The IPO Plus
Aftermarket Fund
................................................................................
SEMI-ANNUAL REPORT
March 31, 1998
Dear Shareholder:
Thank you for being among the original investors in the first ever mutual fund
to focus on investing in Initial Public Offerings ("IPOs") both at the time of
the offering and in the aftermarket. We are pleased to report that the IPO Plus
Aftermarket Fund (the "IPO Fund"), which began on December 19, 1997, was up 23%
net of expenses during its first full quarter ended March 31, l998. This return
compares favorably to a nearly 14% rise in the S&P 500 during the same period.
The IPO Fund's solid inaugural quarter is due to the positive returns gained
from purchasing IPOs at the time of the offering as well as buying IPOs in
subsequent aftermarket trading. Among the IPOs that produced the strongest
returns for the IPO Fund in their first day of trading were: Verisign, an
Internet security provider, which rose 82%; DoubleClick, an Internet advertising
network operator, which rose 57%; RELTEC, a leading maker of telecom equipment,
which rose 22%; and CompX, a leading provider of hardware for computer
furniture, which gained 20%.
Other IPOs purchased by the IPO Fund at the time of the offering that produced
solid gains were: Columbia Sportswear, the designer of popularly priced
outerwear; Steelcase, the leading maker of office furniture; Ritchie Brothers
Auctioneers, the Canadian-based auctioneer of farm and earth moving equipment;
and Waddell & Reed, a leading underwriter and distributor of mutual funds.
The IPO Fund's investment strategy also includes buying the shares of IPOs in
the aftermarket when the IPO Fund believes these companies have limited
research, unseasoned trading, limited public ownership, and other
characteristics that differentiate them from stocks in the broad market indices.
For example, the IPO Fund purchased E*Trade, a leading on-line brokerage firm;
Keebler, the second largest cookie maker; Ocular Sciences, a maker of
value-priced contact lenses which it sells directly to eyewear professionals;
and TV Azteca, Mexico's second largest, but most innovative, TV broadcaster.
As you can see from the portfolio holdings, the IPO Fund contains a diverse
group of stocks, encompassing both small and large capitalization companies as
well as US and foreign equities. Today's IPO market is much broader than in the
past. It includes not only technology and emerging growth companies but also
established healthcare, consumer products, energy, financial and retailing
companies.
Looking forward, we continue to see a healthy IPO market, reflecting the
vigorous economic activity in the US, breakthroughs in medical and communication
technology, changing tastes among consumers, and growing affluence in Europe,
South America and Asia. These factors make the IPO market one of the most
rewarding areas of equity investment.
The IPO Fund will continue to pursue capital appreciation by seeking the most
compelling IPO opportunities using Renaissance Capital's propriety research.
Sincerely,
Renaissance Capital
PORTFOLIO OF INVESTMENTS
..............................................................................
March 31, l998
(unaudited)
Shares Value
--------- -------------
Common Stock (65.9%)
CONSUMER CYCLICAL (13.9%)
Benckiser NV B* 7,000 $ 385,000
CompX* 15,000 350,625
Steelcase Inc. A* 10,000 365,000
-------------
1,100,625
CONSUMER STAPLES (4.2%)
Keebler Foods Co.* 11,000 330,000
ENERGY (4.0%)
Santa Fe International Corp. 8,400 318,675
FINANCIAL (11.7%)
CB Commercial Real Estate Services Group, Inc.* 6,400 256,000
E*TRADE Group, Inc.* 12,800 319,200
Waddell & Reed Financial, Inc. A* 13,500 351,000
-------------
926,200
HEALTH CARE (2.4%)
Ocular Sciences, Inc.* 6,000 191,250
INFORMATION (15.3%)
DoubleClick Inc.* 4,500 158,063
NeoMagic Corp.* 21,100 398,262
RELTEC Corp.* 9,000 318,938
TV Azteca, S.A. ADR* 17,000 333,625
VeriSign, Inc.* 100 4,400
-------------
1,213,288
See Notes to Financial Statements
PORTFOLIO OF INVESTMENTS
................................................................................
(Continued)
Shares Value
---------- ---------------
RETAIL (14.4%)
Columbia Sportswear Co.* 8,500 $ 179,562
Cost Plus, Inc.* 11,000 349,594
dELiA*s Inc.* 10,900 261,600
PC Connection, Inc.* 2,500 53,125
Ritchie Bros. Auctioneers Inc.* 12,500 300,781
---------------
1,144,662
TOTAL COMMON STOCK (Cost $4,891,422) 5,224,700
US GOVERNMENT SECURITIES (48.2%)
US Treasury Bills due 6/25/98 to 7/2/98
Face amount of $3,864,000 (Cost $3,817,316) 3,817,614
---------------
TOTAL GOVERNMENT SECURITIES 3,817,614
TOTAL INVESTMENTS (114.1%) (Cost $8,708,738) (a) 9,042,314
OTHER ASSETS AND LIABILITIES (Net) (14.1%) (1,114,501)
---------------
NET ASSETS (100%) $ 7,927,813
===============
* Non-income producing security
(a) The cost for federal income tax purposes was $8,708,738. At March 31, 1998,
net unrealized appreciation for all securities based on tax costs was
$333,576. This consisted of gross unrealized appreciation for all securities
of $375,558 and aggregate gross unrealized depreciation for all securities
of $41,982.
