File No. 811-08049
File No. 333-21311
As filed via EDGAR with the Securities and Exchange Commission on
February 23, 2000
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No.
Post-Effective Amendment No. 2 |X|
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 4
RENAISSANCE CAPITAL GREENWICH FUNDS
(Formerly RENAISSANCE FUNDS)
(Exact Name of Registrant as Specified in Charter)
325 Greenwich Avenue
Greenwich, Connecticut 06830
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (203) 622-2978
Linda R. Killian, C.F.A.
Renaissance Capital Corporation
325 Greenwich Avenue
Greenwich, Connecticut 06830
(Name and Address of Agent for Service)
Copy to:
Susan Penry-Williams, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective:
|X| Immediately upon filing pursuant to |_| on ________ __, 2000 pursuant
paragraph (b) to paragraph (b)
|_| 60 days after filing pursuant to |_| on February 26, 1999
paragraph (a)(1) pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to |_| on (date) pursuant to
paragraph (a)(2) paragraph (a)(2), of rule 485(b).
If appropriate, check the following box: |_|
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 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PART C. OTHER INFORMATION
ITEM 23. Exhibits
(a) Amended Certificate of Trust dated October 30, 1997
is incorporated herein by reference to Exhibit
99.B1(a) to the Registrant's Registration Statement
on Form N-1A filed electronically on October 31,
1997, accession number 0001026634-97-0000012.
Delaware Trust Instrument dated January 8, 1997 is
incorporated herein by reference to Exhibit 99.B1(b)
to the Registrant's Registration Statement on Form
N-1A filed electronically on February 6, 1997,
accession number 0001026634-97-000003.
(b) Bylaws dated February 3, 1997 is incorporated herein
by reference to Exhibit 99.B2 to the Registrant's
Registration Statement on Form N-1A filed
electronically on February 6, 1997, accession number
0001026634-97-000003.
(c) None.
(d) Form of Investment Advisory Agreement between the
Registrant and Renaissance Capital Corporation is
incorporated herein by reference to Exhibit 99.B5 to
the Registrant's Registration Statement on Form N-1A
filed electronically on October 31, 1997, accession
number 0001026634-97-000012.
(e) Form of Distribution Agreement between Registrant and
Renaissance Capital Investments, Inc. is incorporated
herein by reference to Exhibit 99.B6(a) to the
Registrant's Registration Statement on Form N-1A filed
electronically on October 31, 1997, accession
number 0001026634-97-000012.
Form of Selected Dealer Agreement is incorporated
herein by reference to Exhibit 99.B6(b) to the
Registrant's Registration Statement on Form N-1A
filed electronically on October 31, 1997, accession
number 0001026634-97-000012.
(f) None.
(g) Form of Domestic Custody Agreement between the
Registrant and The Chase Manhattan Bank is
incorporated herein by reference to Exhibit 99.B8(a)
to the Registrant's Registration Statement on Form
N-1A filed electronically on October 31, 1997,
accession number 0001026634-97-000012.
(h) Form of Administration, Accounting and Transfer
Agency Services Agreement between the Registrant and
Chase Global Fund Services Company is incorporated
herein by reference to Exhibit 99.B9 to the
Registrant's Registration Statement on Form N-1A
filed electronically on October 31, 1997, number
0001026634-97-000012.
(i) Opinion of Kramer Levin Naftalis & Frankel LLP is
hereby incorporated by reference to Exhibit 99.B10
(a) to the Registrant's Registration Statement on
Form N-1A filed electronically on December 18, 1997,
accession number 0001026634-97-000015.
Opinion of Morris, Nichols, Arsht & Tunnell is hereby
incorporated by reference to Exhibit 99.B10(b) to the
Registrants Registration statement of Form N-1A filed
electronically on December 18, 1997, accession number
0001026634-97-000015.
(j) Consent of Kramer, Levin, Naftalis & Frankel is filed
herewith.
Consent of Tait, Weller & Baker is filed herewith.
(k) None.
(l) Form of Investment Letter is incorporated herein by
reference to Exhibit 99.B13 to the Registrant's
Registration Statement on Form N-1A filed
electronically on October 31, 1997, accession number
0001026634-97-000012.
(m) Form of Rule 12b-1 Distribution Plan is incorporated
herein by reference to Exhibit 99.B15 to the
Registrant's Registration Statement on Form N-1A filed
electronically on October 31, 1997, number
0001026634-97-000012.
(n) None.
ITEM 24. Persons Controlled By or Under Common Control with Registrant
None.
ITEM 25. Indemnification
Article X, Section 10.02 of the Registrant's Delaware Trust Instrument,
incorporated herein as Exhibit 2 hereto, provides for the
indemnification of Registrant's Trustees and officers, as follows:
Section 10.02 Indemnification.
(a) Subject to the exceptions and limitations contained in
Subsection 10.02(b):
(i) every person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (A) by the court or
other body approving the settlement; (B) by at least a majority of
those Trustees who are neither Interested Persons of the Trust nor
are parties to the matter based upon a review of readily available
facts (as opposed to a full trial-type inquiry); or (C) by written
opinion of independent legal counsel based upon a review of readily
available facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable,
shall not be exclusive of or affect any other rights to which any
Covered Person may now or hereafter be entitled, shall continue as to
a person who has ceased to be a Covered Person and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Nothing contained herein shall affect any rights to indemnification
to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in Subsection (a) of this Section 10.02 may be paid by the
Trust or Series from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such Covered Person
that such amount will be paid over by him to the Trust or Series if
it is ultimately determined that he is not entitled to
indemnification under this Section 10.02; provided, however, that
either (i) such Covered Person shall have provided appropriate
security for such undertaking, (ii) the Trust is insured against
losses arising out of any such advance payments or (iii) either a
majority of the Trustees who are neither Interested Persons of the
Trust nor parties to the matter, or independent legal counsel in a
written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Section
10.02."
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling
persons or Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Investment Company Act of 1940, as
amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment
by Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser
Renaissance Capital Corporation, Registrant's investment adviser, is
a registered investment adviser providing research on initial public offerings
to institutional and individual investors. The directors and officers of
Renaissance Capital Corporation have held the following positions of a
substantial nature:
Name Position with the Adviser Other Employment
William K. Chairman of the Board, Chairman of the Board and President
Smith President and Director of Renaissance Capital Investments,
Inc., the underwriter
Kathleen Vice President, Secretary, Secretary, Treasurer and Director
Shelton Smith Treasurer and Director of the underwriter
Linda R.
Killian Vice President, Assistant Vice President, Assistant Secretary
Secretary and Director and Director of the underwriter
The business address of each of the officers and directors is 325 Greenwich
Avenue, Greenwich, CT 06830.
Item 27. Principal Underwriters
(a) Not applicable.
(b) Renaissance Capital Investments, Inc. serves as underwriter to the
Registrant. The following information is provided with respect to each
director, officer or partner of the underwriter:
================================================================================
Name and principal Positions and offices Positions and offices
business address with Underwriter with Registrant
- --------------------------------------------------------------------------------
William K. Smith Chairman of the Board Chairman of Board,
325 Greenwich Avenue and President President and Trustee
Greenwich, Connecticut
06830
- --------------------------------------------------------------------------------
Kathleen Shelton Smith Secretary, Treasurer Vice President, Treasurer,
325 Greenwich Avenue and Director co-Chief Investment Officer
Greenwich, Connecticut and Trustee
06830
- --------------------------------------------------------------------------------
Linda R. Killian Vice President, Assistant Vice President, Secretary,
325 Greenwich Avenue Secretary and Director Chief Investment Officer
Greenwich, Connecticut and Trustee
06830
================================================================================
(c)Not applicable.
ITEM 28. Location of Accounts and Records
The majority of the accounts, books and other documents required to
be maintained by Section 31(a) of the Investment Company Act of 1940 (the "1940
Act") and the Rules thereunder are maintained at the offices of Chase Global
Funds Services Company, 73 Tremont Street, Boston, Massachusetts 02108. The
records required to be maintained under Rule 31a-1(b)(1) with respect to
journals of receipts and deliveries of securities and receipts and disbursements
of cash are maintained at the offices of the Registrant's custodian, as listed
under "Investment Advisory and Other Services" in Part B to this Registration
Statement.
ITEM 29. Management Services
Not applicable.
ITEM 30. Undertakings
Registrant undertakes that, if requested to do so by the
holders of at least 10% of the Registrant's outstanding shares, a shareholder
meeting will be called for the purpose of voting upon the removal of a director
or directors and that communications with other shareholders will be assisted as
provided by Section 16(c) of the 1940 Act.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(6) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to its Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Greenwich, and the State of Connecticut on this 17th day of February, 1998.
RENAISSANCE CAPITAL GREENWICH FUNDS
By:
William K. Smith, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities indicated on the 17th day of February,
2000.
- ------------------------------------ Chairman, President
William K. Smith and Trustee
- -------------------------------------- Vice President, Treasurer,
Kathleen Shelton Smith Co-Chief Investment Officer and Trustee
- -------------------------------------- Vice President, Secretary,
Linda R. Killian Co-Chief Investment Officer and Trustee
Martin V. Alonzo Trustee
Warren K. Greene Trustee
Philip D. Gunn Trustee
_______________________
G. Peter O'Brien Trustee
Gerald W. Puschel Trustee
- ----------------------
By Susan Penry-Williams
Attorney In Fact
<PAGE>
EXHIBIT INDEX
Exhibit (j) Consent of Kramer Levin Naftalis & Frankel LLP.
Consent of Tait, Weller & Baker.
THE IPO PLUS
AFTERMARKET FUND
Renaissance Capital Greenwich Funds
Prospectus
February 23, 2000
Investment Objective: Capital Appreciation
The IPO Plus Aftermarket Fund (the "IPO Fund") seeks capital appreciation by
investing in the common stocks of Initial Public Offerings ("IPOs") on the
offering and in the aftermarket.
Investment Adviser: Renaissance Capital
Renaissance Capital Corporation ("Renaissance Capital"), a registered investment
adviser, serves as the IPO Fund's investment adviser. Renaissance Capital is
internationally recognized as a leading provider of research on initial public
offerings.
No Front-end or Back-end Sales Load
No sales load is charged on purchases. See "Fee Table" for further information
on fees.
Low Minimum Initial Investment
The minimum initial investment for a regular account is $2,500. An IRA may be
initiated with a $500 minimum investment.
This Prospectus describes information about the IPO Fund that an investor ought
to know before investing. Investors should read it and keep it for future
reference.
The Securities and Exchange Commission has not approved or disapproved the
shares of the fund. The Securities and Exchange Commission also has not
determined whether this Prospectus is accurate or complete. Any person who tells
you that the Securities and Exchange Commission has made such an approval or
determination is committing a crime.
Renaissance Capital Corporation
325 Greenwich Avenue
Greenwich, CT 06830
1-888-IPO-FUND
www.IPOhome.com
<PAGE>
TABLE OF CONTENTS
Page
Prospectus
1
Risk/Return Summary
3
Annual Total Returns
3
Fee Table
4
Investment Objectives, Strategies & Risks
5
Investment Policies and Techniques
7
Management of the IPO Fund
9
Shareholder Information
11
Investing in the IPO Fund
12
Redeeming IPO Fund Shares
15
Dividend and Tax Matters
17
Distribution Arrangements
18
Financial Highlights
19
Additional Information
20
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE
The IPO Fund seeks appreciation of capital.
PRINCIPAL STRATEGIES
The IPO Fund pursues this objective by investing in the common stocks of IPOs on
the offering and in the aftermarket. The IPO Fund uses Renaissance Capital's
research and statistical information on IPOs in selecting securities for its
portfolio.
