the twelve month period ended December 31, 2002. The payments
under the Plan are included in the maximum operating expenses which may be borne
by the Aggressive Growth Portfolio.



         Navellier Securities Corp. ("NSC") was paid $139,778 for the Aggressive
Growth Portfolio in 12b-1 fees during fiscal 2002 and spent $0 for advertising,
$5,591 for printing, $12,580 for mailing (including mailing of prospectuses to
other than current shareholders), $   to underwriters, $96,594 to compensate
dealers, $   to compensate NSC sales and other personnel, $   for interest and
$25,013 in other expenses during fiscal 2002.


         Louis Navellier, the sole owner of Navellier Management, Inc. and the
sole owner of Navellier Securities Corp., received a direct financial interest
in the operation of the 12b-1 Plan.

THE MID CAP GROWTH PORTFOLIO, THE AGGRESSIVE MICRO CAP PORTFOLIO, THE SMALL CAP
VALUE PORTFOLIO, THE LARGE CAP GROWTH PORTFOLIO, THE LARGE CAP VALUE PORTFOLIO,
AND THE AGGRESSIVE SMALL CAP EQUITY PORTFOLIO DISTRIBUTION PLANS

         The Mid Cap Growth Portfolio, the Aggressive Micro Cap Portfolio, the
Small Cap Value Portfolio, the Large Cap Growth Portfolio, the Large Cap Value
Portfolio, and the Aggressive Small Cap Equity Portfolio have each adopted a
Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), whereby each such
Portfolio compensates Distributor or others in the amount of 0.25% per annum of
the average daily net assets of each such Portfolio for expenses incurred and
services rendered for the promotion and distribution of the shares of each such
Portfolio of the Fund, including, but not limited to, the printing of
prospectuses, statements of additional information and reports used for sales
purposes, expenses (including personnel of Distributor) of preparation of sales
literature and related expenses, advertisements and other distribution-related
expenses, including a prorated portion of Distributor's overhead expenses
attributable to the distribution of each such Portfolio's Fund shares. Such
payments are made monthly. Each 12b-1 fee includes, in addition to promotional
activities, amounts that each such Portfolio pays to Distributor or others as a
service fee to compensate such parties for personal services provided to
shareholders of such Portfolio and/or the maintenance of shareholder accounts.
The total amount of 12b-1 fees paid for such personal services and promotional
services shall be 0.25% per year of the average daily net assets of each such
Portfolio. The Distributor can keep all of said 12b-1 fees it receives to the
extent it is not required to pay others for such services. Such Rule 12b-1 fees
are made pursuant to the distribution plan and distribution agreements entered

                                       16



into between such service providers and Distributor or each of the Portfolios
directly. Each 12b-1 Plan for each such Portfolio also covers payments by the
Distributor and Investment Adviser to the extent such payments are deemed to be
for the financing of any activity primarily intended to result in the sale of
shares issued by each such Portfolio within the context of Rule 12b-1. The
payments under each such 12b-1 Plan for each Portfolio are included in the
maximum operating expenses which may be borne by each such Portfolio. Payments
under each such 12b-1 Plan for each such Portfolio may exceed actual expenses
incurred by the Distributor, Investment Adviser or others.


         The Distributor was paid $390,962; $31,155; $16,178; $29,599; $40,440
and $2,264 respectively in 12b-1 fees during the twelve month period ended
December 31, 2002 for services in connection with the Mid Cap Growth Portfolio,
Aggressive Micro Cap Portfolio, Small Cap Value Portfolio, Aggressive Small Cap
Equity Portfolio, Large Cap Growth Portfolio and Large Cap Value Portfolio, and
spent $10,000 for advertising, $11,186 for printing, $33,995 for mailing
(including mailing of prospectuses to other than current shareholders), $0 to
underwriters, $386,397 to compensate dealers, $0 to compensate NSC sales and
other personnel, $0 for interest and $69,020 in other expenses during fiscal
2002. Investors may also be charged a transaction fee if they effect
transactions in fund shares through a broker or agent. Louis Navellier has a
direct financial interest in the operation of each of these 12b-1 Plans.


         (c) THE CUSTODIAN AND TRANSFER AGENT

         FBR National Bank & Trust, 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. The Distributor shall be responsible for the review of applications in
order to guarantee that all requisite and statistical information has been
provided with respect to the establishment of accounts.

         (d) LEGAL COUNSEL

         The Law Offices of Samuel Kornhauser 155 Jackson Street, Suite 1807,
San Francisco, California 94111 is legal counsel to the Fund, to the Investment
Adviser and to the Distributor.

                    BROKERAGE ALLOCATION AND OTHER PRACTICES

         In effecting portfolio transactions for the Fund, the Investment
Adviser adheres to the Fund's policy of seeking best execution and price,
determined as described below, except to the extent it is permitted to pay
higher brokerage commissions for "brokerage and research services," as defined
herein. The Investment Adviser may cause the Fund to pay a broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission which another broker or dealer would have charged for
effecting the transaction if the Investment Adviser determines in good faith
that such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer or that any
offset of direct expenses of a Portfolio yields the best net price. As provided
in Section 28(e) of the Securities Exchange Act of 1934, "brokerage and research
services" include giving advice as to the value of securities, the advisability
of investing in, purchasing, or selling securities, and the availability of
securities; furnishing analysis and reports concerning issuers, industries,
economic facts and trends, portfolio strategy and the performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Brokerage and research services
provided by brokers to the Fund or to the Investment Adviser are considered to
be in addition to and not in lieu of services required to be performed by the
Investment Adviser under its contract with the Fund and may benefit both the
Fund and other clients of the Investment Adviser or customers of or affiliates
of the Investment Adviser. Conversely, brokerage and research services provided
by brokers to other clients of the Investment Adviser or its affiliates may
benefit the Fund.

         If the securities in which a particular Portfolio of the Fund invests
are traded primarily in the over-the-counter market, where possible, the Fund
will deal directly with the dealers who make a market in the securities involved
unless better prices and execution are available elsewhere. Such dealers usually
act as principals for their own account. On occasion, securities may be
purchased directly from the issuer. Bonds and money market instruments are
generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.

         The determination of what may constitute best execution and price in
the execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Fund (involving both price paid or received and any net
commissions and other costs paid), the efficiency with which the transaction is
effected, the ability to effect the transaction at all where a large block is
involved, the availability of the broker to stand ready to execute possibly
difficult

                                       17



transactions in the future, and the financial strength and stability of the
broker. Such considerations are judgmental and are weighed by the Investment
Adviser in determining the overall reasonableness of brokerage commissions paid
by the Fund. Some portfolio transactions are subject to the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., and subject to
obtaining best prices and executions, effected through dealers who sell shares
of the Fund.

         The Board of Trustees of the Fund will periodically review the
performance of the Investment Adviser of its respective responsibilities in
connection with the placement of portfolio transactions on behalf of the Fund
and review the commissions paid by the Fund over representative periods of time
to determine if they are reasonable in relation to the benefits to the Fund.

         The Board of Trustees will periodically review whether the recapture
for the benefit of the Fund of some portion of the brokerage commissions or
similar fees paid by the Fund on portfolio transactions is legally permissible
and advisable. At present, no recapture arrangements are in effect. The Board of
Trustees will review whether recapture opportunities are available and are
legally permissible, and, if so, will determine, in the exercise of their
business judgment, whether it would be advisable for the Fund to seek such
recapture.

                              EXPENSES OF THE FUND

GENERAL

         Each Portfolio is responsible for the payment of its own expenses.
These expenses are deducted from that Portfolio's investment income before
dividends are paid. These expenses include, but are not limited to: fees paid to
the Investment Adviser (fees paid to the Consultant are paid by the Investment
Adviser from its fees and are NOT paid by the Fund or the applicable Portfolio
or by the shareholders), the Custodian and the Transfer Agent; Trustees' fees;
taxes; interest; brokerage commissions; organization expenses; securities
registration ("blue sky") fees; legal fees; auditing fees; printing and other
expenses which are not directly assumed by the Investment Adviser under its
investment advisory or expense reimbursement agreements with the Fund. General
expenses which are not associated directly with a specific Portfolio (including
fidelity bond and other insurance) are allocated to each Portfolio based upon
their relative net assets. The Investment Adviser may, but is not obligated to,
from time to time advance funds, or directly pay, for expenses of the Fund and
may seek reimbursement of or waive reimbursement of those advanced expenses.

COMPENSATION OF THE INVESTMENT ADVISER

         The Investment Adviser presently receives an annual 0.84% fee for
investment management of The Aggressive Growth Portfolio, the Mid Cap Growth
Portfolio, the Aggressive Micro Cap Portfolio; the Small Cap Value Portfolio,
the Large Cap Growth Portfolio and the Aggressive Small Cap Equity Portfolio and
receives an annual 0.75% fee for investment management of the Large Cap Value
Portfolio. Each fee is payable monthly, based upon each Portfolio's average
daily net assets. The Investment Adviser also receives a 0.25% annual fee for
rendering administrative services to the Fund pursuant to an Administrative
Services Agreement and is entitled to reimbursement for operating expenses it
advances for the Fund.

DISTRIBUTION PLANS

         THE AGGRESSIVE GROWTH PORTFOLIO DISTRIBUTION PLAN

         The Aggressive Growth Portfolio has adopted a Plan pursuant to Rule
12b-1 under the 1940 Act (the "Plan"), whereby it reimburses Distributor or
others in an amount up to 0.25% per annum of the average daily net assets of the
Aggressive Growth Portfolio for expenses incurred for the promotion and
distribution of the shares of such Portfolio of the Fund, including, but not
limited to, the printing of prospectuses, statements of additional information
and reports used for sales purposes, expenses (including personnel of
Distributor) of preparation of sales literature and related expenses,
advertisements and other distribution-related expenses, including a prorated
portion of Distributor's overhead expenses attributable to the distribution of
such Portfolio Fund shares. Such payments are made monthly. The 12b-1 fee
includes, in addition to promotional activities, amounts the Aggressive Growth
Portfolio may pay to Distributor or others as a service fee to reimburse such
parties for personal services provided to shareholders of the Aggressive Growth
Portfolio and/or the maintenance of shareholder accounts. The total amount of
12b-1 fees paid for such personal services and promotional services shall not
exceed 0.25% per year of the average daily net assets of the Aggressive Growth
Portfolio. The Distributor can keep all of said 12b-1 fees it receives to the
extent it is not required to pay others for such services. Such Rule 12b-1 fees
are made pursuant to the distribution plan(s) and distribution agreements
entered into between such service providers and Distributor or the Fund
directly. Payments in excess of reimbursable expenses under the plan in any year
must be refunded. The Rule 12b-1 expenses and fees in excess of 0.25% per year
of the Aggressive Growth Portfolio's average net assets that otherwise

                                       18



qualify for payment may not be carried forward into successive annual periods.
The Plan also covers payments by certain parties to the extent such payments are
deemed to be for the financing of any activity primarily intended to result in
the sale of shares issued by the Aggressive Growth Portfolio within the context
of Rule 12b-1. The payments under the Plan are included in the maximum operating
expenses which may be borne by the Aggressive Growth Portfolio.

         THE DISTRIBUTION PLANS FOR THE MID CAP GROWTH, THE AGGRESSIVE MICRO
         CAP, THE SMALL CAP VALUE, THE LARGE CAP GROWTH, THE LARGE CAP VALUE,
         AND THE AGGRESSIVE SMALL CAP EQUITY PORTFOLIOS

         The Mid Cap Growth Portfolio, the Aggressive Micro Cap Portfolio, the
Small Cap Value Portfolio, the Large Cap Growth Portfolio, the Large Cap Value
Portfolio and the Aggressive Small Cap Equity Portfolio have each adopted a Plan
pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), whereby each Portfolio
compensates Distributor or others in the amount of 0.25% per annum of the
average daily net assets of the applicable Portfolio for expenses incurred and
services rendered for the promotion and distribution of the shares of that
particular Portfolio of the Fund, including, but not limited to, the printing of
prospectuses, statements of additional information and reports used for sales
purposes, expenses (including personnel of Distributor) of preparation of sales
literature and related expenses, advertisements and other distribution-related
expenses, including a prorated portion of Distributor's overhead expenses
attributable to the distribution of each particular portfolio's shares. Such
payments are made monthly. Each 12b-1 fee includes, in addition to promotional
activities, amounts each Portfolio pays to Distributor or others as a service
fee to compensate such parties for personal services provided to shareholders of
such Portfolio and/or the maintenance of shareholder accounts. The total amount
of 12b-1 fees paid for such personal services and promotional services for each
such portfolio shall be 0.25% per year of the average daily net assets of each
Portfolio. The Distributor can keep all of said 12b-1 fees it receives to the
extent it is not required to pay others for such services. Such Rule 12b-1 fees
are made pursuant to the distribution plan and distribution agreements entered
into between such service providers and Distributor or each particular Portfolio
directly. The 12b-1 Plan for each of these Portfolios also covers payments by
the Distributor and Investment Adviser to the extent such payments are deemed to
be for the financing of any activity primarily intended to result in the sale of
shares issued by each such Portfolio within the context of Rule 12b-1. The
payments under the 12b-1 Plan for each of these Portfolios are included in the
maximum operating expenses which may be borne by each of these Portfolios.
Payments under the 12b-1 Plan for each of these Portfolios may exceed actual
expenses incurred by the Distributor, Investment Adviser or others.

BROKERAGE COMMISSIONS

         The Investment Adviser may select selected broker-dealers to execute
portfolio transactions for the Portfolios of 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 in connection with comparable transactions. In addition, when
selecting broker-dealers for Fund portfolio transactions, the Investment Adviser
may consider the record of such broker-dealers with respect to the sale of
shares of the Fund.

                       CAPITAL STOCK AND OTHER SECURITIES

         The rights and preferences attached to the shares of each Portfolio 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 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 series
affected by such matter. Rule 18f-2 further provides that a series shall be
deemed to be affected by a matter unless the interests of each series in the
matter are substantially identical or that the matter does not affect any
interest of such 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.

                              DESCRIPTION OF SHARES

    The Fund is a Delaware business trust organized on October 17, 1995. 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 ("Portfolios") of shares of beneficial interest and to classify or
reclassify any unissued shares with respect to such classes. Presently the Fund
is offering shares of seven Portfolios--the Navellier Aggressive Growth
Portfolio, the Navellier Mid Cap Growth Portfolio, the Navellier

                                       19



Aggressive Micro Cap Portfolio, the Navellier Small Cap Value Portfolio, the
Navellier Large Cap Growth Portfolio, the Navellier Large Cap Value Portfolio
and the Aggressive Small Cap Equity Portfolio each of which is described above.

         The shares of each Portfolio, 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 each Portfolio of the Fund when a shareholder's
investment, as a result of redemptions in the Fund, falls below the minimum
investment required by the Fund (see "Redemption of Shares"). Each share of a
Portfolio is equal as to earnings, expenses, and assets of the Portfolio and, in
the event of liquidation of the Portfolio, is entitled to an equal portion of
all of the Portfolio's net assets. Shareholders of each Portfolio of the Fund
are entitled to one vote for each full share held and fractional votes for
fractional shares held, and will vote in the aggregate and not by Portfolio
except as otherwise required by law or when the Board of Trustees determines
that a matter to be voted upon affects only the interest of the shareholders of
a particular Portfolio. 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 any Portfolio for the purpose of electing or
removing Trustees.

         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.

                   PURCHASE, REDEMPTION, AND PRICING OF SHARES

         The Fund's various portfolio shares are sold to the general public on a
continuous basis through the Distributor, the Transfer Agent and the
Distributor's network of broker-dealers.

PURCHASE BY MAIL

         Investments in the Fund can be made directly to the Distributor or
through the transfer agent--FBR National Bank & Trust--or through selected
securities dealers who have the responsibility to transmit orders promptly and
who may charge a processing fee.

TO INVEST BY MAIL: Fill out an application designating which Portfolio you are
investing in and make a check payable to "The Navellier Performance Funds." Mail
the check along with the application to:

         The Navellier Performance Funds
         c/o FBR National Bank & Trust
         4922 Fairmont Avenue
         Bethesda, MD 20814

         Purchases by check will be credited to an account as of the date the
Portfolio's net asset value is next determined after receipt of payment and a
properly completed account application. Foreign checks will not be accepted. Be
certain to specify which Portfolio or Portfolios you are investing in.

         Purchase orders which do not specify the Portfolio in which an
investment is to be made will be returned. (See "Purchase and Pricing of
Shares--General Purchasing Information".) Net asset value per share is
calculated once daily as of 4 p.m. E.S.T. on each business day. (See "Purchase
and Pricing of Shares--Valuation of Shares".)

THE NAVELLIER PERFORMANCE FUNDS' PORTFOLIOS

         The shares of each Portfolio are sold at their net asset value per
share next determined after an order in proper form (i.e., a completely filled
out application form) is received by the Transfer Agent.

         If an order for shares of a Portfolio is received by the Transfer Agent
by 4:00 p.m. Eastern Time on any business day, such shares will be purchased at
the net asset value determined as of 4:00 p.m. Eastern Time on that day.
Otherwise, such shares will be purchased at the net asset value determined as of
4:00 p.m. Eastern Time on the next business day. However, orders received by the
Transfer Agent from the Distributor or from dealers or brokers after the net
asset value is determined that day will receive such net asset value price if
the orders were received by the Distributor or 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.
Eastern Time). Shares

                                       20



are entitled to receive any declared dividends on the day following the date of
purchase.

PURCHASES THROUGH SELECTED DEALERS

         Shares purchased through Selected Dealers will be effected at the net
asset value next determined after the Selected Dealer receives the purchase
order, provided that the Selected Dealer transmits the order to the Transfer
Agent and the Transfer Agent accepts the order by 4:00 p.m. Eastern Time on the
day of determination. See "Valuation of Shares". If an investor's order is not
transmitted and accepted by 4:00 p.m. Eastern Time, the investor must settle his
or her entitlement to that day's net asset value with the Selected Dealer.
Investors may also purchase shares of the Fund by telephone through a Selected
Dealer by having the Selected Dealer telephone the Transfer Agent with the
purchase order. Investors may be charged a transaction fee if they effect
transactions in Fund shares through a broker or agent. However, shares purchased
directly from the Fund will be free of any transaction charges.

         Certain selected Dealers may effect transactions in shares of the
Portfolios through the National Securities Clearing Corporation's Fund/SERV
system.

         Purchases of shares through Selected 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. There is no sales load charged to
the investor on purchases of the Fund's Portfolios, whether purchased through a
Selected Dealer or directly through the Transfer Agent; there is however an
ongoing Rule 12b-1 fee applicable to all portfolios.

         Shareholders who wish to transfer Fund shares from one broker-dealer to
another should contact the Fund at (800) 622-1386.

         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 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 values of the Portfolios is
not reasonably practicable, or (c) for such other periods as the SEC by order
may permit for protection of the Portfolio'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 (and if a proper election pursuant to Rule 18F-1 of
the Investment Company Act has been made by the Fund), redemption payments could
be made in securities valued at the value used in determining net asset value.
There generally will be brokerage and other costs incurred by the redeeming
shareholder in selling such securities.

REDEMPTIONS BY TELEPHONE

         You automatically receive telephone redemption and exchange privileges
when you purchase Fund shares. You may sell or exchange your shares by phone.

         If any account has more than one owner, the Transfer Agent may rely on
the telephone instructions of any one owner. Each Portfolio of the Fund employs
reasonable procedures in an effort to confirm the authenticity of telephone
instructions, which may include giving some form of personal identification
prior to acting on the telephone instructions. If these procedures are not
followed, the Fund and the Transfer Agent may be responsible for any losses
because of unauthorized or fraudulent instructions. By requesting telephone
redemption privileges, you authorize the Transfer Agent to act upon any
telephone instructions it believes to be genuine, (1) to redeem shares from your
account and (2) to mail or wire transfer the redemption proceeds. You cannot
redeem shares by telephone until 30 days after you have notified the Transfer
Agent of any change of address.

         Telephone redemption is not available for shares held in IRAs. Each
Portfolio may change, modify, or terminate its telephone redemption services at
any time upon 30 days' notice.

FURTHER REDEMPTION INFORMATION

         Additional documentation regarding a redemption by any means may be
required when deemed appropriate by the Fund and/or the Transfer Agent, and the
request for such redemption will not be considered to have been received in
proper form until such additional

                                       21



documentation has been received. An investor should contact the Fund or 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
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 (i.e., when the applicable exchange is
closed or trading has been restricted, etc.), the right of redemption may be
suspended or the redemption may be satisfied by distribution of portfolio
securities rather than cash if a proper election pursuant to Rule 18F-1 of the
Investment Company Act has been made by the Fund.

         Investors may redeem their shares and instruct the Fund or Transfer
Agent, in writing or by telephone, to either deposit the redemption proceeds in
the Fund for Government Investors, an unaffiliated money market mutual fund,
pending further instructions as to the investor's desire to subsequently
reinvest in the Fund or the investor may direct some other disposition of said
redemption proceeds.

         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 each Portfolio of the Fund is determined once daily as of 4 p.m.
Eastern 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,
Presidents' Day, Martin Luther King Jr.'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.

         VALUATION OF ASSETS In determining the value of the assets of any
Portfolio 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, i.e., obligations which have 60
days or less left to maturity, 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 a 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. 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.

EXCHANGE PRIVILEGES

         Shares of each Portfolio in this Fund may be exchanged for one another
at net asset value. Exchanges among portfolios of the Fund may be made only in
those states where such exchanges may legally be made. The total value of shares
being exchanged must at least equal the minimum investment requirement of the
Portfolio into which they are being exchanged. Exchanges are made based on the
net asset value next determined of the shares involved in the exchange. Only one
exchange in any 30-day period is permitted. The Fund reserves the right to
restrict the frequency or otherwise modify, condition, terminate, or impose
charges upon the exchange, upon 60 days' prior written notice to shareholders.
Exchanges between Portfolios will be subject to a $5 exchange fee after five (5)
exchanges per year. There is a limit of ten (10) exchanges per year. Exchanges
will be effected by the redemption of shares of the Portfolio held and the
purchase of shares of the other Portfolio. For federal income tax purposes, any
such exchange constitutes a sale upon which a gain or loss, if any, may be
realized, depending upon whether the value of the shares being exchanged is more
or less than the shareholder's adjusted cost basis. For this purpose, however, a
shareholder's cost basis may not include the sales charge, if any, if the
exchange is effectuated within 90 days of the acquisition of the shares.
Shareholders wishing to make an exchange should contact the Transfer Agent.
Exchange requests in the form required by the Transfer Agent and received by the
Transfer Agent prior to 4:00 p.m. Eastern Time will be effected at the next
determined net asset value.

EXCESSIVE TRADING

                                       22



         The exchange privilege is not intended as a vehicle for short-term or
excessive trading. The Fund does not permit excessive trading/market-timing.
Excessive purchases, redemptions or exchanges of fund shares disrupt portfolio
management and drive fund expenses higher. The Fund may limit or terminate your
exchange privileges or may not accept future investments from you if you engage
in excessive trading. In determining excessive trading, we consider frequent
purchases and redemptions having similar effects as exchanges to be excessive
trading. Four or more exchanges in a quarter (3 months) is considered excessive
trading, though the Fund reserves the right to impose restrictions if there are
less frequent transactions.

MARKET TIMING

         The Fund is not designed for market timing organizations or other
entities using programmed or frequent exchanges. The Fund reserves the right to
reject any specific purchase order, including an order made by a market timer.
Any redemption that is made as a result of this activity will be subject to any
and all redemption fees.

PLEASE NOTE: The Fund reserves the right to delay sending redemption proceeds
for up to seven days. (This generally applies in cases of very large
redemptions, excessive trading or during unusual market conditions.)

                                      TAXES

     In the case of a "series fund" (that is, a regulated investment company
having more than one segregated portfolio of investments the beneficial
interests in which are owned by the holders of a separate series of stock), each
investment portfolio is treated as a separate corporation for federal income tax
purposes. The Fund will be deemed a series fund for this purpose and, thus, each
Portfolio will be deemed a separate corporation for such purpose.

    Each Portfolio of the Fund intends to qualify as a regulated investment
company for federal income tax purposes. Such qualification requires, among
other things, that each Portfolio (a) make a timely election to be a regulated
investment company, (b) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities (including options and futures) or
foreign currencies, and (c) diversify its holdings so that at the end of each
fiscal quarter (i) 50% of the market value of its assets is represented by cash,
government securities, securities of other regulated investment companies, and
securities of one or more other issuers (to the extent the value of the
securities of any one such issuer owned by the Portfolio does not exceed 5% of
the value of its total assets and 10% of the outstanding voting securities of
such issuer) and (ii) not more than 25% of the value of its assets is invested
in the securities (other than government securities and securities of other
regulated investment companies) of any one industry. These requirements may
limit the ability of the Portfolios to engage in transactions involving options
and futures contracts.

         If each Portfolio qualifies as a regulated investment company, it will
not be subject to federal income tax on its "investment company taxable income"
(calculated by excluding the amount of its net capital gain, if any, and by
excluding the dividends-received and net operating loss deductions) or "net
capital gain" (the excess of its long-term capital gain over its net short-term
capital loss) which is distributed to shareholders. In determining taxable
income, however, a regulated investment company holding stock on the record date
for a dividend is required to include the dividend in income on the later of the
ex-dividend date or the date of acquisition.

         DIVIDENDS AND DISTRIBUTIONS

         All dividends and distributions with respect to the shares of any
Portfolio 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 Portfolio
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
return of capital, ordinary income or long-term capital gain for federal income
tax purposes. Between the record date and the cash payment date, each Portfolio
retains the use and benefits of such monies as would be paid as cash dividends.

         Each Portfolio 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 Portfolio, 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

                                       23



respect to the amount, if any, by which such company does not meet distribution
requirements specified in the federal income tax laws. Each Portfolio 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 applicable Portfolio(s)
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.

         Dividends paid out of net investment income and net short-term capital
gains of a Portfolio 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 a Portfolio'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. Corporate shareholders will be informed as to the portion, if any, of
dividends received by them which will qualify for the dividends-received
deduction.

         Dividends paid out of the net capital gain of a Portfolio 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. If shares of the Fund to which such capital gains dividends are
attributable are held by a shareholder for less than 31 days and there is a loss
on the sale or exchange of such shares, then the loss, to the extent of the
capital gain dividend or undistributed capital gain, is treated as a long-term
capital loss.

         All distributions, whether received in shares or cash, must be reported
by each shareholder on his federal income tax return. Taxable dividends declared
in October, November, or December of any year and payable to shareholders of
record on a specified date in such a month will be deemed to have been paid by
the Fund and received by such shareholders on December 31 of the year if such
dividend is actually paid by the Fund during January of the following year.

         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 redemption of all or part of the shares of a series held by any
shareholder will generally be treated as a sale or exchange unless the
redemption fails to substantially reduce the shareholder's percentage ownership
interest in the related Portfolio (determined for this purpose using certain
specific rules of constructive ownership). Any redemption that does not
substantially reduce a shareholder's percentage ownership interest in a
Portfolio may be treated as a dividend.

         If a redemption is treated as a sale or exchange, the shareholder will
generally recognize gain or loss measured by the difference between the
redemption price and the basis of the shares. This gain will generally be
treated as capital gain (long-term or short-term, depending upon the
shareholder's holding period for the redeemed shares).

         The exchange of the shares in one Portfolio for shares in another
Portfolio will be treated as a taxable exchange for federal income tax purposes.
If the exchange occurs within 90 days of the acquisition of the original shares,
however, the shareholder's basis in the original shares will not include the
sales charge, if any, to the extent such charge does not exceed the amount that
would have been charged on the acquisition of the second-acquired shares if such
shares were acquired directly. To the extent that the sales charge, if any, paid
upon acquisition of the original shares is not taken into account in determining
the shareholder's gain or loss from the disposition of the original shares, it
is added to the basis of the newly acquired shares.

                                       24



         On or before January 31 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 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% (or at a
lower rate under an applicable United States income tax treaty).

         Each Portfolio 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
Portfolio'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 net capital gain 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 Portfolio's ordinary income and
capital gain net income) and the term "distributed amount" means, with respect
to any year, the sum of (a) the amount of dividends-paid or deemed paid during
the year, (b) any amount on which the Portfolio 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 individual Portfolios will not be subject to tax in Delaware for
any year in which they each qualify as a regulated investment company. They may,
however, be subject to such tax for any year in which they do not so qualify and
may be subject to tax in certain other states where they are deemed to be doing
business. Moreover, distributions may be subject to state and local taxes. In
those states which have income tax laws, the tax treatment of such Portfolios
and the tax treatment of shareholders with respect to distributions may be
different from the federal income tax treatment of such persons.

         The foregoing is a general summary of the federal income tax
consequences of investing in the Fund to shareholders who are U.S. citizens or
U.S. corporations. Shareholders should consult their own tax advisors about the
tax consequences of an investment in the Fund in light of each shareholder's
particular tax situation. Shareholders should also consult their own tax
advisors about consequences under foreign, state, local or other applicable tax
laws.

                                  UNDERWRITERS

         The Fund's shares will be continuously distributed through Navellier
Securities Corp. (the "Distributor") located at One East Liberty, Third Floor,
Reno, Nevada 89501, pursuant to a distribution agreement dated October 17, 1995.
The Distributor has been selling this Fund's shares since December 28, 1995.

         The Distributor acts as the sole principal underwriter of the Fund's
shares. Through a network established by the Distributor, the Fund's shares may
also be sold through selected investment brokers and dealers. For a description
of the Distributor's obligations to distribute the Fund's securities, see "The
Investment Adviser, Distributor, Custodian and Transfer Agent - Distributor."

         The following table sets forth the remuneration received by Navellier
Securities Corp. ("NSC"), the Distributor, (which is wholly owned by Louis
Navellier) for the following years:

                                       25






               UNDERWRITING
               DISCOUNTS AND        COMPENSATION         BROKERAGE           OTHER
YEAR            COMMISSIONS        ON REDEMPTIONS       COMMISSIONS      COMPENSATION*
- ----           ------------        --------------       -----------      -------------
                                                             
1995                $ 0                 $ 0                $ 0             $       0
1996                $ 0                 $ 0                $ 0             $ 147,832
1997                $ 0                 $ 0                $ 0             $ 258,601
1998                $ 0                 $ 0                $ 0             $ 354,814
1999                $ 0                 $ 0                $ 0             $ 443,158
2000                $ 0                 $ 0                $ 0             $ 994,560
2001                $ 0                 $ 0                $ 0             $ 825,521
2002                $ 0                 $ 0                $ 0             $ 650,376



* These "other compensation" amounts are 12b-1 fees paid to NSC.

                         CALCULATION OF PERFORMANCE DATA

         Performance information for each Portfolio may appear in
advertisements, sales literature, or reports to shareholders or prospective
shareholders. Performance information in advertisements and sales literature may
be expressed as total return on the applicable Portfolio.

         The average annual total return on such Portfolios represents an
annualization of each Portfolio'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 Portfolio's operation, if shorter ("n" in the formula below). The following
formula will be used to compute the average annual total return for the
Portfolio:

                               P (1 + T)(n) = ERV

         In addition to the foregoing, each Portfolio 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.


         For the fiscal year 2002, the Navellier Aggressive Growth Portfolio had
a total return of -36.38%; The Navellier Mid Cap Growth Portfolio had a total
return of -22.83%. The Navellier Aggressive Micro Cap Portfolio had a total
return of -22.68%. The Small Cap Value Portfolio had a total return of -14.08%;
the Large Cap Growth Portfolio had a total return of -26.70%; the Large Cap
Value Portfolio had a total return of -20.53%; and the Aggressive Small Cap
Equity Portfolio had a total return of -33.29%.


         Performance information for the Portfolios shall reflect only the
performance of a hypothetical investment in the Portfolios during the particular
time period on which the calculations are based. Performance information should
be considered in light of the investment objectives and policies,
characteristics and quality of the particular Portfolio, 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.

         Each Portfolio may, from time to time, include in advertisements
containing total return the ranking of those performance figures relative to
such figures for groups of mutual funds categorized by Lipper Analytical
Services, or other services, as having the same investment objectives. The total
return may also be used to compare the performance of the Portfolio against
certain widely acknowledged outside standards or indices for stock and bond
market performance. The Standard & Poor's Composite Index of 500 stocks ("S&P
500") is a market value-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. The
S&P 500 is composed almost entirely of common stocks of companies listed on the
New York Stock Exchange, although the common stocks of a few companies listed on
the American Stock Exchange or traded over-the-counter are included.

As summarized in the Prospectus under the heading "Performance and Yield," the
total return of each Portfolio may be quoted in advertisements and sales
literature.

