IPO Plus Aftermarket Fund
................................................................................
Dear Fellow Shareholder:
The IPO+ Aftermarket Fund is now beginning its fourth year. We would like to
report on how the IPO+ Fund weathered an extremely volatile equity market and
describe our outlook for the future. For the 12 months ended September 30, 2000,
the IPO+ Fund's total return was 64%, as compared with 23% for the Russell 2000
and 13% for the S&P 500.
The IPO+ Fund achieved those returns by investing in telecommunications
infrastructure providers, such as optical equipment maker Sycamore Networks,
biotechnology companies, such as Invitrogen, a leader in genetic testing
equipment, and alternative power providers, such as Capstone Turbine, the
leading maker of micro-turbines to generate electricity.
While the second half of the fiscal year met with volatile conditions in both
the overall equity market and the IPO market in particular, the IPO+ Fund used
the market downturn to invest in recent IPOs whose share prices had been beaten
down without regard for positive fundamentals. The IPO+ Fund also
counterbalanced the selloff in technology and overvalued Internet plays by
taking short positions in a number of companies whose fundamentals are weak.
The management of the IPO+ Fund also wants you to know that we are sensitive to
the tax consequences of owning a mutual fund. This year, once again, the IPO+
Fund will not have a distribution of income dividends or capital gains. Going
forward, as we have in the past, we will manage the IPO+ Fund to avoid
distributions, as long as those actions make sense from an investment point of
view.
At present, the IPO market has gone through a much-needed correction from the
euphoria of the Internet frenzy, and is making a slow recovery. Looking into
2001, we see the beginnings of the type of IPO market that rewards
research-driven, fundamentally-based investors.
The management of the IPO+ Fund believes that IPOs represent the cutting edge of
the economy. We use our fundamental research to select a high quality portfolio
for the IPO+ Fund.
Sincerely,
Renaissance Capital
November 20, 2000
PORTFOLIO OF INVESTMENTS
................................................................................
As of
September 30, 2000
Shares Value
Common Stocks (94.8%)
Business Services (2.2%)
Aether Systems, Inc.* 20,000 $ 2,110,000
School Specialty, Inc.* 20,100 428,381
------------
2,538,381
------------
Computer Equipment (4.7%)
Mobility Electronics, Inc.* 40,000 365,000
Palm, Inc.* 100,000 5,293,750
------------
5,658,750
------------
Electronic Components/Semiconductor
Manufacturing (2.5%)
Axcelis Technologies, Inc.* 30,000 356,250
Entegris, Inc.* 50,000 478,125
Integrated Telecom Express, Inc.* 25,000 518,750
Marvel Technology Group Ltd.* 20,000 1,542,500
------------
2,895,625
------------
Energy Alternatives (7.4%)
Active Power, Inc.* 35,000 2,170,000
Capstone Turbine Corp.* 85,000 5,886,250
NRG Energy, Inc.* 20,000 730,000
------------
8,786,250
------------
Financial (1.4%)
E*Trade Group, Inc.* 100,000 1,643,750
------------
Health Care (12.6%)
deCODE Genetics, Inc.* 10,000 256,875
Diversa Corp.* 27,500 742,500
Dyax Corp.* 20,000 875,000
Genentech, Inc. * 45,000 8,355,937
Invitrogen Corp. * 65,000 4,623,125
------------
14,853,437
------------
Internet - Infrastructure (10.8%)
Brocade Communications Systems, Inc.* 30,000 7,080,000
Cacheflow, Inc.* 30,000 4,290,000
Foundry Networks, Inc.* 20,000 1,338,750
------------
12,708,750
------------
See Notes to Financial Statements
PORTFOLIO OF INVESTMENTS
................................................................................
