-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LMCnTTzgWGEQ96FALMhi5uE5YvuCahmdJPgFKSFbfoF5B9bvogiiouG6KkQqz4j4 huaS7CJygbwSBMb5kJuWKA== 0001398344-10-000389.txt : 20100309 0001398344-10-000389.hdr.sgml : 20100309 20100309142601 ACCESSION NUMBER: 0001398344-10-000389 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100309 DATE AS OF CHANGE: 20100309 EFFECTIVENESS DATE: 20100309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTHAND FUNDS CENTRAL INDEX KEY: 0000917124 IRS NUMBER: 132620737 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08268 FILM NUMBER: 10666512 BUSINESS ADDRESS: STREET 1: 469 EL CAMINO REAL STREET 2: SUITE 227 CITY: SANTA CLARA STATE: CA ZIP: 95050 BUSINESS PHONE: 1-888-884-2675 MAIL ADDRESS: STREET 1: P.O. BOX 8356 CITY: COLUMBUS STATE: OH ZIP: 43219 FORMER COMPANY: FORMER CONFORMED NAME: INTERACTIVE INVESTMENTS DATE OF NAME CHANGE: 19940106 0000917124 S000011674 Firsthand Technology Value Fund C000032040 Firsthand Technology Value Fund TVFQX 0000917124 S000011679 Firsthand Technology Leaders Fund C000032049 Firsthand Technology Leaders Fund TLFQX 0000917124 S000011681 Firsthand e-Commerce Fund C000032051 Firsthand e-Commerce Fund TEFQX 0000917124 S000018833 Firsthand Alternative Energy Fund C000052080 Firsthand Alternative Energy Fund ALTEX N-CSR 1 fp0001475_ncsr.htm fp0001475_ncsr.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-CSR
 
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
 
Investment Company Act file number    811-08268  
 
Firsthand Funds 

(Exact name of registrant as specified in charter)
 
469 El Camino Real, Suite 227
Santa Clara, CA 95050

 (Address of principal executive offices) (Zip code)

SiVest Group, Incorporated
469 El Camino Real, Suite 227
Santa Clara, CA  95050

 (Name and address of agent for service)

registrant's telephone number, including area code:     (408) 624-9527   
 
Date of fiscal year end:   December 31  
 
Date of reporting period:   December 31, 2009  
 
 
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
 
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
 
 
 

 
Item 1. Reports to Stockholders.
 
The Report to Shareholders is attached herewith.
 
 
 
 
 
 
   
Firsthand Funds
   
   
Annual Report to Shareholders
   
 
 
Firsthand Technology Value Fund ®
 
Firsthand Technology Leaders Fund
 
Firsthand e-Commerce Fund
 
Firsthand Alternative Energy Fund
 
 
December 31, 2009
 
 
 
 

 
 
CONTENTS

Performance Summary
2
President’s Letter
4
Shareholder Fee Example
6
Performance and Portfolio Discussion
8
Audit Letter
16
Portfolio of Investments
17
Statements of Assets and Liabilities
23
Statements of Operations
24
Statements of Changes in Net Assets
25
Statement of Cash Flows
27
Financial Highlights
28
Notes to Financial Statements
30
Additional Information
47


PERFORMANCE SUMMARY
Period Returns (Average Annual Total Returns as of 12/31/09)

         
Expense
Fund
1-Year
3-Year
5-Year
10-Year
Ratio
Firsthand Technology Value Fund®
29.52%
-5.64%
0.56%
-9.45%
1.85%
Firsthand Technology Leaders Fund
55.62%
-1.88%
2.67%
-8.14%
1.85%
Firsthand e-Commerce Fund
73.98%
4.94%
7.70%
-10.85%
1.85%
Firsthand Alternative Energy Fund
41.02%
1.98%
           
NASDAQ Composite Index
45.36%
-1.14%
1.70%
-5.08%
S&P 500 Index
26.47%
-5.52%
0.43%
-0.95%
WilderHill Clean Energy Index
29.78%
 
Returns assume reinvestment of all dividends and distributions but do not reflect the impact of taxes. The performance data quoted represent past performance. Past performance cannot guarantee 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 Funds will fluctuate so that an 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 NASDAQ Composite Index (NASDAQ) is a capitalization-weighted index of all common stocks listed with NASDAQ. The Standard & Poor’s 500 Index (S&P 500) is a market-weighted index of 500 stocks of well-established companies. Each index represents an unmanaged, broad-based basket of stocks. These indices are typically used as benchmarks for overall market performance. The WilderHill Clean Energy Index is a market-weighted index of 40 companies in the cleaner fuel, energy conversion, energy storage, greener utilities, power delivery and conservation, and renewable energy harvesting sectors. You cannot invest directly in an index.
 
2
2009 Annual Report
 
 
 

 
 
Returns Since Inception (Average Annual Total Returns as of 12/31/09)

 
Average
   
WilderHill
 
Annual
NASDAQ
 
Clean
 
Total
Composite
S&P 500
Energy
Fund
Returns
Index
Index
Index
Firsthand Technology Value Fund® (5/20/94)
10.26%
8.12%
7.88%
Firsthand Technology Leaders Fund (12/10/97)
5.64%
3.41%
2.88%
Firsthand e-Commerce Fund (9/30/99)
-7.07%
-1.25%
0.42%
Firshand Alternative Energy Fund (10/29/07)
-9.70%
-11.73%
-32.49%

Each Fund may invest in small-capitalization companies and Initial Public Offerings (“IPOs”). These investments may be more volatile than investments in large-capitalization companies and loss of principal could be greater. The Funds may invest in foreign securities, which may be subject to greater risks than investing in domestic securities. Because the Funds are not diversified, they can take larger positions in fewer companies, increasing their risk profile. The Funds invest in several industries within the technology sector and the relative weightings of these industries in a Fund’s portfolio may change at any time.
 
Holdings by Industry - % of Net Assets (as of 12/31/09)

 
Firsthand
Firsthand
Firsthand
Firsthand
 
Technology
Technology
e-Commerce
Alternative
Industry
Value Fund
Leaders Fund
Fund
Energy Fund
Advanced Materials
5.8%
5.4%
4.9%
Basic Materials
0.8%
Building Automation
3.4%
Communications
3.0%
4.7%
7.4%
Communications Equipment
6.9%
9.1%
1.6%
Computer
3.7%
6.5%
Consumer Electronics
2.5%
Defense & Aerospace
2.5%
Electronic Manufacturing Services
0.2%
Energy Efficiency
3.1%
9.1%
Environmental Services
0.8%
Industrials
4.0%
Intellectual Property
13.4%
4.3%
Internet
8.9%
6.0%
42.6%
Networking
0.1%
3.2%
4.4%
Other Electronics
9.7%
11.8%
7.5%
8.1%
Peripherals
2.7%
7.0%
Photonics
1.5%
Renewable Energy
11.0%
2.0%
46.9%
Semiconductors
18.2%
14.7%
5.3%
Services
1.3%
Software
8.0%
17.3%
10.0%
Net Other Assets and Liabilities
3.7%
15.1%
17.5%
12.4%
 
www.firsthandfunds.com
3
 
 
 

 
 
PRESIDENT’S LETTER
 
   
Fellow Shareholders,

2009 represented a dramatic turnaround from the dismal performance of 2008.  Anticipating the beginning of the economic recovery, equity markets began a remarkable bull run late in the first quarter and the major indices clawed back more than half of their prior year losses.  Although growth has returned to the overall economy, we still have a long way to go, and many people will feel the effects of the recession for some time.  The open question now is whether this is an anemic recovery, analogous to Japan’s “lost decade” or whether it will gather momentum over time - reminiscent of the US recovery circa 1992.
 
By and large, it was a very good year for Firsthand Funds.  The technology sector led the recovery in 2009 and was the best-performing sector in the S&P 500 Index.  We saw strong returns in most segments of the tech sector as investors emerged from beneath their desks and began to add risk to their portfolios again.  Three of our four funds handily beat their respective benchmarks.  Firsthand e-commerce Fund led the way, posting a return of nearly 74% for the year.  The laggard, Firsthand Technology Value Fund, still beat the S&P 500 Index, although it trailed the Nasdaq Composite Index.  For more details on the funds’ performance, please see the performance tables that begin on page 2, and the individual fund discussions that follow.
 