                              FINANCIAL STATEMENTS*

* (References in these financial statements to the Aggressive Small Cap
Portfolio refer to the Navellier Performance Funds portfolio which is now named
the Navellier Aggressive Micro Cap Portfolio)

                                       26





                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002

<Table>
<Caption>
               AGGRESSIVE GROWTH PORTFOLIO
- ---------------------------------------------------------
                                            Market Value
  Shares                                      (Note 1)
- ---------------------------------------------------------
                                     
COMMON STOCKS -- 111.5%
AUDIO AND VIDEO PRODUCTS -- 7.8%
   135,300  Applied Films Corp.*           $    2,704,646
                                           --------------
AUTOMOTIVE -- 4.4%
   100,000  Nissan Motor Co., Ltd.              1,538,000
                                           --------------
CASINOS AND GAMING -- 3.7%
    75,000  Alliance Gaming Corp.*              1,277,250
                                           --------------
CHEMICALS -- 3.6%
    25,000  Ecolab, Inc.                        1,237,500
                                           --------------
COMPUTER EQUIPMENT -- 24.2%
   349,000  CompuCom Systems, Inc.*             1,957,890
   200,000  Cray, Inc.*                         1,534,000
    50,000  Imation Corp.*                      1,754,000
    60,000  Neoware Systems, Inc.*                894,600
   105,000  Pinnacle Systems, Inc.*             1,429,050
    40,000  SanDisk Corp.*                        812,000
                                           --------------
                                                8,381,540
                                           --------------
COMPUTER SOFTWARE AND SERVICES -- 14.2%
    30,000  Cognizant Technology
              Solutions Corp.*                  2,166,900
    25,000  Pixar, Inc.*                        1,324,750
    50,000  United Online, Inc.*                  797,050
   100,000  Western Digital Corp.*                639,000
                                           --------------
                                                4,927,700
                                           --------------
CONSUMER PRODUCTS AND SERVICES -- 2.4%
    15,000  Hotels.com*                           819,450
                                           --------------
ELECTRONICS -- 4.8%
    60,000  Energizer Holdings, Inc.*           1,674,000
                                           --------------
INSURANCE -- 6.0%
    60,000  SAFECO Corp.                        2,080,200
                                           --------------
MEDICAL EQUIPMENT AND SUPPLIES -- 7.2%
    50,000  Immucor, Inc.*                      1,012,500
    30,000  Varian Medical Systems, Inc.*       1,488,000
                                           --------------
                                                2,500,500
                                           --------------
</Table>

<Table>
<Caption>
- ---------------------------------------------------------
                                            Market Value
  Shares                                      (Note 1)
- ---------------------------------------------------------
- ---------------------------------------------------------
                                     
OIL AND GAS SERVICES -- 4.1%
    45,000  Patina Oil & Gas Corp.*        $    1,424,250
                                           --------------
PHARMACEUTICALS -- 2.3%
    50,000  Amylin Pharmaceuticals, Inc.*         807,000
                                           --------------
RETAIL -- 3.2%
    65,000  PETsMART, Inc.*                     1,113,450
                                           --------------
SEMICONDUCTORS AND RELATED -- 7.9%
   150,000  Integrated Circuit Systems,
              Inc.*                             2,737,500
                                           --------------
TELECOMMUNICATIONS EQUIPMENT AND SERVICES -- 12.9%
    75,000  Inter-Tel, Inc.                     1,568,250
   100,000  InterDigital Communications
              Corp.*                            1,456,000
    75,000  j2 Global Communications,
              Inc.*                             1,428,000
                                           --------------
                                                4,452,250
                                           --------------
TRANSPORTATION -- 2.8%
    25,000  Ryanair Holdings PLC ADR*             979,000
                                           --------------
TOTAL COMMON STOCKS
  (COST $39,754,609)                           38,654,236
                                           --------------

MONEY MARKET FUNDS -- 19.9%
 6,912,579  FBR Fund for Government
              Investors
              (Cost $6,912,579)                 6,912,579
                                           --------------
TOTAL INVESTMENTS -- 131.4%
  (COST $46,667,188)                           45,566,815
Liabilities in Excess of Other
  Assets -- (31.4)%                           (10,882,330)
                                           --------------
NET ASSETS -- 100.0%                       $   34,684,485
                                           ==============
</Table>

                                        27

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
               MID CAP GROWTH PORTFOLIO
- -------------------------------------------------------
                                          Market Value
  Shares                                    (Note 1)
- -------------------------------------------------------
                                   
COMMON STOCKS -- 95.6%
APPAREL -- 3.8%
   175,400  Coach, Inc.*                 $    5,774,168
                                         --------------
AUTOMOTIVE -- 3.2%
    67,200  AutoZone, Inc.*                   4,747,680
                                         --------------
BANKING -- 6.0%
   300,000  Hudson City Bancorp, Inc.         5,589,000
   101,000  North Fork Bancorporation,
              Inc.                            3,407,740
                                         --------------
                                              8,996,740
                                         --------------
COMPUTER EQUIPMENT -- 5.0%
    73,000  CDW Computer Centers, Inc.*       3,201,050
    72,000  Lexmark International,
              Inc.*                           4,356,000
                                         --------------
                                              7,557,050
                                         --------------
COMPUTER SOFTWARE AND SERVICES -- 22.4%
   196,400  Adobe Systems, Inc.               4,892,324
   275,000  Cognos, Inc.*                     6,448,750
    97,800  Electronic Arts, Inc.*            4,867,506
    74,000  Intuit, Inc.*                     3,472,080
    85,000  Mercury Interactive Corp          2,520,250
    96,400  Pixar, Inc.*                      5,108,236
   157,000  Symantec Corp.*                   6,350,650
                                         --------------
                                             33,659,796
                                         --------------
CONSUMER PRODUCTS AND SERVICES -- 11.4%
   125,000  Apollo Group, Inc.*               5,500,000
    65,000  Expedia, Inc.*                    4,350,463
    84,000  Hotels.com*                       4,588,920
    72,000  Westwood One, Inc.*               2,689,920
                                         --------------
                                             17,129,303
                                         --------------
ELECTRONICS -- 5.8%
   300,000  American Power Conversion
              Corp.*                          4,545,000
   148,000  Energizer Holdings, Inc.*         4,129,200
                                         --------------
                                              8,674,200
                                         --------------
FINANCIAL SERVICES -- 2.8%
   100,000  Moody's Corp.                     4,129,000
                                         --------------
HEALTHCARE PRODUCTS AND SERVICES -- 2.2%
    97,000  Gilead Sciences, Inc.*            3,298,000
                                         --------------
MANUFACTURING -- 1.5%
    37,000  ITT Industries, Inc.              2,245,530
                                         --------------
</Table>

<Table>
<Caption>
- -------------------------------------------------------
                                          Market Value
  Shares                                    (Note 1)
- -------------------------------------------------------
- -------------------------------------------------------
                                   
MEDICAL EQUIPMENT AND SUPPLIES -- 8.2%
    90,000  DENTSPLY International,
              Inc.                       $    3,351,510
    90,000  Oxford Health Plans, Inc.*        3,280,500
    71,000  Patterson Dental Co.*             3,105,540
    50,500  Varian Medical Systems,
              Inc.*                           2,504,800
                                         --------------
                                             12,242,350
                                         --------------
MEDICAL SPECIALTIES -- 2.0%
    93,000  Lincare Holdings, Inc.*           2,940,660
                                         --------------
OIL AND GAS SERVICES -- 3.3%
    47,000  Apache Corp.                      2,678,530
    49,000  Devon Energy Corp.                2,249,100
                                         --------------
                                              4,927,630
                                         --------------
RETAIL -- 11.1%
   175,000  Amazon.com, Inc.*                 3,305,750
    90,000  Michaels Stores, Inc.*            2,817,000
   225,000  PETsMART, Inc.*                   3,854,250
    49,500  Ross Stores, Inc.                 2,098,305
   170,000  Williams-Sonoma, Inc.*            4,615,500
                                         --------------
                                             16,690,805
                                         --------------
SEMICONDUCTORS AND RELATED -- 4.7%
   306,100  NVIDIA Corp.*                     3,523,211
   103,000  QLogic Corp.*                     3,554,530
                                         --------------
                                              7,077,741
                                         --------------
TELECOMMUNICATIONS EQUIPMENT AND SERVICES -- 2.2%
    75,000  L-3 Communications
              Holdings, Inc.*                 3,368,250
                                         --------------
TOTAL COMMON STOCKS
  (COST $142,813,621)                       143,458,903
                                         --------------

MONEY MARKET FUNDS -- 1.5%
 2,229,071  FBR Fund for Government
              Investors
              (Cost $2,229,071)               2,229,071
                                         --------------
TOTAL INVESTMENTS -- 97.1%
  (COST $145,042,692)                       145,687,974
Other Assets Less Liabilities -- 2.9%         4,327,324
                                         --------------
NET ASSETS -- 100.0%                     $  150,015,298
                                         ==============
</Table>

                                        28

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
            AGGRESSIVE MICRO CAP PORTFOLIO
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
                                     
COMMON STOCKS -- 96.8%
AEROSPACE/DEFENSE -- 3.3%
    12,000  InVision Technologies, Inc.*   $    316,320
                                           ------------
APPAREL -- 3.1%
    16,500  Pacific Sunwear of
              California, Inc.*                 291,885
                                           ------------
AUTOMOTIVE -- 1.8%
    15,000  Spartan Motors, Inc.*               170,700
                                           ------------
BUILDING AND CONSTRUCTION -- 2.3%
     7,000  Hovnanian Enterprises, Inc.*        221,900
                                           ------------
BUSINESS SERVICES -- 3.0%
    11,000  Pre-Paid Legal Services,
              Inc.*                             288,200
                                           ------------
CASINOS AND GAMING -- 5.6%
    13,700  Alliance Gaming Corp.*              233,311
    22,000  Monarch Casino & Resort,
              Inc.*                             302,060
                                           ------------
                                                535,371
                                           ------------
CHEMICALS -- 3.9%
    20,000  A. Schulman, Inc.                   372,200
                                           ------------
COMPUTER EQUIPMENT -- 11.5%
    44,000  Cray, Inc.*                         337,480
    21,300  Neoware Systems, Inc.*              317,583
    21,500  Pinnacle Systems, Inc.*             292,615
    22,500  Western Digital Corp.*              143,775
                                           ------------
                                              1,091,453
                                           ------------
COMPUTER SOFTWARE AND SERVICES -- 5.2%
    50,000  Pervasive Software, Inc.*           206,000
    15,000  Verisity Ltd.*                      285,900
                                           ------------
                                                491,900
                                           ------------
ELECTRONICS -- 4.4%
    10,000  Benchmark Electronics, Inc.*        286,600
    28,600  Sonic Solutions*                    143,000
                                           ------------
                                                429,600
                                           ------------
ENGINEERING AND CONSULTING
  SERVICES -- 7.8%
     5,000  EMCOR Group, Inc.*                  265,050
    11,700  FTI Consulting, Inc.*               469,755
                                           ------------
                                                734,805
                                           ------------
FOOD, BEVERAGE AND TOBACCO -- 3.7%
    10,000  Panera Bread Co.*                   348,100
                                           ------------
HEALTHCARE PRODUCTS AND SERVICES -- 2.9%
    20,000  American Medical Security
              Group, Inc.*                      279,600
                                           ------------
</Table>

<Table>
<Caption>
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
- -------------------------------------------------------
                                     
INSURANCE -- 2.4%
     5,500  Hilb, Rogal and Hamilton Co.   $    224,950
                                           ------------
MEDICAL EQUIPMENT AND
  SUPPLIES -- 5.6%
    20,000  Hanger Orthopedic Group,
              Inc.*                             263,000
    13,000  Immucor, Inc.*                      263,250
                                           ------------
                                                526,250
                                           ------------
METALS AND MINING -- 2.8%
    10,500  Royal Gold, Inc.                    261,671
                                           ------------
OIL AND GAS SERVICES -- 2.9%
    11,000  Oceaneering International,
              Inc.*                             272,140
                                           ------------
PHARMACEUTICALS -- 5.1%
    23,400  Chattem, Inc.*                      480,870
                                           ------------
REAL ESTATE -- 2.5%
    13,500  Fidelity National Information
              Solutions, Inc.*                  232,875
                                           ------------
RESTAURANTS -- 7.2%
    15,000  Landry's Restaurants, Inc.          318,600
    10,000  P.F. Chang's China Bistro,
              Inc.*                             363,000
                                           ------------
                                                681,600
                                           ------------
RETAIL -- 2.7%
    10,000  Fred's, Inc.                        257,000
                                           ------------
SEMICONDUCTORS AND RELATED -- 2.3%
    14,000  Artisan Components, Inc.*           216,020
                                           ------------
UTILITIES -- 4.8%
    13,500  Denbury Resources, Inc.*            152,550
     8,000  UGI Corp.                           299,120
                                           ------------
                                                451,670
                                           ------------
TOTAL COMMON STOCKS
  (COST $8,628,008)                           9,177,080
                                           ------------

MONEY MARKET FUNDS -- 3.4%
   325,453  FBR Fund for Government
              Investors
              (Cost $325,453)                   325,453
                                           ------------
TOTAL INVESTMENTS -- 100.2%
  (COST $8,953,461)                           9,502,533
Liabilities in Excess of Other
  Assets -- (0.2)%                              (21,351)
                                           ------------
NET ASSETS -- 100.0%                       $  9,481,182
                                           ============
</Table>

                                        29

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
               SMALL CAP VALUE PORTFOLIO
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
                                     
COMMON STOCKS -- 97.5%
APPAREL -- 6.2%
     7,870  Kellwood Co.                   $    204,620
     7,180  Quicksilver, Inc.*                  191,419
                                           ------------
                                                396,039
                                           ------------
BANKING -- 4.0%
     9,500  Community First Bankshares,
              Inc.                              251,370
                                           ------------
BUILDING AND CONSTRUCTION -- 2.1%
    15,780  USG Corp.*                          133,341
                                           ------------
CASINOS AND GAMING -- 1.5%
     6,650  Boyd Gaming Corp.*                   93,432
                                           ------------
CHEMICALS -- 4.2%
    17,600  RPM International, Inc.             268,928
                                           ------------
COMPUTER EQUIPMENT -- 11.4%
     9,600  Avocent Corp.*                      213,312
    35,200  CompuCom Systems, Inc.*             197,472
     9,000  Imation Corp.*                      315,720
                                           ------------
                                                726,504
                                           ------------
CONSUMER PRODUCTS AND SERVICES -- 13.6%
     9,500  Blyth, Inc.                         254,220
    44,890  MPS Group, Inc.*                    248,691
    15,000  Nu Skin Enterprises, Inc.           179,550
     7,000  Regis Corp.                         181,930
                                           ------------
                                                864,391
                                           ------------
ENERGY EQUIPMENT & SERVICES -- 4.7%
    19,150  Headwaters, Inc.*                   297,016
                                           ------------
FINANCIAL SERVICES -- 1.6%
     6,000  Charter Municipal Mortgage
              Acceptance Co.                    104,220
                                           ------------
FOOD, BEVERAGE, AND TOBACCO -- 1.2%
     3,250  Sensient Technologies Corp.          73,028
                                           ------------
HEALTHCARE PRODUCTS AND SERVICES -- 2.4%
    17,700  US Oncology, Inc.*                  153,459
                                           ------------
INDUSTRIAL GAS AND SERVICES -- 7.2%
    18,400  AirGas, Inc.*                       317,400
     5,260  Hughes Supply, Inc.                 143,703
                                           ------------
                                                461,103
                                           ------------
MEDICAL EQUIPMENT AND SUPPLIES -- 3.8%
    11,480  Hanger Orthopedic Group,
              Inc.*                             150,962
     2,300  Pediatrix Medical Group,
              Inc.*                              92,138
                                           ------------
                                                243,100
                                           ------------
</Table>

<Table>
<Caption>
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
- -------------------------------------------------------
                                     
OFFICE EQUIPMENT AND SUPPLIES -- 2.9%
    37,000  OfficeMax, Inc.*               $    185,000
                                           ------------
PAPER AND PACKAGING -- 2.2%
    17,700  Crown Cork & Seal Company,
              Inc.*                             140,715
                                           ------------
REAL ESTATE INVESTMENT TRUST -- 3.4%
    25,650  MFA Mortgage Investments,
              Inc.                              215,460
                                           ------------
RESTAURANTS -- 3.8%
     5,700  Lone Star Steakhouse &
              Saloon, Inc.                      110,238
     4,780  RARE Hospitality
              International, Inc.*              132,024
                                           ------------
                                                242,262
                                           ------------
RETAIL -- 10.5%
     6,700  Gart Sports Co.*                    129,645
    10,040  ShopKo Stores, Inc.*                124,998
    18,000  The Sports Authority, Inc.*         126,000
     7,600  Tractor Supply Co.*                 285,760
                                           ------------
                                                666,403
                                           ------------
TELECOMMUNICATIONS EQUIPMENT AND SERVICES -- 6.8%
     5,700  ADTRAN, Inc.*                       187,530
    11,600  Inter-Tel, Inc.                     242,556
                                           ------------
                                                430,086
                                           ------------
WASTE MANAGEMENT SERVICES -- 4.0%
     6,600  Waste Connections, Inc.*            254,826
                                           ------------
TOTAL COMMON STOCKS
  (COST $5,945,992)                           6,200,683
                                           ------------

MONEY MARKET FUNDS -- 2.2%
   141,355  FBR Fund for Government
              Investors
              (Cost $141,355)                   141,355
                                           ------------
TOTAL INVESTMENTS -- 99.7%
  (COST $6,087,347)                           6,342,038
Other Assets Less Liabilities -- 0.3%            20,954
                                           ------------
NET ASSETS -- 100.0%                       $  6,362,992
                                           ============
</Table>

                                        30

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
               LARGE CAP GROWTH PORTFOLIO
- ---------------------------------------------------------
                                            Market Value
  Shares                                      (Note 1)
- ---------------------------------------------------------
                                     
COMMON STOCKS -- 92.0%
APPAREL -- 1.0%
     3,100  Nike, Inc.                     $      137,857
                                           --------------
AUTOMOTIVE -- 2.8%
    24,800  Nissan Motor Co., Ltd.                381,424
                                           --------------
COMPUTER EQUIPMENT -- 16.3%
    23,875  Cisco Systems, Inc.                   312,762
    28,500  Dell Computer Corp.*                  762,090
    15,100  Emulex Corp.*                         280,105
    18,375  Hewlett-Packard Co.                   318,990
     7,500  International Business
              Machines Corp.                      581,250
                                           --------------
                                                2,255,197
                                           --------------
COMPUTER SOFTWARE AND SERVICES -- 12.2%
    12,275  First Data Corp.                      434,658
    10,875  Intuit, Inc.*                         510,255
     8,350  Microsoft Corp.*                      431,695
    19,325  Yahoo! Inc.*                          315,964
                                           --------------
                                                1,692,572
                                           --------------
CONSUMER PRODUCTS AND SERVICES -- 7.2%
    10,000  The Clorox Co.                        412,500
     8,550  eBay, Inc.*                           579,861
                                           --------------
                                                  992,361
                                           --------------
ENTERTAINMENT -- 3.2%
    17,125  Fox Entertainment Group,
              Inc.*                               444,051
                                           --------------
FINANCIAL SERVICES -- 5.2%
     6,900  SLM Corp.                             716,634
                                           --------------
FOOD, BEVERAGE AND TOBACCO -- 4.1%
     8,775  Sysco Corp.                           261,407
     5,500  Wm. Wrigley Jr. Co.                   301,840
                                           --------------
                                                  563,247
                                           --------------
HEALTHCARE PRODUCTS AND SERVICES -- 6.2%
     4,825  Forest Laboratories, Inc.*            473,912
     7,200  Johnson & Johnson                     386,712
                                           --------------
                                                  860,624
                                           --------------
</Table>

<Table>
<Caption>
- ---------------------------------------------------------
                                            Market Value
  Shares                                      (Note 1)
- ---------------------------------------------------------
- ---------------------------------------------------------
                                     
INSURANCE -- 5.9%
    10,550  The Allstate Corp.*            $      390,244
     8,700  The Progressive Corp.                 431,781
                                           --------------
                                                  822,025
                                           --------------
MEDICAL EQUIPMENT AND SUPPLIES -- 2.2%
     4,550  Stryker Corp.                         305,396
                                           --------------
RECREATIONAL PRODUCTS -- 2.8%
     8,500  Harley-Davidson, Inc.                 392,700
                                           --------------
RETAIL -- 11.6%
     7,975  Bed Bath & Beyond, Inc.*              275,377
     4,050  Kohl's Corp.*                         226,598
     6,700  Lowe's Companies, Inc.                251,250
    19,000  The TJX Companies, Inc.               370,880
     9,500  Wal-Mart Stores, Inc.                 479,845
                                           --------------
                                                1,603,950
                                           --------------
SEMICONDUCTORS AND RELATED -- 3.6%
    37,700  Applied Materials, Inc.*              491,231
                                           --------------
TELECOMUNICATION, EQUIPMENT AND SERVICES -- 7.7%
    42,275  Nextel Communications, Inc.*          488,276
    15,900  QUALCOMM, Inc.*                       578,601
                                           --------------
                                                1,066,877
                                           --------------
TOTAL COMMON STOCKS (COST $13,607,620)
                                               12,726,146
                                           --------------

MONEY MARKET FUNDS -- 8.6%
 1,189,273  FBR Fund for Government
              Investors
              (Cost $1,189,273)                 1,189,273
                                           --------------
TOTAL INVESTMENTS -- 100.6%
  (COST $14,796,893)                           13,915,419
Liabilities in Excess of Other
  Assets -- (0.6)%                                (83,955)
                                           --------------
NET ASSETS -- 100.0%                       $   13,831,464
                                           ==============
</Table>

                                        31

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
               LARGE CAP VALUE PORTFOLIO
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
                                     
COMMON STOCKS -- 89.5%
CHEMICALS -- 4.7%
       795  PPG Industries, Inc.           $     39,869
                                           ------------
COMPUTER EQUIPMENT -- 4.5%
     2,200  Hewlett-Packard Co.                  38,192
                                           ------------
CONSUMER PRODUCTS AND SERVICES -- 4.9%
     1,200  Eastman Kodak Co.                    42,048
                                           ------------
FOOD, BEVERAGE AND TOBACCO -- 13.5%
       810  Anheuser-Busch Companies,
              Inc.                               39,204
     1,100  ConAgra Foods, Inc.                  27,511
       500  Dean Foods Co.*                      18,550
     1,350  Sara Lee Corp.                       30,388
                                           ------------
                                                115,653
                                           ------------
INDUSTRIAL SERVICES -- 4.0%
     1,600  Republic Services, Inc.*             33,568
                                           ------------
INSURANCE -- 8.8%
     1,345  AFLAC, Inc.                          40,511
       700  The Progressive Corp.                34,741
                                           ------------
                                                 75,252
                                           ------------
MAJOR BANKS -- 9.5%
     1,590  KeyCorp                              39,973
     1,650  SouthTrust Corp.                     41,003
                                           ------------
                                                 80,976
                                           ------------
OFFICE EQUIPMENT AND SUPPLIES -- 2.6%
     1,225  Staples, Inc.*                       22,418
                                           ------------
OIL AND GAS SERVICES -- 9.6%
       500  Burlington Resources, Inc.           21,325
       855  ConocoPhillips                       41,373
       700  Occidental Petroleum Corp.           19,915
                                           ------------
                                                 82,613
                                           ------------
</Table>

<Table>
<Caption>
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
- -------------------------------------------------------
                                     
REGIONAL BANKS -- 13.3%
     1,600  Marshall & Illsley Corp.       $     43,808
     1,950  National Commerce Financial
              Corp.                              46,507
       700  North Fork Bancorporation,
              Inc.                               23,618
                                           ------------
                                                113,933
                                           ------------
SAVINGS BANKS -- 7.0%
       300  Golden West Financial Corp.          21,543
       500  New York Community Bancorp,
              Inc.                               14,440
     1,715  Sovereign Bancorp, Inc.              24,096
                                           ------------
                                                 60,079
                                           ------------
TELECOMMUNICATIONS EQUIPMENT AND SERVICES -- 3.8%
     1,100  CenturyTel, Inc.                     32,318
                                           ------------
UTILITIES -- 3.3%
       450  DTE Energy Co.                       20,880
       250  The Southern Co.                      7,098
                                           ------------
                                                 27,978
                                           ------------
TOTAL COMMON STOCKS
  (COST $786,754)                               764,897
                                           ------------

MONEY MARKET FUNDS -- 4.8%
    40,900  FBR Fund for Government
              Investors (Cost $40,900)           40,900
                                           ------------
TOTAL INVESTMENTS -- 94.3%
  (COST $827,654)                               805,797
Other Assets Less Liabilities -- 5.7%            48,690
                                           ------------
NET ASSETS -- 100.0%                       $    854,487
                                           ============
</Table>

- ------------------------------

* Non-income producing

ADR American Depository Receipts

                       See Notes to Financial Statements.
                                        32


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2002

<Table>
<Caption>
                                                            AGGRESSIVE       MID CAP       AGGRESSIVE
                                                              GROWTH         GROWTH        MICRO CAP
                                                            PORTFOLIO       PORTFOLIO      PORTFOLIO
                                                                                 
 ASSETS
   Securities at Value* (Note 1).........................  $ 45,566,815   $ 145,687,974   $  9,502,533
   Investment Income Receivable (Note 1).................         7,132          15,524          4,061
   Receivable for Securities Sold (Note 1)...............       300,317              --             --
   Receivable for Shares Sold............................        89,954       5,400,485          1,777
   Other Assets..........................................         1,812              --             --
                                                           ------------   -------------   ------------
     Total Assets........................................    45,966,030     151,103,983      9,508,371
                                                           ------------   -------------   ------------
 LIABILITIES
   Investment Advisory Fee Payable (Note 2)..............        28,494         111,556          6,932
   Administrative Fee Payable (Note 2)...................         8,481          13,280          2,063
   Payable for Securities Purchased (Note 1).............     3,746,476              --             --
   Payable for Shares Redeemed...........................     7,492,724         944,180         16,892
   Distribution Fees Payable (Note 4)....................           282             909             65
   Other Liabilities.....................................         5,088          18,760          1,237
                                                           ------------   -------------   ------------
     Total Liabilities...................................    11,281,545       1,088,685         27,189
                                                           ------------   -------------   ------------
 NET ASSETS..............................................  $ 34,684,485   $ 150,015,298   $  9,481,182
                                                           ============   =============   ============
 NET ASSETS CONSIST OF:
   Paid-in Capital applicable to:
     Regular Class.......................................  $ 61,836,209   $ 225,163,637   $ 20,902,478
     I Class.............................................            --      26,407,497             --
   Accumulated Net Realized Loss on Investments..........   (26,051,351)   (102,201,118)   (11,970,368)
   Net Unrealized Appreciation (Depreciation) of
     Investments.........................................    (1,100,373)        645,282        549,072
                                                           ------------   -------------   ------------
 NET ASSETS..............................................  $ 34,684,485   $ 150,015,298   $  9,481,182
                                                           ============   =============   ============
   Regular Class.........................................  $ 34,684,485   $ 136,836,373   $  9,481,182
                                                           ============   =============   ============
   I Class...............................................  $         --   $  13,178,925   $         --
                                                           ============   =============   ============
 SHARES OUTSTANDING
   Regular Class.........................................     3,868,381       7,889,745        530,856
                                                           ============   =============   ============
   I Class...............................................            --         750,722             --
                                                           ============   =============   ============
 NET ASSET VALUE PER SHARE:
   Regular Class.........................................  $       8.97   $       17.34   $      17.86
                                                           ============   =============   ============
   I Class...............................................  $         --   $       17.56   $         --
                                                           ============   =============   ============
 --------------------------------------------------------
 * The Cost of Securities at Value is $46,667,188, $145,042,692, and $8,953,461, respectively
</Table>

                       See Notes to Financial Statements.
                                        33


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2002

<Table>
<Caption>
                                                              SMALL CAP      LARGE CAP       LARGE CAP
                                                                VALUE          GROWTH          VALUE
                                                              PORTFOLIO      PORTFOLIO       PORTFOLIO
                                                                                   
 ASSETS
   Securities at Value* (Note 1)...........................  $ 6,342,038    $ 13,915,419    $   805,797
   Investment Income Receivable
     (Note 1)..............................................       10,577           7,123          1,328
   Receivable for Securities Sold
     (Note 1)..............................................           --              --        232,869
   Receivable for Shares Sold..............................       17,378             592             --
   Other Assets............................................           --              --             --
                                                             -----------    ------------    -----------
     Total Assets..........................................    6,369,993      13,923,134      1,039,994
                                                             -----------    ------------    -----------
 LIABILITIES
   Investment Advisory Fee Payable (Note 2)................        4,713          10,102            558
   Administrative Fee Payable (Note 2).....................        1,403           3,006            186
   Payable for Securities Purchased (Note 1)...............           --              --        184,608
   Payable for Shares Redeemed.............................           --          76,662             37
   Distribution Fees Payable (Note 4)......................           43              96              6
   Other Liabilities.......................................          842           1,804            112
                                                             -----------    ------------    -----------
     Total Liabilities.....................................        7,001          91,670        185,507
                                                             -----------    ------------    -----------
 NET ASSETS................................................  $ 6,362,992    $ 13,831,464    $   854,487
                                                             ===========    ============    ===========
 NET ASSETS CONSIST OF:
   Paid-in Capital.........................................  $ 7,313,498    $ 35,591,483    $ 1,339,248
   Undistributed Net Investment Income.....................          292              --             39
   Accumulated Net Realized Loss on Investments............   (1,205,489)    (20,878,545)      (462,943)
   Net Unrealized Appreciation (Depreciation) of
     Investments...........................................      254,691        (881,474)       (21,857)
                                                             -----------    ------------    -----------
 NET ASSETS................................................  $ 6,362,992    $ 13,831,464    $   854,487
                                                             ===========    ============    ===========
 SHARES OUTSTANDING........................................      634,299       1,134,468        121,578
                                                             ===========    ============    ===========
 NET ASSET VALUE PER SHARE.................................  $     10.03    $      12.19    $      7.03
                                                             ===========    ============    ===========
 ----------------------------------------------------------
 * The Cost of Securities at Value is $6,087,347, $14,796,893, and $827,654, respectively.
</Table>

                       See Notes to Financial Statements.
                                        34


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2002

<Table>
<Caption>
                                                            AGGRESSIVE       MID CAP       AGGRESSIVE
                                                              GROWTH          GROWTH        MICRO CAP
                                                            PORTFOLIO       PORTFOLIO       PORTFOLIO
                                                                                  
 INVESTMENT INCOME
   Interest (Note 1).....................................  $     24,504    $     93,216    $     6,700
   Dividends (Note 1)....................................       241,059         829,935         29,474
                                                           ------------    ------------    -----------
     Total Investment Income.............................       265,563         923,151         36,174
                                                           ------------    ------------    -----------
 EXPENSES
   Investment Advisory Fee (Note 2)......................       469,643       1,436,452        104,681
   Administrative Fee (Note 2)...........................       139,775         171,006         31,155
   Distribution Plan Fees -- Regular Class (Note 4)......       139,775         390,951         31,155
   Transfer Agent and Custodian Fee (Note 3).............       109,577         295,573         53,250
   Shareholder Reports and Notices.......................        27,189         101,382         12,858
   Registration Fees.....................................        17,717          36,806         16,970
   Insurance Fees........................................        13,634          43,547          3,549
   Audit Fees............................................         9,600           9,600          9,600
   Trustees' Fees and Expenses (Note 2)..................         7,143           7,143          7,143
   Legal Fees............................................         6,454           6,454          6,454
   Other Expenses........................................           954           2,194            675
                                                           ------------    ------------    -----------
     Total Expenses......................................       941,461       2,501,108        277,490
     Less Expenses Reimbursed by Investment Adviser (Note
       2)................................................      (108,403)       (260,815)       (91,806)
                                                           ------------    ------------    -----------
       Net Expenses......................................       833,058       2,240,293        185,684
                                                           ------------    ------------    -----------
 NET INVESTMENT LOSS.....................................      (567,495)     (1,317,142)      (149,510)
                                                           ------------    ------------    -----------
 Net Realized Loss on Investment Transactions............   (14,665,365)    (27,246,203)      (702,835)
 Change in Net Unrealized Appreciation/Depreciation of
   Investments...........................................    (9,354,201)    (16,552,887)    (2,154,931)
                                                           ------------    ------------    -----------
 NET LOSS ON INVESTMENTS.................................   (24,019,566)    (43,799,090)    (2,857,766)
                                                           ------------    ------------    -----------
 NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS....  $(24,587,061)   $(45,116,232)   $(3,007,276)
                                                           ============    ============    ===========
</Table>

                       See Notes to Financial Statements.