(Continued)
Shares Value
Internet - Services (9.0%)
Exodus Communications, Inc.* 60,000 $ 2,962,500
FreeMarkets, Inc.* 30,000 1,713,750
HomeStore.com, Inc.* 45,100 2,108,425
Internet Initiative Japan, Inc. ADR* 65,000 2,673,125
Universal Access, Inc.* 100,000 1,175,000
-------------
10,632,800
-------------
Internet - Software (10.3%)
Ariba, Inc.* 35,000 5,014,296
E.piphany, Inc.* 15,000 1,155,938
Phone.com, Inc.* 30,000 3,408,750
TIBCO Software, Inc.* 30,000 2,533,125
-------------
12,112,109
-------------
Leisure (2.8%)
Fox Entertainment Group, Inc., Class A* 14,500 384,250
Martha Stewart Living Omnimedia, Inc., Class 57,100 1,498,875
A*
Radio One, Inc., Class A* 63,000 523,688
Radio One, Inc., Class D* 126,000 889,875
-------------
3,296,688
-------------
Telecom Cellular (1.8%)
AT&T Wireless Group* 100,000 2,087,500
-------------
Telecom Equipment (23.8%)
Accelerated Networks, Inc.* 60,000 1,012,500
Avanex Corp.* 50,000 5,384,375
Avici Systems, Inc.* 25,000 2,378,125
Bookham Technology, Inc.* 23,400 1,003,275
Corvis Corp.* 10,000 610,468
Cosine Communications, Inc.* 20,000 1,111,250
Finisar Corp.* 120,000 5,805,000
JDS Uniphase Corp.* 33,000 3,124,688
Kana Communications, Inc.* 25,000 556,250
New Focus, Inc.* 22,500 1,778,906
Stratos Lightwave, Inc.* 31,000 999,750
Sycamore Networks, Inc.* 40,000 4,320,000
-- ---------
28,084,587
Shares Value
Telecom Services (5.5%)
360Networks, Inc.* 50,000 $ 981,250
American Tower Corp., Class A* 65,000 2,449,688
China Unicom Limited ADR* 20,000 436,250
GT Group Telecom, Class B* 50,000 659,375
Triton PCS Holdings, Inc., Class A* 40,000 525,000
United Pan-Europe Comm. NV ADR, Class A* 75,000 1,457,813
---------------
6,509,376
---------------
Total Common Stocks (Cost $111,584,688) 111,808,003
---------------
US Government Securities (4.6%)
US Treasury Bill due 12/21/00
Face amount of $5,488,000 (Cost $5,414,038) 5,414,038
---------------
Total Investments (Cost $116,998,726) (99.4%)(a) 117,222,041
Total Short Sales (Proceeds $7,080,680) (-5.1%) (6,022,294)
Other Assets and Liabilities (Net) (5.7%) 6,781,261
---------------
Net Assets (100.0%) $117,981,008
===============
Schedule of Short Sales (-5.1%)
Aclara Biosciences, Inc. 30,000 $913,125
Alloy Online, Inc. 33,700 286,450
Click Commerce, Inc. 25,000 1,068,750
EXE Technologies, Inc. 60,000 900,000
HeadHunterNet, Inc. 20,000 93,750
Orchid Biosciences, Inc. 40,000 1,360,000
QS Communications AG ADR 4,000 68,000
Rediff.com India Limited ADR 54,000 394,875
Savvis Communications Corp. 50,000 450,000
Sina.com 17,500 248,281
Somera Communications, Inc. 25,000 239,063
---------------
(Proceeds $7,080,680) $ 6,022,294
===============
* Non-income producing
ADR American Depository Receipt
(a) The cost for federal income tax purposes was $116,998,726. At September 30,
2000, net unrealized appreciation for all securities (excluding securities
sold short) based on tax cost was $223,315. This consists of aggregate
gross unrealized appreciation for all securities of $27,201,615 and
aggregate gross unrealized depreciation for all securities of $26,978,300.
See Notes to Financial Statements
FINANCIAL HIGHLIGHTS
................................................................................
.
................................................................................