PRINCIPAL RISKS
Investing in IPOs entails special risks, including limited operating history of
the companies, unseasoned trading, high portfolio turnover and limited
liquidity. The IPO Fund is also subject to risk common to all equity mutual
funds. These and other risk factors are described in "Risks." You could lose
money if you invest in the IPO Fund. Investing in the IPO Fund is best suited
for individuals who are not concerned with or who do not require investment
income.
ANNUAL TOTAL RETURNS
The Annual Total Returns bar chart shows the changes in the IPO Fund's
performance for the years ended December 31, 1999 and December 31, 1998. The
following table shows how the IPO Fund's average annual return compares to the
Russell 2000 Index. Past performance is not an indication of future results.
The IPO Fund's performance for the period January 1, 1999 to December 31, 1999
was +114.9%.
<PAGE>
FEE TABLE
This table describes the fees and expenses that your may pay if you buy and hold
shares of the IPO Fund.
Shareholder Fees
(fees paid directly from you investment)
Sales Charge on Purchases........................................... None
Sales Charge on Reinvested Dividends................................ None
Deferred Sales Charge............................................... None
Redemption Fee on Shares Held 90 Days or Less....................... 2.00%
Annual Fund Operating Expenses
(expenses that are deducted from IPO Fund assets)
Management Fees (a)................................................. 1.50%
Distribution/Service (12b-1) Fees................................... .50%
Other Expenses (a).................................................. .61%
----
Total Annual Operating Expenses (a)................................. 2.61%
Expenses Reimbursed to the Fund (a)................................. .11%
----
Net Annual Fund Operating Expenses................................. 2.50%
-----
Example
(to help you compare the cost of investing in the IPO Fund to other mutual
funds)
You would incur the following costs assuming (a) a $10,000 investment in the IPO
Fund, (b) a 5% return each year, and (c) the IPO Fund's operating expenses
remaining the same (although actual cost may be higher or lower):
If you redeemed your shares at the end of each period:
One Year Three Years Five Years Ten Years
$253 $801 $1375 $2936
(a) Renaissance Capital has agreed to defer or waive fees or absorb some or
all of the expense of the IPO Fund in order to limit Total Annual Operating
Expenses to 2.5%. Subject to the 2.5% limitation, such fee deferrals and expense
absorptions are subject to later reimbursement over a period of three years. At
September 30, 1999, the expense ratio was 3.41%. Renaissance Capital is
contractually obligated to cap expenses at 2.5% through February 2001. Due to
growth of assets, the annual expense ratio is expected to be lower than 2.5%. .
INVESTMENT OBJECTIVES, STRATEGIES & RISKS
Investment Objectives
The IPO Fund seeks appreciation of capital. The IPO Fund gives individual
investors the opportunity to invest in a diverse selection of IPOs that may not
otherwise be accessible to individuals. This objective may not be changed
without shareholder approval.
Investment Strategy
The IPO Fund pursues this objective by investing at least 65% of its total
assets in a diversified portfolio of the common stocks of IPOs at the time of
the offering and in subsequent aftermarket trading. Aftermarket trading is the
secondary trading in an IPO after the initial issuance of shares to public
shareholders. The IPO Fund will limit aftermarket investments to those IPOs
which have one or more of the following characteristics: (i) limited research;
(ii) unseasoned trading; (iii) limited float; (iv) limited public ownership; (v)
limited operating history; or (vi) are relatively unknown in the U.S. capital
markets. Each of these characteristics distinguishes these companies from
established companies that trade in the broader stock market. Academic and
financial literature consider the aftermarket period for IPOs to be up to ten
years. Investments may be made in both large and small capitalization companies.
The IPO Fund may also sell securities short. See "Investment Policies and
Techniques".
Access to Hot Issues
Due to intense demand for a limited number of shares of certain "hot issues,"
individual investors acting alone may have difficulty obtaining shares of IPOs
at the offering price. A "hot issue" is any newly issued security which, at the
time of its offering, trades in the aftermarket at a price in excess of its
offering price. In addition, individual investors may also be limited to those
IPOs underwritten by the broker with whom the individual investor has an
account. By virtue of its size and institutional nature, the IPO Fund may have
greater access to IPOs at the offering price. However, there is no assurance
that the IPO Fund will be able to obtain allocations of "hot issues."
Independent IPO Research
The IPO Fund uses Renaissance Capital's research and statistical information on
IPOs in selecting securities for its portfolio. This research analyzes the
business, fundamentals, financial results, management control issues and
proposed valuation of the IPO. Prior to an IPO and for a period of time
thereafter, underwriters and brokerage firms involved in the underwriting are
prohibited from providing any commentary or disseminating research on these
companies to the general public. Future research distributed by an underwriter
may not be considered to be independent due to the financial benefits derived
from the underwriting.
Renaissance Capital employs proprietary statistical information on IPO
performance trends, number of pending IPOs, industry sectors, and valuation
trends to determine the overall tone of market activity. Other information
sources used by Renaissance Capital may include the IPO's prospectus filed with
the SEC, discussions and meetings with management, periodic corporate financial
reports, press releases, general economic and industry data supplied by
government agencies and trade associations, and research reports prepared by
broker/dealers.
Risks
As with all mutual funds, investing in the IPO Fund involves certain risks.
There is no guarantee that the IPO Fund will meet its investment objective or
that it will perform as it has in the past. You may lose money if you invest in
the IPO Fund. Accordingly, you should consider the risks described below, as
well as the risks described in the Statement of Additional Information, before
you decide to invest in the IPO Fund.
Special Risks of IPOs
By definition, IPOs have not traded publicly until the time of their offerings.
Special risks associated with IPOs may include a limited number of shares
available for trading, unseasoned trading, lack of investor knowledge of the
company, and limited operating history, all of which may contribute to price
volatility. The limited number of shares available for trading in some IPOs may
make it more difficult for the IPO Fund to buy or sell significant amounts of
shares without an unfavorable impact on prevailing prices. In addition, some
IPOs are involved in relatively new industries or lines of business, which may
not be widely understood by investors. Some of the companies involved in new
industries may be regarded as developmental stage companies, without revenues or
operating income, or the near-term prospects of such. Foreign initial public
offerings are subject to foreign political and currency risks. Many IPOs are
issued by undercapitalized companies of small or microcap size.
Risks Common to all Mutual Funds
In general, mutual funds are subject to three common risks:
Market risk is the risk that the market value of a security will go up or down,
sometimes rapidly or unpredictably, depending on the supply and demand for the
type of security. These fluctuations may cause a security to be worth more or
less than the price the IPO Fund originally paid for it. Market risk applies to
individual securities, industries, sectors of the economy, and the entire market
and is common to all investments. Manager risk is the risk that the IPO Fund's
portfolio managers may use a strategy that does not produce the intended result.
Manager risk also refers to the possibility that the portfolio manager's
strategy may not achieve the IPO Fund's investment objective.
INVESTMENT POLICIES AND TECHNIQUES
Under normal conditions, the IPO Fund will invest at least 65% of its total
assets in the common stocks of the IPOs on the offering and in the aftermarket.
The IPO Fund may also invest up to 35% of its total assets in the common stocks
of issuers that are not IPOs. The following provides a brief description of some
additional types of securities in which the IPO Fund may invest including
certain transactions it may enter into and techniques described herein without
shareholder approval unless a policy is expressly deemed to be changeable only
by shareholder vote.
Short Selling
The IPO Fund may from time to time sell securities short. A short sale is a
transaction in which the IPO Fund sells borrowed securities in anticipation of a
decline in the market price of the securities. The IPO Fund may make a profit or
incur a loss depending on whether the market price of the security decreases or
increases between the date of the short sale and the date on which the IPO Fund
must replace the borrowed security. All short sales must be fully
collateralized, and the IPO Fund will not sell securities short if, immediately
after and as a result of the sale, the value of all securities sold short by the
IPO Fund exceeds 33 1/3% of its total assets.
Short Term Obligations
When Renaissance Capital deems market or economic conditions to be unfavorable,
the IPO Fund may assume a defensive position by temporarily investing up to 100%
of its assets in cash or high quality money market instruments, such as
short-term U.S. government obligations, commercial paper, or repurchase
agreements, seeking to protect its assets until conditions stabilize.
Investment in Foreign Issuers
The IPO Fund may invest up to 25% of its assets, measured at the time of
investment, in securities of foreign issuers. However, investment may be made
without limitation in securities of foreign issuers that are registered with the
SEC and trade on a U.S. stock exchange. Such investments will be made either
directly in such issuers or indirectly through American Depository Receipts
("ADRs"), American Depository Shares ("ADSs") or closed-end investment
companies.
Portfolio Turnover
The IPO Fund may make short-term investments when it is deemed desirable to do
so. The IPO Fund may, from time to time, sell a security without regard to the
length of time that it has been held to realize a profit or to avoid an
anticipated loss. Short-term transactions produce higher portfolio turnover
rates than would otherwise be the case, resulting in the likelihood of larger
expenses (including brokerage commissions) than are incurred by mutual funds
that engage primarily in long-term transactions. The IPO Fund's portfolio
turnover rate was 145.8% for the 12 months ended September 30, 1999.
Additional Investment Techniques
The IPO Fund may invest in derivatives, such as futures and options, which will
subject the IPO Fund to additional risks, including increased volatility and a
disproportionate impact on IPO Fund performance. The IPO Fund may also invest in
illiquid and restricted securities, convertible securities, and repurchase
agreements, and may sell securities short and engage in securities lending. The
IPO Fund may use borrowed money to purchase securities, which is a form of
leverage. Each of these investment techniques involves additional risks, which
are described in detail in the Statement of Additional Information ("SAI").
<PAGE>
MANAGEMENT OF THE IPO FUND
Investment Adviser
Renaissance Capital, located at 325 Greenwich Avenue, Greenwich, CT, 06830,
serves as the investment adviser pursuant to an Investment Advisory Agreement
(the "Investment Advisory Agreement"), which provides that Renaissance Capital
will furnish continuous investment advisory services and management to the IPO
Fund, subject to the overall authority of the IPO Fund's Board of Trustees.
Renaissance Capital specializes in researching IPOs and has been providing its
proprietary research, primarily to institutional investors, since 1992.
Renaissance Capital is internationally recognized as a leading provider of
research on initial public offerings. Renaissance Capital has analyzed and built
a proprietary research database of more than 2,500 IPOs. Renaissance Capital
believes it is the leading provider of such research to institutional investors.
In addition, Renaissance Capital makes full-length and abridged versions of its
original research available to a wide group of investors through various
electronic delivery media. This research and statistical information on IPOs is
used in selecting securities for the IPO Fund.
Renaissance Capital supervises and manages the investment portfolio of the IPO
Fund and directs the day-to-day management of the IPO Fund's investment
portfolio. For its services, Renaissance Capital will receive an annual fee of
1.5% on the average daily net assets of the IPO Fund. Renaissance Capital may,
from time to time, voluntarily agree to defer or waive fees or absorb some or
all of the expenses of the IPO Fund. In the event it should do so, such fee
deferrals and expense absorptions are subject to later reimbursement for a
period of three years.
Portfolio Managers
The principals of Renaissance Capital are responsible for the day-to-day
management of the IPO Fund's portfolio. Each individual has more than 18 years
of relevant portfolio management, securities analysis and corporate finance
experience prior to forming Renaissance Capital.
Linda R. Killian, C.F.A.
Founder and Principal of Renaissance Capital, her 20-year professional
experience spans investment management and equity research.
