2011 Global IPO Review and 2012 Outlook
January 5, 2012

Blame it on Greece!
The global IPO market produced 338 offerings in 2011, down 29% from 2010. Against the dismal backdrop of the downward spiraling euro-zone, a moribund US economy and heightened market volatility, however, the 2011 results are remarkable. In the US, 24 Internet companies went public, the most to do so in over a decade, including three of the top five most highly anticipated Internet 2.0 names. The three largest private equity-backed deals in US history raised $8.3 billion. World-recognized luxury brands such as Prada, Ferragamo and Michael Kors completed IPOs. Had it not been for the Greek solvency crisis, which erupted in mid-summer, the US IPO market certainly and the global IPO market possibly would have continued the recovery that began in late 2009. Instead, as Angela, Nicolas and a changing cast of Italian, Greek and IMF leaders dithered, postured, and failed to reach resolution, the global IPO market collapsed in August, resulting in the worst IPO returns since 2008.
Key takeaways:
  • 2H11 market distractions caused global IPO volume to plummet; Asia suffered dramatically while the US was less affected
  • Global IPO performance declined across the board; US IPOs significantly underperformed the S&P 500
  • Four of the five largest US Internet IPOs ever – Bankrate, Groupon, LinkedIn and Zynga – raised $2.4 billion
  • Global purveyors of luxury goods and fast-growing US retailers raised capital to fuel store footprint growth
  • Demand for US-listed Chinese IPOs evaporated as evidence of financial fraud, improprieties and misrepresentation unfolded
  • Private equity-backed IPO issuance in the US reached record highs; venture activity also remained strong
  • US filing activity proved resilient, creating the most robust pipeline seen in over a decade

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Performance Disclosure: Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Investors should consider the investment objectives, risks, charges and expenses carefully before investing.

As stated in the Prospectus, the total annual operating expenses for the Fund was 3.48%. The Adviser has contractually agreed to keep net expenses from exceeding 2.50% of the Fund’s average daily net assets for at least a year from the date of the Prospectus and for an indefinite period thereafter subject to annual re-approval of the agreement by the Board of Trustees. An investor cannot invest directly in an index. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.

Definitions: Net Asset Value (NAV) of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding. Market Price is current value at which an asset or service can be bought or sold. Premium/Discount is provided to show the comparison of the daily net asset value (NAV) and the midpoint of the closing bid/ask for each of the funds. The Renaissance IPO Index® (IPOUSA) is a stock market index based upon a portfolio of U.S.-listed newly public companies that includes securities prior to their inclusion in core U.S. equity portfolios. The Renaissance International IPO Index® (IPOXUS) is a stock market index based upon a portfolio of newly public companies listed on non-U.S. exchanges. The S&P 500® Index (SPX) is a stock market index based on the market capitalizations of 500 large companies whose common stock is publicly traded on the NYSE.

Risk Disclosure: Investments in the Renaissance IPO ETF, symbol "IPO", the Renaissance International IPO ETF, symbol "IPOS" (the “ETFs”), and the Global IPO Fund, symbol "IPOSX" (the “Mutual Fund”) are subject to investment risk, including possible loss of the principal amounts invested. The ETFs and the Mutual Fund (the “Funds”) invest in companies that have recently completed initial public offerings. These stocks are unseasoned equities lacking trading history, a track record of reporting to investors and widely available research coverage which many result in extreme price volatility. Due to a greater number of IPOs in certain segments, the Funds may also be subject to information technology and financial sector risk, small and mid-capitalization company risk, and, for the Renaissance International IPO ETF, emerging markets risk. The Funds may hold securities in the form of Depository Receipts, REITs, and Partnership Units which have greater risks than common shares. The strategies have high portfolio turnover and securities lending risks. The returns of the ETFs may not match the return of the respective indices. The ETFs are classified as non-diversified investment companies subject to concentration risk.

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Investment Disclosure: The information and opinions expressed herein were prepared by Renaissance Capital's research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital, the Renaissance IPO ETF (symbol: IPO), the Renaissance International IPO ETF (symbol: IPOS), or the Global IPO Fund (symbol: IPOSX), may have investments in securities of companies mentioned.