For a Share Outstanding Throughout the Period
December 19, 1997++
Year Ended Year Ended Through
September 30, September 30, September 30,
2000 1999 1998
---- ---- ----
Net Asset Value, Beginning of Period $ 11.19 $ 12.50 18.58
Income From Investment Operations:
Net Investment Loss (0.24) (0.08) (0.16)
Net Realized and Unrealized Gain (Loss) (1.23) 12.14 7.55
Total from Investment Operations (1.31) 11.90 7.39
Net Asset Value, End of Period $30.48 $ 18.58 $ 11.19
Total Return 64.05% 66.04% (10.48)%**
Ratios and Supplemental Data
Net Assets, End of Period (Thousands) $ 117,981 $ 15,422 $ 7,288
Ratio of Expenses to Average Net Assets 2.50%* 2.50% 2.50%
Ratio of Net Investment Loss to
Average Net Assets (0.87)% (1.17)% (0.96)%*
Ratio of Expenses to Average
Net Assets (excluding waivers) 3.41% 4.54 2.50%
Ratio of Net Investments Loss to Average
Net Assets (excluding waivers) (0.87)% (2.08)% (2.99)%*
Portfolio Turnover Rate 67.54% 145.78% 71.26%
++ Commencement of Operations
* Annualized
** Not Annualized
================================================================================
See Notes to Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 2000
Assets
Investment Securities, at Value, (cost $116,998,726) $ 117,222,041
Deposits with Brokers for Securities Sold Short 10,334,825
Receivable for Investments Sold 1,436,114
Organizational Costs - Note A 51,133
Receivable for Portfolio Shares Sold 23,332
Other Assets 213
Total Assets 129,067,658
-----------
Liabilities
Cash Overdraft 319,845
Securities Sold Short, at Value (proceeds $7,080,680) 6,022,294
Payable for Investments Purchased 3,026,200
Payable for Portfolio Shares Redeemed 1,363,202
Payable for Advisory Fee -- Note B 130,210
Payable for Distribution Fees -- Note D
54,700
Payable for Administrative Fees -- Note C
46,830
Payable for Shareholder Services Fees -- Note D 40,151
Accrued Expenses 83,218
Total Liabilities 11,086,650
Net Assets $117,981,008
============
Net Assets Consist of:
Paid-in-Capital $126,194,318
Accumulated Net Realized Loss on Investments (9,495,011)
Net Unrealized Appreciation on:
Investment Securities 223,315
Short Sales 1,058,386
Net Assets $117,981,008
============
Net Asset Value, Offering and Redemption Price Per Share
($117,981,008 / 3,870,279 shares of beneficial interest, without par value,
unlimited number of shares authorized) $30.48
======
See Notes to Financial Statements
STATEMENT OF OPERATIONS
............................................................
For the Year Ended September 30, 2000
Investment Income Interest 955,487
Other Income 767,653
Total Investment Income 1,723,140
Expenses
Investment Adviser - Note B
Basic Fees $1,584,818
Add: Fees Recouped 38,534
1,623,352
------------
Shareholder Services Fees 264,131
Note D Distributions Fee - Note D 264,131
Administration Fee - Note C 243,881
Federal and State Registrations 27,125
Shareholder Reports 51,543
Trustees' Fees - Note E 50,000
Legal 31,453
Amortization of Organizational Costs - Note A 23,186
Custody Fees 19,976
Auditing 9,500
Other Expenses 32,724
Net Expenses 2,641,002
Net Investment Loss (917,862)
Realized and Unrealized Gain (Loss) on Investments
Net Realized Gain/Loss on:
Investment Securities (17,127,092)
Short Sales 6,775,817
Net Realized Loss on Investments (10,351,275)
Net Change in Unrealized Appreciation during the period on:
Investment Securities (810,850)
Short Sales
914,609
Net Unrealized Appreciation on Investments 103,759
Net Realized and Unrealized Loss on Investments (10,247,516)
Net Decrease in Net Assets Resulting from Operations $ (11,165,378)
==============
See Note to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS
...........................................................
Year Ended Year Ended
September 30, 2000 September 30, 1999
Decrease in Net Assets from Operations
Net Investment $ (917,862) (135,273)
Net Realized Gain/(Loss) from Investments (10,351,275 1,012,584
Net Unrealized Appreciation on Investments 103,759 3,583,467
------- ---------
Net Increase (Decrease) in Net Assets
Resulting from Operations (11,165,378) 4,460,778
Fund Share Transactions
Proceeds from Shares Sold 187,998,811 9,922,133
Cost of Shares Redeemed (74,274,026) (6,249,024)
------------ ----------
Net Increase from Fund Share
Transactions 113,724,785 3,673,109
Total Increase in Net Assets 102,559,407 8,133,887
Net Assets
Beginning of Year 15,421,601 7,287,714
End of Year $ $
117,981,008 15,421,601
Increase in Fund Shares Issued
Number of Shares Sold 5,349,071 553,443
Number of Shares Redeemed (2,308,747) (374,789)
Net Increase in Fund Shares
3,040,324 178,654
========= =======
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
................................................................................