Before forming Renaissance Capital, she was a portfolio manager and analyst with
Wertheim Schroder Investment Services, where she managed broadly diversified
equity and balanced accounts for pension, high net worth and not-for-profit
organizations. Her analytic coverage included health care, retailing,
telecommunications services, consumer products and media. Prior to Wertheim
Schroder, she was a portfolio manager and equity analyst with Citicorp
Investment Management where she created, managed and researched the Medium
Capitalization Stock Fund, one of the first investment vehicles focusing on the
mid-cap sector. Over the six years at Citicorp, she also covered a variety of
industries as an analyst, including telecommunication services, special
situations, multi-industry companies and mid-capitalization companies. Before
joining Citicorp, she was a member of the Utility Corporate Finance Group at The
First Boston Corporation, where she was involved in numerous utility debt and
equity financings and specialized in financial issues pertaining to
diversification and deregulation. As a public utility finance professional, she
appeared as an expert witness before public utility commissions and published
articles on deregulation in industry journals. Ms. Killian earned an M.B.A.
from the Wharton School in 1979 and a B.A. from New York University in 1972,
where she was designated an Outstanding Scholar. She is a Chartered Financial
Analyst and is active in the New York Society of
Security Analysts.
Kathleen Shelton Smith
Founder and Principal of Renaissance Capital, her 20-year professional
experience consists of investment banking and equity research involving
technology and emerging growth companies. Her industry expertise is broad
including technology, communications, health care and industrial companies.
Prior to forming Renaissance Capital in 1991, she was a director of Merrill
Lynch Capital Markets' Technology and Emerging Growth Investment Banking Group.
Her experience includes mergers and acquisitions and numerous public equity
offerings. She has been the investment banker for many IPOs including Cabletron
Systems, EMC Corporation and United States Cellular. Over the years she has been
a keynote speaker at many highly regarded Technologic Conferences including the
conferences on Personal Computers, Communications, Software and Semiconductors.
Ms. Smith earned an M.B.A. from the Wharton School in 1979 and a B.A., Phi
Beta Kappa, from the Pennsylvania State University in
1976. She is certified by the NASD as a general securities principal.
William K. Smith
Founder and President of Renaissance Capital, his 21-year professional
experience covers equity research, investment banking, financial restructuring
and management consulting.
Prior to forming Renaissance Capital, he was an investment banking senior vice
president at Kidder Peabody where he was a founding member of Kidder's Financial
Restructuring Group. This group was involved in numerous significant and complex
restructuring assignments. His industry experience spans electrical equipment,
retailing, steel, energy, health care, automotive, technology, publishing,
banking and insurance. He was a vice president in the Corporate Finance Group at
Bear Stearns prior to Kidder Peabody. While at Bear Stearns, he specialized in
corporate restructurings, valuations and mergers & acquisitions. Before that, he
was a senior manager in management consulting at the Touche Ross Financial
Services Center where he specialized in valuations and mergers & acquisitions
for a broad cross section of clients. He is the author of the book, "Strategic
Growth Through Mergers and Acquisitions," which was published by Prentice Hall
in the United States and Japan.
Mr. Smith earned an M.B.A. in finance from the Wharton School in 1978 and a B.S.
in Electrical Engineering from Villanova University in 1973. He is certified
by the NASD as a general securities principal and a financial and operations
principal.
SHAREHOLDER INFORMATION
Net Asset Value
Net asset value for the IPO Fund is determined as of the end of regular trading
hours on the New York Stock Exchange (currently 4:00 p.m. Eastern Time) on days
that the New York Stock Exchange is open. The net asset value per share is
determined by dividing the market value of the IPO Fund's securities as of the
close of trading plus any cash or other assets (including dividends and accrued
interest) less all liabilities (including accrued expenses) by the number of the
IPO Fund's shares outstanding. The IPO Fund's shares trade on the NASDAQ under
the symbol IPOSX.
Automatic Investment Plan
The IPO Fund offers an Automatic Investment Plan whereby an investor may
automatically purchase shares of the IPO Fund on a monthly basis ($100 minimum
per transaction). Applications to establish the Automatic Investment Plan are
available from the IPO Fund.
Retirement Plans
The IPO Fund offers various tax-sheltered retirement plans that allow investors
to invest for retirement and to shelter some of their income from taxes.
Application forms, as well as descriptions of applicable service fees and
certain limitations on contributions and withdrawals, are available from the
Transfer Agent of the IPO Fund upon request. These Retirement Plans include
Individual Retirement Accounts ("IRAs") and Rollover IRAs.
Minimum Account Balance
The IPO Fund reserves the right to redeem shares held in any account at its
option upon thirty days written notice if the net asset value of the account
falls below $500 for reasons other than market conditions and remains so during
the notice period.
INVESTING IN THE IPO FUND
Shares of the IPO Fund may be purchased directly from the IPO Fund, or through
an account maintained with a securities broker or other financial institution.
Investors may be charged a fee if they effect transactions through a securities
broker or agent.
All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks. No cash will be accepted. A $15 fee may be charged against an investor's
account for any payment check returned to the Transfer Agent for insufficient
funds, stop payment, closed account or other reasons. The investor will also be
responsible for any losses suffered by the IPO Fund as a result. The IPO Fund
reserves the right to reject any purchase order for IPO Fund shares. No share
certificates will be issued.
The minimum purchase requirements, which may be waived in certain circumstances,
are $2,500 for regular accounts; and $500 for IRAs. Additional investments are
$100. Questions about the IPO Fund can be answered by calling toll-free
1-888-IPO-FUND.
Procedure for Purchasing IPO Fund Shares
To Open an Account: To Add to an Account:
- ----------------- --------------------
By Mail
Complete and sign the Make the check payable
New Account Application. To the IPO FUND and
Make sure the check is mail to the address at the
payable to the IPO Fund left. Put the account
and mail to: name, address and IPO
Fund account number, on
The IPO Fund the check.
P.O. Box 2798
Boston, MA 02208-2798
By Courier
Follow instructions above Follow the instructions
and send to: above and send to the
address at the left.
The IPO Fund
c/o Chase Global Fund Services
73 Tremont Street
Boston, MA 02108-3913
By Telephone
Telephone transactions Call toll free
may not be used for initial 1-888-IPO-FUND to
purchases. initiate an electronic
funds transfer. ACH
bank account information will be required.
By Wire
Call toll free 1-888-IPO-FUND Follow the instructions at the
to notify us of a wire left. Please note
transfer and to verify that wires may be
instructions. You will be rejected if they do
given a wire reference not contain complete
control number. Then wire account information.
funds care of Chase Manhattan
Bank:
Credit: 021000021
Account No.: 910-2-776128
Wire Reference Control No.:__________
Further Credit: IPO Fund
Shareholder Account No.:____________
Shareholder Name: _________________
Include your name, address and taxpayer ID.
Purchases by Mail or Courier
The New Account Application, if properly filled out and accompanied by a check
made payable to the IPO Fund, will be processed upon receipt by the Transfer
Agent. If the Transfer Agent receives your order and payment by the close of
regular trading (currently 4:00 p.m. Eastern Time) on the New York Stock
Exchange, your shares will be purchased at the net asset value calculated at the
close of regular trading on that day. If received after that time, your shares
will be purchased at the net asset value determined as of the close of regular
trading on the next business day.
Purchases Through Financial Service Agents
If you are investing through a Financial Service Agent, please refer to their
program materials for any additional special provisions or fees that may be
different from those described in this Prospectus. Certain Financial Service
Agents may receive compensation from the IPO Fund. The Financial Service Agent
must promise to send to the Transfer Agent immediately available funds in the
amount of the purchase price within one business day from the date of the trade.
Purchases by Telephone
Only bank accounts held at domestic financial institutions that are Automated
Clearing House (ACH) members can be used for telephone transactions. Telephone
transactions may not be used for initial purchases. Your account must already be
established prior to initiating telephone transactions. Your shares will be
purchased at the net asset value determined as of the close of regular trading
on the date that the Transfer Agent receives payment for shares purchased by
electronic funds transfer through the ACH system. Most transfers are completed
within three business days after your call to place the order. To preserve
flexibility, the IPO Fund may revise or remove the ability to purchase shares by
phone, or may charge a fee for such service, although currently, the IPO Fund
does not expect to charge a fee.
The IPO Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures may include requiring
some form of personal identification prior to acting upon telephone
instructions, providing written confirmations of all such transactions, and/or
tape recording all telephone instructions. Assuming procedures such as the above
have been followed, the IPO Fund will not be liable for any loss, cost or
expense for acting upon an investor's telephone instructions or for any
unauthorized telephone redemption. As a result of this policy, the investor will
bear the risk of any loss unless the IPO Fund has failed to follow such
procedure(s).
Purchases by Wire
Before you purchase your initial shares by wire, you must prepare and file a New
Account Application with the Transfer Agent. The Transfer Agent must receive the
New Account Application before any of the shares purchased can be redeemed. You
should contact your bank (which will need to be a commercial bank that is a
member of the Federal Reserve System) for information on sending funds by wire,
including any charges that your bank may make for these services.
REDEEMING IPO FUND SHARES
You may sell (redeem) your shares at any time. A fee will be charged on the
redemption of shares equal to 2% of the redemption price of shares of the IPO
Fund held 90 days or less that are being redeemed. There is no redemption fee
for the sale of shares held longer than 90 days. The redemption fee will not
apply to shares representing the reinvestment of dividends and capital gains
distributions. Reinvested distributions will be sold first without a fee. The
redemption fee will be applied on a share by share basis using the "first shares
in, first shares out" (FIFO) method. Therefore, the oldest shares are considered
to have been sold first. Redemption fee proceeds will be applied to the IPO
Fund's aggregate expenses allocable to providing custody and redemption
services, including transfer agent fees, postage, printing, telephone costs and
employment costs relating to the handling and processing of redemptions. Any
excess fee proceeds will be added to the IPO Fund's capital. Ordinarily, the IPO
Fund makes payment by check for the shares redeemed within seven days after it
receives a properly completed request. However, the right of redemption may be
suspended or payment may be postponed under unusual circumstances such as when
trading on the New York Stock Exchange is restricted. Payment of redemption
proceeds with respect to shares purchased by check will not be made until the
check or payment received has cleared, which may take up to 15 calendar days
from the purchase date.
Payment of the redemption proceeds for shares of the IPO Fund where an investor
requests wire payment will normally be made in federal funds on the next
business day. The Transfer Agent will wire redemption proceeds only to the bank
and account designated on the New Account Application or in written instructions
subsequently received by the Transfer Agent, and only if it is a commercial bank
and a member of the Federal Reserve System. The Transfer Agent currently charges
a $10 fee for each payment made by wire of redemption proceeds, which fee will
be deducted from the investor's proceeds.
Procedure for Requesting Redemption
You may request the sale of your shares by mail, courier or telephone as
described below:
By Mail
By Courier
The IPO Fund
The IPO Fund
P.O. Box 2798
c/o Chase Global Fund Services
Boston, MA 02208-2798
73 Tremont Street
Boston, MA 02108-3913
The selling price of each share being redeemed will be the IPO Fund's per share
net asset value next calculated after receipt of all required documents in good
order. Good order means that the request must include:
o Your IPO Fund account number
o The number of shares or dollar amount to be sold (redeemed)
o The signatures of all account owners exactly as they are registered
on the account
o Any required signature guarantees
o Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships o In the case of shares being redeemed from
an IRA or IRA/SEP Plan, a statement of whether or not federal income tax should
be
withheld (in the absence of any statement, federal tax will be withheld)
A signature guarantee of each owner is required to redeem shares in the
following situations (I) if you change ownership on your account; (ii) when you
want the redemption proceeds sent to a different address from that registered on
the account; (iii) if the proceeds are to be made payable to someone other than
the account's owner(s); (iv) any redemption transmitted by federal wire transfer
to your bank; and (v) if a change of address request has been received by the
IPO Fund or the Transfer Agent within the last 15 days. In addition, signature
guarantees are required for all redemptions of $25,000 or more from any
shareholder account.
Signature guarantees are designed to protect both you and the IPO Fund from
fraud. Signature guarantees can be obtained from most banks, credit unions or
savings associations, or from broker/dealers, national securities exchanges,
registered securities associations or clearing agencies deemed eligible by the
SEC. Notaries cannot provide signature guarantees.
