Firsthand Technology Opportunities Fund

Firsthand Technology Opportunities Fund

Average Annual Total Returns vs. Indices
As of September 30, 2017
Period Firsthand Technology
Opportunities Fund
NASDAQ Composite Index S&P 500 Index
Since inception (9/30/99) 2.00% 5.91% 5.83%
10-Year 11.66% 10.46% 7.42%
5-Year 16.79% 17.36% 14.18%
3-Year 15.35% 14.52% 10.79%
1-Year 34.45% 23.79% 18.60%
Q3 '17 (not annualized) 11.82% 6.07% 4.48%
Monthly Performance Update
As of October 31, 2017
Period Firsthand Technology
Opportunities Fund
Since inception (9/30/99) 2.34%
10-Year 11.26%
5-Year 19.47%
3-Year 18.76%
1-Year 47.48%
1-Month 6.39%

Datasheet

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 are 1.86%. The Fund's total net operating expenses are 1.85%. Under the Investment Advisory Agreements, the Investment Adviser has agreed to reduce its fees and/or make expense reimbursements so that the Fund's total operating expenses (excluding independent trustees' compensation, brokerage and commission expenses, litigation costs and any extraordinary and non-recurring expenses) are limited to 1.85% of the Fund's average daily net assets up to $200 million, 1.80% of such assets from $200 million to $500 million, 1.75% of such assets from $500 million to $1 billion, and 1.70% of such assets in excess of $1 billion. The current expense waiver is in effect until 8/31/18.

Growth of a Hypothetical $10,000 Investment

September 30, 1999 through September 30, 2017

Chart represents the growth of a hypothetical $10,000 investment from Firsthand Technology Opportunities Fund inception date until the end of the quarter indicated. Firsthand Technology Opportunities Fund performance assumes reinvestment of all dividends and includes all Firsthand Technology Opportunities Fund expenses but does not reflect the impact of taxes.

Q3 '17 Contributors to Performance

Firsthand Technology Opportunities Fund outperformed its primary benchmarks, returning 11.82% for the third quarter, compared with 6.07% and 4.48% gains for the Nasdaq Composite and the S&P 500 indices, respectively. Arista Networks (ANET) was the top contributor to the Fund's outperformance. Shares of the networking equipment vendor jumped following a significant Q2 earnings beat and upbeat Q3 guidance, which helped Arista shares finish Q3 up 26.58%.

Tencent Holdings (TCEHY) was another strong performer, up 20.36% for the quarter. The Chinese tech giant reported a Q2 earnings beat, with revenue up 59% year-over-year. Its online games continue to dominate the industry. Honor of Kings has approximately 55 million daily active users, with monthly revenues of more than $147 million. Following government-imposed limits to the number of hours players under 18 can access the game in China, Tencent plans to launch Honor of Kings in the U.S. and Europe.

The Chinese government also stepped up pressure on several tech companies this summer to reign in controversial and illegal content. Alibaba (BABA) was one of the companies specifically called out by state officials, but that did not stop shares of the e-commerce giant from surging 22.58% in Q3. The gains were based in part on its Q2 earnings report that showed operating profit more than doubling year-over-year to $2.88 billion.

Streaming giant Netflix (NFLX) was up 21.38% in Q3, thanks, in part, to strong subscriber growth during the second quarter. The company added 5.2 million subscribers in Q2, which significantly outpaced the 3.2 million subscribers predicted by the consensus of Wall Street analysts.

Q3 '17 Detractors from Performance

The biggest detractor from Fund performance for the quarter was Pandora (P). The music streaming company's CEO stepped down at the end of June, following the sale of its Ticketfly business unit to Eventbrite at a steep loss. In September, the company received a $480 million investment from SiriusXM (SIRI), which quashed rumors of the company being sold outright, at least for now. Despite reporting a Q2 loss that was smaller than Wall Street estimates and subscription revenue that was up 25% year over year, Pandora's listener hours were down compared to last year and shares finished Q3 down 13.68%.

Shares of Tesla (TSLA) also declined in Q3, finishing down 5.67%. The electric car maker delivered an earnings beat for Q2, with a smaller-than-anticipated loss of $1.33 per share, and better-than-expected revenues of $2.79 million. The company also announced that Model 3 reservations were up to more than 500,000. However, production of the Model 3 has been slow, with the company saying it would produce 1,500 of the sedans in September, but with actual production figures standing at fewer than 300 since July.

Other detractors included MaxLinear (MXL) and Rocket Fuel (FUEL). MaxLinear (MXL) was down 14.84% for the quarter. We received shares of MaxLinear in May when the semiconductor manufacturer acquired Exar for $13 per share. Ad tech company Rocket Fuel was acquired in September by Sizmek, a private ad tech company, for $2.60 per share.

Firsthand Technology Opportunities 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 certain industries in the technology sector. Specific risks associated with investments in the technology industries (as described in the Fund's Prospectus) 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 technology sector 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 NASDAQ Composite Index (NASDAQ) and the Standard & Poor's 500 Index (S&P 500) each represent an unmanaged, broad-based basket of stocks and are typically used as benchmarks for overall market performance. 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 9/30/17: ANET (13.07% of TEFQX), BABA (6.80% of TEFQX), BIDU (3.66% of TEFQX), MXL (1.17% of TEFQX), NFLX (6.25% of TEFQX), P (1.52% of TEFQX), TCEHY (10.38% of TEFQX), TSLA (3.48% of ALTEX, 3.36% of TEFQX). As of 9/30/17 FUEL and SIRI were not held in any Firsthand Funds portfolio. 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.