|Average Annual Total Returns vs. Indices|
|As of December 31, 2016|
|NASDAQ Composite Index||S&P 500 Index|
|Since inception (9/30/99)||0.06%||4.97%||5.28%|
|Q4 '16 (not annualized)||-4.94%||1.69%||3.82%|
|Monthly Performance Update|
|As of January 31, 2017|
|Since inception (9/30/99)||0.41%|
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 8/31/17.
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.
The top contributor to Fund performance during the quarter was InvenSense (INVN). Shares of the chip maker surged in Q4 on news that it was being acquired for $1.3 billion by Japanese chip maker TDK. Additionally, the company reported in December that it cut a deal with OPPO, a Chinese smartphone maker, helping it alleviate its dependence on Apple (AAPL) and Samsung (no U.S. symbol). InvenSense finished Q4 up 72.37%.
Netflix (NFLX) was another top contributor, up 25.62% during Q4 thanks to impressive third-quarter numbers that soundly beat Wall Street expectations. The streaming media giant added 3.2 million subscribers internationally and 370,000 in the U.S. in Q3 and issued Q4 guidance that was higher than analysts expected. The company is crediting its original programming, which includes the hit shows Stranger Things and Narcos, with the subscriber growth.
Networking equipment provider Arista Networks (ANET) was a strong performer for the Fund during the quarter, finishing up 13.74%. The company beat expectations for Q3, with year-over-year revenue and earnings up 33% and 41%, respectively.
Despite reporting revenue and profits for the third quarter that were in line with analysts’ expecations, Chinese tech giant Tencent Holdings (no U.S. symbol) declined -10.92% in Q4 and was the leading detractor from Fund performance. The company reported revenue of $6 billion, which represents 52% growth year-over-year, driven primarily by mobile gaming and the WeChat messaging app. This year, Tencent become the highest-valued company in Asia. Nonetheless, investors concerned over weakening Chinese currency began pulling money out of Chinese exchange-traded funds (ETFs) in December; given Tencent’s large weighting on Hong Kong’s Hang Seng stock exchange, those ETF redemptions had a big impact on the company’s shares.
Workday (WDAY), which offers financial and human capital management software, had a decent fiscal Q3 2017 but weak Q4 guidance helped drive shares down -27.92% for the quarter. The company reported delays in some multinational customer deals. Additionally, flexible billing terms used to close large deals further depressed the company’s fourth-quarter forecast.
Fitness wearable heavyweight Fitbit (FIT) was also a detractor from Fund performance, down -50.67% in Q4. The company has suffered as demand from consumers for wearables has slowed at the same time that competition has increased from tech giants Apple (AAPL), Samsung (no U.S. symbol) and Garmin (GRMN). While Fitbit is still the leader in the wearables market, third quarter year-over-year growth in the market was just 3.1%.
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 12/31/16: AAPL (0.67% of TEFQX), ANET (9.31% of TEFQX), FIT (0.94% of TEFQX), INVN (7.39% of TEFQX), NFLX (5.56% of TEFQX), Tencent (8.32% of TEFQX), WDAY (3.39% of TEFQX). As of 12/31/16, GRMN and Samsung 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.