Despite the recession — some might say because of it — a number of consumer trends demonstrated their ability to thrive in any climate.  Several of our portfolio companies benefited from this.  Netflix was a prime example, adding subscribers and gaining market share as cost-conscious consumers were more willing to try their service.  Like many industry leaders, Netflix emerged from the recession in a stronger position than before.

Apple continued to write its own success story.  Amidst a stagnant economy and brutal competition, with consumers as price sensitive as ever, the iPhone continued to gain market share while charging a premium price.  It’s a stunning example of the power of innovation, and it renews one’s confidence in the future of Silicon Valley.

The alternative energy sector appears to be back on the growth track after a rough 2009.  Dramatic declines in the price of polysilicon, the feedstock for most solar cells, brought overall costs down considerably — but not fast enough to offset price declines in solar panels.  On the other side of the vise, project financing all but disappeared in the wake of the banking crisis, stunting demand.  The silver lining: Solar power today is more cost competitive than ever before, and the ultimate goal of “grid parity”— the point at which the cost of solar power equals the cost of grid power — is drawing much closer.

Our thesis here remains unchanged:  Alternative energy cannot burst into the mainstream until it can stand on its own — without subsidies.  Our focus is on the companies and technological innovation that will drive down costs.
 
4
2009 Annual Report
 
 
 

 
 
Overall, we are pleased with the performance of our stocks in 2009.  But after such a strong market rebound, and with the economic recovery still weak and uneven, we are mindful that there is plenty of opportunity for disappointment.  Even if the economy continues to expand, 2010 could be a volatile year.

As ever, change creates uncertainties, anxieties, and opportunities.  Looking ahead, we see innovation as the key.  The creative application of technology is what solves today’s problems and opens tomorrow’s new markets.  That is what drives our efforts and shapes our portfolios as we navigate these changing times.  Thank you for your investment in Firsthand Funds.

Sincerely,


Kevin Landis
President, Firsthand Funds
 
www.firsthandfunds.com
5
 
 
 

 

SHAREHOLDER FEE EXAMPLE

Example — In general, mutual fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads), redemption fees, and exchange fees; and (2) ongoing costs, including management fees, 12b-1 distribution and service fees, non-12b-1 service fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Note that Firsthand Funds (“Trust”) does not charge transaction fees for 12b-1 distribution and service fees, though you may incur transaction fees if you purchase shares through a broker.

The example on the following page is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2009 through December 31, 2009.

Actual Expenses — The section of the table at right entitled “Actual” provides information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section entitled “Actual” under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. If your account is an IRA or other tax-qualified savings plan, your expenses may also have included a $10 annual fee. In either case, the amount of any fee paid through your account would increase the estimate of expenses you paid during the period and decrease your ending account value.

Hypothetical Example for Comparison Purposes — The section of the table at right entitled “Hypothetical” provides information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate your actual ending account balance or the expenses you paid for the period. However, you may use this information to compare the ongoing costs of investing in the Trust to other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. As in the case of the actual expense example, if your account is subject to an IRA fee, the amount of the fee paid through your account would increase the hypothetical expenses you would have paid during the period and decrease the hypothetical ending account value.

Please note that the expenses shown in the table at right are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The examples also assume all dividends and distributions have been reinvested.
 
6
2009 Annual Report
 
 
 

 
 
Firsthand Technology Value Fund
 
 
Beginning
Ending
Expenses Paid
 
 
Account Value
Account Value
During Period*
Annualized
 
7/1/09
12/31/09
7/1/09-12/31/09
Expense Ratio
         
Actual
$1,000
$1,181.20
$10.61
1.93%
Hypothetical**
$1,000
$1,015.48
$9.80
1.93%


Firsthand Technology Leaders Fund

 
Beginning
Ending
Expenses Paid
 
 
Account Value
Account Value
During Period*
Annualized
 
7/1/09
12/31/09
7/1/09-12/31/09
Expense Ratio
         
Actual
$1,000
$1,237.70
$10.55
1.87%
Hypothetical**
$1,000
$1,015.78
$9.50
1.87%
 
 
Firsthand e-Commerce Fund
 
 
Beginning
Ending
Expenses Paid
 
 
Account Value
Account Value
During Period*
Annualized
 
7/1/09
12/31/09
7/1/09-12/31/09
Expense Ratio
         
Actual
$1,000
$1,285.70
$10.77
1.87%
Hypothetical**
$1,000
$1,015.78
$9.50
1.87%
 
 
Firsthand Alternative Energy Fund
 
 
Beginning
Ending
Expenses Paid
 
 
Account Value
Account Value
During Period*
Annualized
 
7/1/09
12/31/09
7/1/09-12/31/09
Expense Ratio
         
Actual
$1,000
$1,219.20
$11.36
2.03%
Hypothetical**
$1,000
$1,014.97
$10.31
2.03%
 

*
Expenses are calculated by multiplying the Fund’s annualized expense ratio listed above by the average account value over the period and multiplying that number by 184/365 (to reflect the one-half year period).
**
5% return per year before expenses.
The expenses shown in the table do not reflect any fees that may be charged to you by brokers, financial intermediaries, or other financial institutions.
 
www.firsthandfunds.com
7
 
 
 

 
 
FIRSTHAND TECHNOLOGY VALUE FUND
Performance and Portfolio Discussion

How did the Fund perform in 2009?

Firsthand Technology Value Fund (TVFQX) posted a gain of 29.52%, versus a 45.36% increase for the NASDAQ Composite Index and a 26.47% gain for the S&P 500 Index. For the six months ended December 31, 2009, Firsthand Technology Value Fund rose 18.11% as compared to 24.26% and 22.59% increases for the NASDAQ and the S&P 500 indices, respectively.
 
Which industries had the greatest impact on the Fund’s performance?

For the period ended December 31, 2009, semiconductor and intellectual property stocks represented the portfolio’s largest weightings, followed by renewable energy and software holdings. The Fund’s underperformance during the past 12 months reflects poor performance of our holdings in the semiconductor, renewable energy, and intellectual property industries.
 
Which individual holdings were the largest contributors to the Fund’s performance?

The Fund’s top contributor in 2009 was Corning (GLW), a diversified manufacturer of glass products, including fiber optic equipment and glass substrates for LCD panels. The company’s shares rebounded strongly during the year as the global economic situation improved, boosting consumer confidence and providing a lift to the LCD television market.

VeriFone (PAY), a provider of electronic payment systems, was another top performer for the Fund. The company’s stock posted a gain of over 200% during the year as it returned to profitability. VeriFone has been aggressively rolling out its products and services to retailers, restaurants, and taxi cab companies worldwide.

Shares of Netflix (NFLX) returned to their growth trajectory in 2009 as the company continued to defy its detractors by growing revenues, earnings, and subscribers. Netflix has been active in partnering with DVD and game console vendors to offer streaming video services to its 11-million-plus subscribers. Late in the year, rumors of a potential acquisition by Amazon also helped boost the stock.
 
Which holdings were the greatest detractors from the Fund’s performance?

The Fund’s top detractors were both privately held companies in the alternative energy industry. The largest detractor was SoloPower, a thin-film solar company in which the Fund initially invested in 2006. During 2009, the value of our SoloPower investment declined, reflecting changing economics in the solar business, as well as certain fundamental developments at the company.

Solaicx was another private company whose performance hurt the Fund in 2009. The company, which makes equipment for manufacturing silicon ingots intended for use in silicon solar cells, suffered from extreme pricing pressure caused by the global economic decline and required a dilutive round of financing, in which the Fund did not participate.

Shares of Rambus (RMBS) took a big hit early in the year after a U.S. District Court ruled that its patent suit against Micron Technology was “unenforceable.” Though the Fund liquidated its position immediately following the announcement, it was unable to avoid the stock’s rapid decline.
 
8
2009 Annual Report
 
 
 

 

Fund Performance and Holdings Information (as of 12/31/09)
Firsthand Technology Value Fund vs. Market Indices

 
Firsthand
NASDAQ
 
 
Technology
Composite
S&P 500
 
Value Fund
Index
Index
Since Inception (5/20/94)
10.26%
8.12%
7.88%
10-Year
-9.45%
-5.08%
-0.95%
5-Year
0.56%
1.70%
0.43%
3-Year
-5.64%
-1.14%
-5.52%
1-Year
29.52%
45.36%
26.47%

Growth of a Hypothetical $10,000 Investment


Returns assume reinvestment of all dividends and distributions but do not reflect the impact of taxes. The performance data quoted represent past performance. Past performance cannot guarantee 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 Funds will fluctuate so that an 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.

