The IPO Plus
Aftermarket Fund
................................................................................
ANNUAL REPORT
September 1999
Dear Fellow Shareholders:
Over the past year, the IPO market has climbed from the drought in offerings
caused by the near global financial meltdown in the late summer of 1998 and
weathered a series of rate hikes and cautionary remarks by Fed Chairman Alan
Greenspan to end up in September 1999 in a powerful upswing. In fact, due in
part to the recent offerings of Goldman Sachs, Genentech, and more recently,
United Parcel Service, the IPO market of 1999 will set a new record of capital
raised. Returns on IPOs are historically strong.
The healthy and active IPO market is reflected in the performance of the IPO
Plus Aftermarket Fund, which was up 66% for the twelve months ended September
30, 1999. This compares favorably with the IPO Fund's benchmark index, the
Russell 2000, which was up 19.1% for the same period. We are pleased with these
results, which we achieved through investments in selected IPOs at their
offering prices, further investments in aftermarket trading and selected short
positions.
At the present time, the IPO market is dominated by Internet-related companies,
most of which are unprofitable and many of which have little revenue. Judging
the investment merits of these companies is difficult and we work very hard to
understand the business models and market opportunities each presents. We want
to remind our shareholders that we are fundamentally-driven investors. This
means that we may not invest in every "hot" IPO, but pick our companies
carefully.
The outlook for 2000 is optimistic. Rapid changes in technology, the Internet
revolution and global economic changes are creating opportunities for the
formation of new enterprises. We expect that many of these new companies will
seek financing by doing initial public offerings in the U.S.
The IPO Fund will not have a dividend or a capital gain distribution for 1999.
Thank you for being a shareholder.
Sincerely,
Renaissance Capital
IPO Plus Aftermarket Fund
Portfolio of Investments
...............................................................................
As of
September 30, 1999
Common Stock (77.2%) Shares Value
------------ -------------
Business Services (9.5%)
Azurix Corp.* 20,000 $ 343,750
Convergys Corp.* 22,000 435,875
Corporate Executive Board Co.* 4,000 163,000
School Specialty, Inc.* 15,100 254,813
Tenfold Corp. 10,000 265,000
------------
1,462,438
------------
Capital Goods (1.4%)
Creo Products, Inc. 9,000 221,062
------------
Consumer Cyclical (3.2%)
Boyds Collection Ltd.* 20,000 245,000
Steelcase, Inc. 17,900 249,481
------------
494,481
------------
Consumer Staples (4.6%)
Aurora Foods, Inc./DE* 20,000 320,000
Keebler Foods Co.* 4,000 119,500
Seminis, Inc., Class A* 32,000 276,000
------------
715,500
------------
Energy (1.5%)
Santa Fe International Corp. 10,400 224,250
------------
Financial (6.2%)
E*Trade Group, Inc.* 30,000 705,000
Gabelli Asset Management, Inc.* 16,000 247,000
------------
952,000
------------
Health Care (7.5%)
Genentech, Inc.* 4,000 585,250
Invitrogen Corp.* 7,000 235,375
Ocular Sciences, Inc.* 17,000 329,375
------------
1,150,000
------------
Leisure (4.9%)
Fox Entertainment Group, Inc., Class A* 14,500 306,313
Radio One, Inc.* 11,000 465,500
------------
762,813
------------
IPO Plus Aftermarket Fund
Portfolio of Investments
(Continued)
................................................................................
Shares Value
-------------- -------------
Technology/Internet (11.8%)
Acrue Software, Inc.* 5,000 112,500
Active Software, Inc.* 8,500 203,469
Allaire Corp.* 5,000 280,000
Foundry Networks, Inc.* 1,000 126,000
Gadzoox Networks, Inc.* 5,000 269,375
HomeStore.com, Inc.* 5,100 212,606
Mpath Interactive, Inc.* 10,000 115,000
Packeteer, Inc.* 3,000 102,188
Quest Software, Inc.* 5,000 232,500
RAVISENT Technologies, Inc.* 11,000 158,125
Vitria Technology, Inc.* 200 7,350
-------------
1,819,113
-------------
Telecom Equipment (7.7%)
E-Tek Dynamics, Inc.* 15,000 813,750
Extreme Networks, Inc.* 6,000 379,875
-------------
1,193,625
Telecom Services (18.9%)
American Tower Corp., Class A* 10,000 195,625
Covad Communications Group, Inc.* 14,000 610,312
Hyperion Telecommunications Corp., Class A* 15,000 372,188
Internet Initiative Japan, Inc. ADR* 5,000 320,000
United Pan-Europe Communications NV ADR* 14,000 854,000
Williams Cos, Inc. 15,000 561,562
-------------
2,913,687
-------------
Total Common Stocks (Cost $10,874,804) 11,908, 969
-------------
US Government Securities (21.1%)
US Treasury Bill due 11/26/99
Face amount of $3,270,000 (Cost $3,247,568) 3,247,568
-------------
Total Investments (98.3%) (Cost $14,122,372) (a) 15,156,537
Total Short Sales (Proceeds $731,902) (-3.8%) (588,125)
Other Assets and Liabilities (Net) 5.5% 853,189
Net Assets (100%) $15,421,601
===============
IPO Plus Aftermarket Fund
Portfolio of Investments
(Continued)
................................................................................