See Notes to Financial Statements
FINANCIAL HIGHLIGHTS
................................................................................
.
................................................................................
For a Share Outstanding Throughout the Period From December 19,
l997 (commencement of operations) to March 31, l998
(unaudited)
Net Asset Value, Beginning of Period $ 12.50
Income From Investment Operations
Net Investment Income -
Net Realized and Unrealized Gain 2.92
-------------
Total from Investment Operations 2.92
Net Asset Value, End of Period $ 15.42
==============
Total Return + 23.36% **
Ratios and Supplemental Data
Net Assets, End of Period (Thousands) $ 7,928
Ratio of Expenses to Average Net Assets 2.50% *
Ratio of Net Investment Income to Average Net Assets 0.46% *
Ratio of Expenses to Average Net Assets
(excluding waivers) 8.56%*
Ratio of Net Investment Income to Average Net Assets
(excluding waivers) (5.60%)*
Portfolio Turnover Rate 23%
Average Commission Rate $ 0.0613
* Annualized
** Not Annualized
+ Total return would have been lower had certain fees not been waived.
See Notes to Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
................................................................................
.
March 31, l998
(unaudited)
ASSETS
Investment Securities, at Value, (cost $8,708,738) $ 9,042,314
Cash 17,859
Receivable for Portfolio Shares Sold 345,749
Receivable for Investments Sold 2,400
Dividends and Interest Receivable 317
Organizational Costs--Note A 106,228
Receivable from Investment Adviser--Note B 3,678
Other Assets 15,754
------
Total Assets 9,534,299
LIABILITIES
Payable for Investments Purchased 1,474,722
Payable for Administrative Fees--Note C 1,190
Payable for Distribution Fees--Note D 1,096
Payable for Shareholder Services Fees--Note D 1,096
Other Liabilities 128,382
Total Liabilities 1,606,486
NET ASSETS $ 7,927,813
=============
NET ASSETS CONSIST OF:
Paid in Capital 7,557,945
Undistributed Net Investment Income 2,460
Accumulated Net Realized Gain on Investments 33,832
Net Unrealized Appreciation on Investments 333,576
-----------
Net Assets $7,927,813
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE ($7,927,813 / 514,001 shares of beneficial interest,
without par value, unlimited number of shares authorized) $ 15.42
===========
See Notes to Financial Statements
STATEMENT OF OPERATIONS
...............................................................................
From December 19, 1997 (commencement of operations) to March 31, l998
(unaudited)
INVESTMENT INCOME
Dividends $ 273
Interest 15,584
--------
Total Investment Income 15,857
EXPENSES
Investment Adviser--Note B
Basic Fees $ 8,013
Less: Fees Waived (8,013) -
-------
Administrative Fees--Note C 1,190
Distributions Fee--Note D 1,335
Shareholder Services Fees--Note D 1,335
Trustees' Fees--Note E
Basic Fees $ 1,830
Less: Fees Waived (1,830) -
-------
Federal and State Registration 14,542
Legal 4,224
Shareholder Reports 3,345
Auditing 2,534
Amortization of Organizational Costs--Note A 6,656
Other Expenses 844
Total Expenses 36,005
Fees Assumed by the Investment Adviser--Note B (22,608)
--------
Net Expenses 13,397
NET INVESTMENT INCOME 2,460
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investments 33,832
Net Unrealized Appreciation/Depreciation
during the Period on Investments 333,576
---------
Net Gain on Investments 367,408
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 369,868
===========
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS
...............................................................................
From December 19, l997 (commencement of operations) to March 31, l998
(unaudited)
INCREASE IN NET ASSETS FROM OPERATIONS
Net Investment Income $2,460
Net Realized Gain from Investments 33,832
Net Unrealized Appreciation on Investments 333,576
-------------
Net Increase in Net Assets Resulting from Operations 369,868
FUND SHARE TRANSACTIONS
Proceeds from Shares Sold 7,457,956
Cost of Shares Redeemed (2,011)
-------------
Net Increase from Fund Share Transactions 7,455,945
Total Increase in Net Assets 7,825,813
=============
NET ASSETS
Beginning of Period 102,000
-------------
End of Period (including undistributed net investment
income of $2,460) $ 7,927,956
=============
INCREASE (DECREASE) IN FUND SHARES ISSUED
Number of Shares Sold 505,972
Number of Shares Redeemed (131)
-------------
Net Increase in Fund Shares 505,841
=============
See Notes to Financial Statements
Notes to Financial Statements
...............................................................................