Holdings by Industry*
 
Top 10 Holdings**
 
 
% Net Assets
 
% Net Assets
Semiconductors
18.2%
SoloPower, Series A
9.6%
Intellectual Property
13.4%
Silicon Genesis Corp., Series 1-E
7.6%
Renewable Energy
11.0%
Netflix, Inc.
5.6%
Other Electronics
9.7%
VeriFone Holdings, Inc.
4.9%
Internet
8.9%
Intevac, Inc.
4.7%
Software
8.0%
Broadcom Corp., Class A
4.6%
Communications Equipment
6.9%
Intel Corp.
4.0%
Advanced Materials
5.8%
Microsoft Corp.
3.9%
Energy Efficiency
3.1%
Techwell, Inc.
3.4%
Communications
3.0%
Echelon Corp.
3.1%
Peripherals
2.7%
   
Defense & Aerospace
2.5%
   
Photonics
1.5%
   
Services
1.3%
   
Electronics Manufacturing Services
0.2%
   
Networking
0.1%
   
Net Other Assets and Liabilities
3.7%
   

*
Based on percentage of net assets as of 12/31/09.
**
Top 10 stock holdings total 51.4% of net assets. These holdings are current as of 12/31/09, and may not be representative of current or future investments.
 
www.firsthandfunds.com
9
 
 
 

 
 
FIRSTHAND TECHNOLOGY LEADERS FUND
Performance and Portfolio Discussion

How did the Fund perform in 2009?
Firsthand Technology Leaders Fund (TVFQX) posted a gain of 55.62%, versus a 45.36% increase for the NASDAQ Composite Index and a 26.47% gain for the S&P 500 Index. For the six months ended December 31, 2009, Firsthand Technology Leaders Fund rose 23.77% as compared to 24.26% and 22.59% increases for the NASDAQ and the S&P 500 indices, respectively.

Which industries had the greatest impact on the Fund’s performance?
For the period ended December 31, 2009, software and semiconductor stocks represented the portfolio’s largest weightings, followed by holdings in the “other electronics” and communications equipment industries. The portfolio’s exposure to the peripherals, Internet, advanced materials, and semiconductor industries contributed most to the Fund’s outperformance versus its benchmarks in 2009.

Which individual holdings were the largest contributors to the Fund’s performance?
The Fund’s top contributor in 2009 was Seagate (STX), the world’s largest manufacturer of disk drives. Seagate’s stock steadily gained ground throughout 2009 as the company‘s restructuring began yielding positive results. After struggling through the economic downturn, the company returned to profitability in the third quarter of 2009.

The Fund’s investment in Google (GOOG) was another significant contributor to performance. The stock doubled in 2009, with the resurgence in growth of the paid Internet search business. The company entered several new markets this year, notably the cell phone market with its Android operating system.

VeriFone (PAY), a provider of electronic payment systems, was another top performer for the Fund. The company’s stock posted a gain of over 200% during the year as it returned to profitability. VeriFone has been aggressively rolling out its products and services to retailers, restaurants, and taxi cab companies worldwide.

Corning (GLW) was another top performer in 2009. The company is a diversified manufacturer of glass products, including fiber optic equipment and glass substrates for LCD panels. Corning’s shares rebounded strongly during the year as the global economic situation improved, boosting consumer confidence and providing a lift to the LCD television market.

Which holdings were the greatest detractors from the Fund’s performance?
Owing to the broad market recovery in 2009, only a handful of portfolio companies posted negative returns for the year. Increased competition and slowing growth altered the market dynamics in the solar panel industry in 2009, causing shares of SunPower (SPWRB) to decline modestly.

First Solar (FSLR), another solar panel manufacturer, also suffered in the changing landscape of the global solar market. The Fund liquidated its position in the stock mid-year as business fundamentals deteriorated. Demand expectations have been curbed considerably, thanks to the global recession and cutbacks in solar subsidies, particularly in Europe. Furthermore, First Solar’s competitive cost advantage has eroded substantially as silicon prices have fallen, bringing the cost of silicon-based photovoltaic panels more in line with the company’s thin-film cadmium telluride solution.

Nokia (NOK) was another underperformer in 2009. Though it remains the largest handset manufacturer in the world by a wide margin, the company continues to struggle in the high-margin smartphone segment. As a result, Nokia’s growth has not kept pace with competitors during the economic recovery, causing its stock to wane.

Despite increasing revenue, China Mobile (CHL) suffered a small decline in its stock price in 2009 as investors fled telecom carrier stocks in search of higher growth rates as the market rebounded.
 
10
2009 Annual Report
 
 
 

 

Fund Performance and Holdings Information (as of 12/31/09)
Firsthand Technology Leaders Fund vs. Market Indices

 
Firsthand
NASDAQ
 
 
Technology
Composite
S&P 500
 
Leaders Fund
Index
Index
Since Inception (12/10/97)
5.64%
3.41%
2.88%
10-Year
-8.14%
-5.08%
-0.95%
5-Year
2.67%
1.70%
0.43%
3-Year
-1.88%
-1.14%
-5.52%
1-Year
55.62%
45.36%
26.47%

Growth of a Hypothetical $10,000 Investment

 
Returns assume reinvestment of all dividends and distributions but do not reflect the impact of taxes. The performance data quoted represent past performance. Past performance cannot guarantee 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 Funds will fluctuate so that an 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.
 
Holdings by Industry*
 
Top 10 Holdings**
 
 
% Net Assets
 
% Net Assets
Software
17.3%
Google, Inc., Class A
6.0%
Semiconductors
14.7%
VeriFone Holdings, Inc.
5.7%
Other Electronics
11.8%
QUALCOMM, Inc.
5.6%
Communications Equipment
9.1%
Intel Corp.
5.5%
Peripherals
7.0%
Corning, Inc.
5.4%
Internet
6.0%
Adobe Systems, Inc.
5.2%
Advanced Materials
5.4%
China Mobile Hong Kong Ltd. - ADR
4.7%
Communications
4.7%
Broadcom Corp., Class A
4.6%
Computer
3.7%
Samsung Electronics Co., Ltd. - GDR
4.5%
Networking
3.2%
NICE Systems Ltd. - ADR
3.9%
Renewable Energy
2.0%
   
Net Other Assets and Liabilities
15.1%
   

*
Based on percentage of net assets as of 12/31/09.
**
Top 10 stock holdings total 51.1% of net assets. These holdings are current as of 12/31/09, and may not be representative of current or future investments.
 
www.firsthandfunds.com
11
 
 
 

 
 
FIRSTHAND E-COMMERCE FUND
Performance and Portfolio Discussion

How did the Fund perform in 2009?
Firsthand e-Commerce Fund (TEFQX) posted a gain of 73.98%, versus a 45.36% increase for the NASDAQ Composite Index and a 26.47% gain for the S&P 500 Index. For the six months ended December 31, 2009, Firsthand e-Commerce Fund rose 28.57% as compared to 24.26% and 22.59% increases for the NASDAQ and the S&P 500 indices, respectively.

Which industries had the greatest impact on the Fund’s performance?
For the period ended December 31, 2009, Internet and software stocks represented the portfolio’s largest weightings, followed by holdings in the “other electronics” and communications industries. The Fund’s Internet stocks were largely responsible for the Fund’s outperformance during the year.

Which individual holdings were the largest contributors to the Fund’s performance?
The Fund’s top contributor in 2009 was Baidu (BIDU), the leading Chinese-language Internet search provider. The company’s stock was up over 200% in 2009, propelled by its status as the dominant search franchise in arguably the fastest-growing economy in the world. Although growth slowed somewhat during the year, Baidu continues to take share in the Chinese market and its revenue ramp remains healthy.

LivePerson (LPSN) was another standout performer for the Fund this past year. The company, whose stock rose nearly 300% in 2009, provides online sales support and customer service functions for small and medium-sized businesses, as well as large companies including The Home Depot and Hewlett-Packard. Despite the sluggish economy, company sales continued to grow, due in part to its ability to help clients cut costs.