.
................................................................................
Schedule of Short Sales (-3.8%) Shares Value
------------ -------------
Common Stocks
drkoop.com, Inc. 10,000 $
141,875
Interliant, Inc. 10,000 119,375
Internet America, Inc. 5,000 60,625
Mail.com, Inc. 10,000 143,750
Prodigy Commnications Corp. 2,500 44,375
quepasa.com 10,000 78,125
---------------
(Proceeds $731,902) $
588,125
===============
* Non-income producing
ADR American depositary receipt
(a) The cost for federal income tax purposes was $14,122,372. At September
30, 1999, net unrealized appreciation for all securities (excluding
securities sold short) based on tax cost was $1,034,165. This consists of
aggregate gross unrealized appreciation for all securities of $2,380,162
and aggregate gross unrealized depreciation for all securities
$1,345,997.
<PAGE>
Financial Highlights
................................................................................
For a Share Outstanding Throughout the Period
December 19, 1997
Year Ended Through
September 30, 1999 September 30, 1998
Net Asset Value, Beginning of Period $11.19 $12.50
------------ -------------
Income From Investment Operations
Net Investment Loss (0.16) (0.08)
Net Realized and Unrealized Gain / Loss 7.55 (1.23)
------------ -------------
Total from Investment Operations 7.39 (1.31)
------------ -------------
Net Asset Value, End of Period $18.58 $11.19
============ =============
Total Return 66.04% (10.48)%**
Ratios and Supplemental Data
Net Assets, End of Period (Thousands) $15,422 $7,288
Ratio of Expenses to Average Net Assets 2.50% 2.50%*
Ratio of Net Investment Loss to Average (1.17)% (0.96)%*
Net Assets
Ratio of Expenses to Average Net 3.41% 4 .54%
Assets (excluding wavers)
Ratio of Net Investment Loss to Average Net (2.08)% (2.99)%*
Assets (excluding waivers)
Portfolio Turnover Rate 145.78 71.26%*
+ Commencement of Operations
* Annualized
** Not Annualized
See Notes to Financial Statements
Statement of Assets and Liabilities
................................................................................
.
As of September 30, 1999
Assets
Investment Securities, at Value, (cost $14,122,372) $
15,156,537
Cash 2,976
Deposits with Brokers for Securities Sold Short 1,545,048
Organizational Costs --- Note A 74,319
Receivable for Portfolio Shares Sold 32,350
Dividends and Interest Receivable 2,307
Other Assets 377
---------------------
Total Assets 16,813,914
Liabilities
Securities Sold Short, at Value (proceeds $731,902) 588,125
Payable for Investments Purchased 729,155
Payable for Portfolio Shares Redeemed 23,080
Payable for Administrative Fees--Note C 4,702
Payable for Advisory Fee --- Note B 8,562
Payable for Distribution Fees--Note D 3,237
Payable for Shareholder Services Fees--Note D 3,237
Accrued Expenses 32,215
---------------------
Total Liabilities 1,392,313
Net Assets $ 15,421,601
=====================
Net Assets Consist of:
Paid in Capital 13,387,395
Accumulated Net Realized Gain on Investments 856,264
Net Unrealized Appreciation on:
Investment Securities 1,034,165
Short Sales 143,777
---------------------
Net Assets $15,421,601
=====================
Net Asset Value, Offering and Redemption Price per
Share ($15,421,601 / 829,955 shares of
beneficial interest, without par value, unlimited
number of shares authorized)
$ 18.58
- --------------------------------------------------------=====================
See Notes to Financial Statements
Statement of Operations
................................................................................
