The IPO Plus Aftermarket Fund
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Semi-Annual Report
March 31, 1999
Dear Shareholders:
The IPO market has rebounded strongly from the lows suffered during the October
1998 international financial crisis. After a subdued fourth quarter, with few
companies going public, the IPO market roared back into action during the first
quarter of 1999. The IPO Plus Aftermarket Fund produced gains of 45% during the
six months ended March 31, 1999, compared to a 19% rise for the Russell 2000 and
a 26% rise for the S&P 500 for the same period.
The last six months was one of the most unique periods for the IPO market. Not
only did IPOs regain their strength after suffering through the worst drought in
IPO history, but did so due to an onslaught of Internet companies. With very few
exceptions, IPO performance recently has followed a simple pattern: Internet
IPOs produced enormous returns, non-Internet companies did not. Over the last
six months more than one third of all IPOs were Internet related. Looking
forward, more than 40% of all upcoming IPOs are Internet related.
Over the last six months, the IPO Fund invested in a variety of Internet related
companies, ranging from e-tailers such as Priceline.com and Ticketmaster Online
to Internet content providers/portals such as ZD Net and the MiningCo.com. We
also invested in Internet community providers, such as GeoCities and
VerticalNet, content aggregators, such as Infospace, and Internet Service
Providers (ISPs) such as Critical Path and FlashNet Communications. Online
broker E*Trade, which was purchased over a year ago, continues as a core
Internet holding.
However, the IPO Fund is diversified across many industries. For example, during
the last six months, the IPO Fund invested in a variety of non-Internet
companies: collectibles maker Boyds Collection, insurance claims transaction
processor MedE America, genetic research kit maker Invitrogen, "best practices"
consultant Corporate Executive Board, mutual fund family Gabelli Asset
Management, and wireless communications tower provider American Tower.
Since the debut of online auctioneer eBay in mid 1998, we have been concerned
about the high market valuations of Internet stocks. We recognize that the
valuations are based on metrics that are vastly different from the rest of the
market. The wide divergence between the Internet IPOs, some of which have
minimal revenue and most of which have no operating profits, and the
non-Internet IPOs is unprecedented. The IPO Fund has been highly selective about
its purchases of Internet IPOs, focusing on the companies that are first movers
in the e-commerce and e-communications categories that offer large
opportunities.
.
Having said that, our proprietary research is more critical than ever in
identifying the Internet companies with viable businesses while avoiding the
Internet time bombs. Our research also provides us with the basis for
identifying the high-quality, reasonably valued non-Internet companies, which
are the IPO market's wallflowers, but which should provide strong returns under
different market conditions.
Sincerely,
Renaissance Capital
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Portfolio of Investments
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March 31, 1999
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(unaudited)
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Shares Value
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Common Stock (79.2%)
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Business Services (9.6%)
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Convergys Corp.* 22,000 $376,750
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Corporate Executive Board Co. * 4,000 105,500
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MEDE America Corp.* 10,000 198,750
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School Specialty, Inc.* 15,100 295,394
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976,394
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Computer/Internet (8.6%)
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Critical Path, Inc.* 1,000 77,000
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MiningCo.com, Inc.* 2,000 179,000
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NeoMagic Corp.* 22,100 219,619
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Priceline.com, Inc.* 2,200 182,325
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Ziff-Davis, Inc.* 6,000 216,000
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873,944
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Consumer Cyclical (4.8%)
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Boyds Collection Ltd.* 20,000 360,000
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Gerber Childrenswear, Inc.* 20,000 126,250
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486,250
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Consumer Staples (4.6%)
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Aurora Foods Inc.* 20,000 327,500
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Keebler Foods Co.* 4,000 146,000
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473,500
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Energy (1.9%)
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Santa Fe International Corp. 10,400 194,350
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194,350
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Financial (17.9%)
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E*Trade Group, Inc.* 25,000 1,457,812
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Gabelli Asset Management, Inc.* 16,000 249,000
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Heller Financial, Inc., Class A 5,000 117,500
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1,824,312
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See Notes to Financial Statements
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(Continued)
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Shares Value
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Health Care (6.3%)
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Invitrogen Corp.* 12,000 $154,500
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Ocular Sciences, Inc.* 17,000 487,687
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642,187
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Leisure (3.8%)
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Fox Entertainment Group, Inc., Class A* 14,500 393,313
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___________
393,313
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Telecom Services (21.8%)
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American Tower Corp., Class A* 10,000 245,000