By Telephone
Shares of the IPO Fund may also be sold by calling the Transfer Agent toll free
at 1-888-IPO-FUND. To use this procedure for telephone redemption, a shareholder
must have previously elected this procedure in writing, which election will be
reflected in the records of the Transfer Agent, and the redemption proceeds must
be mailed directly to the investor or transmitted to the investor's
predesignated account at a domestic bank. To change the designated account or
address, a written request with signature(s) guaranteed must be sent to the
Transfer Agent. The IPO Fund reserves the right to limit the number of telephone
redemptions by an investor. Once made, telephone requests may not be modified or
canceled. The selling price of each share being redeemed will be the IPO Fund's
per share net asset value next calculated after receipt by the Transfer Agent of
the telephone redemption request. The IPO Fund will not be liable for following
instructions communicated by telephone that it reasonably believes to be
genuine.
The IPO Fund reserves the right to redeem shares held in any account at its
option upon thirty days written notice if the net asset value of the account
falls below $500 for reasons other than market conditions and remains so during
the notice period.
DIVIDEND AND TAX MATTERS
Dividends and Capital Gain Distributions
The IPO Fund intends to pay dividends from net investment income and net
realized capital gains (not offset by capital loss carryovers) on an annual
basis in December. Investors may elect to reinvest all income dividends and
capital gains distributions in shares of the IPO Fund or in cash as designated
on the New Account Application. If the investor does not specify an election,
all income dividends and capital gains distributions will automatically be
reinvested in full and fractional shares of the IPO Fund will be calculated to
the nearest 1000th of a share. Shares will be purchased at the net asset value
in effect on the business day after the dividend record date and will be
credited to the investor's account on such date. Reinvested dividends and
distributions receive the same tax treatment as those paid in cash.
An investor may change his or her election at any time by sending written
notification to the IPO Fund, P.O. Box 2798, Boston, MA 02108. The election is
effective for distributions with a dividend record date on or after the date
that the Transfer Agent receives notice of the election.
Taxes
The IPO Fund intends to qualify annually for and elect tax treatment applicable
to all regulated investment companies under Subchapter M of the Internal Revenue
Code of 1996, as amended. Because it intends to distribute substantially all of
its net investment income and capital gains to shareholders, it is not expected
that the IPO Fund will be required to pay any federal income taxes. The IPO Fund
would be subject to a 4% excise tax on the portion of its undistributed income
if it fails to meet certain annual distribution requirements. The IPO Fund
intends to make distributions in a timely manner, and accordingly, does not
expect to be subject to taxes. Shareholders will normally have to pay federal
income taxes and any state and local income taxes on the dividends and
distributions they receive from the IPO Fund. Shareholders not subject to tax on
their income will not be required to pay tax on amounts distributed to them.
At the end of each calendar year, shareholders are sent full information on
dividends and long-term capital gains distributions for tax purposes, including
information as to the portion taxable as ordinary income and the portion taxable
as long-term capital gains.
Prior to purchasing shares of the IPO Fund, prospective shareholders (except for
tax qualified retirement plans) should consider the impact of dividends or
capital gains distributions which are expected to be announced, or have been
announced but not paid. Any such dividends or capital gains distributions paid
shortly after a purchase of shares by an investor prior to the record date will
have the effect of reducing the per share net asset value by the amount of the
dividends or distributions. All or a portion of such dividends or distributions,
although in effect a return of capital, is subject to taxation.
Shareholders are advised to consult their own tax advisers with respect to these
matters.
DISTRIBUTION ARRANGEMENTS
The IPO Fund has adopted a Distribution and Shareholder Servicing Plan
(the"Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan authorizes
annual payments by the IPO Fund in connection with the distribution of its
shares at an annual rate, as determined from time to time by the Board of
Trustees, of up to .50% of the IPO Fund's average daily net assets A long-term
shareholder should consider that the fees and costs he will incur under the
Distribution Plan may result in the shareholder paying more over time than the
equivalent of the maximum front-end sales charges permitted by the rules and
regulations of the National Association of Securities Dealers, Inc.
Payments for distribution under the Plan shall be used to compensate or
reimburse the Broker/Dealer and other broker-dealers for services provided and
expenses incurred in connection with the sale of the IPO Fund's shares, and are
not tied to the amount of actual expenses incurred. Payments for distribution
may also be used to compensate broker-dealers with trail or maintenance
commissions at an annual rate of up to .25% of the average daily net asset value
of shares invested in the IPO Fund by customers of these broker-dealers.
FINANCIAL HIGHLIGHTS INFORMATION
This financial highlights table is intended to help you understand the IPO
Fund's financial performance for the period since its inception on December 18,
1997. Certain information reflects financial results for a single share of the
IPO Fund. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the IPO Fund assuming
reinvestment of all dividends and distributions.
Tait, Weller & Baker has audited this information. Tait, Weller & Baker's report
along with further detail on the IPO Fund's financial statements are included
the annual report which is available upon request.
For a capital 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 (loss) from investment operations
Net investment loss (.16) (.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%)
Net assets, end of period (thousands) $15,422 $ 7,288
Ratio/supplemental data:
Ratio of expenses to average net assets 2.50% 2.50%*
Ratio of net investment loss to
average net assets (1.17)% (0.96)%*
Ratio of expenses to
average net assets (excluding waivers) 3.41% 4.54%*
Ratio of net investment loss to
average net assets (excluding waivers)(2.08%) (2.99%)*
Portfolio turnover rate 145.78% 71.26%
+ Commencement of operations
* Annualized
ADDITIONAL INFORMATION
Statement of Additional Information
The SAI provides a more complete discussion of certain matters contained in this
Prospectus and is incorporated by reference, which means that it is considered a
part of the Prospectus.
Annual and Semi-Annual Reports
The annual and semi-annual reports to shareholders contain additional
information about the IPO Fund's investments, including a discussion of the
market conditions and investment strategies that significantly affected the IPO
Fund's performance during its last fiscal year.
Obtaining Information
You may obtain the SAI and annual and semi-annual reports without charge by
calling toll free 888-IPO-FUND or by writing to the IPO Fund, P.O. Box 2798,
Boston, MA 02208-2798. You may review this information at the Public Reference
Room of the SEC, Washington, D.C. 20549-6009 or by visiting the SEC's World Wide
Website at http://www.sec.gov. You can obtain information about the operations
of the SEC's Public Reference Room by calling 1-800-SEC-0330.
Counsel
Kramer Levin Naftalis & Frankel LLP 919 Third Avenue, New York, NY 10022-3852,
serves as counsel to Renaissance Capital Funds.
Independent Certified Public Accountants
Tait, Weller & Baker, 8 Penn Plaza, Suite 800, Philadelphia, PA 19103 serves as
independent certified public accountants of Renaissance Capital Funds.
Investment Company Act File no. 811-08049
The IPO Plus Aftermarket Fund
STATEMENT OF ADDITIONAL INFORMATION
February 23, 2000
The IPO Plus Aftermarket Fund (the "IPO Fund") is a series of Renaissance
Capital Greenwich Funds ("Renaissance Capital Funds"), a Delaware Trust,
operating as a diversified, open-end investment company. This Statement of
Additional Information is not a prospectus but contains information in addition
to and more detailed than that set forth in the Prospectus and should be read in
conjunction with the Prospectus for the IPO Fund also dated February 23, 2000. A
Prospectus may be obtained without charge by writing the IPO Fund, P.O. Box
2798, Boston, MA 02208, or by calling toll free at 1-888-IPO FUND.
TABLE OF CONTENTS
FUND HISTORY 2
INVESTMENT STRATEGIES AND RISKS 2
INVESTMENT RESTRICTIONS 7
MANAGEMENT OF THE IPO FUND 8
INVESTMENT ADVISORY AND OTHER SERVICES 11
SHAREHOLDER SERVICES 11
BROKERAGE ARRANGEMENTS 12
HOW TO BUY SHARES 13
HOW TO REDEEM SHARES 13
VALUATION OF SECURITIES 14
TAXES 14
PERFORMANCE INFORMATION 16
ADDITIONAL INFORMATION 17
FINANCIAL STATEMENTS 18
<PAGE>
FUND HISTORY
The IPO Fund is a series of Renaissance Capital Funds, a Delaware business trust
organized on January 8, 1997. The Trust may offer an unlimited number of shares
and classes of the IPO Fund.
INVESTMENT STRATEGIES AND RISKS
The following information supplements, and should be read in conjunction with,
the section in the Prospectus entitled "Investment Objective and Strategies".
Short Sales
The IPO Fund may seek to hedge investments or realize additional gains through
short sales. Short sales are transactions in which the IPO Fund sells a security
it does not own, in anticipation of a decline in the market value of that
security. The IPO Fund may make a profit or incur a loss depending on whether
the market price of the security decreases or increases between the date of the
short sale and the date on which the IPO Fund must replace the borrowed
security. To complete such a transaction, the IPO Fund must borrow the security
to make delivery to the buyer. The IPO Fund then is obligated to replace the
security borrowed by purchasing it at the market price at or prior to the time
of replacement. The price at such time may be more or less than the price at
which the IPO Fund sold the security. Until the security is replaced, the IPO
Fund is required to repay the lender any dividends or interest that accrue
during the period of the loan. To borrow the security, the IPO Fund also may be
required to pay a premium, which would increase the cost of the security sold.
The net proceeds of the short sale will be retained by the broker (or by the IPO
Fund's custodian in a special custody account), to the extent necessary to meet
margin requirements, until the short position is closed out. The IPO Fund also
will incur transaction costs in effecting short sales. To secure its obligation
to deliver the securities sold short, the IPO Fund will deposit in escrow in a
separate account with its custodian, an equal amount of the securities sold
short or securities convertible into or exchangeable for such securities.
All short sales must be fully collateralized, and the IPO Fund will not sell
securities short if, immediately after and as a result of the sale, the value of
all securities sold short by the IPO Fund exceeds 25% of its total assets. The
IPO Fund may also engage in a technique known as selling short "against the
box." When selling short "against the box," the IPO Fund will own an equal
amount of securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same issue as and in
an amount equal to, the securities sold short. Gain will be recognized as a
result of certain constructive sales including short sales against the box.
Securities Lending
For incremental income purposes, the IPO Fund may lend its portfolio securities
constituting up to 33 1/3% of its total assets to U.S. or foreign
broker-dealers, banks or institutional borrowers of securities which have been
rated within the two highest grades assigned by Standard & Poor's Corporation or
Moody's Investors Service or have been determined by Renaissance Capital to be
of comparable quality. Renaissance Capital is responsible for monitoring
compliance with this rating standard during the term of any securities lending
agreement. With the loan of portfolio securities, there is a risk that the
borrowing institution will failto redeliver the securities due. The IPO Fund
must receive a minimum of 100% collateral, plus any interest due in the form of
cash or U.S. Government securities. This collateral must be valued daily and
should the market value of the loaned securities increase, the borrower must
furnish additional collateral to the IPO Fund. During the time portfolio
securities are on loan, the borrower will pay the IPO Fund any dividends or
interest paid on such securities plus any interest negotiated between the
parties to the lending agreement. Loans will be subject to termination by the
IPO Fund or the borrower at any time. While the IPO Fund will not have the right
to vote securities on loan, it intends to terminate the loan and regain the
right to vote if that is considered important with respect to the investment.
