Firsthand Alternative Energy Fund
|Average Annual Total Returns vs. Indices
|As of December 31, 2016
|WilderHill Clean Energy Index
||S&P 500 Index
|Since inception (10/29/07)
|Q4 '16 (not annualized)
|Monthly Performance Update
|As of January 31, 2017
|Since inception (10/29/07)
The Fund's performance information assumes reinvestment of all dividends and includes all Fund expenses, but does not reflect the impact of taxes. Performance data quoted represent past performance, which is not a guarantee of future results, and current performance may be lower or higher than the performance quoted. Both the return from and the principal value of an investment in the Fund will fluctuate so that any investor's shares, when redeemed, may be worth more or less than their original cost. To obtain performance as of the most recent month-end, please contact Firsthand Funds by calling 1.888.884.2675 or go to www.firsthandfunds.com.
The Fund's total gross operating expenses for 2015 were 2.11%. (The gross expense ratio listed in the Fund's prospectus was 2.00%.) The Fund's total net operating expenses are 1.98%.Under the Investment Advisory Agreement, the Investment Adviser has agreed to reduce its fees and/or make expense reimbursements so that the Fund's total annual operating expenses (excluding independent trustees' compensation, brokerage and commission expenses, short sale expenses, litigation costs and any extraordinary and non-recurring expenses) are limited to 1.98% of the Fund's average daily net assets up to $200 million, 1.93% of such assets from $200 million to $500 million, 1.88% of such assets from $500 million to $1 billion, and 1.83% of such assets in excess of $1 billion. The Investment Adviser has also agreed to donate a portion of its management fees collected, amounting to 0.20% of the Fund's average daily net assets, to various non-profit organizations as elected by Fund shareholders. The current expense waiver is in effect until 8/31/17.
Chart represents the growth of a hypothetical $10,000 investment from Firsthand Alternative Energy Fund inception date until the end of the quarter indicated. Firsthand Alternative Energy Fund performance assumes reinvestment of all dividends and includes all Fund expenses but does not reflect the impact of taxes.
Q4 '16 Contributors to Performance
Smart meter maker Itron (ITRI) was a top contributor, reporting better-than-expected earnings and revenue for Q3 and finishing Q4 up 12.72%. In early December the company was recognized as a leader in the 2016 Gartner Magic Quadrant for meter data management products. Gartner is a research firm that analyses various industries and rates them based on their vision and execution.
Shares of Power Integrations (POWI) reached an all-time high on December 8, on the heels of a Q3 earnings beat reported in late October. The company also issued better-than-anticipated Q4 revenue guidance, and finished the fourth quarter up 7.65%.
Quanta Services (PWR), an energy infrastructure firm, posted big gains throughout 2016 and finished Q4 up 24.51%. The company posted in-line earnings on slightly lower-than-expected revenues. The company also revised Q4 guidance downward. Nonetheless, infrastructure stocks experienced a rally following the November presidential election with investors anticipating government spending on energy, roads, and bridges in a new Trump administration.
SolarCity (SCTY) was acquired by Tesla Motors (TSLA) in November 2016. The Fund received 0.11 shares of Tesla for each share it held of Solar City at the time of the acquisition. Shares of SCTY between September 30, 2016 and November 21, 2016 were up 3.99%, Tesla shares finished the fourth quarter up 4.73%, and the position was a positive contributor for the Fund during the quarter.
Q4 '16 Detractors from Performance
The largest detractor from Fund performance in Q4 was industrial insulation materials manufacturer Aspen Aerogels (ASPN). The company posted a larger-than-expected loss for Q3 on revenue that was slightly better than anticipated and closed out the fourth quarter down -30.70%.
Turbine maker Vestas Wind Systems (VWSYF) was another detractor from Fund performance. Despite Q3 results that exceeded analyst expectations as well as upgrading its full year guidance, shares of Vestas slid -20.93% in Q4.
Solar inverter manufacturer SolarEdge (SEDG) was also a drag on Fund performance in Q4, finishing down -28.03%. Despite reporting earnings that beat expectations, SolarEdge shares slid in part due to a slowing residential solar market. That market has experienced a shift from large to local installers, which took a toll on SolarEdge, which provides components to big nationwide installers including SolarCity (SCTY) and SunPower (SPWR).
Other detractors during the quarter included photovoltaic manufacturers SunPower (SPWR) and First Solar (FSLR), down -25.90% and -18.74%, respectively, for the quarter.
Firsthand Alternative Energy Fund is subject to greater risk than more diversified funds because of its investments in fewer securities and because of its concentration of investments in the alternative energy and energy technology sectors. Specific risks associated with these investments could cause the Fund's share price to fluctuate dramatically. The Fund's investments in small-cap companies present greater risk than investments in larger companies. The Fund invests in several industries within the alternative energy and energy technology sectors and the relative weightings of these industries in the Fund's portfolio may change at any time. Equity investing involves risks, including the potential loss of the principal amount invested.
The Standard & Poor's 500 Index (S&P 500) represents an unmanaged, broad-based basket of stocks and is typically used as a benchmark for overall market performance. The WilderHill Clean Energy Index is a market-weighted index of 53 companies in the cleaner fuel, energy conversion, energy storage, greener utilities, power delivery and conservation, and renewable energy harvesting sectors. The indices' performance figures assume the reinvestment of all dividends (except where noted), but do not reflect the impact of taxes. Additionally, because an investor cannot invest in an index directly, indices' performance figures do not reflect the expenses associated with the management of an actual mutual fund portfolio.
As of 12/31/16: ASPN (2.84% of ALTEX), FSLR (4.42% of ALTEX), ITRI (6.88% of ALTEX), POWI (7.74% of ALTEX), PWR (3.43% of ALTEX), SEDG (2.68% of ALTEX), SPWR (2.59% of ALTEX), TSLA (4.86% of ALTEX, 2.74% of TEFQX), VWSYF (3.85% of ALTEX). SolarCity was acquired by Tesla on 11/21/16 and ceased trading under the symbol SCTY. A complete list of portfolio holdings for Firsthand Funds is available on www.firsthandfunds.com and is updated 45 days after the end of the every calendar quarter. The portfolio holdings discussed are subject to change.
The information provided should not be considered a recommendation to purchase or sell a particular security and there is no assurance that, as of the date of publication, the securities purchased remain in a Fund's portfolio or that securities sold have not been repurchased. Also, you should note that the securities discussed, even if they have been purchased by a Fund, do not represent a Fund's entire portfolio and, in the aggregate, may represent only a small percentage of that Fund's holdings. There can be no assurance that any Firsthand Funds will buy, sell, or hold any particular security after the date referred to in the discussion.