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E-Tek Dynamics, Inc.* 10,000 358,750
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Equant NV-NY* 12,000 903,000
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Hyperion Telecommunications Corp., Class A* 15,000 181,875
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United Pan-Europe Communications NV* 14,000 535,500
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2,224,125
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Total Common Stocks (Cost $6,703,778) $8,088,375
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US Government Securities (24.6%)
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US Treasury Bills due 6/17/99
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Face amount of $ 2,540,000 (Cost $ 2,516,262) 2,516,096
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Total Government Securities 2,516,096
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Total Investments (103.8%) (Cost $ 9,220,040) (a) 10,604,471
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Other Assets and Liabilities (Net) (-3.8%) (393,515)
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Net Assets (100%) $10,210,956
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* Non-income producing
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(a) Aggregate costs for Federal tax and book purposes was $9,220,040. At
March 31, 1999, net unrealized appreciation for all securities based on
tax costs was $1,384,431. This consisted of gross unrealized appreciation
for all securities of $2,168,206 and aggregate gross unrealized
depreciation for all securities of $783,775.
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Financial Highlights
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For a Share Outstanding Throughout the Period
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Six Months 19-Dec-97 *
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Ended Through
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31-Mar-99 30-Sep-98
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(unaudited)
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Net Asset Value, Beginning of Period $11.19 $12.50
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Income From Investment Operations
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Net Investment Income (Loss) (0.08) (0.08)
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Net Realized and Unrealized Gain (Loss) 5.13 (1.23)
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______ _________
Total from Investment Operations 5.05 (1.31)
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Net Asset Value, End of Period $16.24 $11.19
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Total Return 45.26% + (10.48%) +
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Ratios and Supplemental Data
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Net Assets, End of Period (000) $10,211 $7,288
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Ratio of Expenses to Average Net Assets 2.50% ** 2.50% **
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Ratio of Net Investment Loss to Average
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Net Assets (1.19%) ** (.96%) **
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Ratio of Expenses to Average Net Assets ** **
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(excluding waivers) 3.61% 4.54%
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Ratio of Net Investment Loss to Average
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Net Assets (excluding waivers) (2.30%) ** (2.99%) **
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Portfolio Turnover Rate 58.45% + 71.26% +
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* Commencement of Operations
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** Annualized
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+ Not annualized
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See Notes to Financial Statements
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Statement of Assets and Liabilities
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March 31, 1999
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(unaudited)
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Assets
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Investment Securities at Value (cost $9,220,040) $10,604,471
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Receivable for Investments Sold 9,627
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Organizational Costs--Note A 85,912
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Dividends and Interest Receivable 338
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Other Assets 970
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Total Assets 10,701,318
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Liabilities
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Payable for Investments Purchased 435,550
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Payable for Administrative Fee--Note C 4,333
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Payable for Advisory Fee--Note C 8,652
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Payable for Portfolio Shares Redeemed 8,462
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Payable for Distribution Fees--Note D 6,032
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Payable for Shareholder Services Fees--Note D 4,041
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Accrued Expenses 23,292
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Total Liabilities 490,362
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Net Assets $10,210,956
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Net Assets Consist of :
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Paid in Capital 9,553,053
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Accumulated Net Investment (Loss) (53,098)
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Accumulated Net Realized Loss on Investments (673,430)
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Net Unrealized Appreciation on Investments 1,384,431
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Net Assets $10,210,956
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Net Asset Value, Offering and Redemption
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Price Per Share ($10,210,956 / 628,719 shares of
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beneficial interest, without par value, unlimited
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number of shares authorized) $16.24
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See Notes to Financial Statement
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Statement of Operations