The Fund’s investment in Google (GOOG) was another significant contributor to performance. The stock doubled in 2009, with the resurgence in growth of the paid Internet search business. The company entered several new markets this year, notably the cell phone market with its Android operating system.

VeriFone (PAY), a provider of electronic payment systems, was another top performer for the Fund. The company’s stock posted a gain of more than 200% during the year as it returned to profitability. VeriFone has been aggressively rolling out its products and services to retailers, restaurants, and taxi cab companies worldwide.

Which holdings were the greatest detractors from the Fund’s performance?
Owing to the broad market recovery in 2009, only a handful of portfolio companies posted negative returns for Fund during the year.

Although it posted a small positive return for calendar year 2009, we sold Comcast (CMCSK) mid-year, at a time when it was down moderately on a year-to-date basis. “Carrier” stocks like Comcast tend to trade more like utilities than technology stocks. They are often a relatively safe haven during economic downturns, but tend to lag in a bull market. The position was liquidated in order to better position the Fund for a market recovery.

The Fund began purchasing the stock of telecom supplier Ericsson (ERIC) late in the third quarter of 2009. The stock slid during the fourth quarter, however, as a string of disappointments from the company rattled investors. Despite improving its competitive position by acquiring the North American GSM operations from Nortel in November, the stock sold off following lower-than-expected Q3 earnings, a widely publicized staffing reduction, and declining prospects for profitability of its Sony-Ericsson and ST-Ericsson subsidiaries.

Shares of Activision Blizzard (ATVI), another third-quarter acquisition of the Fund, dropped sharply in late October as industry-wide sales of video games lagged expectations. Despite blockbuster sales of its latest hit, “Call of Duty: Modern Warfare 2,” the company’s stock continues to struggle in the face of declining industry revenues.
 
12
2009 Annual Report
 
 
 

 
 
Fund Performance and Holdings Information (as of 12/31/09)
Firsthand e-Commerce Fund vs. Market Indices

 
Firsthand
NASDAQ
 
 
e-Commerce
Composite
S&P 500
 
Fund
Index
Index
Since Inception (9/30/99)
-7.07%
-1.25%
0.42%
10-Year
-10.85%
-5.08%
-0.95%
5-Year
7.70%
1.70%
0.43%
3-Year
4.94%
-1.14%
-5.52%
1-Year
73.98%
45.36%
26.47%

Growth of a Hypothetical $10,000 Investment


 
Returns assume reinvestment of all dividends and distributions but do not reflect the impact of taxes. The performance data quoted represent past performance. Past performance cannot guarantee 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 Funds will fluctuate so that an 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.

Holdings by Industry*
 
Top 10 Holdings**
 
 
% Net Assets
 
% Net Assets
Internet
42.6%
Google, Inc., Class A
9.1%
Software
10.0%
Baidu, Inc. - ADR
6.7%
Other Electronics
7.5%
VeriFone Holdings, Inc.
5.7%
Communications
7.4%
Shanda Interactive
 
Computer
6.5%
      Entertainment Ltd. - ADR
5.2%
Networking
4.4%
Equinix, Inc.
4.6%
Consumer Electronics
2.5%
Microsoft Corp.
4.6%
Communications Equipment
1.6%
Cisco Systems, Inc.
4.4%
Net Other Assets and Liabilities
17.5%
VeriSign, Inc.
3.9%
   
International Business Machines Corp.
3.5%
   
Akamai Technologies, Inc.
3.4%
 
*
Based on percentage of net assets as of 12/31/09.
**
Top 10 stock holdings total 51.1% of net assets. These holdings are current as of 12/31/09, and may not be representative of current or future investments.
 
www.firsthandfunds.com
13
 
 
 

 
 
FIRSTHAND ALTERNATIVE ENERGY FUND
Performance and Portfolio Discussion

How did the Fund perform in 2009?

Firsthand Alternative Energy Fund (ALTEX) posted a gain of 41.02%, versus a 29.78% increase for the WilderHill Clean Energy Index and a 26.47% gain for the S&P 500 Index. For the six months ended December 31, 2009, Firsthand Alternative Energy Fund rose 21.92% as compared to 10.36% and 22.59% increases for the WilderHill and the S&P 500 benchmarks, respectively.
 
Which industries had the greatest impact on the Fund’s performance?

For the period ended December 31, 2009, renewable energy and energy efficiency stocks represented the portfolio’s largest weightings, followed by holdings in the “other electronics” and semiconductor industries. The Fund was buoyed by strong performance during the year across all the industries in which the Fund invests.
 
Which individual holdings were the largest contributors to the Fund’s performance?

The Fund’s top contributor in 2009 was Aixtron (AIXG), a provider of deposition equipment to the LED industry. The stock posted knock-out performance in 2009, gaining nearly 400%, as demand for high-brightness LEDs continued to rise, particularly in backlighting for LCD TVs. This demand has resulted in explosive growth in new equipment orders for the company.

Power Integrations (POWI) was another strong contributor to the Fund’s performance this past year. The company exhibited solid revenue and earnings growth as demand increased for its energy-efficient power conversion chips.

Chinese-based Trina Solar (TSL) thrived in a difficult environment in 2009, as its industry-leading manufacturing costs enabled it to increase market share while improving its margins. The vertically integrated photovoltaic manufacturer currently sells most of its volume in Europe, but the local Chinese market is expected to comprise an increasing portion of its total sales in the future.

The stock of Motech Industries (no U.S. symbol), a Taiwanese solar cell manufacturer, rose 73.12% following the return of top-line revenue growth in Q3 and an optimistic fourth quarter outlook.
 
Which holdings were the greatest detractors from the Fund’s performance?

Owing to the broad market recovery in 2009, only a handful of portfolio companies posted negative returns for the Fund during the year. Among them was Orion Energy Systems (OESX), a provider of energy-efficient lighting systems, which saw its shares post a modest loss in 2009. After struggling in the difficult economy for much of the year, the company appeared to turn the corner in Q3, and its stock price surged in the fourth quarter.

Shares of Norwegian integrated solar manufacturer Renewable Energy Corp. (no U.S. symbol) struggled in 2009 as declining prices, sluggish demand, low capacity utilization, and write-offs conspired to weaken the company’s financial condition. Among the myriad problems faced by the company during the year was the termination of fixed-price contracts for silicon wafers, precipitated by the dramatic price declines in the market.

The Fund also realized a loss on Energy Conversion Devices (ENER), which it sold late in the third quarter. Revenues for the maker of so-called “building-integrated solar” modules declined throughout 2009 as new construction and re-roofing projects remained sluggish worldwide.
 
14
2009 Annual Report
 
 
 

 
 
Fund Performance and Holdings Information (as of 12/31/09)
Firsthand Alternative Energy Fund vs. Market Indices

 
Firsthand
WilderHill
 
 
Alternative
Clean Energy
S&P 500
 
Energy Fund
Index
Index
Since Inception (10/29/07)
-9.70%
-32.49%
-11.73%
1-Year
41.02%
29.78%
26.47%
 
Growth of a Hypothetical $10,000 Investment


Returns assume reinvestment of all dividends and distributions but do not reflect the impact of taxes. The performance data quoted represent past performance. Past performance cannot guarantee 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 Funds will fluctuate so that an 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.