For the Year Ended September 30, 1999
Investment Income
Dividends $16,635
Interest 110,277
Other Income 27,162
------------------
Total Investment Income 154,074
Expenses
Investment Adviser - Note B
Basic Fees $173,521
Less: Fees Waived (99,370) 74,151
Administrative Fees - Note C 47,272
Legal 31,051
Distributions Fee - Note D 28,912
Shareholder Services Fees - Note D 28,912
Amortization of Organizational Costs - Note A 23,123
Federal and State Registration 19,151
Shareholders Reports 18,154
Auditing 8,000
Trustee's Fees - Note E
Basic Fees 6,500
Less: Fees Waived (6,500)
Custody Fees 5,336
Other Expenses 5,285
Net Expenses 289,347
Net Investment Loss (135,273)
Realized/Unrealized Gain (Loss) on Investments
Net Realized Gain (Loss) on:
Investment Securities 1,187,083
Short Sales (174,499)
------------------
Net Realized Gain on Investments 1,012,584
Net Change in Unrealized Appreciation during the period on:
Investment Securities 3,439,690
Short Sales 143,777
------------------
Net Unrealized Appreciation on Investments 3,583,467
Net Realized and Unrealized Gain on Investments 4,596,051
Net Increase in Net Assets Resulting from Operations $ 4,460,778
==================
See Notes to Financial Statements
Statement of Changes in Net Assets
...............................................................................
December 19, 1997*
Year Ended through
September 30, 1999 September 30, 1998
----------------------- ------------------
Increase in Net Assets from Operations
Net Investment Loss $ (135,273) $ (51,671)
Net Realized Gain/Loss from Investments 1,012,584 (156,320)
Net Unrealized Appreciation /
(Depreciation) on Investments
3,583,467 (2,405,525)
---------------- --------------
Net Increase (Decrease) in Net Assets
Resulting from Operations
4,460,778 (2,613,516)
---------------- --------------
Fund Share Transactions
Proceeds from Shares Sold 9,922,133 12,919,811
Cost of Shares Redeemed (6,249,024) (3,018,581)
---------------- --------------
Net Increase from Fund Share Transactions 3,673,109 9,901,230
---------------- --------------
Total Increase in Net Assets 8,133,887 7,287,714
Net Assets
Beginning of Period 7,287,714 ______
================ ==============
End of Period $15,421,601 $7,287,714
================ ==============
Increase in Fund Shares Issued
Number of Shares Sold 553,443 868,305
Number of Shares Redeemed (374,789) (217,004)
---------------- --------------
Net Increase in Fund Shares 178,654 651,301
================ ==============
* Commencement of Operations
See Notes to Financial Statements
Notes to Financial Statements
...............................................................................
September 30, 1999
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.
Permanent book and tax basis differences resulted in reclassification for the
year ended September 30, 1999, as follows: a decrease in paid in capital of
$135,273 and an increase in undistributed net investment income of $135,273.
Permanent book-tax differences, if any, are not included in ending undistributed
net investment income (loss) for purpose of calculating net investment income
(loss) per share in the financial highlights.
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%. During the period ended September 30, 1999,
Renaissance Capital deferred fees of $99,370. These deferrals are subject to
later recapture by the Renaissance Capital for a period of three years. Total
deferrals subject to recapture by Renaissance Capital are $209,476.
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.
To discourage short term investing and recover certain administrative, transfer
agency, shareholders servicing and other costs associated with such short term
investing, the IPO Fund charges a 2% fee on such redemption of shares held less
than six months. Such fees amounted to $27,162 for the year ending September 30,
1999, representing 0.23% of average net assets.
E. TRUSTEES' FEES: For the period ended September 30, 1999, the trustees have
agreed to waive their fees.
F. PURCHASES AND SALES: For the period ended September 30, 1999, the IPO Fund
made purchases of approximately $13,838,210 and sales of approximately
$12,833,091 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.
REPORT ON INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and
Board of Directors of
Renaissance Capital Greenwich Funds
We have audited the accompanying statement of assets and liabilities of The IPO
Plus Aftermarket Fund, a series of shares of Renaissance Capital Greenwich
Funds, including the portfolio of investments as of September 30, 1999 and the
related statement of operations for the year then ended and the statement of
changes in net assets and the financial highlights for the year in the period
then ended and for the period December 19, 1997 (commencement of operations) to
September 30, 1998. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on the financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of September 30, 1999 by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
IPO Plus Aftermarket Fund as of September 30, 1999, the results of their
operations for the year then ended and the changes in net assets and the
financial highlights for the year in the period then ended and for the period
December 19, 1997 (commencement of operations) to September 30, 1998, in
conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
October 29, 1999