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Six Months Ended
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March 31, 1999
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(unaudited)
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Investment Income
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Dividends $8,571
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Interest 49,688
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_______
Total Investment Income 58,259
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Expenses
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Investment Adviser--Note B
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Basic Fees $66,684 -
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Less: Fees Waived (45,353) 21,331
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Administrative Fees--Note C 15,187
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Distributions Fee--Note D 11,114
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Shareholder Services Fees--Note D 11,114
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Trustees' Fees--Note E
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Basic Fees 3,971
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Less: Fees Waived (3,971)
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Federal and State Registration 16,900
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Legal 11,574
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Shareholder Reports 5,850
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Auditing 3,391
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Amortization of Organizational Costs--Note A 11,530
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Other Expenses 3,366
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Net Expenses 111,357
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Net Investment Loss (53,098)
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Realized and Unrealized Gain (Loss) on
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Investments
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Net Realized Loss on Investments (517,110)
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Net Unrealized Appreciation/Depreciation
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during the Period on Investments 3,789,956
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Net Gain on Investments 3,272,846
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Net Increase in Net Assets Resulting
from Operations $3,219,748
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See Notes to Financial Statements
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Statement of Changes in Net Assets
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Six Months 19-Dec-97 *
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Ended Through
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31-Mar-99 30-Sep-98
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(unaudited)
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Increase in Net Assets from Operations
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Net Investment Loss ($53,098) ($51,671)
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Net Realized Loss from Investments (517,110) (156,320)
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Net Unrealized Appreciation/Depreciation
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on Investments 3,789,956 (2,405,525)
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Net Increase (Decrease) in Net Assets
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Resulting from Operations 3,219,748 (2,613,516)
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Fund Share Transactions
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Proceeds from Shares Sold 2,222,185 12,919,811
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Dividend Reinvestment 368 -
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Cost of Shares Redeemed (2,519,059) (3,018,581)
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Net Increase (Decrease) from Fund
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Share Transactions (296,506) 9,901,230
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Total Increase in Net Assets 2,923,242 7,287,714
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Net Assets
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Beginning of Period 7,287,714 -
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End of Period $10,210,956 $7,287,714
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Increase (Decrease) in Fund Shares Issued
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Number of Shares Sold 156,765 868,305
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Dividend Reinvestment 30 -
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Number of Shares Redeemed (179,377) (217,004)
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Net Increase (Decrease) in Fund Shares (22,582) 651,301
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*Commencement of Operations
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See Notes to Financial Statements
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Notes to Financial Statements
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March 31, 1999
(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.
The investment objective of the IPO Fund is to seek capital appreciation by
investing in the common stocks of Initial Public Offerings on the offering and
in the aftermarket.
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
Notes to Financial Statements
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(continued)
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.
5. ORGANIZATIONAL COSTS: Renaissance Capital Corporation "Renaissance Capital"
agreed to advance the organization expenses incurred by the IPO Fund and was
reimbursed for such expenses after commencement of the IPO Fund's operations.
The organization expenses will be amortized on a straight-line basis over a
period of five years commencing after the effective date of the IPO Fund's
Registration Statement.
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, 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%. During
the six months ended March 31, 1999 Renaissance Capital deferred fees of
$49,324. These deferrals and reimbursements are subject to later recapture by
Renaissance Capital for a period of three years.
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, 1999, the Trustees have agreed
to waive their fees.
F. PURCHASES AND SALES: For the period ended March 31, 1999, the IPO Fund made
purchases of approximately $4,046,719 and sales of approximately $5,550,327 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.