Holdings by Industry*
 
Top 10 Holdings**
 
 
% Net Assets
 
% Net Assets
Renewable Energy
46.9%
Amtech Systems, Inc.
7.8%
Energy Efficiency
9.1%
Silicon Genesis Corp., Common
4.2%
Other Electronics
8.1%
Echelon Corp.
3.8%
Semiconductors
5.3%
Solarfun Power Holdings Co., Ltd. - ADR
3.5%
Advanced Materials
4.9%
Meyer Burger Technology AG
3.4%
Intellectual Property
4.3%
Johnson Controls, Inc.
3.4%
Industrials
4.0%
Power Integrations, Inc.
3.3%
Building Automation
3.4%
Canadian Solar, Inc.
3.3%
Basic Materials
0.8%
Itron, Inc.
3.2%
Environmental Services
0.8%
Motech Industries, Inc.
3.2%
Net Other Assets and Liabilities
12.4%
   

*
Based on percentage of net assets as of 12/31/09.
**
Top 10 stock holdings total 39.1% of net assets. These holdings are current as of 12/31/09, and may not be representative of current or future investments.
 
www.firsthandfunds.com
15
 
 
 

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Trustees
Firsthand Funds
Santa Clara, California

We have audited the accompanying statements of assets and liabilities of Firsthand Funds (the “Funds”), comprising respectively, the Firsthand Technology Value Fund, Firsthand Technology Leaders Fund, e- Commerce Fund and Firsthand Alternative Energy Fund, including the portfolios of investments as of December 31, 2009, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the statement of cash flows (with respect to the Firsthand Technology Value Fund) for the year then ended and the financial highlights for the periods indicated thereon.  These financial statements and financial highlights are the responsibility of the Funds’ management.  Our responsibility is to express an opinion on those fin ancial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).   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. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting.  Accordingly, we express no such opinion.  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 December 31, 2009 by correspondence with the custodian and brokers or by other appropriate auditing procedures when replies from brokers were not received.  As described in Note 5, Firsthand Technology Value Fund has restricted securities, representing 26.8% of the Fund’s net assets, that do not have market quotations readily available and are valued at their fair value as determined in good faith using procedures established by the Board of Trustees. Amounts ultimately realized from the disposal of such restricted securities may vary significantly from the fair values presented. 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 basi s 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 Firsthand Funds as of December 31, 2009, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, the statement of cash flows (with respect to the Firsthand Technology Value Fund) for the year then ended and the financial highlights for the periods indicated thereon, in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER & BAKER, LLP
Philadelphia, Pennsylvania
February 19, 2010
 
16
2009 Annual Report
 
 
 

 
 
FIRSTHAND TECHNOLOGY VALUE FUND
Portfolio of Investments (as of 12/31/09)
 
         
Market
 
   
Shares
   
Value
 
COMMON STOCKS — 70.0% ($124,518,612)
           
Advanced Materials — 3.0% ($5,379,766)
           
Corning, Inc.
    278,600     $ 5,379,766  
Communications — 2.9% ($5,203,036)
               
Clearwire Corp., Class A*
    298,600       2,018,536  
Equinix, Inc.*
    30,000       3,184,500  
Communications Equipment — 6.9% ($12,289,231)
               
QUALCOMM, Inc.
    75,300       3,483,378  
Research In Motion Ltd.*
    65,300       4,410,362  
ZTE Corp.
    710,000       4,395,491  
Defense & Aerospace — 2.5% ($4,482,640)
               
FLIR Systems, Inc.*
    137,000       4,482,640  
Electronics Manufacturing Sevices — 0.2% ($346,150)
               
Quanta Computer, Inc. - GDR
    31,815       346,150  
Energy Efficiency — 3.1% ($5,544,176)
               
Echelon Corp.*
    479,600       5,544,176  
Intellectual Property — 0.9% ($1,503,079)
               
Silicon Genesis Corp., Common*(1)(2)
    881,892       1,503,079  
Internet — 8.9% ($15,764,247)
               
Akamai Technologies, Inc.*
    105,900       2,682,447  
Netflix, Inc.*
    180,000       9,925,200  
Shanda Interactive Entertainment Ltd. - ADR*
    60,000       3,156,600  
Other Electronics — 9.7% ($17,302,128)
               
Intevac, Inc.*
    722,156       8,283,129  
Microvision, Inc.*
    125,100       396,567  
VeriFone Holdings, Inc.*
    526,400       8,622,432  
Peripherals — 2.7% ($4,838,540)
               
Seagate Technology, Inc.
    266,000       4,838,540  
Photonics — 1.5% ($2,637,530)
               
Newport Corp.*
    287,000       2,637,530  
Renewable Energy — 0.2% ($267,444)
               
Amtech Systems, Inc.*
    20,000       220,400  
Solaicx Common * (1)
    4,704,401       47,044  
Semiconductors — 18.2% ($32,341,458)
               
AuthenTec, Inc.*
    167,829       370,902  
Broadcom Corp., Class A*
    261,600       8,227,320  
Entropic Communications, Inc.*
    200,000       614,000  
Intel Corp.
    350,800       7,156,320  
Marvell Technology Group Ltd.*
    245,900       5,102,425  
Samsung Electronics Co., Ltd. - GDR (3)
    1,699       582,881  
Semiconductor Manufacturing International Corp. - ADR*
    600,000       1,944,000  
Synaptics, Inc.*
    77,000       2,360,050  
Techwell, Inc.*
    453,300       5,983,560  
Services — 1.3% ($2,386,250)
               
Accenture PLC, Class A
    57,500       2,386,250  
Software — 8.0% ($14,232,937)
               
Activision Blizzard, Inc.*
    379,100       4,211,801  
Microsoft Corp.
    228,800       6,976,112  
NICE Systems Ltd. - ADR*
    98,100       3,045,024  
PREFERRED STOCKS — 24.7% ($43,872,506)
               
Advanced Materials — 2.8% ($5,000,000)
               
UCT Coatings, Inc., Series B* (1)
    500,000       5,000,000  
Intellectual Property — 11.3% ($20,027,910)
               
Silicon Genesis Corp., Series 1-C* (1) (2)
    82,914       823,412  
Silicon Genesis Corp., Series 1-D* (1) (2)
    850,830       3,265,877  
Silicon Genesis Corp., Series 1-E* (1) (2)
    5,704,480       13,538,842  
Silicon Genesis Corp., Series 1-F* (1) (2)
    912,453       2,399,779  
Networking — 0.1% ($230,806)
               
IP Unity, Inc., Series E* (1)
    193,042       211,484  
 
see accompanying notes to financial statements
 
www.firsthandfunds.com
17
 
 
 

 
 
FIRSTHAND TECHNOLOGY VALUE FUND - continued
Portfolio of Investments (as of 12/31/09)
 
         
Market
 
   
Shares
   
Value
IP Unity, Inc., Series C* (1)
    1,932,222     $ 19,322  
Renewable Energy — 10.5% ($18,598,037)
               
SoloPower, Series B* (1) (2)
    228,779       1,525,142  
SoloPower, Series A* (1) (2)
    2,721,088       17,072,895  
Services — 0.0% ($15,753)
               
Innovion Corp., Series C* (1)
    1,575,322       15,753  
CONVERTIBLE BOND — 0.0% ($71,753)
               
Services — 0.0% ($71,753)
               
Innovion Corp., 9.5% (1)
    434,099       71,753  
RIGHTS — 0.1% ($119,440)
               
Communications — 0.1% ($119,440)
               
Clearwire Corp., Rights 06/21/10*
    298,600       119,440  
WARRANTS — 1.2% ($2,162,196)
               
Advanced Materials — 0.0% ($7,493)
               
UCT Coatings, Inc., Common Warrant (1)
    144,542       1,446  
UCT Coatings, Inc., Common Warrant (1)
    4,722       47  
UCT Coatings, Inc., Common Warrant (1)
    600,000       6,000  
Intellectual Property — 1.2% ($2,154,634)
               
Silicon Genesis Corp., 1-E Warrant (1) (2)*
    94,339       123,902  
Silicon Genesis Corp., 1-E Warrant (1) (2)*
    1,257,859       1,985,367  
Silicon Genesis Corp., Common Warrant (1) (2)*
    37,982       45,365  
Networking — 0.0% ($69)
               
IP Unity, Inc., E Warrant (1)*
    69,496       69  
Renewable Energy — 0.0% ($0)
               
Solaicx, Common Warrant (1)*
    67,081       0  
PARTICIPATION NOTES  — 0.3% ($498,978)
               
Renewable Energy — 0.3% ($498,978)
               
Suzlon Energy Ltd., 0.00% 09/16/10*
    257,000       498,978  
Total Investments (Cost $164,647,841) — 96.3%
            171,243,485  
Other assets in excess of liabilities — 3.7%
            6,587,234  
                 
NET ASSETS — 100.0%
          $ 177,830,719  
 
*
Non-income producing security.
(1)
Restricted security.
(2)
Affiliated issuer.
(3)
Rule 144A, Section 4(2), or other security that is restricted as to resale to institutional investors. The Investment Advisor, using Board-approved procedures has deemed these securities to be liquid. At December 31, 2009, the value of these securities amounted to $582,881 or 0.3%.
ADR
American Depositary Receipt
GDR
Global Depositary Receipt
 
see accompanying notes to financial statements
 
18
2009 Annual Report
 
 
 

 
 