                                        35


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2002

<Table>
<Caption>
                                                                SMALL CAP      LARGE CAP     LARGE CAP
                                                                  VALUE         GROWTH         VALUE
                                                                PORTFOLIO      PORTFOLIO     PORTFOLIO
                                                                                    
 INVESTMENT INCOME
   Interest (Note 1).........................................  $     4,161    $     5,063    $     628
   Dividends (Note 1)........................................       88,801        103,515       14,235
                                                               -----------    -----------    ---------
     Total Investment Income.................................       92,962        108,578       14,863
                                                               -----------    -----------    ---------
 EXPENSES
   Investment Advisory Fee (Note 2)..........................       54,359        135,879        6,792
   Administrative Fee (Note 2)...............................       16,178         40,440        2,264
   Distribution Plan Fees (Note 4)...........................       16,178         40,440        2,264
   Transfer Agent and Custodian Fee (Note 3).................       48,902         58,163       42,989
   Organizational Expense (Note 1)...........................       18,360         18,360       18,360
   Registration Fees.........................................       16,410         16,410       16,327
   Audit Fees................................................        9,600          9,600        9,600
   Trustees' Fees and Expenses (Note 2)......................        7,143          7,143        7,143
   Legal Fees................................................        6,454          6,454        6,454
   Shareholder Reports and Notices...........................        4,417         15,569        1,463
   Insurance Fees............................................          782          5,458          244
   Other Expenses............................................          305            874          298
                                                               -----------    -----------    ---------
     Total Expenses..........................................      199,088        354,790      114,198
     Less Expenses Reimbursed by Investment Adviser (Note
       2)....................................................     (102,666)      (113,766)    (101,520)
                                                               -----------    -----------    ---------
       Net Expenses..........................................       96,422        241,024       12,678
                                                               -----------    -----------    ---------
 NET INVESTMENT INCOME (LOSS)................................       (3,460)      (132,446)       2,185
                                                               -----------    -----------    ---------
 Net Realized Loss on Investment Transactions................   (1,205,489)    (2,363,379)    (167,920)
 Change in Net Unrealized Appreciation/Depreciation of
   Investments...............................................      (73,928)    (2,449,986)     (31,934)
                                                               -----------    -----------    ---------
 NET LOSS ON INVESTMENTS.....................................   (1,279,417)    (4,813,365)    (199,854)
                                                               -----------    -----------    ---------
 NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS........  $(1,282,877)   $(4,945,811)   $(197,669)
                                                               ===========    ===========    =========
</Table>

                       See Notes to Financial Statements.

                                        36


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
                                                  AGGRESSIVE GROWTH                MID CAP GROWTH
                                                      PORTFOLIO                       PORTFOLIO
                                                 FOR THE YEARS ENDED             FOR THE YEARS ENDED
                                                     DECEMBER 31,                   DECEMBER 31,
                                             ----------------------------   -----------------------------
                                                 2002           2001            2002            2001
                                             ------------   -------------   -------------   -------------
                                                                                
 FROM INVESTMENT ACTIVITIES
   Net Investment Loss.....................  $  (567,495)   $    (254,873)  $  (1,317,142)  $    (336,434)
   Net Realized Loss on Investment
     Transactions..........................  (14,665,365)      (9,099,335)    (27,246,203)    (53,679,300)
   Change in Net Unrealized Appreciation/
     Depreciation of Investments...........   (9,354,201)      (2,480,799)    (16,552,887)    (24,508,738)
                                             ------------   -------------   -------------   -------------
     Net Decrease in Net Assets Resulting
       from Operations.....................  (24,587,061)     (11,835,007)    (45,116,232)    (78,524,472)
                                             ------------   -------------   -------------   -------------
 FROM SHARE TRANSACTIONS
   Net Proceeds from Sales of Shares:
       Regular Class.......................   60,687,229      150,873,005     120,908,460     221,183,096
       I Class.............................           --               --       6,551,769       5,840,632
   Cost of Shares Redeemed:
       Regular Class.......................  (74,671,466)    (152,927,618)   (108,270,674)   (244,942,950)
       I Class.............................           --               --      (3,779,009)     (9,821,891)
                                             ------------   -------------   -------------   -------------
     Net Increase (Decrease) in Net Assets
       Resulting from Share Transactions...  (13,984,237)      (2,054,613)     15,410,546     (27,741,113)
                                             ------------   -------------   -------------   -------------
     TOTAL DECREASE IN NET ASSETS..........  (38,571,298)     (13,889,620)    (29,705,686)   (106,265,585)
 NET ASSETS -- Beginning of Year...........   73,255,783       87,145,403     179,720,984     285,986,569
                                             ------------   -------------   -------------   -------------
 NET ASSETS -- End of Year.................  $34,684,485    $  73,255,783   $ 150,015,298   $ 179,720,984
                                             ============   =============   =============   =============
 SHARES
   Sold:
       Regular Class.......................    5,314,780       10,975,786       6,132,867       9,035,895
       I Class.............................           --               --         316,788         232,927
   Redeemed:
       Regular Class.......................   (6,643,279)     (11,150,780)     (5,612,684)    (10,129,589)
       I Class.............................           --               --        (191,307)       (413,828)
                                             ------------   -------------   -------------   -------------
     Net Increase (Decrease) in Shares.....   (1,328,499)        (174,994)        645,664      (1,274,595)
                                             ============   =============   =============   =============
</Table>

                       See Notes to Financial Statements.

                                        37


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
                                                   AGGRESSIVE MICRO CAP             SMALL CAP VALUE
                                                         PORTFOLIO                     PORTFOLIO
                                                    FOR THE YEARS ENDED           FOR THE YEARS ENDED
                                                       DECEMBER 31,                  DECEMBER 31,
                                                ---------------------------   ---------------------------
                                                    2002           2001           2002           2001
                                                ------------   ------------   ------------   ------------
                                                                                 
 FROM INVESTMENT ACTIVITIES
   Net Investment Income (Loss)...............  $  (149,510)   $   (130,899)  $    (3,460)   $     9,389
   Net Realized Gain (Loss) on Investment
     Transactions.............................     (702,835)     (5,675,002)   (1,205,489)       441,104
   Change in Net Unrealized Appreciation/
     Depreciation of Investments..............   (2,154,931)      1,785,959       (73,928)        28,298
                                                -----------    ------------   -----------    -----------
     Net Increase (Decrease) in Net Assets
       Resulting from Operations..............   (3,007,276)     (4,019,942)   (1,282,877)       478,791
                                                -----------    ------------   -----------    -----------
 DISTRIBUTIONS TO SHAREHOLDERS
   From Net Investment Income.................           --              --        (5,140)       (16,426)
   From Net Realized Gain.....................           --              --      (287,283)            --
                                                -----------    ------------   -----------    -----------
     Total Distributions to Shareholders......           --              --      (292,423)       (16,426)
                                                -----------    ------------   -----------    -----------
 FROM SHARE TRANSACTIONS
   Net Proceeds from Sales of Shares..........    4,633,641      44,845,031     8,001,268      9,463,455
   Reinvestment of Distributions..............           --              --       284,510         16,243
   Cost of Shares Redeemed....................   (8,687,893)    (53,473,862)   (5,121,474)    (7,132,274)
                                                -----------    ------------   -----------    -----------
     Net Increase (Decrease) in Net Assets
       Resulting from Share Transactions......   (4,054,252)     (8,628,831)    3,164,304      2,347,424
                                                -----------    ------------   -----------    -----------
     TOTAL INCREASE (DECREASE) IN NET
       ASSETS.................................   (7,061,528)    (12,648,773)    1,589,004      2,809,789
 NET ASSETS -- Beginning of Year..............   16,542,710      29,191,483     4,773,988      1,964,199
                                                -----------    ------------   -----------    -----------
 NET ASSETS -- End of Year....................  $ 9,481,182    $ 16,542,710   $ 6,362,992    $ 4,773,988
                                                ===========    ============   ===========    ===========
 SHARES
   Sold.......................................      208,373       2,038,514       644,892        838,962
   Issued in Reinvestment of Distributions....           --              --        28,371          1,325
   Redeemed...................................     (393,751)     (2,402,343)     (429,419)      (630,425)
                                                -----------    ------------   -----------    -----------
     Net Increase (Decrease) in Shares........     (185,378)       (363,829)      243,844        209,862
                                                ===========    ============   ===========    ===========
</Table>

                       See Notes to Financial Statements.

                                        38


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
                                                         LARGE CAP GROWTH             LARGE CAP VALUE
                                                            PORTFOLIO                    PORTFOLIO
                                                       FOR THE YEARS ENDED          FOR THE YEARS ENDED
                                                           DECEMBER 31,                DECEMBER 31,
                                                    --------------------------   -------------------------
                                                       2002           2001          2002          2001
                                                    -----------   ------------   -----------   -----------
                                                                                   
 FROM INVESTMENT ACTIVITIES
   Net Investment Income (Loss)...................  $  (132,446)  $   (162,473)  $     2,185   $     6,011
   Net Realized Loss on Investment Transactions...   (2,363,379)   (14,555,778)     (167,920)     (159,534)
   Change in Net Unrealized Appreciation/
     Depreciation of Investments..................   (2,449,986)     4,237,420       (31,934)      (28,830)
                                                    -----------   ------------   -----------   -----------
     Net Decrease in Net Assets Resulting from
       Operations.................................   (4,945,811)   (10,480,831)     (197,669)     (182,353)
                                                    -----------   ------------   -----------   -----------
 DISTRIBUTIONS TO SHAREHOLDERS
   From Net Investment Income.....................           --             --        (4,184)       (8,810)
                                                    -----------   ------------   -----------   -----------
 FROM SHARE TRANSACTIONS
   Net Proceeds from Sales of Shares..............    6,490,743     27,238,340     1,419,443     2,375,536
   Reinvestment of Distributions..................           --             --         4,153         8,753
   Cost of Shares Redeemed........................   (8,548,293)   (39,991,036)   (1,325,292)   (2,433,678)
                                                    -----------   ------------   -----------   -----------
     Net Increase (Decrease) in Net Assets
       Resulting from Share Transactions..........   (2,057,550)   (12,752,696)       98,304       (49,389)
                                                    -----------   ------------   -----------   -----------
     TOTAL DECREASE IN NET ASSETS.................   (7,003,361)   (23,233,527)     (103,549)     (240,552)
 NET ASSETS -- Beginning of Year..................   20,834,825     44,068,352       958,036     1,198,588
                                                    -----------   ------------   -----------   -----------
 NET ASSETS -- End of Year........................  $13,831,464   $ 20,834,825   $   854,487   $   958,036
                                                    ===========   ============   ===========   ===========
 SHARES
   Sold...........................................      469,930      1,619,400       172,338       245,897
   Issued in Reinvestment of Distributions........           --             --           590           982
   Redeemed.......................................     (588,022)    (2,395,090)     (159,167)     (255,013)
                                                    -----------   ------------   -----------   -----------
     Net Increase (Decrease) in Shares............     (118,092)      (775,690)       13,761        (8,134)
                                                    ===========   ============   ===========   ===========
</Table>

                       See Notes to Financial Statements.

                                        39


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                  AGGRESSIVE GROWTH
                                                                      PORTFOLIO
                                                          FOR THE YEARS ENDED DECEMBER 31,
                                                 ---------------------------------------------------
                                                  2002       2001       2000       1999       1998
                                                 -------    -------    -------    -------    -------
                                                                              
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year........   $14.10     $16.22     $19.01     $14.82     $13.29
                                                 -------    -------    -------    -------    -------
   Income (Loss) from Investment Operations:
     Net Investment Loss.......................    (0.15)     (0.05)     (0.19)     (0.16)     (0.15)
     Net Realized and Unrealized Gain (Loss) on
       Investments.............................    (4.98)     (2.07)      0.59       6.95       1.68
                                                 -------    -------    -------    -------    -------
   Total from Investment Operations............    (5.13)     (2.12)      0.40       6.79       1.53
                                                 -------    -------    -------    -------    -------
 Distributions to Shareholders:
   From Net Realized Gain......................       --         --      (3.19)     (2.60)        --
                                                 -------    -------    -------    -------    -------
   Net Increase (Decrease) in Net Asset
     Value.....................................    (5.13)     (2.12)     (2.79)      4.19       1.53
                                                 -------    -------    -------    -------    -------
   Net Asset Value -- End of Year..............    $8.97     $14.10     $16.22     $19.01     $14.82
                                                 =======    =======    =======    =======    =======
 TOTAL INVESTMENT RETURN.......................   (36.38)%   (13.07)%     3.06%     46.11%     11.51%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2).......     1.49%      1.49%      1.49%      1.49%      1.68%
   Expenses Before Reimbursement (Note 2)......     1.69%      1.65%      1.63%      1.68%      1.89%
   Net Investment Loss After Reimbursement
     (Note 2)..................................    (1.02)%    (0.35)%    (1.11)%    (1.00)%    (0.92)%
   Net Investment Loss Before Reimbursement
     (Note 2)..................................    (1.22)%    (0.51)%    (1.26)%    (1.20)%    (1.13)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate.....................      517%       535%       376%       702%       237%
   Net Assets at End of Year (in thousands)....  $34,684    $73,256    $87,145    $90,028    $81,404
   Number of Shares Outstanding at End of Year
     (in thousands)............................    3,868      5,197      5,372      4,736      5,491
</Table>

                       See Notes to Financial Statements.

                                        40


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                   MID CAP GROWTH
                                                                     PORTFOLIO
                                                                   REGULAR CLASS
                                               ------------------------------------------------------
                                                          FOR THE YEARS ENDED DECEMBER 31,
                                               ------------------------------------------------------
                                                 2002        2001        2000        1999       1998
                                               --------    --------    --------    --------    ------
                                                                                
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year......    $22.47      $30.84      $30.20      $13.65    $12.43
                                               --------    --------    --------    --------    ------
   Income (Loss) from Investment Operations:
     Net Investment Loss.....................     (0.16)      (0.05)      (0.25)      (0.08)    (0.06)
     Net Realized and Unrealized Gain (Loss)
       on Investments........................     (4.97)      (8.32)       1.32(A)    17.40      1.59
                                               --------    --------    --------    --------    ------
   Total from Investment Operations..........     (5.13)      (8.37)       1.07       17.32      1.53
                                               --------    --------    --------    --------    ------
 Distributions to Shareholders:
   From Net Realized Gain....................        --          --       (0.43)      (0.77)    (0.31)
                                               --------    --------    --------    --------    ------
   Net Increase (Decrease) in Net Asset
     Value...................................     (5.13)      (8.37)       0.64       16.55      1.22
                                               --------    --------    --------    --------    ------
   Net Asset Value -- End of Year............    $17.34      $22.47      $30.84      $30.20    $13.65
                                               ========    ========    ========    ========    ======
 TOTAL INVESTMENT RETURN.....................    (22.83)%    (27.14)%      3.63%     126.97%    12.31%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2).....      1.34%       1.34%       1.34%       1.49%     1.66%
   Expenses Before Reimbursement (Note 2)....      1.49%       1.50%       1.41%       1.69%     2.56%
   Net Investment Loss After Reimbursement
     (Note 2)................................     (0.80)%     (0.19)%     (0.87)%     (1.00)%   (0.38)%
   Net Investment Loss Before Reimbursement
     (Note 2)................................     (0.95)%     (0.35)%     (0.94)%     (1.23)%   (1.27)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate...................       170%        261%        196%        208%      211%
   Net Assets at End of Year (in
     thousands)..............................  $136,836    $165,561    $261,040    $137,108    $8,124
   Number of Shares Outstanding at End of
     Year (in thousands).....................     7,890       7,370       8,463       4,540       595
 --------------------------------------------
</Table>

 (A) 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.

                       See Notes to Financial Statements.

                                        41


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                         MID CAP GROWTH
                                                                           PORTFOLIO
                                                                            I CLASS
                                                               ----------------------------------
                                                                    FOR THE
                                                                  YEARS ENDED          FOR THE
                                                                  DECEMBER 31,       PERIOD ENDED
                                                               ------------------    DECEMBER 31,
                                                                2002       2001         2000*
                                                               -------    -------    ------------
                                                                            
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Period....................   $22.65     $30.95       $31.31
                                                               -------    -------      -------
   Income (Loss) from Investment Operations:
     Net Investment Income (Loss)............................    (0.09)      0.05        (0.08)
     Net Realized and Unrealized Gain (Loss) on
       Investments...........................................    (5.00)     (8.35)        0.15(A)
                                                               -------    -------      -------
   Total from Investment Operations..........................    (5.09)     (8.30)        0.07
                                                               -------    -------      -------
 Distributions to Shareholders:
   From Net Realized Gain....................................       --         --        (0.43)
                                                               -------    -------      -------
   Net Decrease in Net Asset Value...........................    (5.09)     (8.30)       (0.36)
                                                               -------    -------      -------
   Net Asset Value -- End of Period..........................   $17.56     $22.65       $30.95
                                                               =======    =======      =======
 TOTAL INVESTMENT RETURN.....................................   (22.47)%   (26.82)%       0.31%(B)
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2).....................     0.99%      0.99%        0.99%(C)
   Expenses Before Reimbursement (Note 2)....................     1.14%      1.15%        1.06%(C)
   Net Investment Income (Loss) After Reimbursement (Note
     2)......................................................    (0.46)%     0.16%       (0.47)%(C)
   Net Investment Loss Before Reimbursement (Note 2).........    (0.61)%    (0.00)%(+)     (0.54)%(C)
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate...................................      170%       261%         196%
   Net Assets at End of Period (in thousands)................  $13,179    $14,160      $24,947
   Number of Shares Outstanding at End of Period (in
     thousands)..............................................      751        625          806
 ------------------------------------------------------------
</Table>

 (A) 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.
 (B) Total returns for periods of less than one year are not annualized.
 (C) Annualized

 * From Commencement of Operations February 2, 2000.

 (+) The net investment income ratio is less than 0.01%

                       See Notes to Financial Statements.

                                        42


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                  AGGRESSIVE MICRO CAP
                                                                       PORTFOLIO
                                                    ------------------------------------------------
                                                            FOR THE YEARS ENDED DECEMBER 31,
                                                    ------------------------------------------------
                                                     2002      2001       2000       1999      1998
                                                    ------    -------    -------    ------    ------
                                                                               
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year...........  $23.10    $ 27.03    $ 22.35    $20.42    $20.40
                                                    ------    -------    -------    ------    ------
   Income (Loss) from Investment Operations:
     Net Investment Loss..........................   (0.28)     (0.18)     (0.14)    (0.28)    (0.14)
     Net Realized and Unrealized Gain (Loss) on
       Investments................................   (4.96)     (3.75)      5.43(A)   3.27      0.16
                                                    ------    -------    -------    ------    ------
   Total from Investment Operations...............   (5.24)     (3.93)      5.29      2.99      0.02
                                                    ------    -------    -------    ------    ------
 Distributions to Shareholders:
   From Net Realized Gain.........................      --         --      (0.61)    (1.06)       --
                                                    ------    -------    -------    ------    ------
   Net Increase (Decrease) in Net Asset Value.....   (5.24)     (3.93)      4.68      1.93      0.02
                                                    ------    -------    -------    ------    ------
   Net Asset Value -- End of Year.................  $17.86     $23.10     $27.03    $22.35    $20.42
                                                    ======    =======    =======    ======    ======
 TOTAL INVESTMENT RETURN..........................  (22.68)%   (14.54)%    23.82%    14.79%     0.10%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2)..........    1.49%      1.49%      1.48%     1.49%     1.51%
   Expenses Before Reimbursement (Note 2).........    2.23%      2.08%      1.84%     2.68%     2.50%
   Net Investment Loss After Reimbursement (Note
     2)...........................................   (1.20)%    (0.72)%    (0.85)%   (1.06)%   (0.71)%
   Net Investment Loss Before Reimbursement (Note
     2)...........................................   (1.94)%    (1.31)%    (1.21)%   (2.24)%   (1.70)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate........................     167%       203%       269%      190%      196%
   Net Assets at End of Year (in thousands).......  $9,481    $16,543    $29,191    $5,869    $9,651
   Number of Shares Outstanding at End of Year (in
     thousands)...................................     531        716      1,080       263       473
 -------------------------------------------------
</Table>

 (A) 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.

                       See Notes to Financial Statements.

                                        43


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                     SMALL CAP VALUE
                                                                        PORTFOLIO
                                                      ----------------------------------------------
                                                             FOR THE YEARS ENDED DECEMBER 31,
                                                      ----------------------------------------------
                                                       2002      2001      2000      1999      1998
                                                      ------    ------    ------    ------    ------
                                                                               
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year.............  $12.23    $10.88     $9.06     $9.21    $10.12
                                                      ------    ------    ------    ------    ------
   Income (Loss) from Investment Operations:
     Net Investment Income (Loss)...................   (0.01)     0.02     (0.04)     0.19      0.07
     Net Realized and Unrealized Gain (Loss) on
       Investments..................................   (1.71)     1.37      1.88     (0.15)    (0.91)
                                                      ------    ------    ------    ------    ------
   Total from Investment Operations.................   (1.72)     1.39      1.84      0.04     (0.84)
                                                      ------    ------    ------    ------    ------
 Distributions to Shareholders:
   From Net Investment Income.......................   (0.01)    (0.04)    (0.02)    (0.19)    (0.07)
   From Net Realized Gain...........................   (0.47)       --        --        --        --
                                                      ------    ------    ------    ------    ------
       Total Distributions to Shareholders..........   (0.48)    (0.04)    (0.02)    (0.19)    (0.07)
                                                      ------    ------    ------    ------    ------
   Net Increase (Decrease) in Net Asset Value.......   (2.20)     1.35      1.82     (0.15)    (0.91)
                                                      ------    ------    ------    ------    ------
   Net Asset Value -- End of Year...................  $10.03    $12.23    $10.88     $9.06     $9.21
                                                      ======    ======    ======    ======    ======
 TOTAL INVESTMENT RETURN............................  (14.08)%   12.79%    20.29%     0.44%    (8.28)%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2)............    1.49%     1.49%     1.48%     1.49%     1.53%
   Expenses Before Reimbursement (Note 2)...........    3.07%     4.01%     8.62%     9.25%    13.01%
   Net Investment (Income) Loss After Reimbursement
     (Note 2).......................................   (0.05)%    0.23%    (0.56)%    2.42%     1.12%
   Net Investment Loss Before Reimbursement (Note
     2).............................................   (1.63)%   (2.29)%   (7.70)%   (5.34)%  (10.36)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate..........................     271%      290%      148%       91%       85%
   Net Assets at End of Year (in thousands).........  $6,363    $4,774    $1,964    $1,232      $857
   Number of Shares Outstanding at End of Year (in
     thousands).....................................     634       390       181       136        93
</Table>

                       See Notes to Financial Statements.

                                        44


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                   LARGE CAP GROWTH
                                                                      PORTFOLIO
                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                  --------------------------------------------------
                                                   2002       2001       2000       1999       1998
                                                  -------    -------    -------    -------    ------
                                                                               
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year.........   $16.63     $21.73     $23.59     $14.47    $10.25
                                                  -------    -------    -------    -------    ------
   Income (Loss) from Investment Operations:
     Net Investment Loss........................    (0.12)     (0.13)     (0.20)     (0.12)    (0.02)
     Net Realized and Unrealized Gain (Loss) on
       Investments..............................    (4.32)     (4.97)     (1.61)      9.24      4.24
                                                  -------    -------    -------    -------    ------
   Total from Investment Operations.............    (4.44)     (5.10)     (1.81)      9.12      4.22
                                                  -------    -------    -------    -------    ------
 Distributions to Shareholders:
   From Net Realized Gain.......................       --         --      (0.05)        --        --
                                                  -------    -------    -------    -------    ------
   Net Increase (Decrease) in Net Asset Value...    (4.44)     (5.10)     (1.86)      9.12      4.22
                                                  -------    -------    -------    -------    ------
   Net Asset Value -- End of Year...............   $12.19     $16.63     $21.73     $23.59    $14.47
                                                  =======    =======    =======    =======    ======
 TOTAL INVESTMENT RETURN........................   (26.70)%   (23.47)%    (7.66)%    63.03%    41.17%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2)........     1.49%      1.49%      1.48%      1.49%     1.54%
   Expenses Before Reimbursement (Note 2).......     2.20%      1.99%      1.76%      2.75%     9.11%
   Net Investment Loss After Reimbursement (Note
     2).........................................    (0.82)%    (0.62)%    (1.14)%    (0.99)%   (0.43)%
   Net Investment Loss Before Reimbursement
     (Note 2)...................................    (1.53)%    (1.12)%    (1.43)%    (2.26)%   (8.00)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate......................      115%       124%        54%        75%       80%
   Net Assets at End of Year (in thousands).....  $13,831    $20,835    $44,068    $12,667    $2,402
   Number of Shares Outstanding at End of Year
     (in thousands).............................    1,134      1,253      2,028        537       166
</Table>

                       See Notes to Financial Statements.

                                        45


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                      LARGE CAP VALUE
                                                                         PORTFOLIO
                                                              FOR THE YEARS ENDED DECEMBER 31,
                                                       ----------------------------------------------
                                                        2002      2001      2000      1999      1998
                                                       ------    ------    ------    ------    ------
                                                                                
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year..............   $8.89    $10.34    $10.43    $11.39    $10.11
                                                       ------    ------    ------    ------    ------
   Income (Loss) from Investment Operations:
     Net Investment Income...........................    0.01      0.05      0.12      0.21      0.16
     Net Realized and Unrealized Gain (Loss) on
       Investments...................................   (1.84)    (1.42)    (0.03)     0.27      1.91
                                                       ------    ------    ------    ------    ------
   Total from Investment Operations..................   (1.83)    (1.37)     0.09      0.48      2.07
                                                       ------    ------    ------    ------    ------
 Distributions to Shareholders:
   From Net Investment Income........................   (0.03)    (0.08)    (0.18)    (0.21)    (0.16)
     From Net Realized Gain..........................      --        --        --     (1.23)    (0.63)
                                                       ------    ------    ------    ------    ------
       Total Distributions to Shareholders...........   (0.03)    (0.08)    (0.18)    (1.44)    (0.79)
                                                       ------    ------    ------    ------    ------
   Net Increase (Decrease) in Net Asset Value........   (1.86)    (1.45)    (0.09)    (0.96)     1.28
                                                       ------    ------    ------    ------    ------
   Net Asset Value -- End of Year....................   $7.03     $8.89    $10.34    $10.43    $11.39
                                                       ======    ======    ======    ======    ======
 TOTAL INVESTMENT RETURN.............................  (20.53)%  (13.26)%    0.92%     4.24%    20.48%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2).............    1.40%     1.40%     1.40%     1.40%     1.42%
   Expenses Before Reimbursement (Note 2)............   12.62%     9.87%    10.00%    10.14%    14.34%
   Net Investment Income After Reimbursement (Note
     2)..............................................    0.24%     0.51%     1.42%     2.10%     1.69%
   Net Investment Loss Before Reimbursement (Note
     2)..............................................  (10.98)%   (7.96)%   (7.18)%   (6.63)%  (11.22)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate...........................     343%      271%      175%       90%      256%
   Net Assets at End of Year (in thousands)..........    $854      $958    $1,199      $994      $655
   Number of Shares Outstanding at End of Year (in
     thousands)......................................     122       108       116        95        58
</Table>

                       See Notes to Financial Statements.

                                        46


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2002

1. Significant Accounting Policies

     The Navellier Performance Funds (the "Fund") is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, (the "Act") as an open-end investment company which offers its shares
in a series of no-load non-diversified and diversified portfolios. The Fund's
objective is to achieve long-term capital growth. The Fund is authorized to
issue an unlimited number of shares of capital stock with no stated par value.
The Fund currently consists of seven separate portfolios, each with its own
investment objectives and policies: the Aggressive Growth Portfolio, a
non-diversified open-end management company portfolio, the Mid Cap Growth
Portfolio, a diversified open-end management company portfolio, the Aggressive
Micro Cap Portfolio (formerly the Aggressive Small Cap Portfolio), a diversified
open-end management company portfolio, the Small Cap Value Portfolio, a
diversified open-end management company portfolio, the Large Cap Growth
Portfolio, a non-diversified open-end management company portfolio and the Large
Cap Value Portfolio, a diversified open-end management company portfolio.
Financial statements for the Aggressive Small Cap Equity Portfolio can be found
in a separately printed report.

     The Mid Cap Growth Portfolio consists of two shares of classes: Regular
Class shares offered since November 26, 1996, and I Class shares offered since
December 28, 1999. Income and expenses of the Portfolio are allocated
proportionately to the two classes of shares based on daily net assets, except
for Rule 12b-1 distribution fees, which are charged only to Regular Class, and
other class specific transfer agent fees, which accrue at different rates.

     The following is a summary of significant accounting policies which the
Fund follows:

        (a) Listed securities are valued at the last sales price of the New York
    Stock Exchange and other major exchanges. Over-the-Counter securities are
    valued at the last sales price. If market quotations are not readily
    available, the Board of Trustees will value the Fund's securities in good
    faith. The Trustees will periodically review this method of valuation and
    recommend changes which may be necessary to assure that the Fund's
    instruments are valued at fair value. Debt securities with maturities of 60
    days or less are valued at amortized cost.

        (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 from net investment income, if any, 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. Distributions to shareholders, which are determined in accordance
    with income tax regulations, are recorded on ex-dividend date.

        (d) The Fund intends to comply with the provisions of the Internal
    Revenue Code applicable to regulated investment companies and will
    distribute all net investment income and capital gains to its shareholders.
    Therefore, no Federal income tax provision is required.

        (e) Organizational expenses of the Small Cap Value Portfolio, the Large
    Cap Growth Portfolio, and the Large Cap Value Portfolio totaling $91,800,
    $91,800, and $91,800, respectively, are being deferred and amortized over 60
    months beginning with public offering of shares in the portfolios. Any
    redemption by an initial investor during the amortization period will be
    reduced by a pro rata portion of any of the unamortized organization
    expenses. Such proration is to be calculated by dividing the number of
    initial shares redeemed by the number of initial shares outstanding at the
    date of redemption. At December 31, 2002, there were no unamortized
    organization costs remaining.

        (f) The preparation of financial statements in conformity with generally
    accepted accounting principles in the United States of America requires
    management to make estimates and assumptions that affect the reported
    amounts of assets and liabilities and disclosure of contingent assets and
    liabilities at the date of the financial statements and the reported amounts
    of increases and decreases in net assets from operations during the
    reporting period. Actual results could differ from those estimates.

                                        47

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------

2. Investment Advisory Fees and Other Transactions with Affiliates

     Investment advisory services are provided by Navellier Management, Inc.
(the "Adviser"). Effective May 1, 1998, under an agreement with the Adviser, the
Fund pays a fee at the annual rate of 0.84% of the daily net assets of the
Aggressive Growth Portfolio, the Mid Cap Growth Portfolio, the Aggressive Micro
Cap Portfolio, the Small Cap Value Portfolio and the Large Cap Growth Portfolio,
and 0.75% of the daily net assets of the Large Cap Value Portfolio. The Adviser
receives an annual fee equal to 0.25% of average daily net assets of the
Aggressive Growth, the Aggressive Micro Cap, the Small Cap Value, the Large Cap
Growth and the Large Cap Value Portfolios, and 0.10% of the average daily net
assets of the Mid Cap Growth Portfolio 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.

     The Adviser has agreed to limit the total normal expenses of each Portfolio
to 1.49% of average annual net assets, except for the Large Cap Value Portfolio,
Mid Cap Growth Portfolio -- Regular Class and the Mid Cap Growth Portfolio -- I
Class which are limited to 1.40%, 1.34% and 0.99%, respectively. In order to
maintain the expense limitation, the Adviser paid certain operating expenses on
a net basis of the Aggressive Growth Portfolio, the Mid Cap Growth Portfolio,
the Aggressive Micro Cap Portfolio, the Small Cap Value Portfolio, the Large Cap
Growth Portfolio and the Large Cap Value Portfolio totaling $108,403, $260,815,
$91,806, $102,666, $113,766 and $101,520, respectively.

     Navellier Securities Corp. (the "Distributor") acts as the Fund's
Distributor and is registered as a broker-dealer under the Securities and
Exchange Act of 1934. The Distributor, which is the principal underwriter of the
Fund's shares, renders its services to the Fund pursuant to a distribution
agreement. An officer and trustee of the Fund is also an officer and director of
the Distributor.

     The Fund pays each of its Trustees not affiliated with the Adviser $12,500
annually. For the year ended December 31, 2002, Trustees' fees and expenses
totaled $42,858.

3. Transfer Agent and Custodian

     FBR National Bank & Trust provides transfer agency, dividend disbursing and
other shareholder services to the Fund. In addition, FBR National Bank & Trust
serves as custodian of the Fund's assets. Fees paid to FBR National Bank & Trust
are based upon a fee schedule approved by the Board of Trustees.

4. Distribution Plan

     The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Act, whereby it reimburses the Distributor or others in an
amount not to exceed 0.25% per annum of the average daily net assets of the
Aggressive Growth Portfolio, the Mid Cap Growth Portfolio (Regular Class shares
only), the Aggressive Micro Cap Portfolio, the Small Cap Value Portfolio, the
Large Cap Growth Portfolio and the Large Cap Value Portfolio, for expenses
incurred in the promotion and distribution of shares of the Fund. These expenses
include, but are not limited to, the printing of prospectuses, statements of
additional information, and reports used for sales purposes, expenses of
preparation of sales literature and related expenses (including Distributor
personnel), advertisements and other distribution-related expenses, including a
prorated portion of the Distributor's overhead expenses attributable to the
distribution of shares. Such payments are made monthly. The 12b-1 fee includes,
in addition to promotional activities, the amount the Fund may pay to the
Distributor or others as a service fee to reimburse such parties for personal
services provided to shareholders of the Fund and/or the maintenance of
shareholder accounts. Such Rule 12b-1 fees are made pursuant to the Plan and
distribution agreements entered into between such service providers and the
Distributor or the Fund directly.