Futures Contracts
The IPO Fund may enter into futures contracts, options on futures contracts and
stock index futures contracts and options thereon for the purposes of remaining
fully invested and reducing transaction costs. Futures contracts provide for the
future sale by one party and purchase by another party of a specified amount of
a specific security, class of securities, or an index at a specified future time
and at a specified price. A stock index futures contract is a bilateral
agreement pursuant to which two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference between
the stock index value at the close of trading of the contracts and the price at
which the futures contract is originally struck. Futures contracts which are
standardized as to maturity date and underlying financial instrument are traded
on national futures exchanges. Futures exchanges and trading are regulated under
the Commodity Exchange Act by the Commodity Futures Trading Commission ("CFTC"),
a U.S. Government agency.
Although futures contracts by their terms call for actual delivery and
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold," or "selling" a contract previously
purchased) in an identical contract to terminate the position. A futures
contract on a securities index is an agreement obligating either party to pay,
and entitling the other party to receive, while the contract is outstanding,
cash payments based on the level of a specified securities index. The
acquisition of put and call options on futures contracts will, respectively,
give the IPO Fund the right (but not the obligation), for a specified price, to
sell or to purchase the underlying futures contract, upon exercise of the
option, at any time during the option period. Brokerage commissions are incurred
when a futures contract is bought or sold.
Futures traders are required to make a good faith margin deposit in cash or
government securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be changed.
Brokers may establish deposit requirements which are higher than the exchange
minimums. Initial margin deposits on futures contracts are customarily set at
levels much lower than the prices at which the underlying securities are
purchased and sold, typically ranging upward from less than 5% of the value of
the contract being traded.
After a futures contract position is opened, the value of the contract is
marked-to-market daily. If the futures contract price changes to the extent that
the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The IPO Fund
expects to earn interest income while its margin deposits are held pending
performance on the futures contract.
When interest rates are expected to rise or market values of portfolio
securities are expected to fall, the IPO Fund can seek through the sale of
futures contracts to offset a decline in the value of its portfolio securities.
When interest rates are expected to fall or market values are expected to rise,
the IPO Fund, through the purchase of such contracts, can attempt to secure
better rates or prices for the IPO Fund than might later be available in the
market when it effects anticipated purchases.
The IPO Fund's ability to effectively utilize futures trading depends on several
factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock index.
Second, it is possible that a lack of liquidity for futures contracts could
exist in the secondary market, resulting in an inability to close a futures
position prior to its maturity date. Third, the purchase of a futures contract
involves the risk that the IPO Fund could lose more than the original margin
deposit required to initiate a futures transaction.
Restrictions on the Use of Futures Contracts. The IPO Fund will only sell
futures contracts to protect securities it owns against price declines or
purchase contracts to protect against an increase in the price of securities it
intends to purchase. The IPO Fund will not enter into futures contract
transactions for purposes other than bona fide hedging purposes to the extent
that, immediately thereafter, the sum of its initial margin deposits on open
contracts exceeds 5% of the market value of the IPO Fund's total assets. In
addition, the IPO Fund will not enter into futures contracts to the extent that
the value of the futures contracts held would exceed 1/3 of the IPO Fund's total
assets. Futures transactions will be limited to the extent necessary to maintain
the Fund's qualification as a regulated investment company.
Renaissance Capital Funds, on behalf of the IPO Fund, has undertaken to restrict
its futures contract trading as follows: first, the IPO Fund will not engage in
transactions in futures contracts for speculative purposes; second, the IPO Fund
will not market its funds to the public as commodity pools or otherwise as
vehicles for trading in the commodities futures or commodity options markets;
third, the IPO Fund will disclose to all prospective shareholders the purpose of
and limitations on its commodity futures trading; fourth, the IPO Fund will
submit to the CFTC special calls for information. Accordingly, registration as a
commodities pool operator with the CFTC is not required.
In addition to the margin restrictions discussed above, transactions in futures
contracts may involve the segregation of funds pursuant to requirements imposed
by the Securities and Exchange Commission (the "SEC"). Under those requirements,
where the IPO Fund has a long position in a futures contract, it may be required
to establish a segregated account (not with a futures commission merchant or
broker, except as may be permitted under SEC rules) containing cash or certain
liquid assets equal to the purchase price of the contract (less any margin on
deposit). For a short position in futures or forward contracts held by the IPO
Fund, those requirements may mandate the establishment of a segregated account
(not with a futures commission merchant or broker, except as may be permitted
under SEC rules) with cash or certain liquid assets that, when added to the
amounts deposited as margin, equal the market value of the instruments
underlying the futures contracts (but are not less than the price at which the
short positions were established). However, segregation of assets is not
required if the IPO Fund "covers" a long position. For example, instead of
segregating assets, the IPO Fund, when holding a long position in a futures
contract, could purchase a put option on the same futures contract with a strike
price as high or higher than the price of the contract held by the IPO Fund. In
addition, where the IPO Fund takes short positions, or engages in sales of call
options, it need not segregate assets if it "covers" these positions. For
example, where the IPO Fund holds a short position in a futures contract, it may
cover by owning the instruments underlying the contract. The IPO Fund may also
cover such a position by holding a call option permitting it to purchase the
same futures contract at a price no higher than the price at which the short
position was established. Where the IPO Fund sells a call option on a futures
contract, it may cover either by entering into a long position in the same
contract at a price no higher than the strike price of the call option or by
owning the instruments underlying the futures contract. The IPO Fund could also
cover this position by holding a separate call option permitting it to purchase
the same futures contract at a price no higher than the strike price of the call
option sold by the IPO Fund.
Risk Factors in Futures Transactions. Positions in futures contracts may be
closed out only on an exchange that provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, the IPO Fund would continue to be required to make daily cash
payments to maintain the required margin. In such situations, if the IPO Fund
has insufficient cash, it may have to sell portfolio securities to meet daily
margin requirements at a time when it may be disadvantageous to do so. In
addition, the IPO Fund may be required to make delivery of the instruments
underlying futures contracts it holds. The inability to close options and
futures positions also could have an adverse impact on the ability to
effectively hedge them. The IPO Fund will minimize the risk that it will be
unable to close out a futures contract by only entering into futures contracts
which are traded on national futures exchanges and for which there appears to be
a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased participation by speculators in
the futures market, which may also cause temporary price distortions. A
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchaser or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
futures strategies engaged in by the IPO Fund are primarily for hedging
purposes, Renaissance Capital believes that the IPO Fund is generally not
subject to risks of loss exceeding those that would be undertaken if, instead of
the futures contract, it had invested in the underlying financial instrument and
sold it after the decline.
Utilization of futures transactions by the IPO Fund does involve the risk of
imperfect or no correlation where the securities underlying futures contract
have different maturities than the portfolio securities being hedged. It is also
possible that the IPO Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by the IPO Fund of margin deposits in the event of bankruptcy of a
broker with whom the IPO Fund has an open position in a futures contract or
related option.
Options
The IPO Fund may purchase and sell put and call options on their portfolio
securities to enhance investment performance and to protect against changes in
market prices.
Covered Call Options. The IPO Fund may write covered call options on its
securities to realize a greater current return through the receipt of premiums
than it would realize on its securities alone. Such option transactions may also
be used as a limited form of hedging against a decline in the price of
securities owned by the IPO Fund.
A call option gives the holder the right to purchase, and obligates the writer
to sell, a security at the exercise price at any time before the expiration
date. A call option is "covered" if the writer, at all times while obligated as
a writer, either owns the underlying securities (or comparable securities
satisfying the cover requirements of the securities exchanges), or has the right
to acquire such securities through immediate conversion of securities.
In return for the premium received when it writes a covered call option, the IPO
Fund gives up some or all of the opportunity to profit from an increase in the
market price of the securities covering the call option during the life of the
option. The IPO Fund retains the risk of loss should the price of such
securities decline. If the option expires unexercised, the IPO Fund realizes a
gain equal to the premium, which may be offset by a decline in price of the
underlying security. If the option is exercised, the IPO Fund realizes a gain or
loss equal to the difference between the IPO Fund's cost for the underlying
security and the proceeds of sale (exercise price minus commissions) plus the
amount of the premium.
The IPO Fund may terminate a call option that it has written before it expires
by entering into a closing purchase transaction. The IPO Fund may enter into
closing purchase transactions in order to free itself to sell the underlying
security or to write another call on the security, realize a profit on a
previously written call option, or protect a security from being called in an
unexpected market rise. Any profits from a closing purchase transaction may be
offset by a decline in the value of the underlying security. Conversely, because
increases in the market price of a call option will generally reflect increases
in the market price of the underlying security, any loss resulting from a
closing purchase transaction is likely to be offset in whole or in part by
unrealized appreciation of the underlying security owned by the IPO Fund.
Covered Put Options. The IPO Fund may write covered put options in order to
enhance its current return. Such options transactions may also be used as a
limited form of hedging against an increase in the price of securities that the
IPO Fund plans to purchase. A put option gives the holder the right to sell, and
obligates the writer to buy, a security at the exercise price at any time before
the expiration date. A put option is "covered" if the writer segregates cash and
high-grade short-term debt obligations or other permissible collateral equal to
the price to be paid if the option is exercised.
In addition to the receipt of premiums and the potential gains from terminating
such options in closing purchase transactions, the IPO Fund also receives
interest on the cash and debt securities maintained to cover the exercise price
of the option. By writing a put option, the IPO Fund assumes the risk that it
may be required to purchase the underlying security for an exercise price higher
than its then current market value, resulting in a potential capital loss unless
the security later appreciates in value.
The IPO Fund may terminate a put option that it has written before it expires by
a closing purchase transaction. Any loss from this transaction may be partially
or entirely offset by the premium received on the terminated option.
Purchasing Put and Call Options. The IPO Fund may also purchase put options to
protect portfolio holdings against a decline in market value. This protection
lasts for the life of the put option because the IPO Fund, as a holder of the
option, may sell the underlying security at the exercise price regardless of any
decline in its market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs that the IPO Fund must
pay. These costs will reduce any profit the IPO Fund might have realized had it
sold the underlying security instead of buying the put option.
The IPO Fund may purchase call options to hedge against an increase in the price
of securities that the IPO Fund wants ultimately to buy. Such hedge protection
is provided during the life of the call option since the IPO Fund, as holder of
the call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the IPO Fund might have
realized had it bought the underlying security at the time it purchased the call
option.
The IPO Fund may also purchase put and call options to attempt to enhance its
current return.
Risks Involved in the Sale of Options. Options transactions involve certain
risks, including the risks that Renaissance Capital will not forecast interest
rate or market movements correctly, that the IPO Fund may be unable at times to
close out such positions, or that hedging transactions may not accomplish their
purpose because of imperfect market correlations. The successful use of these
strategies depends on the ability of Renaissance Capital to forecast market and
interest rate movements correctly.
An exchange-listed option may be closed out only on an exchange that provides a
secondary market for an option of the same series. There is no assurance that a
liquid secondary market on an exchange will exist for any particular option or
at any particular time. If no secondary market were to exist, it would be
impossible to enter into a closing transaction to close out an option position.
As a result, the IPO Fund may be forced to continue to hold, or to purchase at a
fixed price, a security on which it has sold an option at a time when
Renaissance Capital believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other unforeseen
events might cause The Options Clearing Corporation or an exchange to institute
special trading procedures or restrictions that might restrict the IPO Fund's
use of options. The exchanges have established limitations on the maximum number
of calls and puts of each class that may be held or written by an investor or
group of investors acting in concert. It is possible that Renaissance Capital
Funds and other clients of Renaissance Capital may be considered such a group.
These position limits may restrict the IPO Funds' ability to purchase or sell
options on particular securities. Options that are not traded on national
securities exchanges may be closed out only with the other party to the option
transaction. For that reason, it may be more difficult to close out unlisted
options than listed options. Furthermore, unlisted options are not subject to
the protection afforded purchasers of listed options by The Options Clearing
Corporation.