FIRSTHAND TECHNOLOGY LEADERS FUND
Portfolio of Investments (as of 12/31/09)
 
         
Market
 
   
Shares
   
Value
 
COMMON STOCKS — 84.9% ($32,254,888)
           
Advanced Materials — 5.4% ($2,070,553)
           
Corning, Inc.
    107,227     $ 2,070,553  
Communications — 4.7% ($1,768,983)
               
China Mobile Hong Kong Ltd. - ADR
    38,100       1,768,983  
Communications Equipment — 9.1% ($3,461,019)
               
Nokia Corp. - ADR
    104,100       1,337,685  
QUALCOMM, Inc.
    45,900       2,123,334  
Computer — 3.7% ($1,391,676)
               
Apple, Inc.*
    6,600       1,391,676  
Internet — 6.0% ($2,266,027)
               
Google, Inc., Class A*
    3,655       2,266,027  
Networking — 3.2% ($1,236,980)
               
Cisco Systems, Inc.*
    51,670       1,236,980  
Other Electronics — 11.8% ($4,493,730)
               
Koninklijke (Royal) Philips Electronics N.V.
    39,100       1,151,104  
L-1 Identity Solutions, Inc.*
    155,200       1,162,448  
VeriFone Holdings, Inc.*
    133,100       2,180,178  
Peripherals — 7.0% ($2,643,409)
               
EMC Corp.*
    79,200       1,383,624  
Seagate Technology, Inc.
    69,257       1,259,785  
Renewable Energy — 2.0% ($768,306)
               
Suntech Power Holdings Co., Ltd. - ADR*
    46,200       768,306  
Semiconductors — 14.7% ($5,577,447)
               
Broadcom Corp., Class A*
    55,925       1,758,841  
Intel Corp.
    103,100       2,103,240  
Samsung Electronics Co., Ltd. - GDR (1)
    5,000       1,715,366  
Software — 17.3% ($6,576,758)
               
Activision Blizzard, Inc.*
    104,700       1,163,217  
Adobe Systems, Inc.*
    54,200       1,993,476  
Microsoft Corp.
    47,950       1,461,995  
NICE-Systems Ltd. - ADR*
    48,200       1,496,128  
VMware, Inc., Class A*
    10,900       461,942  
Total Investments (Cost $30,238,328) — 84.9%
            32,254,888  
Other assets in excess of liabilities — 15.1%
            5,717,085  
NET ASSETS — 100.0%
          $ 37,971,973  
 
(1)
Rule 144A, Section 4(2), or other security that is restricted as to resale to institutional investors. The Investment Advisor, using Board-approved procedures has deemed this security to be liquid. At December 31, 2009, the value of this security amounted to $1,715,366 or 4.5%.
*
Non-income producing security.
ADR
American Depositary Receipt
 
see accompanying notes to financial statements
 
www.firsthandfunds.com
19
 
 
 

 
 
FIRSTHAND E-COMMERCE FUND
Portfolio of Investments (as of 12/31/09)
 
 
 
 
   
Market
 
   
Shares
   
Value
 
COMMON STOCKS — 82.5% ($28,754,615)
           
Communications — 7.4% ($2,592,186)
           
Equinix, Inc.*
    15,000     $ 1,592,250  
NeuStar, Inc., Class A*
    43,400       999,936  
Communications Equipment — 1.6% ($549,562)
               
Telefonaktiebolaget Ericsson LM - ADR
    59,800       549,562  
Computer — 6.5% ($2,279,666)
               
Apple, Inc.*
    5,100       1,075,386  
International Business Machines Corp.
    9,200       1,204,280  
Consumer Electronics — 2.5% ($860,223)
               
Shutterfly, Inc.*
    48,300       860,223  
Internet — 42.6% ($14,851,151)
               
51job, Inc. - ADR*
    58,600       1,038,392  
Akamai Technologies, Inc.*
    46,200       1,170,246  
Baidu, Inc. - ADR*
    5,700       2,344,011  
comScore, Inc.*
    29,700       521,235  
CyberSource Corp.*
    41,814       840,880  
Google, Inc., Class A*
    5,100       3,161,898  
LivePerson, Inc.*
    140,000       975,800  
Monster Worldwide, Inc.*
    45,100       784,740  
Netflix, Inc.*
    12,400       683,736  
Shanda Interactive Entertainment Ltd. - ADR*
    34,700       1,825,567  
ValueClick, Inc.*
    56,300       569,756  
VistaPrint NV*
    16,500       934,890  
Networking — 4.4% ($1,524,978)
               
Cisco Systems, Inc.*
    63,700       1,524,978  
Other Electronics — 7.5% ($2,605,057)
               
L-1 Identity Solutions, Inc.*
    84,500       632,905  
VeriFone Holdings, Inc.*
    120,400       1,972,152  
Software — 10.0% ($3,491,792)
               
Activision Blizzard, Inc.*
    48,200       535,502  
Microsoft Corp.
    52,200       1,591,578  
VeriSign, Inc.*
    56,300       1,364,712  
Total Investments (Cost $21,156,299) — 82.5%
            28,754,615  
Other assets in excess of liabilities — 17.5%
            6,100,447  
                 
NET ASSETS — 100.0%
          $ 34,855,062  
 
*
Non-income producing security.
ADR
American Depositary Receipt
 
see accompanying notes to financial statements
 
20
2009 Annual Report
 
 
 

 
 
FIRSTHAND ALTERNATIVE ENERGY FUND
Portfolio of Investments (as of 12/31/09)
 
   
 
   
Market
 
   
Shares
   
Value
 
COMMON STOCKS — 89.1% ($6,618,237)
           
Advanced Materials — 4.9% ($365,878)
           
Corning, Inc.
    9,760     $ 188,466  
MEMC Electronic Materials, Inc.*
    2,130       29,011  
Metabolix, Inc.*
    4,700       52,029  
Praxair, Inc.
    1,200       96,372  
Basic Materials — 0.8% ($56,580)
               
Metalico, Inc.*
    11,500       56,580  
Building Automation — 3.4% ($250,608)
               
Johnson Controls, Inc.
    9,200       250,608  
Energy Efficiency — 9.1% ($676,203)
               
Echelon Corp.*
    24,500       283,220  
Honeywell International, Inc.
    3,880       152,096  
Itron, Inc.*
    3,565       240,887  
Environmental Services — 0.8% ($57,340)
               
ADA-ES, Inc.*
    9,400       57,340  
Industrials — 4.0% ($300,886)
               
3M Co.
    2,800       231,476  
United Technologies Corp.
    1,000       69,410  
Intellectual Property — 4.2% ($309,186)
               
Silicon Genesis Corp., Common (1)*
    181,407       309,186  
Other Electronics — 8.1% ($602,241)
               
Aixtron AG - ADR
    6,900       231,150  
Intevac, Inc.*
    17,800       204,166  
Koninklijke (Royal) Philips Electronics N.V.
    5,670       166,925  
Renewable Energy — 48.5% ($3,603,075)
               
Akeena Solar, Inc.*
    104,400       130,500  
Amtech Systems, Inc.*
    52,600       579,652  
Ascent Solar Technologies, Inc.*
    21,200       112,360  
Canadian Solar, Inc.*
    8,400       242,088  
Clipper Windpower PLC*
    3,000       8,357  
FuelCell Energy, Inc.*
    5,000       18,800  
Gamesa Corp. Tecnologica S.A.
    7,000       118,359  
GT Solar International, Inc.*
    23,900       132,884  
JA Solar Holdings Co., Ltd. - ADR*
    7,000       39,900  
KYOCERA Corp. - ADR
    950       84,123  
Meyer Burger Technology AG*
    1,000       255,381  
Motech Industries, Inc.
    49,995       237,587  
Orion Energy Systems, Inc.*
    14,000       61,460  
Renesola Ltd. - ADR*
    22,200       105,672  
Renewable Energy Corp. A.S.*
    13,000       100,704  
Sharp Corp.
    11,000       137,891  
Solarfun Power Holdings Co., Ltd. - ADR*
    34,400       262,472  
SunPower Corp., Class B*
    10,000       209,500  
Suntech Power Holdings Co., Ltd. - ADR*
    9,420       156,655  
Trina Solar Ltd. - ADR*
    2,300       124,131  
U.S. Geothermal, Inc.*
    10,500       16,065  
ULVAC, Inc.
    2,700       65,111  
Vestas Wind Systems A.S.*
    3,000       183,000  
WaterFurnace Renewable Energy, Inc.
    600       14,893  
Yingli Green Energy Holding Co. - ADR*
    13,000       205,530  
Semiconductors — 5.3% ($396,240)
               