                                        48

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------

5. Securities Transactions

     For the year ended December 31, 2002, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:

<Table>
<Caption>
                             AGGRESSIVE      MID CAP      AGGRESSIVE     SMALL CAP     LARGE CAP    LARGE CAP
                               GROWTH         GROWTH       MICRO CAP       VALUE        GROWTH        VALUE
                             PORTFOLIO      PORTFOLIO      PORTFOLIO     PORTFOLIO     PORTFOLIO    PORTFOLIO
                            ------------   ------------   -----------   -----------   -----------   ----------
                                                                                  
Purchases.................  $282,243,251   $287,844,244   $19,836,219   $19,127,913   $18,110,547   $2,960,103
                            ============   ============   ===========   ===========   ===========   ==========
Sales.....................  $295,675,425   $279,503,713   $23,882,730   $16,149,398   $21,182,386   $2,933,856
                            ============   ============   ===========   ===========   ===========   ==========
</Table>

6. Unrealized Appreciation and Depreciation of Investments

     Unrealized appreciation and depreciation as of December 31, 2002, based on
the cost for Federal income tax purposes is as follows:

<Table>
<Caption>
                                                                   AGGRESSIVE      MID CAP      AGGRESSIVE
                                                                     GROWTH         GROWTH      MICRO CAP
                                                                    PORTFOLIO     PORTFOLIO     PORTFOLIO
                                                                   -----------   ------------   ----------
                                                                                       
      Gross Unrealized Appreciation..............................  $ 1,616,699   $  9,958,038   $1,133,332
      Gross Unrealized Depreciation..............................   (2,828,147)    (9,583,055)    (584,260)
                                                                   -----------   ------------   ----------
      Net Unrealized Appreciation (Depreciation).................  $(1,211,448)  $    374,983   $  549,072
                                                                   ===========   ============   ==========
      Cost of Investments for Federal Income Tax Purposes........  $46,778,263   $145,312,991   $8,953,461
                                                                   ===========   ============   ==========
</Table>

<Table>
<Caption>
                                                                  SMALL CAP      LARGE CAP     LARGE CAP
                                                                    VALUE         GROWTH         VALUE
                                                                  PORTFOLIO      PORTFOLIO     PORTFOLIO
                                                                  ----------    -----------    ---------
                                                                                      
      Gross Unrealized Appreciation.............................  $  404,015    $   613,419    $  6,739
      Gross Unrealized Depreciation.............................    (170,783)    (1,494,893)    (28,596)
                                                                  ----------    -----------    --------
      Net Unrealized Appreciation (Depreciation)................  $  233,232    $  (881,474)   $(21,857)
                                                                  ==========    ===========    ========
      Cost of Investments for Federal Income Tax Purposes.......  $6,108,806    $14,796,893    $827,654
                                                                  ==========    ===========    ========
</Table>

     The difference between book basis and tax basis unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.

7. Federal Income Tax

     Permanent differences between tax and financial reporting of net investment
income are reclassified. As of December 31, 2002, net investment losses were
reclassified to paid-in-capital for Aggressive Growth Portfolio, Mid Cap Growth
Portfolio, Aggressive Micro Cap Portfolio, Small Cap Value Portfolio, Large Cap
Growth Portfolio and Large Cap Value Portfolio in the amount of $567,495,
$1,317,142, $149,510, $8,892, $132,446 and $2,038, respectively. Net assets of
the Funds were not affected by these reclassifications.

     At December 31, 2002, for Federal income tax purposes, the following funds
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:

<Table>
<Caption>
                                                                   AGGRESSIVE      MID CAP     AGGRESSIVE
                                                                     GROWTH        GROWTH       MICRO CAP
      EXPIRES DECEMBER 31,                                          PORTFOLIO     PORTFOLIO     PORTFOLIO
      --------------------                                         -----------   -----------   -----------
                                                                                      
      2008.......................................................  $        --   $ 8,346,460   $ 1,655,525
      2009.......................................................   11,798,794    61,028,476     9,184,053
      2010.......................................................   11,625,059    29,500,719            --
                                                                   -----------   -----------   -----------
                                                                   $23,423,853   $98,875,655   $10,839,578
                                                                   ===========   ===========   ===========
</Table>

                                        49

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------

<Table>
<Caption>
                                                                    SMALL CAP     LARGE CAP
                                                                      VALUE        GROWTH       LARGE CAP
                                                                    PORTFOLIO     PORTFOLIO       VALUE
      EXPIRES DECEMBER 31,                                                                      PORTFOLIO
      --------------------                                         -----------   -----------   -----------
                                                                                      
      2008.......................................................  $        --   $ 1,490,607   $   129,401
      2009.......................................................           --    16,907,142       164,408
      2010.......................................................      794,342     2,330,162       144,528
                                                                   -----------   -----------   -----------
                                                                   $   794,342   $20,727,911   $   438,337
                                                                   ===========   ===========   ===========
</Table>

     On December 18, 2002, the Small Cap Value Portfolio paid short-term and
long-term distributions of $0.272617 and $0.196330 per share, respectively, to
shareholders as of record on December 17, 2002. On December 30, 2002, the Small
Cap Value Portfolio and the Large Cap Value Portfolio paid ordinary income
distributions of $0.008131 and $0.034577, respectively, to shareholders as of
record on December 27, 2002.

     The tax character of distributions paid during 2002 was as follows:

<Table>
<Caption>
                                                              SMALL CAP   LARGE CAP
                                                                VALUE       VALUE
                                                              PORTFOLIO   PORTFOLIO
                                                              ---------   ---------
                                                                    
Distributions paid from:
  Ordinary income...........................................  $  5,140     $4,184
  Short-term capital gains..................................   167,009         --
  Long-term capital gains...................................   120,274         --
                                                              --------     ------
                                                              $292,423     $4,184
                                                              ========     ======
</Table>

     The tax character of distributions paid during 2001 was as follows:

<Table>
<Caption>
                                                              SMALL CAP   LARGE CAP
                                                                VALUE       VALUE
                                                              PORTFOLIO   PORTFOLIO
                                                              ---------   ---------
                                                                    
Distributions paid from:
  Ordinary income...........................................   $16,426     $8,810
  Long-term capital gains...................................        --         --
                                                               -------     ------
                                                               $16,426     $8,810
                                                               =======     ======
</Table>

     As of December 31, 2002, the components of distributable earnings on a tax
basis were as follows:

<Table>
<Caption>
                                                               MID CAP    AGGRESSIVE   SMALL CAP   LARGE CAP
                                                               GROWTH     MICRO CAP      VALUE       VALUE
                                                              PORTFOLIO   PORTFOLIO    PORTFOLIO   PORTFOLIO
                                                              ---------   ----------   ---------   ---------
                                                                                       
      Undistributed Ordinary Income.........................  $     --     $     --    $    292    $     39
      Unrealized Appreciation...............................   645,282      549,072     254,691          --
                                                              --------     --------    --------    --------
                                                              $645,282     $549,072    $254,983    $     39
                                                              ========     ========    ========    ========
</Table>

8. Borrowing Agreement

     The Funds have a short-term borrowing agreement with Custodial Trust
Company which may be drawn upon for temporary purposes. At December 31, 2002,
there were no outstanding borrowings.

                                        50


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
THE NAVELLIER PERFORMANCE FUNDS
RENO, NEVADA

      We have audited the accompanying statement of assets and liabilities of
Navellier Aggressive Growth Portfolio, Navellier Mid Cap Growth Portfolio,
Navellier Aggressive Micro Cap Portfolio, Navellier Small Cap Value Portfolio,
Navellier Large Cap Growth Portfolio and Navellier Large Cap Value Portfolio,
each a series of shares of The Navellier Performance Funds as of December 31,
2002, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for the periods indicated thereon. These
financial statements are the responsibility of the Funds' 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits 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 December 31, 2002, 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 audits provide 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 positions of
Navellier Aggressive Growth Portfolio, Navellier Mid Cap Growth Portfolio,
Navellier Aggressive Micro Cap Portfolio, Navellier Small Cap Value Portfolio,
Navellier Large Cap Growth Portfolio and Navellier Large Cap Value Portfolio as
of December 31, 2002, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for the periods referred to above, in
conformity with accounting principles generally accepted in the United States of
America.

/s/ TAIT, WELLER & BAKER

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
February 12, 2003

                                        51


NAVELLIER PERFORMANCE FUNDS


                                  ANNUAL REPORT

                                        December 31, 2002



                          [IMAGE OF HEAD AND NUMBERS]






Aggressive Growth Portfolio
Mid Cap Growth Portfolio
Aggressive Micro Cap Portfolio
Small Cap Value Portfolio
Large Cap Growth Portfolio
Large Cap Value Portfolio

                                                                [NAVELLIER LOGO]


                                                ANNUAL REPORT, December 31, 2002
                                                     NAVELLIER PERFORMANCE FUNDS
                                                     1 East Liberty, Third Floor
                                                                  Reno, NV 89501
                                                                  (800) 887-8671

- --------------------------------------------------------------------------------

                                                                January 30, 2003

Dear Shareholder,

      The U.S. equity markets experienced another difficult year in 2002. In
fact, we believe that 2002 was the worst year of the three straight losing years
the U.S. markets have had. The declines in equity prices were very broad-based.
All sectors of the market were hit hard in 2002. Likewise, small, mid and large
capitalization stocks all posted double-digit declines. Also experiencing
double-digit losses were both growth and value sectors. Unfortunately, all major
indices posted these large losses. The good news is that while the last three
years have been difficult, we believe that the worst is behind us.

[AGGRESSIVE GROWTH PORTFOLIO LINE GRAPH]

<Table>
<Caption>
                                                    AGGRESSIVE GROWTH          RUSSELL 2000 GROWTH            RUSSELL 2000
                                                    -----------------          -------------------            ------------
                                                                                               
December 28, 1995                                         10000                       10000                       10000
December 29, 1995                                          9999                       10100                       10065
January 31, 1996                                           9630                       10016                       10054
February 29, 1996                                         10620                       10473                       10368
March 29, 1996                                            11330                       10680                       10579
April 30, 1996                                            13020                       11500                       11145
May 31, 1996                                              14040                       12090                       11584
June 28, 1996                                             13050                       11304                       11108
July 31, 1996                                             11180                        9924                       10138
August 30, 1996                                           11850                       10659                       10726
September 30, 1996                                        12730                       11208                       11146
October 31, 1996                                          12150                       10724                       10974
November 29, 1996                                         12220                       11023                       11426
December 31, 1996                                         12250                       11237                       11725
January 31, 1997                                          12440                       11518                       11960
February 28, 1997                                         10880                       10823                       11670
March 31, 1997                                            10670                       10059                       11119
April 30, 1997                                            10530                        9942                       11150
May 30, 1997                                              11290                       11437                       12391
June 30, 1997                                             12040                       11825                       12922
July 31, 1997                                             13200                       12431                       13523
August 29, 1997                                           13280                       12804                       13832
September 30, 1997                                        14560                       13825                       14845
October 31, 1997                                          14010                       12995                       14193
November 28, 1997                                         13500                       12685                       14101
December 31, 1997                                         13447                       12692                       14348
January 30, 1998                                          12992                       12523                       14121
February 27, 1998                                         13922                       13629                       15165
March 31, 1998                                            14671                       14200                       15791
April 30, 1998                                            14691                       14287                       15878
May 29, 1998                                              13892                       13249                       15023
June 30, 1998                                             14135                       13385                       15055
July 31, 1998                                             13659                       12267                       13836
August 31, 1998                                           10816                        9435                       11149
September 30, 1998                                        11717                       10392                       12022
October 30, 1998                                          11676                       10934                       12512
November 30, 1998                                         13356                       11782                       13168
December 31, 1998                                         14995                       12848                       13982
January 29, 1999                                          15582                       13426                       14168
February 26, 1999                                         14388                       12198                       13021
March 31, 1999                                            15025                       12632                       13224
April 30, 1999                                            16735                       13748                       14409
May 28, 1999                                              16735                       13770                       14619
June 30, 1999                                             18152                       14495                       15281
July 30, 1999                                             17504                       14047                       14861
August 31, 1999                                           18303                       13522                       14311
September 30, 1999                                        18496                       13782                       14314
October 31, 1999                                          19163                       14135                       14372
November 30, 1999                                         20479                       15630                       15231
December 31, 1999                                         21909                       18385                       16955
January 31, 2000                                          20111                       18214                       16682
February 29, 2000                                         23465                       22451                       19437
March 31, 2000                                            22670                       20091                       18156
April 30, 2000                                            22324                       18063                       17063
May 31, 2000                                              20791                       16481                       16069
June 30, 2000                                             23154                       18610                       17469
July 31, 2000                                             22451                       17015                       16907
August 31, 2000                                           25171                       18805                       18197
September 30, 2000                                        25194                       17871                       17663
October 31, 2000                                          23350                       16420                       16874
November 30, 2000                                         21137                       13439                       15142
December 31, 2000                                         22580                       14261                       16442
January 31, 2001                                          20436                       15416                       17298
February 28, 2001                                         18362                       13302                       16163
March 31, 2001                                            17499                       12093                       15373
April 30, 2001                                            18947                       13574                       16575
May 31, 2001                                              20255                       13888                       16983
June 30, 2001                                             20311                       14267                       17569
July 31, 2001                                             19852                       13050                       16618
August 31, 2001                                           18738                       12235                       16081
September 30, 2001                                        17861                       10260                       13917
October 31, 2001                                          18738                       11248                       14731
November 30, 2001                                         19058                       12186                       15872
December 31, 2001                                         19629                       12945                       16851
January 31, 2002                                          19170                       12485                       16676
February 28, 2002                                         17555                       11677                       16219
March 31, 2002                                            18028                       12692                       17522
April 30, 2002                                            17861                       12417                       17682
May 31, 2002                                              17318                       11691                       16897
June 30, 2002                                             16956                       10700                       16059
July 31, 2002                                             14896                        9055                       13634
August 31, 2002                                           15132                        9051                       13599
September 30, 2002                                        14047                        8397                       12622
October 31, 2002                                          13740                        8822                       13027
November 30, 2002                                         13838                        9696                       14190
December 31, 2002                                         12487                        9028                       13399
</Table>

                          AGGRESSIVE GROWTH PORTFOLIO

<Table>
<Caption>
           TOTAL RETURNS                     RUSSELL
         FOR PERIODS ENDED                     2000    RUSSELL
        DECEMBER 31, 2002*           FUND     GROWTH     2000
  -------------------------------  --------  --------  --------
                                              
  One Year                         (36.38)%  (30.26)%  (20.48)%
  Annualized 5 Year                 (1.47)%   (6.59)%   (1.36)%
  Annualized Since Inception**        3.22%   (1.45)%     4.26%
  Value of a $10,000 investment
   over Life of Fund**              $12,487    $9,028   $13,399
  * The total returns shown do not reflect the deduction of
    taxes that a shareholder would pay on fund distributions or
    the redemption of fund shares.
  **Inception December 28, 1995
</Table>

 [MID CAP GROWTH PORTFOLIO LINE GRAPH]

<Table>
<Caption>
                                                     MID CAP GROWTH          RUSSELL MID CAP GROWTH
                                                     --------------          ----------------------
                                                                                               
                                                    Russell 2000 Growth
November 26, 1996                                                 10000               10000                       10000
November 30, 1996                                                 10000               10015                       10058
December 31, 1996                                                 10275                9846                       10254
January 31, 1997                                                  10465               10282                       10510
February 28, 1997                                                 10295               10055                        9876
March 31, 1997                                                     9985                9487                        9179
April 30, 1997                                                    10275                9719                        9072
May 30, 1997                                                      10835               10590                       10436
June 30, 1997                                                     11385               10884                       10790
July 31, 1997                                                     12506               11925                       11343
August 29, 1997                                                   12426               11809                       11683
September 30, 1997                                                13386               12407                       12616
October 31, 1997                                                  12766               11785                       11858
November 28, 1997                                                 12776               11909                       11575
December 31, 1997                                                 12965               12066                       11582
January 30, 1998                                                  12725               11848                       11427
February 27, 1998                                                 13695               12962                       12436
March 31, 1998                                                    14665               13506                       12958
April 30, 1998                                                    14634               13689                       13037
May 29, 1998                                                      14039               13126                       12090
June 30, 1998                                                     14404               13497                       12213
July 31, 1998                                                     13768               12919                       11194
August 31, 1998                                                   11651               10453                        8610
September 30, 1998                                                12485               11244                        9483
October 30, 1998                                                  12110               12072                        9977
November 30, 1998                                                 12944               12886                       10751
December 31, 1998                                                 14561               14221                       11724
January 29, 1999                                                  16737               14647                       12251
February 26, 1999                                                 16011               13931                       11131
March 31, 1999                                                    18507               14707                       11527
April 30, 1999                                                    19851               15377                       12545
May 28, 1999                                                      19585               15179                       12565
June 30, 1999                                                     21569               16239                       13227
July 30, 1999                                                     21515               15722                       12818
August 31, 1999                                                   22092               15558                       12338
September 30, 1999                                                21985               15426                       12576
October 29, 1999                                                  25174               16619                       12898
November 30, 1999                                                 28097               18340                       14262
December 31, 1999                                                 33049               21515                       16776
January 31, 2000                                                  32305               21511                       16620
February 29, 2000                                                 44233               26033                       20487
March 31, 2000                                                    37360               26060                       18333
April 30, 2000                                                    37525               23530                       16482
May 31, 2000                                                      31987               21815                       15039
June 30, 2000                                                     33771               24130                       16982
July 31, 2000                                                     31889               22602                       15526
August 31, 2000                                                   38499               26010                       17160
September 30, 2000                                                38017               24739                       16307
October 31, 2000                                                  35183               23046                       14983
November 30, 2000                                                 30094               18038                       12263
December 31, 2000                                                 34250               18988                       13013
January 31, 2001                                                  32073               20072                       14067
February 28, 2001                                                 29319               16600                       12138
March 31, 2001                                                    26520               14225                       11035
April 30, 2001                                                    28630               16596                       12386
May 31, 2001                                                      28497               16517                       12673
June 30, 2001                                                     25965               16526                       13018
July 31, 2001                                                     25154               15412                       11908
August 31, 2001                                                   23966               14295                       11164
September 30, 2001                                                22411               11932                        9363
October 31, 2001                                                  22866               13186                       10263
November 30, 2001                                                 23933               14606                       11120
December 31, 2001                                                 24954               15161                       11812
January 31, 2002                                                  24988               14669                       11392
February 28, 2002                                                 24532               13837                       10655
March 31, 2002                                                    25010               14893                       11581
April 30, 2002                                                    24421               14105                       11330
May 31, 2002                                                      24110               13684                       10668
June 30, 2002                                                     22489               12174                        9763
July 31, 2002                                                     20301               10991                        8263
August 31, 2002                                                   20301               10953                        8259
September 30, 2002                                                19479               10083                        7662
October 31, 2002                                                  20412               10880                        8075
November 30, 2002                                                 21078               11714                        8848
December 31, 2002                                                 19257               11006                        8238
</Table>

                    MID CAP GROWTH PORTFOLIO - REGULAR CLASS

<Table>
<Caption>
               TOTAL RETURNS                      RUSSELL    RUSSELL
             FOR PERIODS ENDED                    MID CAP      2000
            DECEMBER 31, 2002*           FUND      GROWTH     GROWTH
      -------------------------------  --------   --------   --------
                                                    
      One Year                         (22.83)%   (27.41)%   (30.26)%
      Annualized 5 Year                   8.23%   (1.82)%     (6.59)%
      Annualized Since Inception**       11.35%     1.59%     (3.13)%
      Value of a $10,000 investment
       over Life of Fund**              $19,257   $11,006      $8,238
      * The total returns shown do not reflect the deduction of taxes
        that a shareholder would pay on fund distributions or the
        redemption of fund shares.
      **Inception November 26, 1996
</Table>

      The Navellier Funds held up fairly well in the decline (second and third
quarters) with holdings generally concentrated in more defensive growth sectors.
Where the Funds performed poorly was in the 4th quarter rebound, as they did not
up-tick with the market in October and November. We believe that this rally was
mainly led by short-covering and will be short-lived at best. Those stocks that
performed the best during this rally were those that had performed the worst on
the way down. It reminds us a great deal of 4th quarter 2001.


[AGGRESSIVE MICRO CAP PORTFOLIO LINE GRAPH]

<Table>
<Caption>
                                          AGGRESSIVE MICRO
                                                CAP            RUSSELL 2000 GROWTH        RUSSELL 2000
                                          ----------------     -------------------        ------------
                                                                                                 
3/17/97                                        10000                  10000                  10000
3/31/97                                         9859                   9500                   9592
4/30/97                                         9872                   9390                   9618
5/30/97                                        10691                  10802                  10688
6/30/97                                        11432                  11168                  11146
7/31/97                                        12423                  11740                  11665
8/29/97                                        12679                  12092                  11932
9/30/97                                        13593                  13057                  12805
10/31/97                                       13434                  12273                  12243
11/28/97                                       13459                  11981                  12164
12/31/97                                       13276                  11987                  12376
1/30/98                                        12821                  11827                  12181
2/27/98                                        13608                  12872                  13082
3/31/98                                        13914                  13411                  13621
4/30/98                                        14083                  13494                  13697
5/29/98                                        13719                  12513                  12959
6/30/98                                        14090                  12641                  12986
7/31/98                                        13283                  11586                  11935
8/31/98                                        10699                   8911                   9618
9/30/98                                        11441                   9815                  10370
10/30/98                                       11083                  10327                  10793
11/30/98                                       12229                  11128                  11359
12/31/98                                       13289                  12135                  12061
1/29/99                                        13400                  12680                  12222
2/26/99                                        12151                  11520                  11232
3/31/99                                        11454                  11931                  11407
4/30/99                                        12450                  12984                  12429
5/28/99                                        13068                  13005                  12611
6/30/99                                        13856                  13690                  13181
7/30/99                                        13335                  13267                  12820
8/31/99                                        12964                  12771                  12345
9/30/99                                        13914                  13017                  12348
10/29/99                                       13745                  13350                  12398
11/30/99                                       13966                  14762                  13138
12/31/99                                       15254                  17364                  14625
1/31/00                                        14606                  17202                  14390
2/29/00                                        17268                  21204                  16767
3/31/00                                        20912                  18976                  15661
4/30/00                                        19732                  17060                  14719
5/31/00                                        18646                  15566                  13861
6/30/00                                        23288                  17577                  15069
7/31/00                                        19438                  16070                  14585
8/31/00                                        22748                  17761                  15697
9/30/00                                        22441                  16878                  15236
10/31/00                                       20462                  15508                  14556
11/30/00                                       17479                  12692                  13062
12/31/00                                       18888                  13469                  14183
1/31/01                                        17825                  14559                  14922
2/28/01                                        14891                  12564                  13943
3/31/01                                        14625                  11421                  13261
4/30/01                                        16253                  12820                  14298
5/31/01                                        16533                  13117                  14650
6/30/01                                        17245                  13474                  15155
7/31/01                                        16617                  12325                  14335
8/31/01                                        15128                  11555                  13872
9/30/01                                        12878                   9691                  12005
10/31/01                                       14339                  10623                  12707
11/30/01                                       15680                  11510                  13691
12/31/01                                       16141                  12226                  14536
1/31/02                                        16449                  11791                  14385
2/28/02                                        16072                  11028                  13991
3/31/02                                        16826                  11987                  15115
4/30/02                                        17476                  11727                  15253
5/31/02                                        16470                  11042                  14576
6/30/02                                        16714                  10105                  13853
7/31/02                                        14157                   8552                  11761
8/31/02                                        14220                   8548                  11731
9/30/02                                        13130                   7931                  10888
10/31/02                                       13032                   8332                  11237
11/30/02                                       12969                   9158                  12240
12/31/02                                       12480                   8526                  11559
</Table>

                         AGGRESSIVE MICRO CAP PORTFOLIO

<Table>
<Caption>
           TOTAL RETURNS                      RUSSELL
         FOR PERIODS ENDED                      2000     RUSSELL
        DECEMBER 31, 2002*           FUND      GROWTH      2000
  -------------------------------  --------   --------   --------
                                                
  One Year                         (22.68)%   (30.26)%   (20.48)%
  Annualized 5 Year                 (1.23)%    (6.59)%    (1.36)%
  Annualized Since Inception**        3.90%    (2.71)%      2.53%
  Value of a $10,000 investment
   over Life of Fund**              $12,480     $8,526    $11,559
  * The total returns shown do not reflect the deduction of taxes
    that a shareholder would pay on fund distributions or the
    redemption of fund shares.
  **Inception March 17, 1997
</Table>

 [SMALL CAP VALUE PORTFOLIO LINE GRAPH]

<Table>
<Caption>
                                                     SMALL CAP VALUE           RUSSELL 2000 VALUE             RUSSELL 2000
                                                     ---------------           ------------------             ------------
                                                                                               
12/19/97                                                  10000                       10000                       10000
12/31/97                                                  10125                       10363                        9167
1/30/98                                                    9885                       10176                        9022
2/27/98                                                   10405                       10791                        9690
3/31/98                                                   10945                       11228                       10089
4/30/98                                                   11105                       11284                       10145
5/29/98                                                   10695                       10884                        9599
6/30/98                                                   10315                       10823                        9619
7/31/98                                                    9625                        9975                        8840
8/31/98                                                    8244                        8413                        7124
9/30/98                                                    8384                        8888                        7681
10/30/98                                                   8514                        9152                        7994
11/30/98                                                   8894                        9400                        8413
12/31/98                                                   9286                        9694                        8934
1/29/99                                                    9065                        9474                        9053
2/26/99                                                    8419                        8828                        8319
3/31/99                                                    8379                        8755                        8449
4/30/99                                                    8853                        9554                        9206
5/28/99                                                    9216                        9848                        9341
6/30/99                                                    9871                       10204                        9763
7/30/99                                                    9680                        9962                        9495
8/31/99                                                    9105                        9598                        9144
9/30/99                                                    8923                        9406                        9146
10/29/99                                                   8681                        9218                        9183
11/30/99                                                   8944                        9266                        9731
12/31/99                                                   9327                        9550                       10833
1/31/00                                                    8679                        9300                       10659
2/29/00                                                    9317                        9869                       12419
3/31/00                                                    9718                        9915                       11600
4/30/00                                                   10017                        9974                       10902
5/31/00                                                    9801                        9822                       10267
6/30/00                                                   10532                       10109                       11162
7/31/00                                                    9729                       10445                       10803
8/31/00                                                   10892                       10912                       11627
9/30/00                                                   10830                       10851                       11285
10/31/00                                                  10377                       10812                       10781
11/30/00                                                   9893                       10592                        9675
12/31/00                                                  11220                       11730                       10506
1/31/01                                                   11189                       12054                       11053
2/28/01                                                   10653                       12037                       10327
3/31/01                                                   10488                       11844                        9822
4/30/01                                                   11478                       12392                       10591
5/31/01                                                   12375                       12711                       10851
6/30/01                                                   12169                       13222                       11226
7/31/01                                                   12458                       12926                       10618
8/31/01                                                   11839                       12881                       10275
9/30/01                                                   10684                       11459                        8892
10/31/01                                                  11220                       11759                        9412
11/30/01                                                  12056                       12603                       10141
12/31/01                                                  12655                       13375                       10767
1/31/02                                                   12800                       13553                       10655
2/28/02                                                   12852                       13635                       10363
3/31/02                                                   13576                       14656                       11196
4/30/02                                                   13949                       15172                       11298
5/31/02                                                   13680                       14670                       10796
6/30/02                                                   13245                       14346                       10261
7/31/02                                                   11931                       12214                        8711
8/31/02                                                   11786                       12160                        8689
9/30/02                                                   10896                       11291                        8065
10/31/02                                                  11341                       11461                        8323
11/30/02                                                  11672                       12376                        9066
12/31/02                                                  10873                       11847                        8561
</Table>

                            SMALL CAP VALUE PORTFOLIO

<Table>
<Caption>
               TOTAL RETURNS                      RUSSELL
             FOR PERIODS ENDED                      2000     RUSSELL
            DECEMBER 31, 2002*           FUND      VALUE       2000
      -------------------------------  --------   --------   --------
                                                    
      One Year                         (14.08)%   (11.43)%   (20.48)%
      Annualized 5 Year                   1.44%      2.71%    (1.36)%
      Annualized Since Inception**        1.68%      3.42%    (3.04)%
      Value of a $10,000 investment
       over Life of Fund**              $10,873    $11,847     $8,561
      * The total returns shown do not reflect the deduction of taxes
        that a shareholder would pay on fund distributions or the
        redemption of fund shares.
      **Inception December 19, 1997
</Table>

      The year 2002 was a volatile and difficult environment for stocks. The
economy continued to be extremely sluggish and no sector leadership ever emerged
in the equity markets. Our outlook for 2003 is a positive one. We believe that
the economy is showing signs of life and the current administration seems to
realize the importance of moving economic policy in the right direction. We
expect some type of tax legislation (dividend tax relief, capital gains tax cuts
or the income tax cuts becoming permanent) to emerge sometime in the 1st quarter
of 2003. This would give a significant boost to the stock market.

INVESTMENT STRATEGY & OUTLOOK

      The stock market is beginning the New Year more uncertain than ever. The
worst holiday shopping season in over 30 years is a clear signal that consumer
spending will likely remain soft. Orders for durable goods declined in November,
which is further evidence that the U.S. economy is sputtering. The impending
invasion of Iraq is also creating even more uncertainty. Investors are looking
to the Bush Administration and the new Congress to pass various tax incentives
to spur investment, stimulate the U.S. economy and help the stock market. In the
interim, we remain very cautious and especially selective on the stocks that we
are adding to our portfolios. There are two possible scenarios that we foresee
for the stock market.

SCENARIO ONE: THE STOCK MARKET SURGES AFTER DIVIDEND TAX RELIEF IS PASSED

      A potential event that could have a significant bullish impact on the
stock market is the Bush Administration's plan to provide dividend tax relief.
Ideally, the double taxation of dividends would be eliminated on either the
corporate or individual level. This would allow dividend proceeds to flow
directly to investors without being taxed twice. The bigger the dividend tax
cut, the more money that it will trigger to pour into the stock market.