September 30, 2000
The IPO Plus Aftermarket Fund ("IPO+ Fund") is a series of Renaissance Capital
Greenwich Funds ("Renaissance Capital Funds"), a Delaware Trust, operating as a
registered, diversified, open-end investment company. Renaissance Capital Funds,
organized on February 3, 1997, may issue an unlimited number of shares and
classes of the IPO Fund.
The investment objective of the IPO+ Fund is to seek capital appreciation by
investing in the common stocks of Initial Public Offerings on the offering and
in the aftermarket.
A. SIGNIFICANT ACCOUNTING POLICIES: The following significant accounting
policies are in conformity with generally accepted accounting principles. Such
policies are followed by the IPO+ Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
1. SECURITY VALUATION: Portfolio securities are valued at the last sale price on
the securities exchange or national securities market on which such securities
primarily are traded. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
at the average of the most recent bid and asked prices. Short-term investments
are carried at amortized cost, which approximates value. Any securities or other
assets for which recent market quotations are not readily available are valued
at fair value as determined in good faith by the IPO+ Fund's Board of Trustees.
Restricted securities, as well as securities or other assets for which market
quotations are not readily available, or are not valued by a pricing service
approved by the Board of Trustees, are valued at fair value as determined in
good faith by the Board of Trustees.
2. FEDERAL INCOME TAXES: It is the IPO+ Fund's intention to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code
and to distribute all of its taxable income. Accordingly, no provision for
Federal income taxes is required in the financial statements.
At December 31, 1999, the IPO+ Fund had capital loss carryovers, which expire in
2007 available to offset future gains, if any, of approximately $37,000. In
addition, the IPO+ Fund had net realized capital losses of approximately
$513,000 during the period from November 1, 1999 through December 31, 1999,
which are treated for federal income tax purposes as arising during IPO+ Fund's
tax year ending December 31, 2000. These capital loss carryforwards and
"post-October" losses may be utilized in future years to offset net realized
capital gains prior to distributing such gains to shareholders. During the
period January 1, 2000 through September 30, 2000, the IPO+ Fund had net
realized capital losses of approximately $8,900,000 which are treated for
federal income tax purposes as arising during the IPO+ Fund's tax year ending
December 31, 2000.
NOTES TO FINANCIAL STATEMENTS
(continued)
3. DISTRIBUTIONS TO SHAREHOLDERS: The IPO+ Fund will normally distribute
substantially all of its net investment income in December. Any realized net
capital gains will be distributed annually. All distributions are recorded on
the ex-dividend date. The amount and character of income and capital gain
distributions to be paid are determined in accordance with Federal income tax
regulations, which may differ from generally accepted accounting principles.
Permanent book and tax basis differences resulted in reclassification for the
year ended September 30, 2000 as follows: a decrease in paid in capital of
$917,862 and an increase in undistributed net investment income of $917,862.
Permanent book-tax differences, if any, are not included in ending undistributed
net investment income (loss) for purposes of calculating net investment income
(loss) per share in the financial highlights.
4. ORGANIZATIONAL COSTS: Costs incurred by the IPO+ Fund in connection with
its organization and initial registration of shares have been deferred and are
being amortized on a straight-line basis over a five-year period.
5. OTHER: Security transactions are accounted for on a trade date basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
B. INVESTMENT ADVISER: Under the terms of an Investment Advisory Agreement with
Renaissance Capital, a registered investment adviser, the IPO+ Fund agrees to
pay Renaissance Capital an annual fee equal to 1.50% of the average daily net
assets of the IPO+ Fund and payable monthly. Additionally, Renaissance Capital
has voluntarily agreed to defer or waive fees or absorb some or all of the
expenses of the IPO+ Fund in order to limit Total Fund Operating expenses to
2.50%. Deferrals are subject to later recapture by Renaissance Capital for a
period of three years. Total deferrals subject to recapture by Renaissance
Capital are $164,437. In addition, the IPO+ Fund recouped previously deferred
fees totaling $38,534 during the year ended September 30, 2000. This amount has
been included with current annual advisory fees in the Statement of Operations.