National Semiconductor Corp.
    9,700       148,992  
Power Integrations, Inc.
    6,800       247,248  
PREFERRED STOCKS — 0.3% ($19,495)
               
Intellectual Property — 0.1% ($8,630)
               
Silicon Genesis Corp., Series 1-C (1)*
    152       1,510  
Silicon Genesis Corp., Series 1-E (1)*
    3,000       7,120  
Renewable Energy — 0.2% ($10,865)
               
SoloPower, Series C-1 (1)
    1,331       10,865  
 
see accompanying notes to financial statements
 
www.firsthandfunds.com
21
 
 
 

 
 
FIRSTHAND ALTERNATIVE ENERGY FUND
Portfolio of Investments (as of 12/31/09) - continued
 
   
 
   
Market
 
   
Shares
   
Value
Total Investments (Cost $6,265,782)89.4%
          $ 6,637,732  
Other assets in excess of liabilities — 10.6%
            788,960  
                 
NET ASSETS — 100.0%
          $ 7,426,692  
                 
SCHEDULE OF SECURITIES SOLD SHORT — (1.8)% ($(135,400))
               
Renewable Energy — (1.8)% ($(135,400))
               
First Solar, Inc.*
    (1,000 )   $ (135,400 )
                 
Total Schedule of Securities Sold Short (Proceeds $(121,415)) — (1.8)%
          $ (135,400 )
 
*
Non-income producing security.
(1)
Restricted security.
ADR
American Depositary Receipt
 
see accompanying notes to financial statements
 
22
2009 Annual Report
 
 
 

 
 
STATEMENTS OF ASSETS AND LIABILITIES
For the year ended December 31, 2009

   
Firsthand
   
Firsthand
   
Firsthand
   
Firsthand
 
   
Technology
   
Technology
   
e-Commerce
   
Alternative
 
   
Value Fund
   
Leaders Fund
   
Fund
   
Energy Fund
 
                         
ASSETS
                       
Investment securities:                                
Unaffiliated issuers at acquisition cost
  $ 140,343,627     $ 30,238,328     $ 21,156,299     $ 6,265,782  
Affiliated issuers at acquisition cost
    24,304,214                    
Total acquisition cost
  $ 164,647,841     $ 30,238,328     $ 21,156,299     $ 6,265,782  
Unaffiliated issuers at market value
  $ 128,959,825     $ 32,254,888     $ 28,754,615     $ 6,637,732  
Affiliated issuers at market value
    42,283,660                    
Total market value (Note 2)
    171,243,485       32,254,888       28,754,615       6,637,732  
Cash
    5,748,821       5,798,740       6,982,490       1,178,496  
Segregated cash
                      259,679  
Foreign currency at value (cost $0, $0, $0 and $72,191)
                      75,833  
Receivable for securities sold
    1,491,344                    
Receivable from dividends, interest, and reclaims
    616       377       602       1,998  
Receivable for capital shares sold
    15,671       34,354       25,338       12,954  
TOTAL ASSETS
    178,499,937       38,088,359       35,763,045       8,166,692  
                                 
LIABILITIES
                               
Payable for securites purchased
                611,739       71,643  
Payable to affiliates (Note 4)
    278,810       58,639       53,866       11,840  
Payable for capital shares redeemed
    390,408       57,747       242,378       521,117  
Securities sold short, at value (Cost $0, $0, $0 and $121,415)
                      135,400  
TOTAL LIABILITIES
    669,218       116,386       907,983       740,000  
NET ASSETS
  $ 177,830,719     $ 37,971,973     $ 34,855,062     $ 7,426,692  
                                 
Net Assets consist of:                                
Paid-in-capital
  $ 1,870,659,725     $ 238,832,385     $ 176,562,801     $ 7,562,214  
Accumulated net investment loss
                      (2,374 )
Accumulated net realized losses from security transactions, foreign currency, short sales and written options
    (1,699,424,650 )     (202,876,972 )     (149,306,055 )     (494,755 )
Net unrealized appreciation on investments, foreign currency and short sales
    6,595,644       2,016,560       7,598,316       361,607  
NET ASSETS
  $ 177,830,719     $ 37,971,973     $ 34,855,062     $ 7,426,692  
                                 
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)
    5,864,616       1,987,442       7,454,878       926,804  
Net asset value, redemption price and offering price per share (Note 2)
  $ 30.32     $ 19.11     $ 4.68     $ 8.01  
 
see accompanying notes to financial statements
 
www.firsthandfunds.com
23
 
 
 

 
 
STATEMENTS OF OPERATIONS
For the year ended December 31, 2009

   
Firsthand
   
Firsthand
   
Firsthand
   
Firsthand
 
   
Technology
   
Technology
   
e-Commerce
   
Alternative
 
   
Value Fund
   
Leaders Fund
   
Fund
   
Energy Fund
 
                         
INVESTMENT INCOME
                       
Unaffiliated dividends
  $ 757,926     $ 325,205     $ 60,840     $ 27,356  
Unaffiliated interest
    6,900       794       3,068       34  
Foreign tax withholding
    (6,486 )     (13,966 )     (660 )     (2,573 )
TOTAL INVESTMENT INCOME
    758,340       312,033       63,248       24,817  
                                 
EXPENSES
                               
Investment advisory fees (Note 4)
    2,482,381       493,053       377,268       84,569  
Administration fees (Note 4)
    766,891       152,655       117,136       23,909  
Trustees Fees
    9,680       5,550       5,550       6,420  
Dividends paid on securities sold short
                      5,623  
Miscellaneous fees
    58,047                    
GROSS EXPENSES
    3,316,999       651,258       499,954       120,521  
Investment advisory fees waived (Note 4)
    (9,680 )     (5,550 )     (5,550 )     (6,420 )
TOTAL NET EXPENSES
    3,307,319       645,708       494,404       114,101  
                                 
NET INVESTMENT LOSS
    (2,548,979 )     (333,675 )     (431,156 )     (89,284 )
                                 
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
                               
Net realized losses from security transactions
                               
Non-affiliated
    (74,793,265 )     (3,267,039 )     (851,713 )     (429,321 )
Affiliated
    (6,733,855 )                  
Net realized losses from purchased options transactions (1)
          (36,336 )            
Net realized gains (losses) on foreign currency
    59                   (426 )
Net realized gains from written option transactions (1)
          497,522              
Net realized gains from securities sold short
                      123,754  
Net change in unrealized appreciation on investments and foreign currency
    128,457,808       18,138,195       15,259,495       2,444,155  
Net change in unrealized depreciation on securities sold short
                      (97,512 )
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS
    46,930,747       15,332,342       14,407,782       2,040,650  
                                 
CHANGE IN NET ASSETS FROM OPERATIONS
  $ 44,381,768     $ 14,998,667     $ 13,976,626     $ 1,951,366  

(1)
Primary risk exposure is equity contracts.
 
see accompanying notes to financial statements
 
24
2009 Annual Report
 
 
 

 
 
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2009, and December 31, 2008
 
   
Firsthand Technology
   
Firsthand Technology
 
   
Value Fund
   
Leaders Fund
 
   
Year Ended
   
Year Ended
   
Year Ended
   
Year Ended
 
   
12/31/09
   
12/31/08
   
12/31/09
   
12/31/08
 
FROM OPERATIONS:
                       
Net investment loss
  $ (2,548,979 )   $ (4,418,959 )   $ (333,675 )   $ (472,754 )
Net realized gains (losses) from security transactions, foreign currency and written options
    (81,527,061 )     (28,561,406 )     (2,805,853 )     2,123,591  
Net change in unrealized appreciation (depreciation) on investments and foreign currency
    128,457,808       (138,627,920 )     18,138,195       (28,972,979 )
Net increase (decrease) in net assets from operations
    44,381,768       (171,608,285 )     14,998,667       (27,322,142 )
                                 
FROM CAPITAL SHARE TRANSACTIONS:
                               