                                        2


[LARGE CAP GROWTH PORTFOLIO LINE GRAPH]

<Table>
<Caption>
                                                    LARGE CAP GROWTH           RUSSELL 1000 GROWTH               S&P 500
                                                    ----------------           -------------------               -------
                                                                                               
December 19, 1997                                         10000                       10000                       10000
December 31, 1997                                         10256                       10300                       10255
January 30, 1998                                          10106                       10608                       10369
February 27, 1998                                         10856                       11406                       11116
March 31, 1998                                            11577                       11861                       11686
April 30, 1998                                            11537                       12025                       11803
May 29, 1998                                              11517                       11684                       11600
June 30, 1998                                             12267                       12400                       12072
July 31, 1998                                             12167                       12317                       11943
August 31, 1998                                           10756                       10469                       10216
September 30, 1998                                        11336                       11273                       10871
October 30, 1998                                          12127                       12179                       11755
November 30, 1998                                         12777                       13106                       12467
December 31, 1998                                         14478                       14287                       13186
January 29, 1999                                          15959                       15126                       13737
February 26, 1999                                         15259                       14435                       13310
March 31, 1999                                            16549                       15195                       13843
April 30, 1999                                            16009                       15215                       14379
May 28, 1999                                              15189                       14747                       14039
June 30, 1999                                             16820                       15780                       14819
July 30, 1999                                             16830                       15279                       14356
August 31, 1999                                           16980                       15528                       14285
September 30, 1999                                        16860                       15202                       13893
October 29, 1999                                          17680                       16350                       14772
November 30, 1999                                         19901                       17232                       15073
December 31, 1999                                         23604                       19025                       15960
January 31, 2000                                          22693                       18133                       15159
February 29, 2000                                         29147                       19019                       14872
March 31, 2000                                            28466                       20380                       16326
April 30, 2000                                            26675                       19411                       15835
May 31, 2000                                              23924                       18433                       15510
June 30, 2000                                             27186                       19830                       15893
July 31, 2000                                             26125                       19003                       15644
August 31, 2000                                           31028                       20724                       16616
September 30, 2000                                        29817                       18764                       15739
October 31, 2000                                          27286                       17876                       15672
November 30, 2000                                         20562                       15241                       14437
December 31, 2000                                         21795                       14759                       14507
January 31, 2001                                          21494                       15778                       15022
February 28, 2001                                         17171                       13100                       13653
March 31, 2001                                            15697                       11674                       12788
April 30, 2001                                            17051                       13151                       13781
May 31, 2001                                              17141                       12957                       13874
June 30, 2001                                             16529                       12657                       13536
July 31, 2001                                             16268                       12341                       13405
August 31, 2001                                           15346                       11331                       12566
September 30, 2001                                        14022                       10200                       11551
October 31, 2001                                          14774                       10735                       11772
November 30, 2001                                         16369                       11767                       12673
December 31, 2001                                         16680                       11744                       12784
January 31, 2002                                          16279                       11537                       12597
February 28, 2002                                         15376                       11058                       12355
March 31, 2002                                            16118                       11441                       12819
April 30, 2002                                            15847                       10507                       12042
May 31, 2002                                              15677                       10253                       11953
June 30, 2002                                             14754                        9304                       11102
July 31, 2002                                             13570                        8793                       10237
August 31, 2002                                           13651                        8819                       10304
September 30, 2002                                        12748                        7904                        9184
October 31, 2002                                          13229                        8629                       10046
November 30, 2002                                         13179                        9098                       10581
December 31, 2002                                         12226                        8470                        9960
</Table>

                           LARGE CAP GROWTH PORTFOLIO

<Table>
<Caption>
           TOTAL RETURNS                      RUSSELL
         FOR PERIODS ENDED                      1000       S&P
        DECEMBER 31, 2002*           FUND      GROWTH      500
  -------------------------------  --------   --------   --------
                                                
  One Year                         (26.70)%   (27.88)%   (22.09)%
  Annualized 5 Year                   3.58%    (3.84)%    (0.58)%
  Annualized Since Inception**        4.07%    (3.24)%    (0.08)%
  Value of a $10,000 investment
   over Life of Fund**              $12,226     $8,470     $9,960
  * The total returns shown do not reflect the deduction of taxes
    that a shareholder would pay on fund distributions or the
    redemption of fund shares.
  **Inception December 19, 1997
</Table>

 [LARGE CAP VALUE PORTFOLIO LINE GRAPH]

<Table>
<Caption>
                                                LARGE CAP VALUE PORTFOLIO      RUSSELL 1000 VALUE             RUSSELL 1000
                                                -------------------------      ------------------             ------------
                                                                                               
December 19, 1997                                         10000                       10000                       10000
December 31, 1997                                         10118                       10237                       10268
January 30, 1998                                           9998                       10092                       10344
February 27, 1998                                         10808                       10771                       11082
March 31, 1998                                            11369                       11430                       11641
April 30, 1998                                            11499                       11506                       11760
May 29, 1998                                              11249                       11336                       11506
June 30, 1998                                             11369                       11481                       11932
July 31, 1998                                             11249                       11278                       11788
August 31, 1998                                           10218                        9600                       10026
September 30, 1998                                        10538                       10151                       10701
October 30, 1998                                          11489                       10937                       11547
November 30, 1998                                         12029                       11447                       12261
December 31, 1998                                         12190                       11836                       13042
January 29, 1999                                          12190                       11931                       13508
February 26, 1999                                         12072                       11762                       13079
March 31, 1999                                            12532                       12006                       13580
April 30, 1999                                            14191                       13127                       14148
May 28, 1999                                              13881                       12983                       13842
June 30, 1999                                             14009                       13360                       14548
July 30, 1999                                             13624                       12969                       14104
August 31, 1999                                           13281                       12487                       13971
September 30, 1999                                        12607                       12051                       13587
October 29, 1999                                          12982                       12745                       14501
November 30, 1999                                         12479                       12645                       14874
December 31, 1999                                         12707                       12706                       15770
January 31, 2000                                          11951                       12292                       15124
February 29, 2000                                         10989                       11378                       15084
March 31, 2000                                            11866                       12767                       16458
April 30, 2000                                            12317                       12618                       15910
May 31, 2000                                              11963                       12751                       15498
June 30, 2000                                             12073                       12168                       15893
July 31, 2000                                             12426                       12321                       15629
August 31, 2000                                           13706                       13006                       16786
September 30, 2000                                        13754                       13125                       16007
October 31, 2000                                          13401                       13448                       15814
November 30, 2000                                         12134                       12949                       14368
December 31, 2000                                         12823                       13597                       14542
January 31, 2000                                          13022                       13650                       15020
February 28, 2001                                         12377                       13270                       13619
March 31, 2001                                            11757                       12801                       12714
April 30, 2001                                            12451                       13429                       13736
May 31, 2001                                              12451                       13731                       13829
June 30, 2001                                             11918                       13426                       13517
July 31, 2001                                             11658                       13398                       13332
August 31, 2001                                           11149                       12861                       12519
September 30, 2001                                        10492                       11956                       11458
October 31, 2001                                          10231                       11853                       11696
November 30, 2001                                         10963                       12542                       12597
December 31, 2001                                         11124                       12837                       12731
January 31, 2002                                          11299                       12738                       12569
February 28, 2002                                         11224                       12759                       12319
March 31, 2002                                            11486                       13362                       12825
April 30, 2002                                            11574                       12904                       12091
May 31, 2002                                              11461                       12969                       11984
June 30, 2002                                             10861                       12224                       11099
July 31, 2002                                             10148                       11088                       10278
August 31, 2002                                           10123                       11172                       10332
September 30, 2002                                         9222                        9929                        9222
October 31, 2002                                           9297                       10665                        9988
November 30, 2002                                          9222                       11337                       10573
December 31, 2002                                          8839                       10845                        9975
</Table>

                            LARGE CAP VALUE PORTFOLIO

<Table>
<Caption>
               TOTAL RETURNS                      RUSSELL
             FOR PERIODS ENDED                      1000     RUSSELL
            DECEMBER 31, 2002*           FUND      VALUE       1000
      -------------------------------  --------   --------   --------
                                                    
      One Year                         (20.53)%   (15.52)%   (21.65)%
      Annualized 5 Year                 (2.67)%      1.16%    (0.58)%
      Annualized Since Inception**      (2.42)%      1.62%    (0.05)%
      Value of a $10,000 investment
       over Life of Fund**               $8,839    $10,845     $9,975
      * The total returns shown do not reflect the deduction of taxes
        that a shareholder would pay on fund distributions or the
        redemption of fund shares.
      **Inception December 19, 1997
</Table>

SCENARIO TWO: THE STOCK MARKET CONTINUES TO OSCILLATE IN A WILD & VOLATILE
MANNER

      During the past two years, the stock market has had some wild
oscillations. There have been massive short-covering rallies in many technology
stocks during October 2001, March 2002, and during the recent
telecommunication-led rally in October and November 2002. During the past three
quarters, the stock market has been led by consumer-oriented companies (second
quarter), healthcare companies (third quarter) and telecommunication companies
(fourth quarter). Currently, telecommunication companies are rolling over and
giving back many of their recent gains and new leadership is trying to emerge.

      This roller coaster environment is not a healthy environment for long-term
investors. The stock market has been in an environment that ignores fundamentals
and is better suited to active traders. It is not healthy for the stock market
to allow money losing or bankrupt stocks like Lucent and WorldCom to lead the
stock market, which is exactly what happened in the past few months.

      Unfortunately, the market oscillated in a wild manner for eight years
after the 1973 and 1974 stock market collapse. Although the stock market slowly
trended higher in those subsequent years, the volatility was unnerving for many
investors. Apparently, the same phenomenon may be occurring again. This is not a
healthy environment for investors because the stock market's volatility
undermines investor confidence.

      Fortunately, while the stock market was going through its wild gyrations
between 1975 and 1982, there was a select group of stocks that was oblivious to
the stock market's wild swings and instead slowly trended higher. Back then,
about 15% of the stock market represented an oasis amidst the chaos. These oasis
stocks are what we like to refer to as high Alpha stocks, because they tend to
be less correlated to the overall stock market and are less vulnerable during
the downdrafts.

      Traditionally, small capitalization stocks with lower price-to-earnings
ratios have been the least correlated to the overall stock market. Small
capitalization stocks may represent the best oasis

                                        3


in the upcoming months, especially since many thinly traded small capitalization
stocks are poised to surge on any significant increase in trading volume.
Fundamentally, small capitalization stocks have weathered the economic downturn
better than many large capitalization stocks, but due to persistent stock market
outflows, they have performed poorly due to liquidity concerns.

EVENTS THAT COULD STIMULATE THE STOCK MARKET

      Overall, we believe that investors should prepare for the worst possible
environment (wild oscillations) and hope for the best (the elimination of the
double taxation on dividends). We would not be surprised if we get a mix of the
two possible stock market scenarios outlined above. The biggest problem is that
the stock market has erratic flow of funds. After several months of persistent
and record outflows, the stock market finally had positive mutual fund inflows
in November. We are now at the seasonally strong time of year when new pension
contributions will likely result in steady inflows through mid-April. However,
what the stock market really needs is a watershed event that will cause money to
pour in and propel stocks higher for several months.

      In our opinion, the most likely watershed event that will propel the stock
market higher will be the dividend tax relief that the new Congress may pass in
the upcoming months. Currently, the S&P 500 is approximately 40% undervalued
relative to Treasury securities according to most dividend discount models. If
there is 50% dividend tax relief for individual investors, the S&P 500 will then
be approximately 60% undervalued relative to Treasury securities when federal
taxes are taken into consideration. As a result, we can easily envision wave
after wave of bond investors jumping back into the stock market seeking out
strong cash flow companies with predictable high dividend yields.

      Another possible watershed event would be military action against Iraq,
which would remove much of the uncertainty that has been plaguing the overall
market. After the Gulf War commenced twelve years ago, growth stocks surged
dramatically in just three months. The same thing could easily happen again,
because the U.S. dollar would likely surge (out of respect for U.S. military
technology) and foreign investors would likely return to the U.S. seeking the
appreciation of the U.S. dollar.

      There are some other factors that could stimulate the stock market other
than dividend tax relief and military action against Iraq. Corporate earnings
are expected to continue to improve during the next two quarters due to
favorable year over year comparisons. Bond yields could spike higher like they
did on October 9th, which would cause panicked bond investors to return to the
stock market. Finally, there could be clear evidence that the U.S. economy has
turned the corner for good and will be growing for the foreseeable future.

      It will also be interesting to see if the Federal Reserve Board will be
able to stimulate the U.S. economy any further. The Adjusted Monetary Base, the
most predictable money supply indicator, continues to grow steadily. In essence,
the Adjusted Monetary Base is indicating that the Federal Reserve Board has been
successful in pumping money into the U.S. economy through lower interest rates,
home refinancing activity, etc. The problem is that the "velocity of money",
which measures how fast money changes hands, has decelerated as the average
consumer has become increasingly cautious in the past few months.

      The obvious answer is that it is time for the Bush Administration and the
new Congress to stimulate the U.S. economy. It is scary to count on politicians
to fix the U.S. economy and the stock market, but that is the exact predicament
that we are in at the present time. Fortunately, the Bush Administration appears
to be just as focused on fixing the U.S. economy as they have been focused on
disarming Iraq. We are confident that both the Bush Administration and the new
Congress will act swiftly in the upcoming months.

      We believe that 2003 should end up as one of the strongest years ever for
the fundamentally superior stocks that we favor.

                                        4


      Always feel free to contact us if you have any questions or if we can help
you in any way. You may call us at 1.800.887.8671 or visit our web site at
www.navellierperformancefunds.com, where we invite you to take advantage of our
complimentary weekly market commentary service, Marketmail*.

Sincerely,

/s/ Louis G. Navellier
LOUIS G. NAVELLIER

/s/ Alan Alpers
ALAN ALPERS

 * There is no guarantee that the opinions expressed in this newsletter will
   come to pass.

This material has been preceded by a Navellier Performance Funds prospectus.

The preceding 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.

Indices:

The Russell 1000 Index consists of the 1,000 largest securities in the Russell
3000 Index. It is considered to be representative of the large cap market in
general.

The Russell 1000 Growth Index measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.

The Russell 1000 Value Index contains those Russell 1000 securities with a
less-than-average growth orientation.

The Russell 2000 Index is an unmanaged index consisting of the smallest 2,000
stocks in the Russell 3000 Index. It is considered representative of the small
cap market in general.

The Russell 2000 Growth Index contains those Russell 2000 securities with a
greater-than-average growth orientation.

The Russell 2000 Value Index contains those Russell 2000 securities with a
less-than-average growth orientation.

The Russell 3000 Index measures the performance of the 3,000 largest U.S.
companies based on total market capitalization, which represents approximately
98% of the investable U.S. equity market.

The Russell Midcap Growth Index measures the performance of those Russell Midcap
companies with higher price-to-book ratios and higher forecasted growth values.
The stocks are also members of the Russell 1000 Growth Index.

The S&P 500 is an unmanaged index consisting of 500 large cap stocks. It is
considered representative of the stock market as a whole.

These indices are considered representative of pertinent market sectors in
general. None are investment products available for sale.

                                        5


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002

<Table>
<Caption>
               AGGRESSIVE GROWTH PORTFOLIO
- ---------------------------------------------------------
                                            Market Value
  Shares                                      (Note 1)
- ---------------------------------------------------------
                                     
COMMON STOCKS -- 111.5%
AUDIO AND VIDEO PRODUCTS -- 7.8%
   135,300  Applied Films Corp.*           $    2,704,646
                                           --------------
AUTOMOTIVE -- 4.4%
   100,000  Nissan Motor Co., Ltd.              1,538,000
                                           --------------
CASINOS AND GAMING -- 3.7%
    75,000  Alliance Gaming Corp.*              1,277,250
                                           --------------
CHEMICALS -- 3.6%
    25,000  Ecolab, Inc.                        1,237,500
                                           --------------
COMPUTER EQUIPMENT -- 24.2%
   349,000  CompuCom Systems, Inc.*             1,957,890
   200,000  Cray, Inc.*                         1,534,000
    50,000  Imation Corp.*                      1,754,000
    60,000  Neoware Systems, Inc.*                894,600
   105,000  Pinnacle Systems, Inc.*             1,429,050
    40,000  SanDisk Corp.*                        812,000
                                           --------------
                                                8,381,540
                                           --------------
COMPUTER SOFTWARE AND SERVICES -- 14.2%
    30,000  Cognizant Technology
              Solutions Corp.*                  2,166,900
    25,000  Pixar, Inc.*                        1,324,750
    50,000  United Online, Inc.*                  797,050
   100,000  Western Digital Corp.*                639,000
                                           --------------
                                                4,927,700
                                           --------------
CONSUMER PRODUCTS AND SERVICES -- 2.4%
    15,000  Hotels.com*                           819,450
                                           --------------
ELECTRONICS -- 4.8%
    60,000  Energizer Holdings, Inc.*           1,674,000
                                           --------------
INSURANCE -- 6.0%
    60,000  SAFECO Corp.                        2,080,200
                                           --------------
MEDICAL EQUIPMENT AND SUPPLIES -- 7.2%
    50,000  Immucor, Inc.*                      1,012,500
    30,000  Varian Medical Systems, Inc.*       1,488,000
                                           --------------
                                                2,500,500
                                           --------------
</Table>

<Table>
<Caption>
- ---------------------------------------------------------
                                            Market Value
  Shares                                      (Note 1)
- ---------------------------------------------------------
- ---------------------------------------------------------
                                     
OIL AND GAS SERVICES -- 4.1%
    45,000  Patina Oil & Gas Corp.*        $    1,424,250
                                           --------------
PHARMACEUTICALS -- 2.3%
    50,000  Amylin Pharmaceuticals, Inc.*         807,000
                                           --------------
RETAIL -- 3.2%
    65,000  PETsMART, Inc.*                     1,113,450
                                           --------------
SEMICONDUCTORS AND RELATED -- 7.9%
   150,000  Integrated Circuit Systems,
              Inc.*                             2,737,500
                                           --------------
TELECOMMUNICATIONS EQUIPMENT AND SERVICES -- 12.9%
    75,000  Inter-Tel, Inc.                     1,568,250
   100,000  InterDigital Communications
              Corp.*                            1,456,000
    75,000  j2 Global Communications,
              Inc.*                             1,428,000
                                           --------------
                                                4,452,250
                                           --------------
TRANSPORTATION -- 2.8%
    25,000  Ryanair Holdings PLC ADR*             979,000
                                           --------------
TOTAL COMMON STOCKS
  (COST $39,754,609)                           38,654,236
                                           --------------

MONEY MARKET FUNDS -- 19.9%
 6,912,579  FBR Fund for Government
              Investors
              (Cost $6,912,579)                 6,912,579
                                           --------------
TOTAL INVESTMENTS -- 131.4%
  (COST $46,667,188)                           45,566,815
Liabilities in Excess of Other
  Assets -- (31.4)%                           (10,882,330)
                                           --------------
NET ASSETS -- 100.0%                       $   34,684,485
                                           ==============
</Table>

                                        6

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
               MID CAP GROWTH PORTFOLIO
- -------------------------------------------------------
                                          Market Value
  Shares                                    (Note 1)
- -------------------------------------------------------
                                   
COMMON STOCKS -- 95.6%
APPAREL -- 3.8%
   175,400  Coach, Inc.*                 $    5,774,168
                                         --------------
AUTOMOTIVE -- 3.2%
    67,200  AutoZone, Inc.*                   4,747,680
                                         --------------
BANKING -- 6.0%
   300,000  Hudson City Bancorp, Inc.         5,589,000
   101,000  North Fork Bancorporation,
              Inc.                            3,407,740
                                         --------------
                                              8,996,740
                                         --------------
COMPUTER EQUIPMENT -- 5.0%
    73,000  CDW Computer Centers, Inc.*       3,201,050
    72,000  Lexmark International,
              Inc.*                           4,356,000
                                         --------------
                                              7,557,050
                                         --------------
COMPUTER SOFTWARE AND SERVICES -- 22.4%
   196,400  Adobe Systems, Inc.               4,892,324
   275,000  Cognos, Inc.*                     6,448,750
    97,800  Electronic Arts, Inc.*            4,867,506
    74,000  Intuit, Inc.*                     3,472,080
    85,000  Mercury Interactive Corp          2,520,250
    96,400  Pixar, Inc.*                      5,108,236
   157,000  Symantec Corp.*                   6,350,650
                                         --------------
                                             33,659,796
                                         --------------
CONSUMER PRODUCTS AND SERVICES -- 11.4%
   125,000  Apollo Group, Inc.*               5,500,000
    65,000  Expedia, Inc.*                    4,350,463
    84,000  Hotels.com*                       4,588,920
    72,000  Westwood One, Inc.*               2,689,920
                                         --------------
                                             17,129,303
                                         --------------
ELECTRONICS -- 5.8%
   300,000  American Power Conversion
              Corp.*                          4,545,000
   148,000  Energizer Holdings, Inc.*         4,129,200
                                         --------------
                                              8,674,200
                                         --------------
FINANCIAL SERVICES -- 2.8%
   100,000  Moody's Corp.                     4,129,000
                                         --------------
HEALTHCARE PRODUCTS AND SERVICES -- 2.2%
    97,000  Gilead Sciences, Inc.*            3,298,000
                                         --------------
MANUFACTURING -- 1.5%
    37,000  ITT Industries, Inc.              2,245,530
                                         --------------
</Table>

<Table>
<Caption>
- -------------------------------------------------------
                                          Market Value
  Shares                                    (Note 1)
- -------------------------------------------------------
- -------------------------------------------------------
                                   
MEDICAL EQUIPMENT AND SUPPLIES -- 8.2%
    90,000  DENTSPLY International,
              Inc.                       $    3,351,510
    90,000  Oxford Health Plans, Inc.*        3,280,500
    71,000  Patterson Dental Co.*             3,105,540
    50,500  Varian Medical Systems,
              Inc.*                           2,504,800
                                         --------------
                                             12,242,350
                                         --------------
MEDICAL SPECIALTIES -- 2.0%
    93,000  Lincare Holdings, Inc.*           2,940,660
                                         --------------
OIL AND GAS SERVICES -- 3.3%
    47,000  Apache Corp.                      2,678,530
    49,000  Devon Energy Corp.                2,249,100
                                         --------------
                                              4,927,630
                                         --------------
RETAIL -- 11.1%
   175,000  Amazon.com, Inc.*                 3,305,750
    90,000  Michaels Stores, Inc.*            2,817,000
   225,000  PETsMART, Inc.*                   3,854,250
    49,500  Ross Stores, Inc.                 2,098,305
   170,000  Williams-Sonoma, Inc.*            4,615,500
                                         --------------
                                             16,690,805
                                         --------------
SEMICONDUCTORS AND RELATED -- 4.7%
   306,100  NVIDIA Corp.*                     3,523,211
   103,000  QLogic Corp.*                     3,554,530
                                         --------------
                                              7,077,741
                                         --------------
TELECOMMUNICATIONS EQUIPMENT AND SERVICES -- 2.2%
    75,000  L-3 Communications
              Holdings, Inc.*                 3,368,250
                                         --------------
TOTAL COMMON STOCKS
  (COST $142,813,621)                       143,458,903
                                         --------------

MONEY MARKET FUNDS -- 1.5%
 2,229,071  FBR Fund for Government
              Investors
              (Cost $2,229,071)               2,229,071
                                         --------------
TOTAL INVESTMENTS -- 97.1%
  (COST $145,042,692)                       145,687,974
Other Assets Less Liabilities -- 2.9%         4,327,324
                                         --------------
NET ASSETS -- 100.0%                     $  150,015,298
                                         ==============
</Table>

                                        7

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
            AGGRESSIVE MICRO CAP PORTFOLIO
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
                                     
COMMON STOCKS -- 96.8%
AEROSPACE/DEFENSE -- 3.3%
    12,000  InVision Technologies, Inc.*   $    316,320
                                           ------------
APPAREL -- 3.1%
    16,500  Pacific Sunwear of
              California, Inc.*                 291,885
                                           ------------
AUTOMOTIVE -- 1.8%
    15,000  Spartan Motors, Inc.*               170,700
                                           ------------
BUILDING AND CONSTRUCTION -- 2.3%
     7,000  Hovnanian Enterprises, Inc.*        221,900
                                           ------------
BUSINESS SERVICES -- 3.0%
    11,000  Pre-Paid Legal Services,
              Inc.*                             288,200
                                           ------------
CASINOS AND GAMING -- 5.6%
    13,700  Alliance Gaming Corp.*              233,311
    22,000  Monarch Casino & Resort,
              Inc.*                             302,060
                                           ------------
                                                535,371
                                           ------------
CHEMICALS -- 3.9%
    20,000  A. Schulman, Inc.                   372,200
                                           ------------
COMPUTER EQUIPMENT -- 11.5%
    44,000  Cray, Inc.*                         337,480
    21,300  Neoware Systems, Inc.*              317,583
    21,500  Pinnacle Systems, Inc.*             292,615
    22,500  Western Digital Corp.*              143,775
                                           ------------
                                              1,091,453
                                           ------------
COMPUTER SOFTWARE AND SERVICES -- 5.2%
    50,000  Pervasive Software, Inc.*           206,000
    15,000  Verisity Ltd.*                      285,900
                                           ------------
                                                491,900
                                           ------------
ELECTRONICS -- 4.4%
    10,000  Benchmark Electronics, Inc.*        286,600
    28,600  Sonic Solutions*                    143,000
                                           ------------
                                                429,600
                                           ------------
ENGINEERING AND CONSULTING
  SERVICES -- 7.8%
     5,000  EMCOR Group, Inc.*                  265,050
    11,700  FTI Consulting, Inc.*               469,755
                                           ------------
                                                734,805
                                           ------------
FOOD, BEVERAGE AND TOBACCO -- 3.7%
    10,000  Panera Bread Co.*                   348,100
                                           ------------
HEALTHCARE PRODUCTS AND SERVICES -- 2.9%
    20,000  American Medical Security
              Group, Inc.*                      279,600
                                           ------------
</Table>

<Table>
<Caption>
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
- -------------------------------------------------------
                                     
INSURANCE -- 2.4%
     5,500  Hilb, Rogal and Hamilton Co.   $    224,950
                                           ------------
MEDICAL EQUIPMENT AND
  SUPPLIES -- 5.6%
    20,000  Hanger Orthopedic Group,
              Inc.*                             263,000
    13,000  Immucor, Inc.*                      263,250
                                           ------------
                                                526,250
                                           ------------
METALS AND MINING -- 2.8%
    10,500  Royal Gold, Inc.                    261,671
                                           ------------
OIL AND GAS SERVICES -- 2.9%
    11,000  Oceaneering International,
              Inc.*                             272,140
                                           ------------
PHARMACEUTICALS -- 5.1%
    23,400  Chattem, Inc.*                      480,870
                                           ------------
REAL ESTATE -- 2.5%
    13,500  Fidelity National Information
              Solutions, Inc.*                  232,875
                                           ------------
RESTAURANTS -- 7.2%
    15,000  Landry's Restaurants, Inc.          318,600
    10,000  P.F. Chang's China Bistro,
              Inc.*                             363,000
                                           ------------
                                                681,600
                                           ------------
RETAIL -- 2.7%
    10,000  Fred's, Inc.                        257,000
                                           ------------
SEMICONDUCTORS AND RELATED -- 2.3%
    14,000  Artisan Components, Inc.*           216,020
                                           ------------
UTILITIES -- 4.8%
    13,500  Denbury Resources, Inc.*            152,550
     8,000  UGI Corp.                           299,120
                                           ------------
                                                451,670
                                           ------------
TOTAL COMMON STOCKS
  (COST $8,628,008)                           9,177,080
                                           ------------

MONEY MARKET FUNDS -- 3.4%
   325,453  FBR Fund for Government
              Investors
              (Cost $325,453)                   325,453
                                           ------------
TOTAL INVESTMENTS -- 100.2%
  (COST $8,953,461)                           9,502,533
Liabilities in Excess of Other
  Assets -- (0.2)%                              (21,351)
                                           ------------
NET ASSETS -- 100.0%                       $  9,481,182
                                           ============
</Table>

                                        8

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
               SMALL CAP VALUE PORTFOLIO
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
                                     
COMMON STOCKS -- 97.5%
APPAREL -- 6.2%
     7,870  Kellwood Co.                   $    204,620
     7,180  Quicksilver, Inc.*                  191,419
                                           ------------
                                                396,039
                                           ------------
BANKING -- 4.0%
     9,500  Community First Bankshares,
              Inc.                              251,370
                                           ------------
BUILDING AND CONSTRUCTION -- 2.1%
    15,780  USG Corp.*                          133,341
                                           ------------
CASINOS AND GAMING -- 1.5%
     6,650  Boyd Gaming Corp.*                   93,432
                                           ------------
CHEMICALS -- 4.2%
    17,600  RPM International, Inc.             268,928
                                           ------------
COMPUTER EQUIPMENT -- 11.4%
     9,600  Avocent Corp.*                      213,312
    35,200  CompuCom Systems, Inc.*             197,472
     9,000  Imation Corp.*                      315,720
                                           ------------
                                                726,504
                                           ------------
CONSUMER PRODUCTS AND SERVICES -- 13.6%
     9,500  Blyth, Inc.                         254,220
    44,890  MPS Group, Inc.*                    248,691
    15,000  Nu Skin Enterprises, Inc.           179,550
     7,000  Regis Corp.                         181,930
                                           ------------
                                                864,391
                                           ------------
ENERGY EQUIPMENT & SERVICES -- 4.7%
    19,150  Headwaters, Inc.*                   297,016
                                           ------------
FINANCIAL SERVICES -- 1.6%
     6,000  Charter Municipal Mortgage
              Acceptance Co.                    104,220
                                           ------------
FOOD, BEVERAGE, AND TOBACCO -- 1.2%
     3,250  Sensient Technologies Corp.          73,028
                                           ------------
HEALTHCARE PRODUCTS AND SERVICES -- 2.4%
    17,700  US Oncology, Inc.*                  153,459
                                           ------------
INDUSTRIAL GAS AND SERVICES -- 7.2%
    18,400  AirGas, Inc.*                       317,400
     5,260  Hughes Supply, Inc.                 143,703
                                           ------------
                                                461,103
                                           ------------
MEDICAL EQUIPMENT AND SUPPLIES -- 3.8%
    11,480  Hanger Orthopedic Group,
              Inc.*                             150,962
     2,300  Pediatrix Medical Group,
              Inc.*                              92,138
                                           ------------
                                                243,100
                                           ------------
</Table>

<Table>
<Caption>
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
- -------------------------------------------------------
                                     
OFFICE EQUIPMENT AND SUPPLIES -- 2.9%
    37,000  OfficeMax, Inc.*               $    185,000
                                           ------------
PAPER AND PACKAGING -- 2.2%
    17,700  Crown Cork & Seal Company,
              Inc.*                             140,715
                                           ------------
REAL ESTATE INVESTMENT TRUST -- 3.4%
    25,650  MFA Mortgage Investments,
              Inc.                              215,460
                                           ------------
RESTAURANTS -- 3.8%
     5,700  Lone Star Steakhouse &
              Saloon, Inc.                      110,238
     4,780  RARE Hospitality
              International, Inc.*              132,024
                                           ------------
                                                242,262
                                           ------------
RETAIL -- 10.5%
     6,700  Gart Sports Co.*                    129,645
    10,040  ShopKo Stores, Inc.*                124,998
    18,000  The Sports Authority, Inc.*         126,000
     7,600  Tractor Supply Co.*                 285,760
                                           ------------
                                                666,403
                                           ------------
TELECOMMUNICATIONS EQUIPMENT AND SERVICES -- 6.8%
     5,700  ADTRAN, Inc.*                       187,530
    11,600  Inter-Tel, Inc.                     242,556
                                           ------------
                                                430,086
                                           ------------
WASTE MANAGEMENT SERVICES -- 4.0%
     6,600  Waste Connections, Inc.*            254,826
                                           ------------
TOTAL COMMON STOCKS
  (COST $5,945,992)                           6,200,683
                                           ------------

MONEY MARKET FUNDS -- 2.2%
   141,355  FBR Fund for Government
              Investors
              (Cost $141,355)                   141,355
                                           ------------
TOTAL INVESTMENTS -- 99.7%
  (COST $6,087,347)                           6,342,038
Other Assets Less Liabilities -- 0.3%            20,954
                                           ------------
NET ASSETS -- 100.0%                       $  6,362,992
                                           ============
</Table>

                                        9

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
               LARGE CAP GROWTH PORTFOLIO
- ---------------------------------------------------------
                                            Market Value
  Shares                                      (Note 1)
- ---------------------------------------------------------
                                     
COMMON STOCKS -- 92.0%
APPAREL -- 1.0%
     3,100  Nike, Inc.                     $      137,857
                                           --------------
AUTOMOTIVE -- 2.8%
    24,800  Nissan Motor Co., Ltd.                381,424
                                           --------------
COMPUTER EQUIPMENT -- 16.3%
    23,875  Cisco Systems, Inc.                   312,762
    28,500  Dell Computer Corp.*                  762,090
    15,100  Emulex Corp.*                         280,105
    18,375  Hewlett-Packard Co.                   318,990
     7,500  International Business
              Machines Corp.                      581,250
                                           --------------
                                                2,255,197
                                           --------------
COMPUTER SOFTWARE AND SERVICES -- 12.2%
    12,275  First Data Corp.                      434,658
    10,875  Intuit, Inc.*                         510,255
     8,350  Microsoft Corp.*                      431,695
    19,325  Yahoo! Inc.*                          315,964
                                           --------------
                                                1,692,572
                                           --------------
CONSUMER PRODUCTS AND SERVICES -- 7.2%
    10,000  The Clorox Co.                        412,500
     8,550  eBay, Inc.*                           579,861
                                           --------------
                                                  992,361
                                           --------------
ENTERTAINMENT -- 3.2%
    17,125  Fox Entertainment Group,
              Inc.*                               444,051
                                           --------------
FINANCIAL SERVICES -- 5.2%
     6,900  SLM Corp.                             716,634
                                           --------------
FOOD, BEVERAGE AND TOBACCO -- 4.1%
     8,775  Sysco Corp.                           261,407
     5,500  Wm. Wrigley Jr. Co.                   301,840
                                           --------------
                                                  563,247
                                           --------------
HEALTHCARE PRODUCTS AND SERVICES -- 6.2%
     4,825  Forest Laboratories, Inc.*            473,912
     7,200  Johnson & Johnson                     386,712
                                           --------------
                                                  860,624
                                           --------------
</Table>

<Table>
<Caption>
- ---------------------------------------------------------
                                            Market Value
  Shares                                      (Note 1)
- ---------------------------------------------------------
- ---------------------------------------------------------
                                     
INSURANCE -- 5.9%
    10,550  The Allstate Corp.*            $      390,244
     8,700  The Progressive Corp.                 431,781
                                           --------------
                                                  822,025
                                           --------------
MEDICAL EQUIPMENT AND SUPPLIES -- 2.2%
     4,550  Stryker Corp.                         305,396
                                           --------------
RECREATIONAL PRODUCTS -- 2.8%
     8,500  Harley-Davidson, Inc.                 392,700
                                           --------------
RETAIL -- 11.6%
     7,975  Bed Bath & Beyond, Inc.*              275,377
     4,050  Kohl's Corp.*                         226,598
     6,700  Lowe's Companies, Inc.                251,250
    19,000  The TJX Companies, Inc.               370,880
     9,500  Wal-Mart Stores, Inc.                 479,845
                                           --------------
                                                1,603,950
                                           --------------
SEMICONDUCTORS AND RELATED -- 3.6%
    37,700  Applied Materials, Inc.*              491,231
                                           --------------
TELECOMUNICATION, EQUIPMENT AND SERVICES -- 7.7%
    42,275  Nextel Communications, Inc.*          488,276
    15,900  QUALCOMM, Inc.*                       578,601
                                           --------------
                                                1,066,877
                                           --------------
TOTAL COMMON STOCKS (COST $13,607,620)
                                               12,726,146
                                           --------------

MONEY MARKET FUNDS -- 8.6%
 1,189,273  FBR Fund for Government
              Investors
              (Cost $1,189,273)                 1,189,273
                                           --------------
TOTAL INVESTMENTS -- 100.6%
  (COST $14,796,893)                           13,915,419
Liabilities in Excess of Other
  Assets -- (0.6)%                                (83,955)
                                           --------------
NET ASSETS -- 100.0%                       $   13,831,464
                                           ==============
</Table>

                                        10

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS
December 31, 2002 (continued)

<Table>
<Caption>
               LARGE CAP VALUE PORTFOLIO
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
                                     