The effective management fee annual rate for the year ended September 30, 2000,
including current-year accrued fees and recoupement of prior-year deferrals, but
not including the effect of current-year deferrals or expense absorptions is
1.54%.
C. FUND ADMINISTRATION: Under an Administration and Fund Accounting Agreement
(the "Administration Agreement"), the Administrator generally supervised certain
operations of the IPO+ Fund, subject to the over-all authority of the Board of
Trustees. For its services, the Administrator received a maximum annual fee of
0.17%, computed daily and payable monthly as a percent of assets under
management.
D. SHAREHOLDER SERVICES: The IPO+ Fund has adopted a Distribution and
Shareholder Services Plan ("the Plan") pursuant to Rule 12b-1 under the 1940
Act. The Plan authorizes the IPO+ Fund, as determined from time to time by the
Board of Trustees, to pay up to 0.50% of the IPO+ Fund's average daily net
assets for distribution and shareholder servicing.
NOTES TO FINANCIAL STATEMENTS
(Continued)
Total annual fee for distribution of the IPO+ Fund's shares which is payable
monthly, will not exceed 0.25% of the average daily net asset value of shares
invested in the IPO+ Fund by customers of the broker-dealers or distributors.
Each shareholder servicing agent receives an annual fee which is payable monthly
up to 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.
To discourage short-term investing and recover certain administrative, transfer
agency, shareholders servicing and other costs associated with such short-term
investing, the IPO+ Fund charges a 2% fee on such redemptions of shares held
less than 90 days. Such fees amounted to $767,653 for the year ending September
30, 2000, representing 0.73% of average net assets.
E. TRUSTEES' FEES: Beginning January 1, 2000, Trustees' fees are $6,000 per
year plus $1,000 for each meeting attended. Prior to that date, the Trustees
had agreed to waive their fees.
F. PURCHASES AND SALES: For the year ended September 30, 2000, the IPO+ Fund
made purchases of approximately $177,504,142 and sales of approximately
$59,673,518 of investment securities other than long-term U.S. Government and
short-term securities.
G. Short Sales and Segregated Cash: 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. To complete such a transaction, the IPO+ Fund
must borrow the security to deliver to the buyer upon the short sale; the IPO+
Fund is then obligated to replace the security borrowed by purchasing it in the
open market at some later date.
IPO+ Fund will incur a loss if the market price of the security increases
between the date of the short sale and the date on which the Fund replaces the
borrowed security. IPO+ Fund will realize a gain if the security declines in
value between those dates.
All short sales must be fully collateralized. IPO+ Fund maintains the collateral
in segregated accounts consisting of cash and/or U.S. Government securities
sufficient to collateralize the market value of its short positions. Typically,
the segregated cash with brokers and other financial institutions exceeds the
minimum requirements.
IPO+ Fund may also sell short "against the box" (i.e. the Fund enters into a
short sale as described above while holding an offsetting long position in the
security which it sold short). If IPO+ Fund enters into a short sale against the
box, it will segregate an equivalent amount of securities owned by the IPO+ Fund
as collateral while the short sale is outstanding.
H. OTHER: Investing in Initial Public Offerings entails special risks,
including limited operating history of the companies, unseasoned trading,
high portfolio turnover and limited liquidity.
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders
and Board of Directors of
Renaissance Capital Greenwich Funds
We have audited the accompanying statement of assets and liabilities of The IPO
Plus Aftermarket Fund, a series of shares of Renaissance Capital Greenwich
Funds, including the portfolio of investments as of September 30, 2000 and the
related statement of operations for the year then ended and the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the two years in the period then ended and for
the period December 19, 1997 (commencement of operations) to September 30, 1998.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on the
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 2000 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
IPO Plus Aftermarket Fund as of September 30, 2000, the results of their
operations for the year then ended, the changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
two years in the period then ended and for the period December 19, 1997
(commencement of operations) to September 30, 1998, in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
October 29, 2000