<PAGE>
Illiquid Investments and Restricted Securities
The IPO Fund may invest up to 15% of its net assets in illiquid investments
(investments that cannot readily be sold within seven days) including restricted
securities which do not meet the criteria for liquidity established by the Board
of Trustees. Renaissance Capital, under the supervision of the Board of
Trustees, determines the liquidity of the IPO Fund's investments. The absence of
a trading market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses. Restricted securities are securities that cannot
be sold to the public without registration under the Securities Act of 1933.
Unless registered for sale, these securities can only be sold in privately
negotiated transactions or pursuant to an exemption from registration.
Convertible Securities
The IPO Fund may invest in all types of common stocks and equivalents (such as
convertible debt securities and warrants) and preferred stocks. The IPO Fund may
invest in convertible securities which may offer higher income than the common
stocks into which they are convertible. The convertible securities in which the
IPO Fund may invest consist of bonds, notes, debentures and preferred stocks
that may be converted or exchanged at a stated or determinable exchange ratio
into underlying shares of common stock.
The IPO Fund may be required to permit the issuer of a convertible security to
redeem the security, convert it into the underlying common stock or sell it to a
third party. Thus, the IPO Fund may not be able to control whether the issuer of
a convertible security chooses to convert that security. If the issuer chooses
to do so, this action could have an adverse effect on the IPO Fund's ability to
achieve its investment objective.
Investment Company Securities
The IPO Fund may invest up to 5% of its total assets in the securities of any
one investment company, but may not own more than 3% of the securities of any
one investment company or invest more than 10% of its total assets in the
securities of other investment companies. Because such other investment
companies employ an investment adviser, such investment by the IPO Fund will
cause shareholders to bear duplicative fees, such as management fees.
Borrowing
The IPO Fund may, from time to time, borrow up to 33 1/2% of its total assets
from banks at prevailing interest rates for temporary or emergency purposes and
investing in additional securities. The IPO Fund's borrowings are limited so
that immediately after such borrowings the value of assets (including
borrowings) less liabilities (not including borrowings) is at least three times
the amount of the borrowings. Should the IPO Fund, for any reason, have
borrowings that do not meet the above test then, within three business days, the
IPO Fund must reduce such borrowings so as to meet the necessary test. Under
such a circumstance, the IPO Fund may have to liquidate portfolio securities at
a time when it is disadvantageous to do so. Gains made with additional funds
borrowed will generally cause the net value of the IPO Fund's shares to rise
faster than could be the case without borrowings. Conversely, if investment
results fail to cover the cost of borrowings, the net asset value of the Fund
could decrease faster than if there had been no borrowings.
Year 2000
Although the IPO Fund did not experience any difficulties related to the Year
2000 transition, like other mutual funds, the IPO Fund could be adversely
affected if its computer systems or the computer systems used by its service
providers do not properly process and calculate date-related information on and
after January 1, 2000. The IPO Fund and its service providers have been actively
updating their systems to be able to continue to process year 2000 data.
INVESTMENT RESTRICTIONS
The IPO Fund has adopted the following restrictions and policies relating to the
investment of the assets of the IPO Fund and its activities. These are
fundamental restrictions and may not be changed without the approval of the
holders of a majority of the outstanding voting shares of the IPO Fund which
means the lesser of (1) the holders of more than 50% of the outstanding shares
of the IPO Fund or (2) 67% of the shares present if more than 50% of the shares
are present at a meeting in person or by proxy.
The IPO Fund may not:
1. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the IPO
Fund from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities).
2. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the IPO Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business). Investments by the IPO Fund
in securities backed by mortgages on real estate or in marketable securities of
companies engaged in such activities are not hereby precluded.
3. Issue any senior security except that (a) the IPO Fund may engage in
transactions that may result in the issuance of senior securities to the extent
permitted under applicable regulations and interpretations of the 1940 Act or an
exemptive order; (b) the IPO Fund may acquire other securities, the acquisition
of which may result in the issuance of a senior security, to the extent
permitted under applicable regulations or interpretations of the 1940 Act; and
(c) subject to the restrictions set forth below, the IPO Fund may borrow money
as authorized by the 1940 Act.
4. Lend any security or make any other loan if, as a result, more than 33 1/3%
of the IPO Fund's total assets would be lent to other parties, but this
limitation does not apply to purchases of publicly issued debt securities or to
repurchase agreements.
5. Underwrite securities issued by others, except to the extent that the IPO
Fund may be considered an underwriter within the meaning of the Securities Act
of 1933 (the "1933 Act") in the disposition of restricted securities.
6. With respect to 75% of the IPO Fund's total assets, the IPO Fund may not
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result (a) more than 5% of the IPO Fund's total assets would be
invested in the securities of that issuer, or (b) the IPO Fund would hold more
than 10% of the outstanding voting securities of that issuer.
7. Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities,
or repurchase agreements secured thereby) if, as a result, more than 25% of the
IPO Fund's total assets would be invested in the securities of companies whose
principal business activities are in the same industry. In the utilities
category, the industry shall be determined according to the service provided.
For example, gas, electric, water and telephone will be considered as separate
industries.
MANAGEMENT OF THE IPO FUND
Overall responsibility for management of the IPO Fund rests with the Trustees
who are elected by the shareholders. The Trustees, in turn, elect the officers
of the IPO Fund to actively supervise its day-to-day operations.
The Trustees and Officers of the IPO Fund and their principal occupations during
the past five years are set forth below.
- --------------------- ---------------------- ----------------------------
Name and Address Position held Principal Occupations
with the IPO Fund During the Past Five Years
- --------------------- ----------------------- -----------------------------
William K. Smith* Chairman of the Board, Chairman of the Board,
325 Greenwich Avenue President and Trustee President and Director,
Greenwich, CT 06830 Renaissance CapitalCorporation
(1991 - present); Senior Vice
President, Kidder Peabody
(1989-1991); Vice President,
Bear Stearns (1987-1989)
- --------------------- ----------------------- ----------------------------------
- --------------------- ----------------------- ----------------------------------
Linda R. Killian* Vice President, Secretary, Vice President and Director,
325 Greenwich Avenue co-Chief, Investment Officer Renaissance Capital
Greenwich, CT 06830 and Trustee Corporation
(1992-present); Senior Vice
President,
Wertheim Schroder(1989 -1992);
Vice President and Portfolio
Manager, Citicorp Investment
Management (1984-1989)
- -------------------- ----------------------- -----------------------------
- -------------------- ----------------------- -----------------------------
Kathleen Shelton Smith* Vice President, Treasurer, Vice President, Treasurer,
325 Greenwich Avenue co-Chie, Investment Officer Secretary and Director,
Greenwich, CT 06830 Renaissance Capital
Corporation (1991-present);
Director, Merrill Lynch
Capital Markets (1983-1991)
- ------------------- ------------------------- -----------------------------
- ------------------- ------------------------- -----------------------------
Martin V. Alonzo Trustee Chairman, President and Chief
c/o Chase Industries Inc. Executive Officer,
PO Box 152 Chase Industries Inc. ;
Montpelier, OH 43543 (1990-present); Advisor to
Maxxam Group (1987-1990);
Senior Vice President and
President, AMAX (1967-1987)
- ------------------- ----------------------- -----------------------------
- ------------------- ----------------------- -----------------------------
Warren K. Greene Trustee Senior Vice President,
c/o Trendlogic Associates, Trendlogic, Inc., an investment
Inc. advisor and trading advisor,
One Fawcett Place (1995-present); Consultant to
Greenwich, CT 06830 Mutual Funds (1993-1994);
President, Chief Executive
Officer and Investment Officer,
American Investor Funds
(1965-1993)
- ------------------ ------------------------- --------------------------------
- ------------------ ------------------------- --------------------------------
Philip D. Gunn Trustee Principal, Growth Capital
Growth Capital Partners, Inc. Partners, Inc., (1995-present);
520 Madison Avenue Founder and President,
New York, N.Y. 10022 Phillip D. Gunn, a merchant
banking firm, (1982-present)
- ------------------ ------------------------- --------------------------------
- ------------------ ------------------------- --------------------------------
G. Peter O'Brien Trustee Member, Board of Directors,
118 Meadow Road Pinnacle Holdings (1999 - present)
Riverside, CT 06878 Board of Directors, Legg Mason
Family of Mutual Funds (1999 -
present); Member, Board of
Directors, Colgate University
(1996-present), Managing Director,
Merrill Lynch Equity Capital
Markets (1971-1999)
- ------------------ ----------------------- -----------------------------------
- ------------------ ----------------------- -----------------------------------
Gerald W. Puschel Trustee President, F. Schumacher & Co.
c/o F. Schumacher & Co. (1989-present); President, Waverly
79 Madison Avenue (1980-1989)
New York, NY 10016
- ------------------------------------ -------------------------------------------
<PAGE>
*The following table indicates the estimated compensation to be paid to each
Trustee from Renaissance Capital Greenwich Funds for the IPO Fund's most
recently completed fiscal year. Trustees who are "interested persons" of the IPO
Fund , as defined in the 1940 Act. The Trustees of the IPO Fund who are officers
or employees of the investment adviser receive no remuneration from the IPO
Fund. Each of the other Trustees has agreed to waive his fees at this time.
Kathleen S. and William K. Smith are married.
The following table indicates the estimated compensation to be paid to each
Trustee from the Renaissance Capital Funds for a 12-month period ended September
30, 1999.
=============== ================== ================ ========== ============
Pension or Retirement Estimated Annual Total Total
Benefits Accrued as Benefits Upon Compensation Compensation
Portfolio Expenses Retirement From Fund from "Fund
Complex"
- ------------------ ----------------- ------------------------ ------------------
- ------------------ ----------------- ------------------------ ------------------
William K. Smith, -0- -0- -0- -0-
Trustee
- ----------------- ------------------ ------------------------ ------------------
- ---------------- ------------------ ------------------------ ------------------
Linda R. Killian, -0- -0- -0- -0-
Trustee
- ----------------- ------------------- ------------------------ -----------------
- ----------------- ------------------- ------------------------ -----------------
Kathleen Shelton -0- -0- -0- -0-
Smith, Trustee
- ----------------- ------------------- ------------------------ -----------------
- ----------------- ------------------- ------------------------ -----------------
Martin V. Alonzo, -0- -0- -0- -0-
Trustee
- ----------------- ------------------- ------------------------ -----------------
- ----------------- ------------------- ------------------------ -----------------
Warren K. Greene, -0- -0- -0- -0-
Trustee
- ----------------- ------------------- ------------------------ -----------------
- ----------------- ------------------- ------------------------ -----------------
Philip D. Gunn, -0- -0- -0- -0-
Trustee
- ----------------- ------------------- ------------------------ -----------------
- ----------------- ------------------- ------------------------ -----------------
G. Peter O'Brien, -0- -0- -0- -0-
Trustee
- ----------------- ------------------- ------------------------ -----------------
- ----------------- ------------------- ------------------------ -----------------
Gerald W. Puschel, -0- -0- -0- -0-
Trustee
========================= ======================= ======================== =====
(1) Currently there is only the IPO Fund in the Renaissance Capital Funds
Complex. Control persons owning 6% or more of the IPO Fund as of December 31,
1999 are: NA Trustees and officers together own 3% of the IPO Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Prospectus, Renaissance Capital is the IPO Fund's investment
adviser, providing services under the advisory and service contracts.
Renaissance Capital has been a registered investment adviser since August 1994
and it and its predecessor have been operating since September 1991.
The principal executive officers and directors of Renaissance Capital are:
William K. Smith, Chairman and President; Kathleen Shelton
Smith, Director, Vice President, Secretary and Treasurer; and Linda R. Killian,
Director and Vice President. Renaissance Capital is
wholly owned by the three principals.
The investment advisory agreement between the IPO Fund and Renaissance Capital
dated October 10, 1997 provides for an advisory fee at an annual rate of 1.50%
of the IPO Fund's average daily net assets during the year.