COMMON STOCKS -- 89.5%
CHEMICALS -- 4.7%
       795  PPG Industries, Inc.           $     39,869
                                           ------------
COMPUTER EQUIPMENT -- 4.5%
     2,200  Hewlett-Packard Co.                  38,192
                                           ------------
CONSUMER PRODUCTS AND SERVICES -- 4.9%
     1,200  Eastman Kodak Co.                    42,048
                                           ------------
FOOD, BEVERAGE AND TOBACCO -- 13.5%
       810  Anheuser-Busch Companies,
              Inc.                               39,204
     1,100  ConAgra Foods, Inc.                  27,511
       500  Dean Foods Co.*                      18,550
     1,350  Sara Lee Corp.                       30,388
                                           ------------
                                                115,653
                                           ------------
INDUSTRIAL SERVICES -- 4.0%
     1,600  Republic Services, Inc.*             33,568
                                           ------------
INSURANCE -- 8.8%
     1,345  AFLAC, Inc.                          40,511
       700  The Progressive Corp.                34,741
                                           ------------
                                                 75,252
                                           ------------
MAJOR BANKS -- 9.5%
     1,590  KeyCorp                              39,973
     1,650  SouthTrust Corp.                     41,003
                                           ------------
                                                 80,976
                                           ------------
OFFICE EQUIPMENT AND SUPPLIES -- 2.6%
     1,225  Staples, Inc.*                       22,418
                                           ------------
OIL AND GAS SERVICES -- 9.6%
       500  Burlington Resources, Inc.           21,325
       855  ConocoPhillips                       41,373
       700  Occidental Petroleum Corp.           19,915
                                           ------------
                                                 82,613
                                           ------------
</Table>

<Table>
<Caption>
- -------------------------------------------------------
                                           Market Value
  Shares                                     (Note 1)
- -------------------------------------------------------
- -------------------------------------------------------
                                     
REGIONAL BANKS -- 13.3%
     1,600  Marshall & Illsley Corp.       $     43,808
     1,950  National Commerce Financial
              Corp.                              46,507
       700  North Fork Bancorporation,
              Inc.                               23,618
                                           ------------
                                                113,933
                                           ------------
SAVINGS BANKS -- 7.0%
       300  Golden West Financial Corp.          21,543
       500  New York Community Bancorp,
              Inc.                               14,440
     1,715  Sovereign Bancorp, Inc.              24,096
                                           ------------
                                                 60,079
                                           ------------
TELECOMMUNICATIONS EQUIPMENT AND SERVICES -- 3.8%
     1,100  CenturyTel, Inc.                     32,318
                                           ------------
UTILITIES -- 3.3%
       450  DTE Energy Co.                       20,880
       250  The Southern Co.                      7,098
                                           ------------
                                                 27,978
                                           ------------
TOTAL COMMON STOCKS
  (COST $786,754)                               764,897
                                           ------------

MONEY MARKET FUNDS -- 4.8%
    40,900  FBR Fund for Government
              Investors (Cost $40,900)           40,900
                                           ------------
TOTAL INVESTMENTS -- 94.3%
  (COST $827,654)                               805,797
Other Assets Less Liabilities -- 5.7%            48,690
                                           ------------
NET ASSETS -- 100.0%                       $    854,487
                                           ============
</Table>

- ------------------------------

* Non-income producing

ADR American Depository Receipts

                       See Notes to Financial Statements.
                                        11


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2002

<Table>
<Caption>
                                                            AGGRESSIVE       MID CAP       AGGRESSIVE
                                                              GROWTH         GROWTH        MICRO CAP
                                                            PORTFOLIO       PORTFOLIO      PORTFOLIO
                                                                                 
 ASSETS
   Securities at Value* (Note 1).........................  $ 45,566,815   $ 145,687,974   $  9,502,533
   Investment Income Receivable (Note 1).................         7,132          15,524          4,061
   Receivable for Securities Sold (Note 1)...............       300,317              --             --
   Receivable for Shares Sold............................        89,954       5,400,485          1,777
   Other Assets..........................................         1,812              --             --
                                                           ------------   -------------   ------------
     Total Assets........................................    45,966,030     151,103,983      9,508,371
                                                           ------------   -------------   ------------
 LIABILITIES
   Investment Advisory Fee Payable (Note 2)..............        28,494         111,556          6,932
   Administrative Fee Payable (Note 2)...................         8,481          13,280          2,063
   Payable for Securities Purchased (Note 1).............     3,746,476              --             --
   Payable for Shares Redeemed...........................     7,492,724         944,180         16,892
   Distribution Fees Payable (Note 4)....................           282             909             65
   Other Liabilities.....................................         5,088          18,760          1,237
                                                           ------------   -------------   ------------
     Total Liabilities...................................    11,281,545       1,088,685         27,189
                                                           ------------   -------------   ------------
 NET ASSETS..............................................  $ 34,684,485   $ 150,015,298   $  9,481,182
                                                           ============   =============   ============
 NET ASSETS CONSIST OF:
   Paid-in Capital applicable to:
     Regular Class.......................................  $ 61,836,209   $ 225,163,637   $ 20,902,478
     I Class.............................................            --      26,407,497             --
   Accumulated Net Realized Loss on Investments..........   (26,051,351)   (102,201,118)   (11,970,368)
   Net Unrealized Appreciation (Depreciation) of
     Investments.........................................    (1,100,373)        645,282        549,072
                                                           ------------   -------------   ------------
 NET ASSETS..............................................  $ 34,684,485   $ 150,015,298   $  9,481,182
                                                           ============   =============   ============
   Regular Class.........................................  $ 34,684,485   $ 136,836,373   $  9,481,182
                                                           ============   =============   ============
   I Class...............................................  $         --   $  13,178,925   $         --
                                                           ============   =============   ============
 SHARES OUTSTANDING
   Regular Class.........................................     3,868,381       7,889,745        530,856
                                                           ============   =============   ============
   I Class...............................................            --         750,722             --
                                                           ============   =============   ============
 NET ASSET VALUE PER SHARE:
   Regular Class.........................................  $       8.97   $       17.34   $      17.86
                                                           ============   =============   ============
   I Class...............................................  $         --   $       17.56   $         --
                                                           ============   =============   ============
 --------------------------------------------------------
 * The Cost of Securities at Value is $46,667,188, $145,042,692, and $8,953,461, respectively
</Table>

                       See Notes to Financial Statements.
                                        12


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2002

<Table>
<Caption>
                                                              SMALL CAP      LARGE CAP       LARGE CAP
                                                                VALUE          GROWTH          VALUE
                                                              PORTFOLIO      PORTFOLIO       PORTFOLIO
                                                                                   
 ASSETS
   Securities at Value* (Note 1)...........................  $ 6,342,038    $ 13,915,419    $   805,797
   Investment Income Receivable
     (Note 1)..............................................       10,577           7,123          1,328
   Receivable for Securities Sold
     (Note 1)..............................................           --              --        232,869
   Receivable for Shares Sold..............................       17,378             592             --
   Other Assets............................................           --              --             --
                                                             -----------    ------------    -----------
     Total Assets..........................................    6,369,993      13,923,134      1,039,994
                                                             -----------    ------------    -----------
 LIABILITIES
   Investment Advisory Fee Payable (Note 2)................        4,713          10,102            558
   Administrative Fee Payable (Note 2).....................        1,403           3,006            186
   Payable for Securities Purchased (Note 1)...............           --              --        184,608
   Payable for Shares Redeemed.............................           --          76,662             37
   Distribution Fees Payable (Note 4)......................           43              96              6
   Other Liabilities.......................................          842           1,804            112
                                                             -----------    ------------    -----------
     Total Liabilities.....................................        7,001          91,670        185,507
                                                             -----------    ------------    -----------
 NET ASSETS................................................  $ 6,362,992    $ 13,831,464    $   854,487
                                                             ===========    ============    ===========
 NET ASSETS CONSIST OF:
   Paid-in Capital.........................................  $ 7,313,498    $ 35,591,483    $ 1,339,248
   Undistributed Net Investment Income.....................          292              --             39
   Accumulated Net Realized Loss on Investments............   (1,205,489)    (20,878,545)      (462,943)
   Net Unrealized Appreciation (Depreciation) of
     Investments...........................................      254,691        (881,474)       (21,857)
                                                             -----------    ------------    -----------
 NET ASSETS................................................  $ 6,362,992    $ 13,831,464    $   854,487
                                                             ===========    ============    ===========
 SHARES OUTSTANDING........................................      634,299       1,134,468        121,578
                                                             ===========    ============    ===========
 NET ASSET VALUE PER SHARE.................................  $     10.03    $      12.19    $      7.03
                                                             ===========    ============    ===========
 ----------------------------------------------------------
 * The Cost of Securities at Value is $6,087,347, $14,796,893, and $827,654, respectively.
</Table>

                       See Notes to Financial Statements.
                                        13


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2002

<Table>
<Caption>
                                                            AGGRESSIVE       MID CAP       AGGRESSIVE
                                                              GROWTH          GROWTH        MICRO CAP
                                                            PORTFOLIO       PORTFOLIO       PORTFOLIO
                                                                                  
 INVESTMENT INCOME
   Interest (Note 1).....................................  $     24,504    $     93,216    $     6,700
   Dividends (Note 1)....................................       241,059         829,935         29,474
                                                           ------------    ------------    -----------
     Total Investment Income.............................       265,563         923,151         36,174
                                                           ------------    ------------    -----------
 EXPENSES
   Investment Advisory Fee (Note 2)......................       469,643       1,436,452        104,681
   Administrative Fee (Note 2)...........................       139,775         171,006         31,155
   Distribution Plan Fees -- Regular Class (Note 4)......       139,775         390,951         31,155
   Transfer Agent and Custodian Fee (Note 3).............       109,577         295,573         53,250
   Shareholder Reports and Notices.......................        27,189         101,382         12,858
   Registration Fees.....................................        17,717          36,806         16,970
   Insurance Fees........................................        13,634          43,547          3,549
   Audit Fees............................................         9,600           9,600          9,600
   Trustees' Fees and Expenses (Note 2)..................         7,143           7,143          7,143
   Legal Fees............................................         6,454           6,454          6,454
   Other Expenses........................................           954           2,194            675
                                                           ------------    ------------    -----------
     Total Expenses......................................       941,461       2,501,108        277,490
     Less Expenses Reimbursed by Investment Adviser (Note
       2)................................................      (108,403)       (260,815)       (91,806)
                                                           ------------    ------------    -----------
       Net Expenses......................................       833,058       2,240,293        185,684
                                                           ------------    ------------    -----------
 NET INVESTMENT LOSS.....................................      (567,495)     (1,317,142)      (149,510)
                                                           ------------    ------------    -----------
 Net Realized Loss on Investment Transactions............   (14,665,365)    (27,246,203)      (702,835)
 Change in Net Unrealized Appreciation/Depreciation of
   Investments...........................................    (9,354,201)    (16,552,887)    (2,154,931)
                                                           ------------    ------------    -----------
 NET LOSS ON INVESTMENTS.................................   (24,019,566)    (43,799,090)    (2,857,766)
                                                           ------------    ------------    -----------
 NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS....  $(24,587,061)   $(45,116,232)   $(3,007,276)
                                                           ============    ============    ===========
</Table>

                       See Notes to Financial Statements.

                                        14


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2002

<Table>
<Caption>
                                                                SMALL CAP      LARGE CAP     LARGE CAP
                                                                  VALUE         GROWTH         VALUE
                                                                PORTFOLIO      PORTFOLIO     PORTFOLIO
                                                                                    
 INVESTMENT INCOME
   Interest (Note 1).........................................  $     4,161    $     5,063    $     628
   Dividends (Note 1)........................................       88,801        103,515       14,235
                                                               -----------    -----------    ---------
     Total Investment Income.................................       92,962        108,578       14,863
                                                               -----------    -----------    ---------
 EXPENSES
   Investment Advisory Fee (Note 2)..........................       54,359        135,879        6,792
   Administrative Fee (Note 2)...............................       16,178         40,440        2,264
   Distribution Plan Fees (Note 4)...........................       16,178         40,440        2,264
   Transfer Agent and Custodian Fee (Note 3).................       48,902         58,163       42,989
   Organizational Expense (Note 1)...........................       18,360         18,360       18,360
   Registration Fees.........................................       16,410         16,410       16,327
   Audit Fees................................................        9,600          9,600        9,600
   Trustees' Fees and Expenses (Note 2)......................        7,143          7,143        7,143
   Legal Fees................................................        6,454          6,454        6,454
   Shareholder Reports and Notices...........................        4,417         15,569        1,463
   Insurance Fees............................................          782          5,458          244
   Other Expenses............................................          305            874          298
                                                               -----------    -----------    ---------
     Total Expenses..........................................      199,088        354,790      114,198
     Less Expenses Reimbursed by Investment Adviser (Note
       2)....................................................     (102,666)      (113,766)    (101,520)
                                                               -----------    -----------    ---------
       Net Expenses..........................................       96,422        241,024       12,678
                                                               -----------    -----------    ---------
 NET INVESTMENT INCOME (LOSS)................................       (3,460)      (132,446)       2,185
                                                               -----------    -----------    ---------
 Net Realized Loss on Investment Transactions................   (1,205,489)    (2,363,379)    (167,920)
 Change in Net Unrealized Appreciation/Depreciation of
   Investments...............................................      (73,928)    (2,449,986)     (31,934)
                                                               -----------    -----------    ---------
 NET LOSS ON INVESTMENTS.....................................   (1,279,417)    (4,813,365)    (199,854)
                                                               -----------    -----------    ---------
 NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS........  $(1,282,877)   $(4,945,811)   $(197,669)
                                                               ===========    ===========    =========
</Table>

                       See Notes to Financial Statements.

                                        15


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
                                                  AGGRESSIVE GROWTH                MID CAP GROWTH
                                                      PORTFOLIO                       PORTFOLIO
                                                 FOR THE YEARS ENDED             FOR THE YEARS ENDED
                                                     DECEMBER 31,                   DECEMBER 31,
                                             ----------------------------   -----------------------------
                                                 2002           2001            2002            2001
                                             ------------   -------------   -------------   -------------
                                                                                
 FROM INVESTMENT ACTIVITIES
   Net Investment Loss.....................  $  (567,495)   $    (254,873)  $  (1,317,142)  $    (336,434)
   Net Realized Loss on Investment
     Transactions..........................  (14,665,365)      (9,099,335)    (27,246,203)    (53,679,300)
   Change in Net Unrealized Appreciation/
     Depreciation of Investments...........   (9,354,201)      (2,480,799)    (16,552,887)    (24,508,738)
                                             ------------   -------------   -------------   -------------
     Net Decrease in Net Assets Resulting
       from Operations.....................  (24,587,061)     (11,835,007)    (45,116,232)    (78,524,472)
                                             ------------   -------------   -------------   -------------
 FROM SHARE TRANSACTIONS
   Net Proceeds from Sales of Shares:
       Regular Class.......................   60,687,229      150,873,005     120,908,460     221,183,096
       I Class.............................           --               --       6,551,769       5,840,632
   Cost of Shares Redeemed:
       Regular Class.......................  (74,671,466)    (152,927,618)   (108,270,674)   (244,942,950)
       I Class.............................           --               --      (3,779,009)     (9,821,891)
                                             ------------   -------------   -------------   -------------
     Net Increase (Decrease) in Net Assets
       Resulting from Share Transactions...  (13,984,237)      (2,054,613)     15,410,546     (27,741,113)
                                             ------------   -------------   -------------   -------------
     TOTAL DECREASE IN NET ASSETS..........  (38,571,298)     (13,889,620)    (29,705,686)   (106,265,585)
 NET ASSETS -- Beginning of Year...........   73,255,783       87,145,403     179,720,984     285,986,569
                                             ------------   -------------   -------------   -------------
 NET ASSETS -- End of Year.................  $34,684,485    $  73,255,783   $ 150,015,298   $ 179,720,984
                                             ============   =============   =============   =============
 SHARES
   Sold:
       Regular Class.......................    5,314,780       10,975,786       6,132,867       9,035,895
       I Class.............................           --               --         316,788         232,927
   Redeemed:
       Regular Class.......................   (6,643,279)     (11,150,780)     (5,612,684)    (10,129,589)
       I Class.............................           --               --        (191,307)       (413,828)
                                             ------------   -------------   -------------   -------------
     Net Increase (Decrease) in Shares.....   (1,328,499)        (174,994)        645,664      (1,274,595)
                                             ============   =============   =============   =============
</Table>

                       See Notes to Financial Statements.

                                        16


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
                                                   AGGRESSIVE MICRO CAP             SMALL CAP VALUE
                                                         PORTFOLIO                     PORTFOLIO
                                                    FOR THE YEARS ENDED           FOR THE YEARS ENDED
                                                       DECEMBER 31,                  DECEMBER 31,
                                                ---------------------------   ---------------------------
                                                    2002           2001           2002           2001
                                                ------------   ------------   ------------   ------------
                                                                                 
 FROM INVESTMENT ACTIVITIES
   Net Investment Income (Loss)...............  $  (149,510)   $   (130,899)  $    (3,460)   $     9,389
   Net Realized Gain (Loss) on Investment
     Transactions.............................     (702,835)     (5,675,002)   (1,205,489)       441,104
   Change in Net Unrealized Appreciation/
     Depreciation of Investments..............   (2,154,931)      1,785,959       (73,928)        28,298
                                                -----------    ------------   -----------    -----------
     Net Increase (Decrease) in Net Assets
       Resulting from Operations..............   (3,007,276)     (4,019,942)   (1,282,877)       478,791
                                                -----------    ------------   -----------    -----------
 DISTRIBUTIONS TO SHAREHOLDERS
   From Net Investment Income.................           --              --        (5,140)       (16,426)
   From Net Realized Gain.....................           --              --      (287,283)            --
                                                -----------    ------------   -----------    -----------
     Total Distributions to Shareholders......           --              --      (292,423)       (16,426)
                                                -----------    ------------   -----------    -----------
 FROM SHARE TRANSACTIONS
   Net Proceeds from Sales of Shares..........    4,633,641      44,845,031     8,001,268      9,463,455
   Reinvestment of Distributions..............           --              --       284,510         16,243
   Cost of Shares Redeemed....................   (8,687,893)    (53,473,862)   (5,121,474)    (7,132,274)
                                                -----------    ------------   -----------    -----------
     Net Increase (Decrease) in Net Assets
       Resulting from Share Transactions......   (4,054,252)     (8,628,831)    3,164,304      2,347,424
                                                -----------    ------------   -----------    -----------
     TOTAL INCREASE (DECREASE) IN NET
       ASSETS.................................   (7,061,528)    (12,648,773)    1,589,004      2,809,789
 NET ASSETS -- Beginning of Year..............   16,542,710      29,191,483     4,773,988      1,964,199
                                                -----------    ------------   -----------    -----------
 NET ASSETS -- End of Year....................  $ 9,481,182    $ 16,542,710   $ 6,362,992    $ 4,773,988
                                                ===========    ============   ===========    ===========
 SHARES
   Sold.......................................      208,373       2,038,514       644,892        838,962
   Issued in Reinvestment of Distributions....           --              --        28,371          1,325
   Redeemed...................................     (393,751)     (2,402,343)     (429,419)      (630,425)
                                                -----------    ------------   -----------    -----------
     Net Increase (Decrease) in Shares........     (185,378)       (363,829)      243,844        209,862
                                                ===========    ============   ===========    ===========
</Table>

                       See Notes to Financial Statements.

                                        17


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
                                                         LARGE CAP GROWTH             LARGE CAP VALUE
                                                            PORTFOLIO                    PORTFOLIO
                                                       FOR THE YEARS ENDED          FOR THE YEARS ENDED
                                                           DECEMBER 31,                DECEMBER 31,
                                                    --------------------------   -------------------------
                                                       2002           2001          2002          2001
                                                    -----------   ------------   -----------   -----------
                                                                                   
 FROM INVESTMENT ACTIVITIES
   Net Investment Income (Loss)...................  $  (132,446)  $   (162,473)  $     2,185   $     6,011
   Net Realized Loss on Investment Transactions...   (2,363,379)   (14,555,778)     (167,920)     (159,534)
   Change in Net Unrealized Appreciation/
     Depreciation of Investments..................   (2,449,986)     4,237,420       (31,934)      (28,830)
                                                    -----------   ------------   -----------   -----------
     Net Decrease in Net Assets Resulting from
       Operations.................................   (4,945,811)   (10,480,831)     (197,669)     (182,353)
                                                    -----------   ------------   -----------   -----------
 DISTRIBUTIONS TO SHAREHOLDERS
   From Net Investment Income.....................           --             --        (4,184)       (8,810)
                                                    -----------   ------------   -----------   -----------
 FROM SHARE TRANSACTIONS
   Net Proceeds from Sales of Shares..............    6,490,743     27,238,340     1,419,443     2,375,536
   Reinvestment of Distributions..................           --             --         4,153         8,753
   Cost of Shares Redeemed........................   (8,548,293)   (39,991,036)   (1,325,292)   (2,433,678)
                                                    -----------   ------------   -----------   -----------
     Net Increase (Decrease) in Net Assets
       Resulting from Share Transactions..........   (2,057,550)   (12,752,696)       98,304       (49,389)
                                                    -----------   ------------   -----------   -----------
     TOTAL DECREASE IN NET ASSETS.................   (7,003,361)   (23,233,527)     (103,549)     (240,552)
 NET ASSETS -- Beginning of Year..................   20,834,825     44,068,352       958,036     1,198,588
                                                    -----------   ------------   -----------   -----------
 NET ASSETS -- End of Year........................  $13,831,464   $ 20,834,825   $   854,487   $   958,036
                                                    ===========   ============   ===========   ===========
 SHARES
   Sold...........................................      469,930      1,619,400       172,338       245,897
   Issued in Reinvestment of Distributions........           --             --           590           982
   Redeemed.......................................     (588,022)    (2,395,090)     (159,167)     (255,013)
                                                    -----------   ------------   -----------   -----------
     Net Increase (Decrease) in Shares............     (118,092)      (775,690)       13,761        (8,134)
                                                    ===========   ============   ===========   ===========
</Table>

                       See Notes to Financial Statements.

                                        18


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                  AGGRESSIVE GROWTH
                                                                      PORTFOLIO
                                                          FOR THE YEARS ENDED DECEMBER 31,
                                                 ---------------------------------------------------
                                                  2002       2001       2000       1999       1998
                                                 -------    -------    -------    -------    -------
                                                                              
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year........   $14.10     $16.22     $19.01     $14.82     $13.29
                                                 -------    -------    -------    -------    -------
   Income (Loss) from Investment Operations:
     Net Investment Loss.......................    (0.15)     (0.05)     (0.19)     (0.16)     (0.15)
     Net Realized and Unrealized Gain (Loss) on
       Investments.............................    (4.98)     (2.07)      0.59       6.95       1.68
                                                 -------    -------    -------    -------    -------
   Total from Investment Operations............    (5.13)     (2.12)      0.40       6.79       1.53
                                                 -------    -------    -------    -------    -------
 Distributions to Shareholders:
   From Net Realized Gain......................       --         --      (3.19)     (2.60)        --
                                                 -------    -------    -------    -------    -------
   Net Increase (Decrease) in Net Asset
     Value.....................................    (5.13)     (2.12)     (2.79)      4.19       1.53
                                                 -------    -------    -------    -------    -------
   Net Asset Value -- End of Year..............    $8.97     $14.10     $16.22     $19.01     $14.82
                                                 =======    =======    =======    =======    =======
 TOTAL INVESTMENT RETURN.......................   (36.38)%   (13.07)%     3.06%     46.11%     11.51%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2).......     1.49%      1.49%      1.49%      1.49%      1.68%
   Expenses Before Reimbursement (Note 2)......     1.69%      1.65%      1.63%      1.68%      1.89%
   Net Investment Loss After Reimbursement
     (Note 2)..................................    (1.02)%    (0.35)%    (1.11)%    (1.00)%    (0.92)%
   Net Investment Loss Before Reimbursement
     (Note 2)..................................    (1.22)%    (0.51)%    (1.26)%    (1.20)%    (1.13)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate.....................      517%       535%       376%       702%       237%
   Net Assets at End of Year (in thousands)....  $34,684    $73,256    $87,145    $90,028    $81,404
   Number of Shares Outstanding at End of Year
     (in thousands)............................    3,868      5,197      5,372      4,736      5,491
</Table>

                       See Notes to Financial Statements.

                                        19


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                   MID CAP GROWTH
                                                                     PORTFOLIO
                                                                   REGULAR CLASS
                                               ------------------------------------------------------
                                                          FOR THE YEARS ENDED DECEMBER 31,
                                               ------------------------------------------------------
                                                 2002        2001        2000        1999       1998
                                               --------    --------    --------    --------    ------
                                                                                
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year......    $22.47      $30.84      $30.20      $13.65    $12.43
                                               --------    --------    --------    --------    ------
   Income (Loss) from Investment Operations:
     Net Investment Loss.....................     (0.16)      (0.05)      (0.25)      (0.08)    (0.06)
     Net Realized and Unrealized Gain (Loss)
       on Investments........................     (4.97)      (8.32)       1.32(A)    17.40      1.59
                                               --------    --------    --------    --------    ------
   Total from Investment Operations..........     (5.13)      (8.37)       1.07       17.32      1.53
                                               --------    --------    --------    --------    ------
 Distributions to Shareholders:
   From Net Realized Gain....................        --          --       (0.43)      (0.77)    (0.31)
                                               --------    --------    --------    --------    ------
   Net Increase (Decrease) in Net Asset
     Value...................................     (5.13)      (8.37)       0.64       16.55      1.22
                                               --------    --------    --------    --------    ------
   Net Asset Value -- End of Year............    $17.34      $22.47      $30.84      $30.20    $13.65
                                               ========    ========    ========    ========    ======
 TOTAL INVESTMENT RETURN.....................    (22.83)%    (27.14)%      3.63%     126.97%    12.31%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2).....      1.34%       1.34%       1.34%       1.49%     1.66%
   Expenses Before Reimbursement (Note 2)....      1.49%       1.50%       1.41%       1.69%     2.56%
   Net Investment Loss After Reimbursement
     (Note 2)................................     (0.80)%     (0.19)%     (0.87)%     (1.00)%   (0.38)%
   Net Investment Loss Before Reimbursement
     (Note 2)................................     (0.95)%     (0.35)%     (0.94)%     (1.23)%   (1.27)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate...................       170%        261%        196%        208%      211%
   Net Assets at End of Year (in
     thousands)..............................  $136,836    $165,561    $261,040    $137,108    $8,124
   Number of Shares Outstanding at End of
     Year (in thousands).....................     7,890       7,370       8,463       4,540       595
 --------------------------------------------
</Table>

 (A) 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.

                       See Notes to Financial Statements.

                                        20


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                         MID CAP GROWTH
                                                                           PORTFOLIO
                                                                            I CLASS
                                                               ----------------------------------
                                                                    FOR THE
                                                                  YEARS ENDED          FOR THE
                                                                  DECEMBER 31,       PERIOD ENDED
                                                               ------------------    DECEMBER 31,
                                                                2002       2001         2000*
                                                               -------    -------    ------------
                                                                            
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Period....................   $22.65     $30.95       $31.31
                                                               -------    -------      -------
   Income (Loss) from Investment Operations:
     Net Investment Income (Loss)............................    (0.09)      0.05        (0.08)
     Net Realized and Unrealized Gain (Loss) on
       Investments...........................................    (5.00)     (8.35)        0.15(A)
                                                               -------    -------      -------
   Total from Investment Operations..........................    (5.09)     (8.30)        0.07
                                                               -------    -------      -------
 Distributions to Shareholders:
   From Net Realized Gain....................................       --         --        (0.43)
                                                               -------    -------      -------
   Net Decrease in Net Asset Value...........................    (5.09)     (8.30)       (0.36)
                                                               -------    -------      -------
   Net Asset Value -- End of Period..........................   $17.56     $22.65       $30.95
                                                               =======    =======      =======
 TOTAL INVESTMENT RETURN.....................................   (22.47)%   (26.82)%       0.31%(B)
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2).....................     0.99%      0.99%        0.99%(C)
   Expenses Before Reimbursement (Note 2)....................     1.14%      1.15%        1.06%(C)
   Net Investment Income (Loss) After Reimbursement (Note
     2)......................................................    (0.46)%     0.16%       (0.47)%(C)
   Net Investment Loss Before Reimbursement (Note 2).........    (0.61)%    (0.00)%(+)     (0.54)%(C)
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate...................................      170%       261%         196%
   Net Assets at End of Period (in thousands)................  $13,179    $14,160      $24,947
   Number of Shares Outstanding at End of Period (in
     thousands)..............................................      751        625          806
 ------------------------------------------------------------
</Table>

 (A) 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.
 (B) Total returns for periods of less than one year are not annualized.
 (C) Annualized

 * From Commencement of Operations February 2, 2000.

 (+) The net investment income ratio is less than 0.01%

                       See Notes to Financial Statements.

                                        21


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                  AGGRESSIVE MICRO CAP
                                                                       PORTFOLIO
                                                    ------------------------------------------------
                                                            FOR THE YEARS ENDED DECEMBER 31,
                                                    ------------------------------------------------
                                                     2002      2001       2000       1999      1998
                                                    ------    -------    -------    ------    ------
                                                                               
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year...........  $23.10    $ 27.03    $ 22.35    $20.42    $20.40
                                                    ------    -------    -------    ------    ------
   Income (Loss) from Investment Operations:
     Net Investment Loss..........................   (0.28)     (0.18)     (0.14)    (0.28)    (0.14)
     Net Realized and Unrealized Gain (Loss) on
       Investments................................   (4.96)     (3.75)      5.43(A)   3.27      0.16
                                                    ------    -------    -------    ------    ------
   Total from Investment Operations...............   (5.24)     (3.93)      5.29      2.99      0.02
                                                    ------    -------    -------    ------    ------
 Distributions to Shareholders:
   From Net Realized Gain.........................      --         --      (0.61)    (1.06)       --
                                                    ------    -------    -------    ------    ------
   Net Increase (Decrease) in Net Asset Value.....   (5.24)     (3.93)      4.68      1.93      0.02
                                                    ------    -------    -------    ------    ------
   Net Asset Value -- End of Year.................  $17.86     $23.10     $27.03    $22.35    $20.42
                                                    ======    =======    =======    ======    ======
 TOTAL INVESTMENT RETURN..........................  (22.68)%   (14.54)%    23.82%    14.79%     0.10%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2)..........    1.49%      1.49%      1.48%     1.49%     1.51%
   Expenses Before Reimbursement (Note 2).........    2.23%      2.08%      1.84%     2.68%     2.50%
   Net Investment Loss After Reimbursement (Note
     2)...........................................   (1.20)%    (0.72)%    (0.85)%   (1.06)%   (0.71)%
   Net Investment Loss Before Reimbursement (Note
     2)...........................................   (1.94)%    (1.31)%    (1.21)%   (2.24)%   (1.70)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate........................     167%       203%       269%      190%      196%
   Net Assets at End of Year (in thousands).......  $9,481    $16,543    $29,191    $5,869    $9,651
   Number of Shares Outstanding at End of Year (in
     thousands)...................................     531        716      1,080       263       473
 -------------------------------------------------
</Table>

 (A) 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.

                       See Notes to Financial Statements.

                                        22


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                     SMALL CAP VALUE
                                                                        PORTFOLIO
                                                      ----------------------------------------------
                                                             FOR THE YEARS ENDED DECEMBER 31,
                                                      ----------------------------------------------
                                                       2002      2001      2000      1999      1998
                                                      ------    ------    ------    ------    ------
                                                                               
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year.............  $12.23    $10.88     $9.06     $9.21    $10.12
                                                      ------    ------    ------    ------    ------
   Income (Loss) from Investment Operations:
     Net Investment Income (Loss)...................   (0.01)     0.02     (0.04)     0.19      0.07
     Net Realized and Unrealized Gain (Loss) on
       Investments..................................   (1.71)     1.37      1.88     (0.15)    (0.91)
                                                      ------    ------    ------    ------    ------
   Total from Investment Operations.................   (1.72)     1.39      1.84      0.04     (0.84)
                                                      ------    ------    ------    ------    ------
 Distributions to Shareholders:
   From Net Investment Income.......................   (0.01)    (0.04)    (0.02)    (0.19)    (0.07)
   From Net Realized Gain...........................   (0.47)       --        --        --        --
                                                      ------    ------    ------    ------    ------
       Total Distributions to Shareholders..........   (0.48)    (0.04)    (0.02)    (0.19)    (0.07)
                                                      ------    ------    ------    ------    ------
   Net Increase (Decrease) in Net Asset Value.......   (2.20)     1.35      1.82     (0.15)    (0.91)
                                                      ------    ------    ------    ------    ------
   Net Asset Value -- End of Year...................  $10.03    $12.23    $10.88     $9.06     $9.21
                                                      ======    ======    ======    ======    ======
 TOTAL INVESTMENT RETURN............................  (14.08)%   12.79%    20.29%     0.44%    (8.28)%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2)............    1.49%     1.49%     1.48%     1.49%     1.53%
   Expenses Before Reimbursement (Note 2)...........    3.07%     4.01%     8.62%     9.25%    13.01%
   Net Investment (Income) Loss After Reimbursement
     (Note 2).......................................   (0.05)%    0.23%    (0.56)%    2.42%     1.12%
   Net Investment Loss Before Reimbursement (Note
     2).............................................   (1.63)%   (2.29)%   (7.70)%   (5.34)%  (10.36)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate..........................     271%      290%      148%       91%       85%
   Net Assets at End of Year (in thousands).........  $6,363    $4,774    $1,964    $1,232      $857
   Number of Shares Outstanding at End of Year (in
     thousands).....................................     634       390       181       136        93
</Table>

                       See Notes to Financial Statements.