March 31, l998
(unaudited)
The IPO Plus Aftermarket Fund ("IPO Fund") is a series of Renaissance Capital
Greenwich Funds ("Renaissance Capital Funds"), a Delaware Trust, operating as a
registered, diversified, open-end investment company. Renaissance Capital Funds,
organized on February 3, 1997, may issue an unlimited number of shares and
classes of the IPO Fund.
A. SIGNIFICANT ACCOUNTING POLICIES: The following significant accounting
policies are in conformity with generally accepted accounting principles. Such
policies are followed by the IPO Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
1. SECURITY VALUATION: Portfolio securities are valued at the last sale price on
the securities exchange or national securities market on which such securities
primarily are traded. Securities not listed on an exchange or national
securities market, or securities in which there were not transactions, are
valued at the average of the most recent bid and asked prices. Short-term
investments are carried at amortized cost, which approximates value. Any
securities or other assets for which recent market quotations are not readily
available are valued at fair value as determined in good faith by the IPO Fund's
Board of Trustees.
Restricted securities, as well as securities or other assets for which market
quotations are not readily available, or are not valued by a pricing service
approved by the Board of Trustees, are valued at fair value as determined in
good faith by the Board of Trustees.
2. FEDERAL INCOME TAXES: It is the IPO Fund's intention to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code and
to distribute all of its taxable income. Accordingly, no provision for Federal
income taxes is required in the financial statements.
3. DISTRIBUTIONS TO SHAREHOLDERS: The IPO Fund will normally distribute
substantially all of its net investment income in December. Any realized net
capital gains will be distributed annually. All distributions are recorded on
the ex-dividend date. The amount and character of income and capital gain
distributions to be paid are determined in accordance with Federal income tax
regulations, which may differ from generally accepted accounting principles.
4. REPURCHASE AGREEMENTS: The IPO Fund may enter into repurchase agreements.
Under the terms of a repurchase agreement, the IPO Fund acquires securities from
financial institutions or registered broker-dealers, subject to the seller's
agreement to repurchase such securities at a mutually agreed upon date and
price. The seller is required to maintain the value of collateral held pursuant
to the agreement at not less than the repurchase price (including accrued
interest). If the seller were to default on its repurchase obligation or become
insolvent, the IPO Fund would suffer a loss to the extent that the proceeds from
a sale of the underlying portfolio securities were less than the repurchase
price, or to the extent that the disposition of such securities by the IPO Fund
was delayed pending court action.
Notes to Financial Statements
...............................................................................
(continued)
5. ORGANIZATIONAL COSTS: Costs incurred by the IPO Fund in connection with its
organization and initial registration of shares have been deferred and are being
amortized on a straight-line basis over a five-year period.
6. OTHER: Security transactions are accounted for on a trade date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
B. INVESTMENT ADVISER: Under the terms of an Investment Advisory Agreement with
Renaissance Capital Corporation ("Renaissance Capital"), a registered investment
adviser, the IPO Fund agrees to pay Renaissance Capital an annual fee equal to
1.50% of the average daily net assets of the IPO Fund and payable monthly.
Additionally, Renaissance Capital has voluntarily agreed to defer or waive fees
or absorb some or all of the expenses of the IPO Fund in order to limit Total
Fund Operating Expenses to 2.5%.
C. FUND ADMINISTRATION: Under an Administration and Fund Accounting Agreement
(the "Administration Agreement"), Chase Global Funds Services Company (the
"Administrator"), generally supervises certain operations of the IPO Fund,
subject to the over-all authority of the Board of Trustees. For its services,
the Administrator receives a maximum annual fee of .17%, computed daily and
payable monthly as a percent of assets under management.
D. SHAREHOLDER SERVICES: The IPO Fund has adopted a Distribution and Shareholder
Services Plan ("the Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan
authorizes the IPO Fund, as determined from time to time by the Board of
Trustees, to pay up to .50% of the IPO Fund's average daily net assets for
distribution and shareholder servicing.
Total annual fee for distribution of the IPO Fund's shares which is payable
monthly, will not exceed .25% of the average daily net asset value of shares
invested in the IPO Fund by customers of the broker-dealers or distributors.
Each shareholder servicing agent receives an annual fee which is payable monthly
up to .25% of the average daily net assets of shares of the IPO Fund held by
investors for whom the shareholder servicing agent maintains a servicing
relationship.
E. TRUSTEES' FEES: For the period ended March 31, 1998, the Trustees have agreed
to waive their fees.
F. PURCHASES AND SALES: For the period ended March 31, 1998, the IPO Fund made
purchases of approximately $5,162,447 and sales of approximately $287,416 of
investment securities other than long-term U.S. Government and short-term
securities.
G. OTHER: Investing in Initial Public Offerings entails special risks, including
limited operating history of the companies, unseasoned trading, high portfolio
turnover and limited liquidity.