The investment advisory agreement provides that Renaissance Capital shall render
investment advisory and other services to the IPO Fund including, at its
expense, all administrative services, office space and the services of all
officers and employees of the IPO Fund. The IPO Fund pays all other expenses not
assumed by Renaissance Capital, including taxes, interest, brokerage
commissions, insurance premiums, fees and expenses of the custodian and
shareholder servicing agent, legal, audit and fund accounting expenses, fees and
expenses in connection with qualification under federal and state securities
laws, and costs of shareholder reports and proxy materials.
It is possible that certain of Renaissance Capital's clients may have investment
objectives similar to the IPO Fund and certain investments may be appropriate
for the IPO Fund and for other clients advised by Renaissance Capital. From time
to time, a particular security may be bought or sold for only one client's
portfolio or in different amounts and at different times for more than one but
less than all such clients. In addition, a particular security may be bought for
one or more clients when one of more clients are selling such security, or
purchases or sales of the same security may be made for two or more clients at
the same time. In such an event, such transactions, to the extent practicable,
will be averaged as to price and allocated as to amount in proportion to the
amount of each order. In some cases, this procedure could have a detrimental
effect on the price or amount of the securities purchased or sold by the IPO
Fund. In other cases, however, it is believed that the ability of the IPO Fund
to participate, to the extent permitted by law, in volume transactions will
produce less expensive brokerage costs.
The officers, directors, employees of Renaissance Capital and its affiliates may
from time to time own securities that are also held in the IPO Fund's portfolio.
Renaissance Capital has adopted a Code of Ethics which requires among other
things, duplicate confirms of security transactions for each account and
restricting trading in various types of securities to avoid possible conflicts
of interest.
Renaissance Capital may from time to time, directly or through affiliates, enter
into agreements to furnish for compensation special research or financial
services to companies, including services in connection with acquisitions,
mergers, or financings. In the event that such agreements are in effect with
respect to issuers of securities held in the portfolio of the IPO Fund, specific
reference to such agreements will be made in the "Schedule of Investments" in
shareholder reports of the IPO Fund. As of the date of this Statement of
Additional Information, no such agreements exist.
Fund Administration
Under an Administration and Fund Accounting Agreement (the "Administration
Agreement"), Chase Global Funds Services Company (the "Administrator"), located
at 73 Tremont Street, Boston, Massachusetts 02108, 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.
SHAREHOLDER SERVICES
The IPO Fund has entered into shareholder servicing agreements with certain
shareholder servicing agents under which the shareholder servicing agents have
agreed to provide certain support services to their customers who beneficially
own shares of the IPO Fund. These services include assisting with purchase and
redemption transactions, maintaining shareholder accounts and records,
furnishing customer statements, transmitting shareholder reports and
communications to customers and other similar shareholder liaison services. For
performing these services, each shareholder servicing agent receives an annual
fee of up to 0.25% 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. Shareholder servicing agents may subcontract with other parties
for the provision of shareholder support services.
Shareholder servicing agents may offer additional services to their customers,
such as pre-authorized or systematic purchase and redemption plans. Each
shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the IPO Fund to do so) credit to the accounts of their customers
from whom they are already receiving other fees an amount not exceeding such
other fees or the fees for their services as shareholder servicing agents.
In approving the Distribution Plan ("the Plan") in accordance with the
requirements of Rule 12b-1 under the 1940 Act, the Trustees (including the
Independent Trustees, being Trustees who are not "interested persons", as
defined by the 1940 Act, of the Renaissance Capital Funds and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan) considered various factors and determined that there is a
reasonable likelihood that the Plan will benefit the IPO Fund and its
shareholders. The Plan will continue in effect from year to year if specifically
approved annually (a) by the majority of the IPO Fund's outstanding voting
shares or by the Board of Trustees and (b) by the vote of a majority of the
Independent Trustees. While the Plan remains in effect, the Principal Financial
Officer shall prepare and furnish to the Board of Trustees a written report
setting forth the amounts spent by the IPO Fund under the Plan and the purposes
for which such expenditures were made. The Plan may not be amended to increase
materially the amount to be spent for distribution without shareholder approval
and all material amendments to the Plan must be approved by the Board of
Trustees and by the Independent Trustees cast in person at a meeting called
specifically for that purpose. While the Plan is in effect, the selection and
nomination of the Independent Trustees shall be made by those Independent
Trustees then in office.
Custodian, Transfer and Dividend Disbursing Agent
Chase Global Fund Services, which has its principal custodial address at 73
Tremont Street, Boston, MA 02108-3913, acts as custodian of the IPO Fund's
investments, and also serves a the IPO Fund's Transfer and Dividend Disbursing
Agent.
BROKERAGE ARRANGEMENTS
Orders for the purchase and sale of portfolio securities are placed with brokers
and dealers who, in the judgment of Renaissance Capital, are able to execute
them as expeditiously as possible and at the best obtainable price. Purchases
and sales of securities which are not listed or traded on a securities exchange
will ordinarily be executed with primary market makers acting as principal,
except when it is determined that better prices and executions may otherwise be
obtained. Renaissance Capital is also authorized to place purchase or sale
orders with brokers or dealers who may charge a commission in excess of that
charged by other brokers or dealers if the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided. Such services may include but are not limited to information as to the
availability of securities for purchase and sale; statistical or factual
information or opinions pertaining to investments; and appraisals or evaluations
of portfolio securities. Such allocations will be in such amounts and in such
proportions as Renaissance Capital may determine. A portion of the IPO Fund's
brokerage commissions may be paid to Renaissance Capital Investments, Inc. (the
"Broker/Dealer"), an affiliate of Renaissance Capital.
Renaissance Capital undertakes that such higher commissions will not be paid by
the IPO Fund unless (1) Renaissance Capital determines in good faith that the
amount is reasonable in relation to the services in terms of the particular
transaction or in terms of Renaissance Capital's overall responsibilities to the
IPO Fund, (2) such payment is made in compliance with the provisions of Section
28 (e) of the Securities and Exchange Act of 1934 and other applicable state and
federal laws, and (3) in the opinion of Renaissance Capital the total
commissions paid by the IPO Fund are reasonable in relation to the expected
benefits to the IPO Fund over the long term. The investment advisory fees paid
by the IPO Fund under the investment advisory agreement are not reduced as a
result of the IPO Fund's receipt of research services.
Consistent with both the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and such policies as the Board of Trustees may
determine, and subject to seeking best execution, Renaissance Capital may
consider sales of shares of the IPO Fund as a factor in the selection of dealers
to execute portfolio transactions for the IPO Fund.
The Board of Trustees has adopted procedures incorporating the standards of Rule
17e-1 under the 1940 Act which requires that the commissions paid to the
Broker/Dealer or any other "affiliated person" be "reasonable and fair" compared
to the commissions paid to other brokers in connection with comparable
transactions. The procedures require that Renaissance Capital furnish reports to
the Trustees with respect to the payment of commissions to affiliated brokers
and maintain records with respect thereto.
Section 10(f) of the 1940 Act generally prohibits an investment company from
acquiring, during the existence of any underwriting or selling syndicate, any
securities the principal underwriter of which is affiliated with the investment
company's investment adviser. Rule 10f-3, however, permits an investment company
to purchase such securities if certain procedures are followed. These conditions
include (i) that the securities to be purchased are part of a registered
offering or are municipal securities; (ii) that the securities are purchased at
not more than the public offering price; (iii) that the securities are offered
pursuant to an underwriting agreement; (iv) that the commissions paid are fair
and reasonable; (v) that the securities meet certain qualifications and ratings;
(vi) that the amount of securities purchased are limited to up to 25% of the
principal amount of the offering; and (vii) that the investment company may not
purchase such securities directly or indirectly from certain affiliated persons.
The procedures must be approved and reviewed annually by the Board of Trustees
of the investment company.
HOW TO BUY SHARES
(See also "Net Asset Value"and "Investing in the IPO Fund"in the
IPO Fund's Prospectus)
Shares of the IPO Fund are purchased at the net asset value next calculated
after receipt of a purchase order. The IPO Fund reserves the right to reduce or
waive the minimum purchase requirements in certain cases such as pursuant to
payroll deduction plans, etc., where subsequent and continuing purchases are
contemplated. Shares of the IPO Fund may be purchased by various tax-sheltered
retirement plans. Upon request, the Broker/Dealer will provide information
regarding eligibility and permissible contributions. Because a retirement plan
is designed to provide benefits in future years, it is important that the
investment objective of the IPO Fund be consistent with the participant's
retirement objectives and time horizon. Premature withdrawals from a retirement
plan may result in adverse tax consequences. For more complete information,
contact the Broker/Dealer at 1-888-IPO-FUND during New York business hours.
HOW TO REDEEM SHARES
(See also "Redeeming IPO Fund Shares" in the IPO Fund's Prospectus)
The right of redemption may be suspended, or the date of payment postponed
beyond the normal two-day period by the IPO Fund under the following conditions
authorized by the 1940 Act: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend and holiday closures, or
(b) during which trading on the New York Stock Exchange is restricted; (2) for
any period during which an emergency exists as a result of which (a) disposal by
the IPO Fund of securities owned by it is not reasonably practical, or (b) it is
not reasonably practical for the IPO Fund to determine the fair value of its net
assets; (3) for such other periods as the SEC may by order permit for the
protection of the IPO Fund's shareholders.
It is possible that conditions may exist in the future which would, in the
opinion of the Board of Trustees, make it undesirable for the IPO Fund to pay
for redemptions in cash. In such cases the Board may authorize payment to be
made in portfolio securities or other property of the IPO Fund. However, the IPO
Fund has obligated itself under the 1940 Act to redeem for cash all shares
presented for redemption by any one shareholder up to $250,000 (or 1% of the IPO
Fund's net assets if that is less) in any 90-day period. Securities delivered in
payment of redemptions are valued at the same value assigned to them in
computing the net asset value per share. Shareholders receiving such securities
may incur brokerage costs on their sales.
VALUATION OF SECURITIES
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 no transactions, are valued at the average of the
most recent bid and asked prices, except in the case of open short positions
where the asked price is used for valuation purposes. Bid price is used when no
asked price is available. 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. Expenses and fees, including the
management fee and distribution and service fees, are accrued daily and taken
into account for the purpose of determining the net asset value of the IPO
Fund's shares.
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. The Board of Trustees will review the
method of valuation on a current basis. In making their good faith valuation of
restricted securities, the Board of Trustees generally will take the following
factors into consideration: restricted securities which are, or are convertible
into, securities of the same class of securities for which a public market
exists usually will be valued at market value less the same percentage discount
at which purchased. This discount will be revised periodically by the Board of
Trustees if the Trustees believe that it no longer reflects the value of the
restricted securities. Restricted securities not of the same class as securities
for which a public market exists usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Board of Trustees.
TAXES
The IPO Fund intends to qualify each year as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). By so
qualifying, the IPO Fund will not be subject to Federal income taxes to the
extent that it distributes its net investment income and realized net capital
gains.
Distributions of investment income and of the excess of net short-term capital
gain over net long-term capital loss are taxable as ordinary income (whether or
not reinvested in additional IPO Fund shares). Distributions of the excess of
net long-term capital gain over net short-term capital loss (net capital gains)
are taxable to shareholders as long-term capital gain, regardless of the length
of time the shares of the IPO Fund have been held by such shareholders and
regardless of whether the distribution is received in cash or in additional
shares of the IPO Fund. It is expected that dividends will constitute a small
portion of the IPO Fund's gross income.
The Code requires each regulated investment company to pay a nondeductible 4%
excise tax to the extent the company does not distribute, during each calendar
year, an amount equal to 98% of its ordinary income for such calendar year and
98% of its capital gain net income for the one-year period ended on October 31
of such calendar year (or, at the election of a regulated investment company
having a taxable year ending November 30 or December 31, for its taxable year).