                                        23


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                   LARGE CAP GROWTH
                                                                      PORTFOLIO
                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                  --------------------------------------------------
                                                   2002       2001       2000       1999       1998
                                                  -------    -------    -------    -------    ------
                                                                               
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year.........   $16.63     $21.73     $23.59     $14.47    $10.25
                                                  -------    -------    -------    -------    ------
   Income (Loss) from Investment Operations:
     Net Investment Loss........................    (0.12)     (0.13)     (0.20)     (0.12)    (0.02)
     Net Realized and Unrealized Gain (Loss) on
       Investments..............................    (4.32)     (4.97)     (1.61)      9.24      4.24
                                                  -------    -------    -------    -------    ------
   Total from Investment Operations.............    (4.44)     (5.10)     (1.81)      9.12      4.22
                                                  -------    -------    -------    -------    ------
 Distributions to Shareholders:
   From Net Realized Gain.......................       --         --      (0.05)        --        --
                                                  -------    -------    -------    -------    ------
   Net Increase (Decrease) in Net Asset Value...    (4.44)     (5.10)     (1.86)      9.12      4.22
                                                  -------    -------    -------    -------    ------
   Net Asset Value -- End of Year...............   $12.19     $16.63     $21.73     $23.59    $14.47
                                                  =======    =======    =======    =======    ======
 TOTAL INVESTMENT RETURN........................   (26.70)%   (23.47)%    (7.66)%    63.03%    41.17%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2)........     1.49%      1.49%      1.48%      1.49%     1.54%
   Expenses Before Reimbursement (Note 2).......     2.20%      1.99%      1.76%      2.75%     9.11%
   Net Investment Loss After Reimbursement (Note
     2).........................................    (0.82)%    (0.62)%    (1.14)%    (0.99)%   (0.43)%
   Net Investment Loss Before Reimbursement
     (Note 2)...................................    (1.53)%    (1.12)%    (1.43)%    (2.26)%   (8.00)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate......................      115%       124%        54%        75%       80%
   Net Assets at End of Year (in thousands).....  $13,831    $20,835    $44,068    $12,667    $2,402
   Number of Shares Outstanding at End of Year
     (in thousands).............................    1,134      1,253      2,028        537       166
</Table>

                       See Notes to Financial Statements.

                                        24


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<Table>
<Caption>
                                                                      LARGE CAP VALUE
                                                                         PORTFOLIO
                                                              FOR THE YEARS ENDED DECEMBER 31,
                                                       ----------------------------------------------
                                                        2002      2001      2000      1999      1998
                                                       ------    ------    ------    ------    ------
                                                                                
 PER SHARE OPERATING PERFORMANCE:
   Net Asset Value -- Beginning of Year..............   $8.89    $10.34    $10.43    $11.39    $10.11
                                                       ------    ------    ------    ------    ------
   Income (Loss) from Investment Operations:
     Net Investment Income...........................    0.01      0.05      0.12      0.21      0.16
     Net Realized and Unrealized Gain (Loss) on
       Investments...................................   (1.84)    (1.42)    (0.03)     0.27      1.91
                                                       ------    ------    ------    ------    ------
   Total from Investment Operations..................   (1.83)    (1.37)     0.09      0.48      2.07
                                                       ------    ------    ------    ------    ------
 Distributions to Shareholders:
   From Net Investment Income........................   (0.03)    (0.08)    (0.18)    (0.21)    (0.16)
     From Net Realized Gain..........................      --        --        --     (1.23)    (0.63)
                                                       ------    ------    ------    ------    ------
       Total Distributions to Shareholders...........   (0.03)    (0.08)    (0.18)    (1.44)    (0.79)
                                                       ------    ------    ------    ------    ------
   Net Increase (Decrease) in Net Asset Value........   (1.86)    (1.45)    (0.09)    (0.96)     1.28
                                                       ------    ------    ------    ------    ------
   Net Asset Value -- End of Year....................   $7.03     $8.89    $10.34    $10.43    $11.39
                                                       ======    ======    ======    ======    ======
 TOTAL INVESTMENT RETURN.............................  (20.53)%  (13.26)%    0.92%     4.24%    20.48%
 RATIOS TO AVERAGE NET ASSETS:
   Expenses After Reimbursement (Note 2).............    1.40%     1.40%     1.40%     1.40%     1.42%
   Expenses Before Reimbursement (Note 2)............   12.62%     9.87%    10.00%    10.14%    14.34%
   Net Investment Income After Reimbursement (Note
     2)..............................................    0.24%     0.51%     1.42%     2.10%     1.69%
   Net Investment Loss Before Reimbursement (Note
     2)..............................................  (10.98)%   (7.96)%   (7.18)%   (6.63)%  (11.22)%
 SUPPLEMENTARY DATA:
   Portfolio Turnover Rate...........................     343%      271%      175%       90%      256%
   Net Assets at End of Year (in thousands)..........    $854      $958    $1,199      $994      $655
   Number of Shares Outstanding at End of Year (in
     thousands)......................................     122       108       116        95        58
</Table>

                       See Notes to Financial Statements.

                                        25


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 2002

1. Significant Accounting Policies

     The Navellier Performance Funds (the "Fund") is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, (the "Act") as an open-end investment company which offers its shares
in a series of no-load non-diversified and diversified portfolios. The Fund's
objective is to achieve long-term capital growth. The Fund is authorized to
issue an unlimited number of shares of capital stock with no stated par value.
The Fund currently consists of seven separate portfolios, each with its own
investment objectives and policies: the Aggressive Growth Portfolio, a
non-diversified open-end management company portfolio, the Mid Cap Growth
Portfolio, a diversified open-end management company portfolio, the Aggressive
Micro Cap Portfolio (formerly the Aggressive Small Cap Portfolio), a diversified
open-end management company portfolio, the Small Cap Value Portfolio, a
diversified open-end management company portfolio, the Large Cap Growth
Portfolio, a non-diversified open-end management company portfolio and the Large
Cap Value Portfolio, a diversified open-end management company portfolio.
Financial statements for the Aggressive Small Cap Equity Portfolio can be found
in a separately printed report.

     The Mid Cap Growth Portfolio consists of two shares of classes: Regular
Class shares offered since November 26, 1996, and I Class shares offered since
December 28, 1999. Income and expenses of the Portfolio are allocated
proportionately to the two classes of shares based on daily net assets, except
for Rule 12b-1 distribution fees, which are charged only to Regular Class, and
other class specific transfer agent fees, which accrue at different rates.

     The following is a summary of significant accounting policies which the
Fund follows:

        (a) Listed securities are valued at the last sales price of the New York
    Stock Exchange and other major exchanges. Over-the-Counter securities are
    valued at the last sales price. If market quotations are not readily
    available, the Board of Trustees will value the Fund's securities in good
    faith. The Trustees will periodically review this method of valuation and
    recommend changes which may be necessary to assure that the Fund's
    instruments are valued at fair value. Debt securities with maturities of 60
    days or less are valued at amortized cost.

        (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 from net investment income, if any, 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. Distributions to shareholders, which are determined in accordance
    with income tax regulations, are recorded on ex-dividend date.

        (d) The Fund intends to comply with the provisions of the Internal
    Revenue Code applicable to regulated investment companies and will
    distribute all net investment income and capital gains to its shareholders.
    Therefore, no Federal income tax provision is required.

        (e) Organizational expenses of the Small Cap Value Portfolio, the Large
    Cap Growth Portfolio, and the Large Cap Value Portfolio totaling $91,800,
    $91,800, and $91,800, respectively, are being deferred and amortized over 60
    months beginning with public offering of shares in the portfolios. Any
    redemption by an initial investor during the amortization period will be
    reduced by a pro rata portion of any of the unamortized organization
    expenses. Such proration is to be calculated by dividing the number of
    initial shares redeemed by the number of initial shares outstanding at the
    date of redemption. At December 31, 2002, there were no unamortized
    organization costs remaining.

        (f) The preparation of financial statements in conformity with generally
    accepted accounting principles in the United States of America requires
    management to make estimates and assumptions that affect the reported
    amounts of assets and liabilities and disclosure of contingent assets and
    liabilities at the date of the financial statements and the reported amounts
    of increases and decreases in net assets from operations during the
    reporting period. Actual results could differ from those estimates.

                                        26

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------

2. Investment Advisory Fees and Other Transactions with Affiliates

     Investment advisory services are provided by Navellier Management, Inc.
(the "Adviser"). Effective May 1, 1998, under an agreement with the Adviser, the
Fund pays a fee at the annual rate of 0.84% of the daily net assets of the
Aggressive Growth Portfolio, the Mid Cap Growth Portfolio, the Aggressive Micro
Cap Portfolio, the Small Cap Value Portfolio and the Large Cap Growth Portfolio,
and 0.75% of the daily net assets of the Large Cap Value Portfolio. The Adviser
receives an annual fee equal to 0.25% of average daily net assets of the
Aggressive Growth, the Aggressive Micro Cap, the Small Cap Value, the Large Cap
Growth and the Large Cap Value Portfolios, and 0.10% of the average daily net
assets of the Mid Cap Growth Portfolio 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.

     The Adviser has agreed to limit the total normal expenses of each Portfolio
to 1.49% of average annual net assets, except for the Large Cap Value Portfolio,
Mid Cap Growth Portfolio -- Regular Class and the Mid Cap Growth Portfolio -- I
Class which are limited to 1.40%, 1.34% and 0.99%, respectively. In order to
maintain the expense limitation, the Adviser paid certain operating expenses on
a net basis of the Aggressive Growth Portfolio, the Mid Cap Growth Portfolio,
the Aggressive Micro Cap Portfolio, the Small Cap Value Portfolio, the Large Cap
Growth Portfolio and the Large Cap Value Portfolio totaling $108,403, $260,815,
$91,806, $102,666, $113,766 and $101,520, respectively.

     Navellier Securities Corp. (the "Distributor") acts as the Fund's
Distributor and is registered as a broker-dealer under the Securities and
Exchange Act of 1934. The Distributor, which is the principal underwriter of the
Fund's shares, renders its services to the Fund pursuant to a distribution
agreement. An officer and trustee of the Fund is also an officer and director of
the Distributor.

     The Fund pays each of its Trustees not affiliated with the Adviser $12,500
annually. For the year ended December 31, 2002, Trustees' fees and expenses
totaled $42,858.

3. Transfer Agent and Custodian

     FBR National Bank & Trust provides transfer agency, dividend disbursing and
other shareholder services to the Fund. In addition, FBR National Bank & Trust
serves as custodian of the Fund's assets. Fees paid to FBR National Bank & Trust
are based upon a fee schedule approved by the Board of Trustees.

4. Distribution Plan

     The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Act, whereby it reimburses the Distributor or others in an
amount not to exceed 0.25% per annum of the average daily net assets of the
Aggressive Growth Portfolio, the Mid Cap Growth Portfolio (Regular Class shares
only), the Aggressive Micro Cap Portfolio, the Small Cap Value Portfolio, the
Large Cap Growth Portfolio and the Large Cap Value Portfolio, for expenses
incurred in the promotion and distribution of shares of the Fund. These expenses
include, but are not limited to, the printing of prospectuses, statements of
additional information, and reports used for sales purposes, expenses of
preparation of sales literature and related expenses (including Distributor
personnel), advertisements and other distribution-related expenses, including a
prorated portion of the Distributor's overhead expenses attributable to the
distribution of shares. Such payments are made monthly. The 12b-1 fee includes,
in addition to promotional activities, the amount the Fund may pay to the
Distributor or others as a service fee to reimburse such parties for personal
services provided to shareholders of the Fund and/or the maintenance of
shareholder accounts. Such Rule 12b-1 fees are made pursuant to the Plan and
distribution agreements entered into between such service providers and the
Distributor or the Fund directly.

                                        27

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------

5. Securities Transactions

     For the year ended December 31, 2002, purchases and sales (including
maturities) of securities (excluding short-term securities) were as follows:

<Table>
<Caption>
                             AGGRESSIVE      MID CAP      AGGRESSIVE     SMALL CAP     LARGE CAP    LARGE CAP
                               GROWTH         GROWTH       MICRO CAP       VALUE        GROWTH        VALUE
                             PORTFOLIO      PORTFOLIO      PORTFOLIO     PORTFOLIO     PORTFOLIO    PORTFOLIO
                            ------------   ------------   -----------   -----------   -----------   ----------
                                                                                  
Purchases.................  $282,243,251   $287,844,244   $19,836,219   $19,127,913   $18,110,547   $2,960,103
                            ============   ============   ===========   ===========   ===========   ==========
Sales.....................  $295,675,425   $279,503,713   $23,882,730   $16,149,398   $21,182,386   $2,933,856
                            ============   ============   ===========   ===========   ===========   ==========
</Table>

6. Unrealized Appreciation and Depreciation of Investments

     Unrealized appreciation and depreciation as of December 31, 2002, based on
the cost for Federal income tax purposes is as follows:

<Table>
<Caption>
                                                                   AGGRESSIVE      MID CAP      AGGRESSIVE
                                                                     GROWTH         GROWTH      MICRO CAP
                                                                    PORTFOLIO     PORTFOLIO     PORTFOLIO
                                                                   -----------   ------------   ----------
                                                                                       
      Gross Unrealized Appreciation..............................  $ 1,616,699   $  9,958,038   $1,133,332
      Gross Unrealized Depreciation..............................   (2,828,147)    (9,583,055)    (584,260)
                                                                   -----------   ------------   ----------
      Net Unrealized Appreciation (Depreciation).................  $(1,211,448)  $    374,983   $  549,072
                                                                   ===========   ============   ==========
      Cost of Investments for Federal Income Tax Purposes........  $46,778,263   $145,312,991   $8,953,461
                                                                   ===========   ============   ==========
</Table>

<Table>
<Caption>
                                                                  SMALL CAP      LARGE CAP     LARGE CAP
                                                                    VALUE         GROWTH         VALUE
                                                                  PORTFOLIO      PORTFOLIO     PORTFOLIO
                                                                  ----------    -----------    ---------
                                                                                      
      Gross Unrealized Appreciation.............................  $  404,015    $   613,419    $  6,739
      Gross Unrealized Depreciation.............................    (170,783)    (1,494,893)    (28,596)
                                                                  ----------    -----------    --------
      Net Unrealized Appreciation (Depreciation)................  $  233,232    $  (881,474)   $(21,857)
                                                                  ==========    ===========    ========
      Cost of Investments for Federal Income Tax Purposes.......  $6,108,806    $14,796,893    $827,654
                                                                  ==========    ===========    ========
</Table>

     The difference between book basis and tax basis unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.

7. Federal Income Tax

     Permanent differences between tax and financial reporting of net investment
income are reclassified. As of December 31, 2002, net investment losses were
reclassified to paid-in-capital for Aggressive Growth Portfolio, Mid Cap Growth
Portfolio, Aggressive Micro Cap Portfolio, Small Cap Value Portfolio, Large Cap
Growth Portfolio and Large Cap Value Portfolio in the amount of $567,495,
$1,317,142, $149,510, $8,892, $132,446 and $2,038, respectively. Net assets of
the Funds were not affected by these reclassifications.

     At December 31, 2002, for Federal income tax purposes, the following funds
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:

<Table>
<Caption>
                                                                   AGGRESSIVE      MID CAP     AGGRESSIVE
                                                                     GROWTH        GROWTH       MICRO CAP
      EXPIRES DECEMBER 31,                                          PORTFOLIO     PORTFOLIO     PORTFOLIO
      --------------------                                         -----------   -----------   -----------
                                                                                      
      2008.......................................................  $        --   $ 8,346,460   $ 1,655,525
      2009.......................................................   11,798,794    61,028,476     9,184,053
      2010.......................................................   11,625,059    29,500,719            --
                                                                   -----------   -----------   -----------
                                                                   $23,423,853   $98,875,655   $10,839,578
                                                                   ===========   ===========   ===========
</Table>

                                        28

                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------

<Table>
<Caption>
                                                                    SMALL CAP     LARGE CAP
                                                                      VALUE        GROWTH       LARGE CAP
                                                                    PORTFOLIO     PORTFOLIO       VALUE
      EXPIRES DECEMBER 31,                                                                      PORTFOLIO
      --------------------                                         -----------   -----------   -----------
                                                                                      
      2008.......................................................  $        --   $ 1,490,607   $   129,401
      2009.......................................................           --    16,907,142       164,408
      2010.......................................................      794,342     2,330,162       144,528
                                                                   -----------   -----------   -----------
                                                                   $   794,342   $20,727,911   $   438,337
                                                                   ===========   ===========   ===========
</Table>

     On December 18, 2002, the Small Cap Value Portfolio paid short-term and
long-term distributions of $0.272617 and $0.196330 per share, respectively, to
shareholders as of record on December 17, 2002. On December 30, 2002, the Small
Cap Value Portfolio and the Large Cap Value Portfolio paid ordinary income
distributions of $0.008131 and $0.034577, respectively, to shareholders as of
record on December 27, 2002.

     The tax character of distributions paid during 2002 was as follows:

<Table>
<Caption>
                                                              SMALL CAP   LARGE CAP
                                                                VALUE       VALUE
                                                              PORTFOLIO   PORTFOLIO
                                                              ---------   ---------
                                                                    
Distributions paid from:
  Ordinary income...........................................  $  5,140     $4,184
  Short-term capital gains..................................   167,009         --
  Long-term capital gains...................................   120,274         --
                                                              --------     ------
                                                              $292,423     $4,184
                                                              ========     ======
</Table>

     The tax character of distributions paid during 2001 was as follows:

<Table>
<Caption>
                                                              SMALL CAP   LARGE CAP
                                                                VALUE       VALUE
                                                              PORTFOLIO   PORTFOLIO
                                                              ---------   ---------
                                                                    
Distributions paid from:
  Ordinary income...........................................   $16,426     $8,810
  Long-term capital gains...................................        --         --
                                                               -------     ------
                                                               $16,426     $8,810
                                                               =======     ======
</Table>

     As of December 31, 2002, the components of distributable earnings on a tax
basis were as follows:

<Table>
<Caption>
                                                               MID CAP    AGGRESSIVE   SMALL CAP   LARGE CAP
                                                               GROWTH     MICRO CAP      VALUE       VALUE
                                                              PORTFOLIO   PORTFOLIO    PORTFOLIO   PORTFOLIO
                                                              ---------   ----------   ---------   ---------
                                                                                       
      Undistributed Ordinary Income.........................  $     --     $     --    $    292    $     39
      Unrealized Appreciation...............................   645,282      549,072     254,691          --
                                                              --------     --------    --------    --------
                                                              $645,282     $549,072    $254,983    $     39
                                                              ========     ========    ========    ========
</Table>

8. Borrowing Agreement

     The Funds have a short-term borrowing agreement with Custodial Trust
Company which may be drawn upon for temporary purposes. At December 31, 2002,
there were no outstanding borrowings.

                                        29


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
THE NAVELLIER PERFORMANCE FUNDS
RENO, NEVADA

      We have audited the accompanying statement of assets and liabilities of
Navellier Aggressive Growth Portfolio, Navellier Mid Cap Growth Portfolio,
Navellier Aggressive Micro Cap Portfolio, Navellier Small Cap Value Portfolio,
Navellier Large Cap Growth Portfolio and Navellier Large Cap Value Portfolio,
each a series of shares of The Navellier Performance Funds as of December 31,
2002, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for the periods indicated thereon. These
financial statements are the responsibility of the Funds' 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits 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 December 31, 2002, 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 audits provide 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 positions of
Navellier Aggressive Growth Portfolio, Navellier Mid Cap Growth Portfolio,
Navellier Aggressive Micro Cap Portfolio, Navellier Small Cap Value Portfolio,
Navellier Large Cap Growth Portfolio and Navellier Large Cap Value Portfolio as
of December 31, 2002, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for the periods referred to above, in
conformity with accounting principles generally accepted in the United States of
America.

/s/ TAIT, WELLER & BAKER

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
February 12, 2003

                                        30


                                                 THE NAVELLIER PERFORMANCE FUNDS
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION
(unaudited)

Information pertaining to the Trustees and Officers of the Trust is set forth
below. The statement of additional information (SAI) includes additional
information about the Trustees and is available without charge, upon request by
calling (800) 887-8671.

<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------------
NAME                                       NO. OF                                                         OTHER
AGE                            TERM OF    FUNDS IN                                                    TRUSTEESHIPS/
ADDRESS                      OFFICE AND   COMPLEX                                                     DIRECTORSHIPS
POSITION WITH TRUST            TENURE     OVERSEEN     PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS      BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------
                                                                                          
 Louis Navellier*            Trustee and     14      Mr. Navellier is and has been the CEO and        None
 45                          President               President of Navellier & Associates Inc., an
 One East Liberty            since May               investment management company since 1988; CEO
 Third Floor                 10, 1993                and President of Navellier Management, Inc., an
 Reno, NV 89501                                      investment management company since May 10,
 Trustee and President                               1993; CEO and President of Navellier
                                                     International Management, Inc., an investment
                                                     management company, 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
                                                     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              Trustee          7      Professor Langsen is currently retired. He was   None
 83                          since 1995              Professor Emeritus of Financial Economics,
 2206 209th Place N.E.                               School of Business, California State University
 Sammamish, WA 98074                                 at Hayward (1973-1992); Visiting Professor,
 Trustee                                             Financial Economics, University of California
                                                     at Berkeley (1984-1987).
- --------------------------------------------------------------------------------------------------------------------
 Barry Sander                Trustee         13      Currently retired as of December 1, 1998,        None
 54                          since 1995              formerly he was the President and CEO of Ursa
 1835 Ashland Mine Rd.                               Major Inc., a stencil manufacturing firm and
 Ashland, OR 97520                                   had been for the past nine years.
 Trustee
- --------------------------------------------------------------------------------------------------------------------
 Joel Rossman                Trustee         13      Currently retired as of March 15, 1998.          None
 53                          since 1995              Formerly he was President and CEO of Personal
 2921 California                                     Stamp Exchange, Inc., a manufacturer, designer
 San Francisco, CA 94115                             and distributor of rubber stamp products. He
 Trustee                                             had been President and CEO of Personal Stamp
                                                     Exchange for the preceding 10 years.
- --------------------------------------------------------------------------------------------------------------------
 Jacques Delacroix           Trustee         13      Professor of Business Administration, Leavy      None
 60                          since 1995              School of Business, Santa Clara University
 519 Chestnut Street                                 (1983- present).
 Santa Cruz, CA 95060
 Trustee
- --------------------------------------------------------------------------------------------------------------------
 Arjen Kuyper*               Treasurer       14      Mr. Kuyper is COO of Navellier & Associates,     None
 46                          since 1995              Inc. and has been since September 1, 1998.
 One East Liberty                                    Prior to that he was operations manager for
 Third Floor                                         Navellier & Associates, Inc. since 1992 and
 Reno, NV 89501                                      operations manager for Navellier Management,
 Treasurer                                           Inc. and for Navellier Securities Corp., since
                                                     1993.
- --------------------------------------------------------------------------------------------------------------------
</Table>

*Interested Person

Each Trustee will hold office until the Trust's next special meeting of
shareholders and until their successors have been duly elected and qualified or
until their earlier resignation or removal.

                                        31


                 (This page has been left blank intentionally.)



CUSTODIAN & TRANSFER AGENT              NAVELLIER OFFICES
                                     
FBR National Bank & Trust               c/o Navellier Securities Corp.
4922 Fairmont Avenue                    One East Liberty, Third Floor
Bethesda, MD 20814                      Reno, Nevada 89501

800-622-1386 E.S.T.                     800-887-8671 P.S.T.




             NAVELLIER PERFORMANCE FUNDS' LARGE CAP GROWTH PORTFOLIO

                                       AND

             NAVELLIER MILLENNIUM FUNDS' LARGE CAP GROWTH PORTFOLIO

                                       AND

               TOUCHSTONE STRATEGIC TRUST'S LARGE CAP GROWTH FUND

                   PRO FORMA COMBINED SCHEDULE OF INVESTMENTS

                                December 31, 2002



PORTFOLIO OF INVESTMENTS
DECEMBER 31,2002
(UNAUDITED)




                                              TST                   NAVELLIER MILLENNIUM      NAVELLIER PERFORMANCE(A)
                                       LARGE CAP GROWTH FUND     LARGE CAP VALUE PORTFOLIO   LARGE CAP GROWTH PORTFOLIO
                                     SHARES/PAR   MARKET VALUE   SHARES/PAR   MARKET VALUE   SHARES/PAR   MARKET VALUE
                                     -------------------------   -------------------------   --------------------------

                                                                                        
COMMON STOCKS AND EQUITY INTERESTS
BASIC MATERIALS
   Semiconductors and Related
     Applied Materials, Inc.                -             -         2,830         36,874       37,700        491,231
                                                  ---------                      -------                  ----------
ENERGY
   Oilfield Equipment
     BJ Services Co.                   27,100       875,601             -              -            -              -
     Weatherford Intl Ltd              10,600       423,258             -              -            -              -
                                                  ---------                      -------                  ----------
                                                  1,298,859             -              -            -              -
INDUSTRIAL
   Industrial Diversified
     3M Co.                             4,650       573,345             -              -            -              -
                                                  ---------                      -------                  ----------
CONSUMER, CYCLICAL
   Automotive
     Nissan Motor Co. Ltd.                  -             -         1,770         27,223       24,800        381,424
                                                  ---------                      -------                  ----------
   Entertainment
     Fox Entertainment Group, Inc.          -             -         1,120         29,042       17,125        444,051
                                                  ---------                      -------                  ----------
   Media Publishing
     Viacom Inc. - Class A             22,250       908,023             -              -            -              -
                                                  ---------                      -------                  ----------
   Other Recreation
     Harley-Davidson, Inc.             19,200       887,040           585         27,027        8,500        392,700
                                                  ---------                      -------                  ----------
   Restaurants
     Darden Restaurants Inc.           22,450       459,102             -              -            -              -
                                                  ---------                      -------                  ----------
   Retailers, Apparel
     Nike                                   -             -           170          7,560        9,800        137,857
                                                  ---------                      -------                  ----------
   Retailers, Broadline
     Kohls Corp                        15,850       886,807           310         17,345        4,050        226,598
     Walgreen Co.                      20,000       583,800             -              -            -              -
     The TJX Companies, Inc.                -             -         1,580         30,842       19,000        370,880
     Wal-Mart Stores, Inc.             22,750      1,149,10           555         28,032        9,500        479,845
                                                  ---------                      -------                  ----------
                                                  2,619,710                       76,219                   1,077,323
   Retailers, Specialty
     Bed Bath & Beyond Inc.            28,050       968,567           510         17,610        7,975        275,377
     Lowe's Companies, Inc.            25,000       937,500           500         18,750        6,700        251,250
     Staples, Inc.                     27,200       497,760             -              -            -              -
                                                  ---------                      -------                  ----------
                                                  2,403,827                       36,360                     526,627
CONSUMER, NON-CYCLICAL
   Food, Beverage and Tobacco
     Sysco Corp.                            -             -           590         17,576        8,775        261,407
     Wm. Wrigley Jr. Co.                    -             -           360         19,757        5,500        301,840
     Anheuser-Busch Co., Inc.           8,000       387,200             -              -            -              -
     Pepsico, Inc.                     14,300       603,746             -              -            -              -
                                                  ---------                      -------                  ----------
                                                    990,946                       37,333                     563,247
   Consumer Products and Services
     The Clorox Co.                         -             -           735         30,319       10,000        412,500
     eBay, Inc.                             -             -           640         43,405        8,550        579,861
     Apollo Group Inc.                 13,850       609,400             -              -            -              -
                                                  ---------                      -------                  ----------
                                                    609,400                       73,724                     992,361
   Food Retailers
     Whole Foods Market Inc.            8,000       421,840             -              -            -              -
                                                  ---------                      -------                  ----------



(A)  Neither the  Navallier  Performance  Large Cap Growth Fund or the Navallier
     Millennium  Large Cap Growth Fund will be Required to sell current holdings
     to cause the consummation of the Reorganization.






                                            PRO FORMA                       TST
                                           ADJUSTMENTS             LARGE CAP GROWTH FUND(A)
                                      SHARES/PAR  MARKET VALUE     SHARES/PAR     MARKET VALUE
                                      ------------------------     ---------------------------
                                                                   
COMMON STOCKS AND EQUITY INTEREST
BASIC MATERIALS
   Semiconductors and Related
     Applied Materials, Inc.                -          -             40,530      528,105
                                                                               ---------
ENERGY
   Oilfield Equipment
     BJ Services Co.                        -          -             27,100      875,601
     Weatherford Intl Ltd                   -          -             10,600      423,258
                                            -          -                       ---------
                                                                          -    1,298,859
INDUSTRIAL
   Industrial Diversified
     3M Co.                                 -          -              4,650      573,345
                                                                               ---------
CONSUMER, CYCLICAL
   Automotive
     Nissan Motor Co. Ltd.                  -          -             26,570      408,647
                                                                               ---------
   Entertainment
     Fox Entertainment Group, Inc           -          -             18,245      473,093
                                                                               ---------
   Media Publishing
     Viacom Inc. - Class A                  -          -             22,250      908,023
                                                                               ---------
   Other Recreation
     Harley-Davidson, Inc.                  -          -             28,285    1,306,767
                                                                               ---------
   Restaurants
     Darden Restaurants Inc.                -          -             22,450      459,102
                                                                               ---------
   Retailers, Apparel
     Nike                                   -          -              9,970      145,417
                                                                               ---------
   Retailers, Broadline
     Kohls Corp                             -          -             20,210    1,130,750
     Walgreen Co.                           -          -             20,000      583,800
     The TJX Companies, Inc.                -          -             20,580      401,722
     Wal-Mart Stores, Inc.                  -          -             32,805    1,656,980
                                                                               ---------
                                                                               3,773,252
   Retailers, Specialty
     Bed Bath & Beyond Inc.                 -          -             36,535    1,261,554
     Lowe's Companies, Inc.                 -          -             32,200    1,207,500
     Staples, Inc.                          -          -             27,200      497,760
                                                                               ---------
                                            -          -                       2,966,814
CONSUMER, NON-CYCLICAL
   Food, Beverage and Tobacco
     Sysco Corp.                            -          -              9,365      278,983
     Wm. Wrigley Jr. Co.                    -          -              5,860      321,597
     Anheuser-Busch Co., Inc.               -          -              8,000      387,200
     Pepsico, Inc.                          -          -             14,300      603,746
                                                                               ---------
                                                                               1,591,526
   Consumer Products and Services
     The Clorox Co.                         -          -             10,735      442,819
     eBay, Inc.                             -          -              9,190      623,266
     Apollo Group Inc.                      -          -             13,850      609,400
                                                                               ---------
                                                                               1,675,485
   Food Retailers
     Whole Foods Market Inc.                -          -              8,000      421,840
                                                                               ---------




NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2002
(UNAUDITED)




                                                  TST              NAVELLIER MILLENNIUM         NAVELLIER PERFORMANCE
                                        LARGE CAP GROWTH FUND    LARGE CAP VALUE PORTFOLIO   LARGE CAP GROWTH PORTFOLIO
                                       SHARES/PAR  MARKET VALUE  SHARES/PAR   MARKET VALUE   SHARES/PAR    MARKET VALUE
                                       ------------------------  -------------------------   --------------------------
                                                                                         
     Health Care Providers
       Tenet Healthcare Corp.            25,800       423,120           -               -           -               -
                                                    ---------                  ----------                   ---------

     Healthcare Products and Services
       Forest Laboratories, Inc.              -             -         365          35,850       4,825         473,912
       Johnson & Johnson                      -             -         415          22,290       7,200         386,712
                                                    ---------                  ----------                   ---------
                                                            -                      58,140                     860,624

     Household Products (Non-Durable)
       Colgate-Palmolive Co.             18,700       980,441           -               -           -               -
       Procter & Gamble Company           6,850       588,689           -               -           -               -
                                                    ---------                  ----------                   ---------
                                                    1,569,130                           -                           -

     Medical Supplies
       Stryker Corp.                                                  460          30,875       4,550         305,396
       Cardinal Health Inc.              18,300     1,083,177           -               -           -               -
       Medtronic Inc.                    28,800     1,313,280           -               -           -               -
                                                    ---------                  ----------                   ---------
                                                    2,396,457                      30,875                     305,396

     Pharmaceuticals
       Amgen, Inc.                       25,000     1,208,500           -               -           -               -
       Caremark Rx Inc.                  43,500       706,875           -               -           -               -
       Johnson & Johnson                 21,250     1,141,337           -               -           -               -
       Lilly (Eli) & Co.                  8,800       558,800           -               -           -               -
       Pfizer, Inc.                      40,800     1,247,256           -               -           -               -
                                                    ---------                  ----------                   ---------
                                                    4,862,768                           -                           -

TECHNOLOGY

Computer Equipment
       Cisco Systems, Inc.                    -             -       1,800          23,580      23,875         312,762
       Dell Computer Corp.                    -             -       1,690          45,191      28,500         762,090
       Emulex Corp.                           -             -         900          16,695      15,100         280,105
       Hewlett-Packard Co.                    -             -       1,375          23,870      18,375         318,990
       International Business
         Machines Corp.                       -             -         575          44,563       7,500         581,250
                                                    ---------                  ----------                   ---------
                                                            -                     153,899                   2,255,197

     Computers & Information
       Dell Computer Corp                29,900       799,526           -               -           -               -
       SEI Investments                   30,400       826,272           -               -           -               -
       The Bisys Group, Inc.             32,150       511,185           -               -           -               -
                                                    ---------                  ----------                   ---------
                                                    2,136,983                           -                           -

     Semiconductor & Related
       Intel Corp.                       31,100       484,227           -               -           -               -
       Qlogic Corporation                18,000       621,180           -               -           -               -
                                                    ---------                  ----------                   ---------
                                                    1,105,407                           -                           -






                                                 PROFORMA                     TST
                                                ADJUSTMENTS         LARGE CAP GROWTH FUND(A)
                                          SHARES/PAR  MARKET VALUE  SHARES/PAR  MARKET VALUE
                                          ------------------------  ------------------------
                                                                   
     Health Care Providers
       Tenet Healthcare Corp.                 -            -          25,800    $  423,120
                                                                                ----------

     Healthcare Products and Services
       Forest Laboratories, Inc.              -            -           5,190       509,762
       Johnson & Johnson                      -            -           7,615       409,002
                                                                                ----------
                                              -            -                       918,764

     Household Products (Non-Durable)
       Colgate-Palmolive Co.                  -            -          18,700       980,441
       Procter & Gamble Company               -            -           6,850       588,689
                                                                                ----------
                                              -            -                     1,569,130

     Medical Supplies
       Stryker Corp.                          -            -           5,010       336,271
       Cardinal Health Inc.                   -            -          18,300     1,083,177
       Medtronic Inc.                         -            -          28,800     1,313,280
                                                                                ----------
                                              -            -                     2,732,728

     Pharmaceuticals
       Amgen, Inc.                            -            -          25,000     1,208,500
       Caremark Rx Inc.                       -            -          43,500       706,875
       Johnson & Johnson                      -            -          21,250     1,141,337
       Lilly (Eli) & Co.                      -            -           8,800       558,800
       Pfizer, Inc.                           -            -          40,800     1,247,256
                                                                                ----------
                                              -            -                     4,862,768

TECHNOLOGY

Computer Equipment
       Cisco Systems, Inc.                    -            -          25,675       336,342
       Dell Computer Corp.                    -            -          30,190       807,281
       Emulex Corp.                           -            -          16,000       296,800
       Hewlett-Packard Co.                    -            -          19,750       342,860
       International Business
         Machines Corp.                       -            -           8,075       625,813
                                                                                ----------
                                              -            -                     2,409,096

     Computers & Information
       Dell Computer Corp                     -            -          29,900       799,526
       SEI Investments                        -            -          30,400       826,272
       The Bisys Group, Inc.                  -            -          32,150       511,185
                                                                                ----------
                                              -            -                     2,136,983

     Semiconductor & Related
       Intel Corp.                            -            -          31,100       484,227
       Qlogic Corporation                     -            -          18,000       621,180
                                                                                ----------
                                              -            -                     1,105,407




NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2002
(UNAUDITED)




                                                         TST                 NAVELLIER MILLENNIUM       NAVELLIER PERFORMANCE
                                                 LARGE CAP GROWTH FUND     LARGE CAP VALUE PORTFOLIO  LARGE CAP GROWTH PORTFOLIO
                                               SHARES/PAR  MARKET VALUE    SHARES/PAR  MARKET VALUE   SHARES/PAR    MARKET VALUE
                                               ------------------------    -------------------------  --------------------------
                                                                                                  
Software & Processing
       Yahoo! Inc.                                                   -         1,450        23,707       19,325         315,964
       Affiliated Computer Svcs.                 21,100      1,110,915             -             -            -               -
       Cisco Systems, Inc.                       95,900      1,256,290             -             -            -               -
       First Data Corp.                          15,000        531,150           820        29,036       12,275         434,658
       Intuit Inc.                               11,000        516,120           810        38,005       10,875         510,255
       Microsoft Corp.                           29,350      1,517,395           520        26,884        8,350         431,695
       Sungard Data Systems                      44,450      1,047,242             -             -            -               -
       Veritas Software Corp.                    30,250        472,505             -             -            -               -
                                                            ----------                 -----------                   ----------
                                                             6,451,617                     117,632                    1,692,572

Telecommunications Equipment and Services
       Nextel Communications, Inc.                    -              -         3,150        36,383       42,275         488,276
       QUALCOMM, Inc.                                 -              -         1,170        42,576       15,900         578,601
                                                            ----------                 -----------                   ----------
                                                                     -                      78,959                    1,066,877

FINANCIAL SERVICES
   Banking, Major
       Bank of New York Co., Inc.                29,900        716,404             -             -            -               -
                                                            ----------                 -----------                   ----------
                                                               716,404                           -                            -

Financial Services, Diversified
       Freddie Mac                               22,500      1,328,625             -             -            -               -
       SLM Corp.                                 12,150      1,261,899           470        48,814        6,900         716,634
                                                            ----------                 -----------                   ----------
                                                             2,590,524                      48,814                      716,634

Insurance
       The Allstate Corp.                             -              -             -             -       10,550         390,244
       AFLAC, Inc.                                    -              -           660        24,413            -               -
       The Progressive Corp.                          -              -           525        26,056        8,700         431,781
                                                            ----------                 -----------                   ----------
                                                                     -                      50,469                      822,025

Regional Banks
       Fifth Third Bancorp                       15,300        895,815             -             -            -               -
                                                            ----------                 -----------                   ----------
                                                               895,815                           -                            -

CONGLOMERATES
   Conglomerates
       General Electric Co.                      37,450        911,908                           -            -               -
                                                            ----------                 -----------                   ----------

                                                            ----------                 -----------                   ----------
TOTAL COMMON STOCKS AND EQUITY INTERESTS                    35,232,225                     890,150                   12,726,146
                                                            ----------                 -----------                   ----------

GOVERNMENT AGENCY OBLIGATIONS
       FNMA Discount Notes, 1.25%, due 1/2/03         -              -       104,000       103,993            -               -
                                                            ----------                 -----------                   ----------

CASH EQUIVALENTS
   Money Market Fund
       FBR Fund for Government Investors              -              -           887           887    1,189,273       1,189,273
                                                            ----------                 -----------                   ----------

       ------------------------------------------------------------------------------------------------------------------------
       TOTAL INVESTMENTS AT MARKET                          35,232,225                     995,030                   13,915,419
                                                            ----------                 -----------                   ----------

       TOTAL INVESTMENTS AT COST                            42,106,795                   1,052,830                   14,796,893
                                                            ----------                 -----------                   ----------


                                                         PRO FORMA                     TST
                                                        ADJUSTMENTS         LARGE CAP GROWTH FUND(A)
                                                  SHARES/PAR  MARKET VALUE  SHARES/PAR  MARKET VALUE
                                                  ------------------------  ------------------------
                                                                            
Software & Processing
       Yahoo! Inc.                                     -            -          20,775   $    339,671
       Affiliated Computer Svcs.                       -            -          21,100      1,110,915
       Cisco Systems, Inc.                             -            -          95,900      1,256,290
       First Data Corp.                                -            -          28,095        994,844
       Intuit Inc.                                     -            -          22,685      1,064,380
       Microsoft Corp.                                 -            -          38,220      1,975,974
       Sungard Data Systems                            -            -          44,450      1,047,242
       Veritas Software Corp.                          -            -          30,250        472,505
                                                                                        ------------
                                                       -            -                      8,261,821

Telecommunications Equipment and Services
       Nextel Communications, Inc.                     -            -          45,425        524,659
       QUALCOMM, Inc.                                  -            -          17,070        621,177
                                                                                        ------------
                                                       -            -                      1,145,836

FINANCIAL SERVICES
   Banking, Major
       Bank of New York Co., Inc.                      -            -          29,900        716,404
                                                                                        ------------
                                                       -            -                        716,404

Financial Services, Diversified
       Freddie Mac                                     -            -          22,500      1,328,625
       SLM Corp.                                       -            -          19,520      2,027,347
                                                                                        ------------
                                                       -            -                      3,355,972

Insurance
       The Allstate Corp.                              -            -          10,550        390,244
       AFLAC, Inc.                                     -            -             660         24,413
       The Progressive Corp.                           -            -           9,225        457,837
                                                                                        ------------
                                                       -            -                        872,494

Regional Banks
       Fifth Third Bancorp                             -            -          15,300        895,815
                                                                                        ------------
                                                       -            -                        895,815

CONGLOMERATES
   Conglomerates
       General Electric Co.                            -            -          37,450        911,908
                                                                                        ------------

                                                                                        ------------
TOTAL COMMON STOCKS AND EQUITY INTERESTS                                                  48,848,521
                                                                                        ------------

GOVERNMENT AGENCY OBLIGATIONS
       FNMA Discount Notes, 1.25%, due 1/2/03          -            -         104,000        103,993
                                                                                        ------------

CASH EQUIVALENTS
   Money Market Fund
       FBR Fund for Government Investors               -            -       1,190,160      1,190,160
                                                                                        ------------

       ---------------------------------------------------------------------------------------------
       TOTAL INVESTMENTS AT MARKET                                  -                   $ 50,142,674
                                                              -------                   ------------

       TOTAL INVESTMENTS AT COST                                    -                   $ 57,956,518
                                                              -------                   ------------


- ---------------------
(A)  Navellier   Performance  Large  Cap  Growth  Portfolio  is  the  accounting
     survivor, however the surviving Fund name is TST Large Cap Growth Fund.



NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2002
(UNAUDITED)

                         PRO FORMA FINANCIAL STATEMENTS



                                                                     Navellier        Navellier
                                                     TST            Millennium       Performance                         TST
                                               Large Cap Growth  Large Cap Growth  Large Cap Growth   Pro Forma    Large Cap Growth
                                                     Fund            Portfolio        Portfolio      Adjustments       Fund (A)
                                               ----------------  ---------------   ----------------  ------------  ----------------
                                                                                                    
ASSETS

Investments, at cost                             $  42,106,795     $   1,052,830    $  14,796,893    $          -   $  57,956,518
                                                 =============     =============    =============    ============   =============
Investments, at market value                     $  35,232,225     $     995,030    $  13,915,419    $          -   $  50,142,674
Receivable for securities sold                         329,163               873                -               -         330,036
Dividend and interest receivable                        19,244               455            7,123               -          26,822
Other Assets                                            23,575                 -              592               -          24,167
                                                 -------------     -------------    -------------    ------------   -------------
     Total Assets                                   35,604,206           996,358       13,923,134               -      50,523,698
                                                 -------------     -------------    -------------    ------------   -------------

LIABILITIES

Payable for securities purchased                       147,320                 -                -               -         147,320
Bank overdraft                                         322,221                 -                -               -         322,221
Payable for Fund shares repurchased                     44,506                20           76,662               -         121,188
Advisory and distribution fees payable                       -               870           10,102               -          10,972
Accrued expenses and other liabilities                 100,455               253            4,906               -         105,614
                                                 -------------     -------------    -------------    ------------   -------------
     Total Liabilities                                 614,501             1,143           91,670               -         707,314
                                                 -------------     -------------    -------------    ------------   -------------
Net Assets                                       $  34,989,705     $     995,215    $  13,831,464    $          -   $  49,816,384
                                                 =============     =============    =============    ============   =============

ANALYSIS OF NET ASSETS

Accumulated paid in capital                      $  75,392,621     $   1,471,568    $  35,591,483    $          -     112,455,672
Distributions in excess of net investment
  income                                              (321,214)                -                -               -        (321,214)
Accumulated net realized loss on investments       (33,207,132)         (418,553)     (20,878,545)              -     (54,504,230)
Unrealized depreciation of investments              (6,874,570)          (57,800)        (881,474)              -      (7,813,844)
                                                 -------------     -------------    -------------    ------------   -------------
Net Assets                                       $  34,989,705     $     995,215    $  13,831,464    $          -   $  49,816,384
                                                 =============     =============    =============    ============   =============

BY CLASS:

NET ASSETS:

CLASS A                                          $  33,843,198     $     355,316    $  13,831,464    $          -   $  48,029,978
CLASS B                                                 54,017           423,950                -               -         477,967
CLASS C                                              1,092,490           215,949                -               -       1,308,439
                                                 -------------     -------------    -------------    ------------   -------------
                                                 $  34,989,705     $     995,215    $  13,831,464    $          -   $  49,816,384
                                                 =============     =============    =============    ============   =============

OUTSTANDING SHARES:

CLASS A                                              4,202,127            76,781        1,134,468      (1,473,452)      3,939,924
CLASS B                                                  7,090            92,912                -         (60,792)         39,210
CLASS C                                                143,907            47,449                -         (84,019)        107,337
                                                 -------------     -------------    -------------    ------------   -------------
                                                     4,353,124           217,142        1,134,468      (1,618,263)      4,086,471
                                                 =============     =============    =============    ============   =============

NET ASSET VALUE PER SHARE:

CLASS A                                          $        8.05     $        4.63    $       12.19                   $       12.19
                                                 -------------     -------------    =============                   -------------
CLASS B                                          $        7.62     $        4.56                                    $       12.19
                                                 -------------     -------------                                    -------------
CLASS C                                          $        7.59     $        4.55                                    $       12.19
                                                 -------------     -------------                                    -------------


(A)  The  Navellier  Performance  Large Cap Growth  Portfolio is the  accounting
     survivor,  however the surviving  Fund name and legal survivor is TST Large
     Cap Growth.



STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002
(UNAUDITED)



                                                                                NAVELLIER          NAVELLIER
                                                                TST            MILLENNIUM         PERFORMANCE
                                                          LARGE CAP GROWTH   LARGE CAP VALUE    LARGE CAP GROWTH
                                                               FUND               FUND             PORTFOLIO        ADJUSTMENTS
                                                          ----------------   ---------------    ----------------    ------------
INVESTMENT INCOME
                                                                                                        
Dividend Income                                             $    238,986       $      4,529       $    103,515      $          -
Interest Income                                                   20,792              1,574              5,063                 -
                                                            ------------       ------------       ------------      ------------
          Total Income                                           259,778              6,103            108,578                 -
                                                            ------------       ------------       ------------      ------------

EXPENSES
Management fee                                                   398,485              7,883            135,879          (168,624)(A)
Distribution Fees - Class A                                      129,171                789             40,440           (50,325)(A)
Distribution Fees - Class B                                          414              2,941                  -             1,424 (A)
Distribution Fees - Class C                                       14,215              1,788                  -            (2,919)(A)
Administration fees                                                9,073                  -             40,440           (22,114)(A)
Accounting fees                                                   51,492                  -                  -           (27,492)(A)
Audit and legal fees                                              23,362              8,964             16,054           (18,380)(B)
Custodian fee                                                     12,213             60,789 (E)         58,163 (E)      (113,165)(B)
Directors/ Trustees fees                                           6,054              6,750              7,143           (13,893)(C)
Registration fees                                                      -             32,275             16,410           (48,685)(B)
Registration fees - Class A                                        7,890                  -                  -                 -
Registration fees - Class B                                       11,404                  -                  -                 -
Registration fees - Class C                                       11,611                  -                  -                 -
Report Printing                                                   29,175              1,729             15,569           (11,473)(B)
Transfer Agent Fees - Class A                                     32,639                  -                  -            13,361 (A)
Transfer Agent Fees - Class B                                     12,049                  -                  -               (49)(A)
Transfer Agent Fees - Class C                                     11,983                  -                  -                17 (A)
Other expense                                                     35,462              1,156             24,692           (11,310)(D)
                                                            ------------       ------------       ------------      ------------
                                                                 796,692            125,064            354,790          (473,627)
Fees waived (Class A)                                            (10,683)           (43,852)          (113,766)           73,346 (A)
Fees waived (Class B)                                            (23,324)           (40,973)                 -            42,881 (A)
Fees waived (Class C)                                            (16,837)           (24,868)                 -            19,751 (A)
                                                           -------------       ------------       ------------      ------------
          Total expenses, net of fees waived                     745,848             15,371            241,024          (337,649)
                                                           -------------
                                                                               ------------       ------------      ------------
NET INVESTMENT INCOME                                           (486,070)            (9,268)          (132,446)          337,649

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

Realized gain (loss) on investments                         $(17,874,899)      $   (126,421)      $ (2,363,379)     $          -
Change in unrealized appreciation (depreciation)              (6,475,548)          (100,611)        (2,449,986)                -
     of investments                                                    -                  -                  -                 -
                                                            ------------       ------------       ------------      ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS       (24,350,447)          (227,032)        (4,813,365)                -
                                                            ------------       ------------       ------------      ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS              $(24,836,518)      $   (236,300)      $ (4,945,811)     $    337,649
                                                            ============       ============       ============      ============


                                                                  TST            (BASIS POINTS)
                                                           LARGE CAP GROWH         PRO FORMA
                                                                FUND (F)            COMBINED
                                                           ------------------------------------
                                                                               
INVESTMENT INCOME
Dividend Income                                              $    347,030
Interest Income                                                    27,429
                                                             ------------
          Total Income                                           374,459
                                                             ------------
EXPENSES
Management fee                                                    373,623             0.7500%
Distribution Fees - Class A                                       120,075             0.2410%
Distribution Fees - Class B                                         4,779             0.0096%
Distribution Fees - Class C                                        13,084             0.0263%
Administration fees                                                27,399             0.0550%
Accounting fees                                                    24,000             0.0482%
Audit and legal fees                                               30,000             0.0602%
Custodian fee                                                      18,000             0.0361%
Directors/ Trustees fees                                            6,054             0.0122%
Registration fees                                                       -             0.0000%
Registration fees - Class A                                         7,890             0.0158%
Registration fees - Class B                                        11,404             0.0229%
Registration fees - Class C                                        11,611             0.0233%
Report Printing                                                    35,000             0.0703%
Transfer Agent Fees - Class A                                      46,000             0.0923%
Transfer Agent Fees - Class B                                      12,000             0.0241%
Transfer Agent Fees - Class C                                      12,000             0.0241%
Other expense                                                      50,000             0.1004%
                                                             -------------------------------
                                                                  802,919             1.6118%
Fees waived (Class A)                                             (94,955)           -0.1906%
Fees waived (Class B)                                             (21,416)           -0.0430%
Fees waived (Class C)                                             (21,954)           -0.0441%
                                                             -------------------------------
          Total expenses, net of fees waived                      664,594             1.3341%

                                                             -------------------------------
NET INVESTMENT INCOME                                            (290,135)

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

Realized gain (loss) on investments                          $(20,364,699)
Change in unrealized appreciation (depreciation)               (9,026,145)
     of investments                                                     -
                                                             ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS        (29,390,844)

                                                             ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS               $(29,680,980)




(A)  Based on contract in effect for the legal surviving fund. Management Fee is
     .75%. Distribution Fee is Class A .25%, Class B 1.00%, Class C 1.00%.

(B)  Decrease due to the elimination of duplicative expenses achieved by merging
     the funds.

(C)  Based on director compensation plan for the legal surviving fund.

(D)  Includes pricing, Insurance expense and T/A out-of-pocket fees.

(E)  For Navellier funds includes Accounting, Custody and Transfer Agent fees.

(F)  Navellier   Performance  Large  Cap  Growth  Portfolio  is  the  accounting
     survivor, however the surviving Fund name is TST Large Cap Growth.

NAVELLIER PERFORMANCE FUNDS
LARGE CAP GROWTH PORTFOLIO
PRO FORMA NOTES TO COMBINING FINANCIAL STATEMENTS
DECEMBER 31, 2002
(UNAUDITED)

DESCRIPTION OF THE FUND

     The Acquiring Fund, Navellier Performance Funds Large Cap Growth Portfolio,
is  registered  under the  Investment  Company Act of 1940,  as  amended,  as an
open-end,  non-diversified  management  company portfolio  consisting of Class A
shares.  The Target Funds,  Navellier  Millennium Large Cap Growth Portfolio and
Touchstone  Strategic  Trust  Large Cap  Growth  Fund are  registered  under the
Investment  Company  Act  of  1940,  as  amended,  as  an  open-end,  management
investment company. Navellier Millennium Large Cap Growth Portfolio,  consisting
of Class A, B and C shares, is a non-diversified  open-end  management  company.
Touchstone  Strategic  Large Cap  Growth  Fund,  consisting  of Class A, B and C
shares is a diversified open-end management company.

BASIS OF COMBINATION

     The accompanying  unaudited pro forma financial statements are presented to
show the effect of the transfer of assets and  liabilities of the  non-surviving
funds,  the  Navellier  Millennium  Funds  Large  Cap  Value  Portfolio  and the
Touchstone  Strategic Trust Large Cap Growth Fund, in exchange for shares of the
surviving  fund (for  purposes  of  maintaining  the  financial  statements  and
performance), the Navellier Performance Funds Large Cap Growth Portfolio.

     Under  the  terms of the Plan of  Reorganization,  the  combination  of the
surviving  and  non-surviving  funds  will be  accounted  for by the  method  of
accounting for tax-free mergers of investment companies. The statement of assets
and  liabilities  and the related  statement of  operations of the surviving and
non-surviving  funds have been  combined as of and for the twelve  months  ended
December 31, 2002. In accordance with accounting  principles  generally accepted
in the United  States,  the  historical  cost of investment  securities  will be
carried  forward  to the  surviving  fund  and the  results  of  operations  for
pre-combination periods of the surviving fund will not be restated.

     At the time of the  combination,  the combined fund will change its name to
the Touchstone Strategic Trust Large Cap Growth Fund and shares of the surviving
fund will actually represent shares of the Navellier Performance Funds Large Cap
Growth Portfolio. Initially, the new Class B and Class C shares net asset values
will equal the Navellier  Performance Funds Large Cap Growth Portfolio net asset
value. Performance history for the Class B and Class C shares



will not be carried forward from either of the existing target Funds Class B and
Class C shares,  instead performance history will be initiated upon consummation
of the merger.

     The  accompanying  pro  forma  financial   statements  should  be  read  in
conjunction  with the historical  financial  statements of the funds included or
incorporated by reference in the Statement of Additional Information.

PORTFOLIO VALUATION

     Equity securities listed on national securities exchanges are valued at the
last sale price as of the close of business on the day the  securities are being
valued.  Over-the-counter  securities  are valued at the last sales price.  Debt
securities  with  maturities of 60 days or less are valued at amortized cost. In
the absence of readily  available  market  quotations,  securities are valued at
fair value under procedures  established by and under the general supervision of
the Board of Trustees.

CAPITAL SHARES

     The pro forma net asset value per share  assumes the  issuance of shares of
Acquiring  Fund that would have been issued at December 31, 2002,  in connection
with the proposed  reorganization.  The number of shares assumed to be issued is
equal to the net asset value of shares of each Target  Fund,  as of December 31,
2002,  divided by the net asset value per share of the shares of Acquiring  Fund
as of December 31,  2002.  The pro forma  number of shares  outstanding  for the
combined fund consists of the following at December 31, 2002:

- ---------------------------------------------------------------------------
   SHARES OF                 ADDITIONAL SHARES          TOTAL OUTSTANDING
 ACQUIRING FUND                ASSUMED ISSUED                 SHARES
- ---------------------------------------------------------------------------
Pre-Combination              In Reorganization           Post-Combination
- ---------------------------------------------------------------------------
   1,134,468                     2,952,003                  4,086,471
- ---------------------------------------------------------------------------

ESTIMATES

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial  statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.

FEDERAL INCOME TAXES

     Each fund has elected to be taxed as a "regulated investment company" under
the Internal Revenue Code. After the acquisition,  the Acquiring Fund intends to
continue to qualify as a regulated  investment company, if such qualification is
in the best  interest of its  shareholders,  by  complying  with the  provisions
available to certain investment companies,  as defined in applicable sections of
the  Internal  Revenue  Code,  and  to  make  distributions  of  taxable  income
sufficient to relieve it from all, or substantially all, Federal income taxes.

The identified cost of investments for the funds is  substantially  the same for
both  financial  accounting  and Federal  income tax  purposes.  The tax cost of
investments will remain unchanged for the combined fund.



                           TOUCHSTONE STRATEGIC TRUST
                            PART C. OTHER INFORMATION

ITEM 15. INDEMNIFICATION

(a)  Article VI of the Restated Agreement and Declaration of Trust of Touchstone
     Strategic Trust (the "Registrant") provides for indemnification of officers
     and Trustees as follows:

Section 6.4  Indemnification of Trustees, Officers, etc.

     The Trust shall  indemnify  each of its  Trustees and  officers,  including
     persons who serve at the Trust's request as directors, officers or trustees
     of  another  organization  in  which  the  Trust  has  any  interest  as  a
     shareholder,  creditor or otherwise  (hereinafter referred to as a "Covered
     Person") against all liabilities, including but not limited to amounts paid
     in satisfaction of judgments, in compromise or as fines and penalties,  and
     expenses,  including reasonable  accountants' and counsel fees, incurred by
     any Covered  Person in connection  with the defense or  disposition  of any
     action,  suit or other  proceeding,  whether civil or criminal,  before any
     court or  administrative  or legislative body, in which such Covered Person
     may be or may have been involved as a party or otherwise or with which such
     person may be or may have been  threatened,  while in office or thereafter,
     by reason of being or having been such a Trustee or Officer or Director and
     except that no Covered Person shall be indemnified against any liability to
     the Trust or its  Shareholders to which such Covered Person would otherwise
     be subject by reason of willful misfeasance, bad faith, gross negligence or
     reckless  disregard  of the duties  involved in the conduct of such Covered
     Person's office  ("disabling  conduct").  Anything herein  contained to the
     contrary  notwithstanding,  no Covered Person shall be indemnified  for any
     liability to the Trust or its  Shareholders  to which such  Covered  Person
     would  otherwise  be subject  unless (1) a final  decision on the merits is
     made by a court or other body before whom the  proceeding  was brought that
     the Covered Person to be indemnified  was not liable by reason of disabling
     conduct  or,  (2)  in  the  absence  of  such  a  decision,   a  reasonable
     determination is made,  based upon a review of the facts,  that the Covered
     Person was not liable by reason of disabling conduct,  by (a) the vote of a
     majority of a quorum of Trustees  who are neither  "interested  persons" of
     the Company as defined in the Investment Company Act of 1940 nor parties to
     the proceeding ("disinterested, non-party Trustees"), or (b) an independent
     legal counsel in a written opinion

Section 6.5  Advances of Expenses.

     The Trust shall advance  attorneys'  fees or other  expenses  incurred by a
     Covered  Person in defending a proceeding,  upon the  undertaking  by or on
     behalf of the Covered  Person to repay the advance  unless it is ultimately
     determined that such Covered Person is entitled to indemnification, so long
     as one of the  following  conditions  is met: (i) the Covered  Person shall
     provide  security  for his  undertaking,  (ii) the Trust  shall be  insured
     against  losses  arising  by  reason  of any  lawful  advances,  or (iii) a
     majority of a quorum of the disinterested  non-party Trustees of the Trust,
     or an  independent  legal counsel in a written  opinion,  shall  determine,
     based  on a  review  of  readily  available  facts  (as  opposed  to a full
     trial-type  inquiry),  that  there is reason to  believe  that the  Covered
     Person ultimately will be found entitled to indemnification.



Section 6.6  Indemnification Not Exclusive, etc.

     The  right of  indemnification  provided  by this  Article  VI shall not be
     exclusive of or affect any other  rights to which any such  Covered  Person
     may be entitled. As used in this Article VI, "Covered Person" shall include
     such person's heirs,  executors and administrators,  an "interested Covered
     Person"  is one  against  whom  the  action,  suit or other  proceeding  in
     question or another action, suit or other proceeding on the same or similar
     grounds is then or has been pending or  threatened,  and a  "disinterested"
     person  is a  person  against  whom  none of such  actions,  suits or other
     proceedings  or another  action,  suit or other  proceeding  on the same or
     similar  grounds  is  then  or has  been  pending  or  threatened.  Nothing
     contained in this article  shall  affect any rights to  indemnification  to
     which personnel of the Trust,  other than Trustees and officers,  and other
     persons may be entitled by contract or  otherwise  under law, nor the power
     of the Trust to purchase and maintain liability  insurance on behalf of any
     such person.


(b)  The Registrant maintains a mutual fund and investment advisory professional
     and Trustees and officers liability policy. The policy provides coverage to
     the  Registrant,  its  trustees and  officers,  Touchstone  Advisors,  Inc.
     ("Touchstone").  Coverage under the policy includes losses by reason of any
     act error, omission, misstatement,  misleading statement, neglect or breach
     of duty.  The  Registrant  may not pay for  insurance  which  protects  the
     Trustees and officers  against  liabilities  arising from action  involving
     willful  misfeasance,  bad faith, gross negligence or reckless disregard of
     the duties involved in the conduct of their offices.


     The  Advisory  Agreement  and  the  Subadvisory   Agreements  provide  that
     Touchstone (or a  Sub-advisor)  shall not be liable for any act or omission
     in the course of rendering services, absent willful misfeasance,  bad faith
     or gross negligence or reckless  disregard by Touchstone (or a Sub-advisor)
     of its obligations under the Agreement.



ITEM 16.                              EXHIBITS


(1)       Amended Declaration of Trust of Registrant.*

(2)       Amended By-Laws of Registrant.*


(3)       Not applicable

(4)       Agreement and Plan of Reorganization. (Filed herewith as Appendix A to
          Part A)


(5)       Not applicable

(6)       Advisory  Agreement  between the Large Cap Growth Fund (a portfolio of
          the Touchstone Strategic Trust) and Touchstone  Advisors,  Inc. (Filed
          herewith as Appendix B to Part A.)

(6)(a)    Form of Sub-advisory  Agreement between Touchstone Advisors,  Inc. and
          Navellier Management,  Inc. if the merger is approved. (Filed herewith
          as Appendix C to Part A.)

(7)       Underwriting Agreement.*

(8)       Not applicable

(9)       Custodian Agreements

          (a)  Custodian Agreement with Brown Brothers Harriman & Co.*

          (b)  Securities Lending Agreement with Brown Brothers Harriman & Co.*


(10)      Rule 12b-1 Distribution Plan. Filed as Appendix D to Part A.


(11)      Opinion of legal counsel  regarding  the legality of securities  being
          registered.(1)

(12)      Opinion  of  legal   counsel   regarding   certain   tax  matters  and
          consequences to shareholders discussed in Part A.(1)

(13)      Not Applicable.

(14)      Consent  of  Tait,  Weller  &  Baker,  independent  auditors  for  The
          Navellier Performance Funds and for Navellier Millennium Funds.(1)

(14)(a)   Consent   of  Ernst  &  Young   LLP,   independent   accountants   for
          Registrant.(1)


(15)      Financial   Statements   Omitted  Pursuant  to  Item  14(a)(1).   [not
          applicable]


(16)      Powers of Attorney.*



(17)      Not applicable.

- --------------------------------------------------------------------------------

*    Incorporated  by  reference  to  Registration  Statement  on  Form  N-1A or
     subsequently filed Pre-Effective Amendment.

(1)  Filed herewith.


ITEM 17                                UNDERTAKINGS

(1)  The Registrant agrees that prior to any public reoffering of the securities
     registered  through  the  use  of  a  prospectus  which  is  part  of  this
     Registration  Statement  by any  person  or party  who is  deemed  to be an
     underwriter  within the meaning of Rule 145(c) under the  Securities Act of
     1933, as amended,  the reoffering  prospectus  will contain the information
     called for by the applicable  registration  form for reofferings by persons
     who may be deemed  underwriters,  in addition to the information called for
     by the other items of the applicable form.

(2)  The Registrant  agrees that every  prospectus that is filed under paragraph
     (1),  above,  will be filed as part of an  amendment  to this  Registration
     Statement and will not be used until the amendment is effective,  and that,
     in determining  any liability under the Securities Act of 1933, as amended,
     each  post-effective  amendment  shall be deemed  to be a new  registration
     statement  for the  securities  offered  therein,  and the  offering of the
     securities  at that  time  shall be  deemed  to be the  initial  bona  fide
     offering of them.

- -----------------------------



                                   SIGNATURES


As  required  by the  Securities  Act of 1933,  as  amended,  this  Registration
Statement has been signed on behalf of the Registrant, in the City of Cincinnati
and the State of Ohio, on the 19th day of August, 2003.

                         Registrant:

                                        TOUCHSTONE STRATEGIC TRUST


                                        By: /s/ Patrick T. Bannigan
                                            ---------------------------
                                        Patrick T. Bannigan
                                        President

Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement has been signed below by the following  persons in the  capacities and
on the 19th day of August, 2003.

/s/ Terrie A. Wiedenheft
- -----------------------                Controller
TERRIE A. WIEDENHEFT


* JOHN F. BARRETT                      Trustee
- ---------------------

* J. LELAND BREWSTER                   Trustee
- -----------------------

* WILLIAM O. COLEMAN                   Trustee
- -----------------------

* PHILLIP R. COX                       Trustee
- -----------------------

* H. JEROME LERNER                     Trustee
- -----------------------

* OSCAR P. ROBERTSON                   Trustee
- -----------------------

* ROBERT E. STAUTBERG                  Trustee
- -----------------------

*JOHN P. ZANOTTI                       Trustee
- -----------------------

*JILL T.MCGRUDER                       Trustee
- -----------------------

By: /s/ Tina D. Hosking
- -----------------------
   Tina D.Hosking
   *Attorney-in-Fact
   August 19, 2003