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year. The IPO Fund anticipates that it will make
sufficient timely distributions to avoid imposition of the excise tax.
Options and futures contracts entered into by the IPO Fund will be subject to
special tax rules. These rules may accelerate income to the IPO Fund, defer IPO
Fund losses, cause adjustments in the holding periods of IPO Fund securities,
convert capital gains into ordinary income and convert short-term capital losses
into long-term capital losses. As a result, these rules could affect the amount,
timing and character of IPO Fund distributions.
A distribution by the IPO Fund will result in a reduction in the IPO Fund's net
asset value per share. Such a distribution is taxable to the shareholder as
ordinary income or capital gain as described above even though, from an investor
standpoint, it may constitute a return of capital. In particular, investors
should be careful to consider the tax implications of buying shares just prior
to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will then receive a return of capital on the distribution that
nevertheless is taxable to them. All distributions, whether received in cash or
reinvested in shares, must be reported by each shareholder on his or her federal
income tax. Under the Code, dividends declared by the IPO Fund in October,
November and December of any calendar year, and payable to shareholders of
record in such a month, shall be deemed to have been received by the shareholder
on December 31 of such calendar year if such dividend is actually paid in
January of the following calendar year. The IPO Fund intends to pay all
dividends during the month of December so that it will not be affected by this
rule.
A shareholder may realize a capital gain or capital loss on the sale or
redemption of shares of the IPO Fund. The tax consequences of a sale or
redemption depend on several factors, including the shareholder's tax basis in
the shares sold or redeemed and the length of time the shares have been held.
Basis in the shares may be the actual cost of those shares (net asset value of
the IPO Fund shares on purchase or reinvestment date). Under certain
circumstances, a loss on the sale or redemption of shares held for six months or
less may be treated as a long-term capital loss to the extent that the IPO Fund
has distributed long-term capital gain dividends on such shares. Moreover, a
loss on a sale or redemption of IPO Fund shares will be disallowed to the extent
the shareholder purchases other shares of the IPO Fund within 30 days before or
after the date the shares are sold or redeemed.
For Federal income tax purposes, distributions paid from net investment income
and from any realized net short-term capital gains are taxable to shareholders
as ordinary income, whether received in cash or in additional shares. Dividends
are taxable as ordinary income, whereas capital gain distributions are taxable
as long-term capital gains. The 70% dividends-received deduction for
corporations will apply only to the proportionate share of the dividend
attributable to dividends received by the IPO Fund from domestic corporations.
Any dividend or capital gain distribution paid shortly after a purchase of
shares of the IPO Fund will have the effect of reducing the per share net asset
value of such share by the amount of the dividend or distribution. Furthermore,
even if the net asset value of the shares of the IPO Fund immediately after a
dividend or distribution is less than the cost of such shares to the investor,
the dividend or distribution will be taxable to the investor.
The IPO Fund is required to withhold federal income tax at a rate of 31%
("backup withholding") from dividend payments and redemption and exchange
proceeds if an investor fails furnish the IPO Fund with his social security
number or other tax identification number or fails to certify under penalty of
perjury that such number is correct or that he is not subject to backup
withholding due to the underreporting of income. The certification form is
included as part of the share purchase application and should be completed when
the account is opened. Corporations, other exempt individuals or entities, and
foreign individuals that furnish the IPO Fund with proper notification of their
foreign status will not be subject to backup withholding.
This section is not intended to be a full discussion of present or proposed
federal income tax laws and the effect of such laws on an investor. Investors
are urged to consult their respective tax advisers for a complete review of the
tax ramifications of an investment in the IPO Fund.
<PAGE>
PERFORMANCE INFORMATION
General
From time to time, quotations of the IPO Fund's performance may be included in
advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures are calculated in the following manner.
Average Annual Total Return
Average annual total return is the average annual compound rate of return for
periods of one year, five years, and ten years, all ended on the last day of a
recent calendar quarter. Average annual total return quotations reflect changes
in the price of the IPO Fund's shares and assume that all dividends and capital
gains distributions during the respective periods were reinvested in IPO Fund
shares. Average annual total return is calculated by computing the average
annual compound rates of return of a hypothetical investment over such periods,
according to the following formula (average annual total return is then
expressed as a percentage):
T = (ERV/P)1/n - 1
Where:
T = Average annual total return
P = A hypothetical initial investment of $1,000
n = Number of years
ERV = Ending redeemable value: ERV is the value, at the end of
the applicable period, of a hypothetical $1,000 investment made at the beginning
of the applicable period.
It should be noted that average annual total return is based on historical
earnings and based on changes in market conditions and the level of the IPO
Fund's expenses.
In connection with communicating its average annual total return to current or
prospective shareholders, the IPO Fund also may compare these figures to the
performance of other mutual funds tracked by the mutual fund rating services or
to unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management cost.
Comparison of Portfolio Performance
Comparison of the quoted non-standardized performance of various investments is
valid only if performance is calculated in the same manner. Because there are
different methods of calculating performance, investors should consider the
effect of the methods used to calculate performance when comparing performance
of the IPO Fund with performance equated with respect to other investment
companies or types of investments.
Marketing and other IPO Fund literature may include a description of the
potential risks and rewards associated with an investment in the IPO Fund. The
description may include a "risk/return spectrum" which compares the IPO Fund to
other Funds investing in IPOs or broad categories of funds, such as money
market, bond or equity funds, in terms of potential risk and returns. Money
market funds are designed to maintain a constant $1.00 share price and have a
fluctuating yield. Share price, yield and total return of a bond fund will
fluctuate. The share price and return of an equity fund also will fluctuate.
Risk/return spectrums also may depict funds that invest in both domestic and
foreign securities or a combination of bond and equity securities.
ADDITIONAL INFORMATION
Description of Shares
Renaissance Capital Funds is a Delaware business trust. The Delaware Trust
Instrument authorizes the Trustees to issue an unlimited number of shares, which
are units of beneficial interest, without par value. The Trust Instrument
authorizes the Trustees to divide or redivide any unissued shares of the
Renaissance Capital Funds into one or more additional series by setting or
changing in any one or more aspects their respective preferences, conversion or
other rights, voting power, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such conversion or
exchange rights as the Trustees may grant in their discretion. When issued for
payment, as described in the Prospectus and this Statement of Additional
Information, Renaissance Capital Fund's shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of Renaissance
Capital Funds, shares of the IPO Fund are entitled to receive the assets
available for distribution belonging to the IPO Fund, and a proportionate
distribution, based upon the relative asset values of the respective funds of
the Renaissance Capital Funds, of any general assets not belonging to any
particular fund that are available for distribution.
Shares of Renaissance Capital Funds are entitled to one vote per share (with
proportional voting for fractional shares) on such matters as shareholders are
entitled to vote. On any matter submitted to a vote of the shareholders, all
shares are voted separately by individual series (funds), and whenever the
Trustees determine that the matter affects only certain series, may be submitted
for a vote by only such series, except (1) when required by the 1940 Act, shares
are voted in the aggregate and not by individual series; and (2) when the
Trustees have determined that the matter affects the interests of more than one
series and that voting by shareholders of all series would be consistent with
the 1940 Act, then the shareholders of all such series shall be entitled to vote
thereon (either by individual series or by shares voted in the aggregate, as the
Trustees in their discretion may determine). The Trustees may also determine
that a matter affects only the interests of one or more classes of a series, in
which case (or if required under the 1940 Act) such matter shall be voted on by
such class or classes. There will normally be no meetings of shareholders for
the purpose of electing Trustees unless and until such time as less than a
majority of the Trustees have been elected by the shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the election
of Trustees. In addition, Trustees may be removed from office by a vote of the
holders of at least two-thirds of the outstanding shares of Renaissance Capital
Funds. A meeting shall be held for such purpose upon the written request of the
holders of not less than 10% of the outstanding shares. Upon written request by
ten or more shareholders meeting the qualifications of Section 16(c) of the 1940
Act, (i.e. persons who have been shareholders for at least six months, and who
hold shares having a net asset value of at least $25,000 or constituting 1% of
the outstanding shares) stating that such shareholders wish to communicate with
the other shareholders for the purpose of obtaining the signatures necessary to
demand a meeting to consider removal of a Trustee, Renaissance Capital Funds
will provide a list of shareholders or disseminate appropriate materials (at the
expense of the requesting shareholders). Except as set forth above, the Trustees
shall continue to hold office and may appoint their successors.
Shareholder and Trustee Liability
The Delaware Business Trust Act provides that a shareholder of a Delaware
business trust shall be entitled to the same limitation of personal liability
extended to shareholders of Delaware corporations, and the Delaware Trust
Instrument provides that shareholders of Renaissance Capital Funds shall not be
liable for the obligations of Renaissance Capital Funds. The Delaware Trust
Instrument also provides for indemnification out of the trust property of any
shareholder held personally liable solely by reason of his or her being or
having been a shareholder. The Delaware Trust Instrument also provides that
Renaissance Capital Funds shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of Renaissance Capital
Funds, and shall satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is considered to be
extremely remote.
The Delaware Trust Instrument states further that no Trustee, officer, or agent
of Renaissance Capital Funds shall be personally liable in connection with the
administration or preservation of the assets of the IPO Fund or the conduct of
Renaissance Capital Funds's business; nor shall any Trustee, officer, or agent
be personally liable to any person for any action or failure to act except for
his own bad faith, willful misfeasance, gross negligence, or reckless disregard
of his duties. The Declaration of Trust also provides that all persons having
any claim against the Trustees or Renaissance Capital Funds shall look solely to
the assets of Renaissance Capital Funds for payment.
FINANCIAL STATEMENTS
The financial statements and Report of Independent Accounts for the year ended
September 30, 1999 are contained in the Annual Report, which is hereby
incorporated by reference.
The IPO Plus Aftermarket Fund
a series of Renaissance Capital Greenwich Funds
325 Greenwich Avenue
Greenwich, CT 06830
(203) 622-2978
February 17, 2000
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
Re: Renaissance Capital Greenwich Funds
File Nos. 333-21311; 811-08049
Dear Sir/Madam:
We are filing via EDGAR, on behalf of Renaissance Capital Greenwich Funds
(formerly Renaissance Funds), (the "Registrant"), and pursuant to the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, as amended,
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A
pursuant to the Securities Act of 1933 and the Investment Company Act of 1940.
This amendment is being filed pursuant to Rule 485(b) and it is proposed that it
will become effective immediately upon filing. The Registrant has certified and
we concur that it meets all the requirements for immediate effectiveness
pursuant to Rule 485(b).
In the event you have any questions concerning this filing, please do not
hesitate to call me at the above number.
Sincerely,
_______/s/_________
Linda Killian
Secretary
KRAMER LEVIN NAFTALIS & FRANKEL
919 Third Avenue
New York, NY 10022-3852
Tel: (212) 715-9100 47, Avenue Hoche
Fax: (212) 715-8000 75008 Paris
France
February 9, 2000
Renaissance Capital Greenwich Funds
325 Greenwich Avenue
Greenwich, CT 06830
Re: Renaissance Capital Greenwich Funds
File Nos 33-21311; 811-08049
Ladies and Gentlemen:
We hereby consent to the reference of our firm as Counsel in
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A.
Very truly yours,
Kramer & Levin Naftalis & Frankel LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the references to our firm in the Post-Effective Amendment to
the Registration Statement on Form N-1A of the Renaissance Capital Greenwich
Funds and to the use of our report dated October 29, 1999 on the financial
statements and financial highlights of The IPO Plus Aftermarket Fund, a series
of shares of Renaissance Capital Greenwich Funds. Such financial statements and
financial highlights appear in the 1999 Annual Report to Shareholders which is
incorporated by reference in the Registration Statement.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2000
<PAGE>
KL2:175842.4