Proceeds from shares sold
    18,711,657       22,286,071       9,568,729       2,917,653  
Proceeds received in merger (Note 7)
          25,594,071              
Payment for shares redeemed
    (51,258,771 )     (93,054,223 )     (14,237,211 )     (11,495,234 )
Net decrease in net assets from capital share transactions
    (32,547,114 )     (45,174,081 )     (4,668,482 )     (8,577,581 )
TOTAL INCREASE (DECREASE) IN NET ASSETS
    11,834,654       (216,782,366 )     10,330,185       (35,899,723 )
                                 
NET ASSETS:
                               
Beginning of year
    165,996,065       382,778,431       27,641,788       63,541,511  
End of year
  $ 177,830,719     $ 165,996,065     $ 37,971,973     $ 27,641,788  
                                 
CAPITAL SHARE ACTIVITY:
                               
Shares sold
    682,033       609,743       629,525       152,514  
Shares issued in exchange for proceeds received in merger (Note 7)
          648,799              
Shares redeemed
    (1,908,417 )     (2,764,047 )     (892,772 )     (656,841 )
Net decrease in shares outstanding
    (1,226,384 )     (1,505,505 )     (263,247 )     (504,327 )
Shares outstanding, beginning of year
    7,091,000       8,596,505       2,250,689       2,755,016  
Shares outstanding, end of year
    5,864,616       7,091,000       1,987,442       2,250,689  

see accompanying notes to financial statements
 
www.firsthandfunds.com
25
 
 
 

 
 
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2009, and December 31, 2008 - continued

   
Firsthand e-Commerce
   
Firsthand Alternative
 
   
Fund
   
Energy Fund
 
   
Year Ended
   
Year Ended
   
Year Ended
   
Year Ended
 
   
12/31/09
   
12/31/08
   
12/31/09
   
12/31/08
 
                         
FROM OPERATIONS:
                       
Net investment loss
  $ (431,156 )   $ (460,778 )   $ (89,284 )   $ (42,865 )
Net realized gains (losses) from security transactions, foreign currency and securities sold short
    (851,713 )     289,629       (305,993 )     (175,537 )
Net change in unrealized appreciation (depreciation) on investments, foreign currency and securities sold short
    15,259,495       (15,860,320 )     2,346,643       (2,100,521 )
Net increase (decrease) in net assets from operations
    13,976,626       (16,031,469 )     1,951,366       (2,318,923 )
                                 
FROM CAPITAL SHARE TRANSACTIONS:
                               
Proceeds from shares sold
    7,050,328       776,794       4,954,588       6,067,082  
Payment for shares redeemed
    (5,540,915 )     (6,044,231 )     (3,132,085 )     (1,977,420 )
Net increase (decrease) in net assets from capital share transactions
    1,509,413       (5,267,437 )     1,822,503       4,089,662  
TOTAL INCREASE (DECREASE) IN NET ASSETS
    15,486,039       (21,298,906 )     3,773,869       1,770,739  
                                 
NET ASSETS:
                               
Beginning of year
    19,369,023       40,667,929       3,652,823       1,882,084  
End of year
  $ 34,855,062     $ 19,369,023     $ 7,426,692     $ 3,652,823  
Accumulated Net Investment Income (Loss)
  $     $     $ (2,374 )   $  
                                 
                                 
CAPITAL SHARE ACTIVITY:
                               
Shares sold
    1,694,954       189,222       778,385       702,194  
Shares redeemed
    (1,444,951 )     (1,692,106 )     (494,615 )     (231,920 )
Net increase (decrease) in shares outstanding
    250,003       (1,502,884 )     283,770       470,274  
Shares outstanding, beginning of year
    7,204,875       8,707,759       643,034       172,760  
Shares outstanding, end of year
    7,454,878       7,204,875       926,804       643,034  
 
see accompanying notes to financial statements
 
26
2009 Annual Report
 
 
 

 
 
STATEMENT OF CASH FLOWS
December 31, 2009

   
Firsthand
 
   
Technology
 
   
Value Fund
 
CASH FLOWS FROM OPERATING ACTIVITIES
     
Net increase in Net Assets derived from operations
  $ 44,381,768  
         
Adjustments to reconcile net increase in Net Assets derived from operations to net cash provided by operating activities:
       
Purchases of investments
    (34,138,593 )
Proceeds from disposition of investments
    72,673,412  
Cash received from securities litigation
    748,681  
Net realized loss on investments
    81,527,120  
Net unrealized appreciation from investments
    (128,457,808 )
         
Change in assets and liabilities:
       
         
(Increase) Decrease in assets:
       
Receivable for securities sold
    (1,491,344 )
Receivable from dividend, interest, and reclaims
    (616 )
         
Increase (Decrease) in payables:
       
Decrease in payable for securities purchased
    (679,000 )
Payable to affiliates
    13,074  
Net cash provided by operating activities
    34,576,694  
         
CASH FLOWS FROM FINANCING ACTIVITIES
       
Proceeds from shares sold
    18,704,440  
Payment on shares redeemed
    (51,310,294 )
Net cash used in financing activities
    (32,605,854 )
         
Net change in cash
    1,970,840  
Cash - beginning of year (1)
    3,777,981  
Cash - end of year (1)
  $ 5,748,821  

(1)
Consists of PNC Bank money market account.

see accompanying notes to financial statements
 
www.firsthandfunds.com
27
 
 
 

 
 
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
FIRSTHAND TECHNOLOGY VALUE FUND

   
Year
   
Year
   
Year
   
Year
   
Year
 
   
Ended
   
Ended
   
Ended
   
Ended
   
Ended
 
   
12/31/09
   
12/31/08
   
12/31/07
   
12/31/06
   
12/31/05
 
                               
Net asset value at beginning of year
  $ 23.41     $ 44.53     $ 36.09     $ 33.12     $ 29.48  
Income from investment operations:
                                       
Net investment loss
    (0.43 )     (0.62 )     (0.70 )     (0.72 )     (0.62 )
Net realized and unrealized gains (losses) on investments
    7.34       (20.50 )     9.14       3.69       4.26  
Total from investment operations
    6.91       (21.12 )     8.44       2.97       3.64  
Net asset value at end of year
  $ 30.32     $ 23.41     $ 44.53     $ 36.09     $ 33.12  
Total return
    29.52 %     (47.43 %)     23.39 %     8.97 %     12.35 %
Net assets at end of year (millions)
  $ 177.8     $ 166.0     $ 382.8     $ 370.9     $ 446.6  
Ratio of gross expenses to average net assets before waiver
    1.95 %     2.00 %     1.93 %     1.93 %     1.92 %
Ratio of net expenses to average net assets after waiver
    1.94 %     1.94 %     1.93 %     1.92 %     1.92 %
Ratio of net investment loss to average net assets
    (1.49 %)     (1.62 %)     (1.57 %)     (1.70 %)     (1.81 %)
Portfolio turnover rate
    21 %     54 %     50 %     47 %     42 %
 
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
FIRSTHAND TECHNOLOGY LEADERS FUND
 
   
Year
   
Year
   
Year
   
Year
   
Year
 
   
Ended
   
Ended
   
Ended
   
Ended
   
Ended
 
   
12/31/09
   
12/31/08
   
12/31/07
   
12/31/06
   
12/31/05
 
                               
Net asset value at beginning of year
  $ 12.28     $ 23.06     $ 20.23     $ 18.95     $ 16.75  
Income from investment operations:
                                       
Net investment loss
    (0.17 )     (0.21 )     (0.29 )     (0.29 )     (0.23 )
Net realized and unrealized gains (losses) on investments
    7.00       (10.57 )     3.12       1.57       2.43  
Total from investment operations
    6.83       (10.78 )     2.83       1.28       2.20  
Net asset value at end of year
  $ 19.11     $ 12.28     $ 23.06     $ 20.23     $ 18.95  
Total return
    55.62 %     (46.75 %)     13.99 %     6.75 %     13.13 %
Net assets at end of year (millions)
  $ 38.0     $ 27.6     $ 63.5     $ 74.0     $ 121.0  
Ratio of gross expenses to average net assets before waiver
    1.92 %     2.07 %     1.96 %     1.96 %     1.95 %
Ratio of net expenses to average net assets after waiver
    1.90 %     1.95 %     1.95 %     1.95 %     1.95 %
Ratio of net investment loss to average net assets
    (0.98 %)     (1.03 %)     (1.16 %)     (1.13 %)     (1.43 %)
Portfolio turnover rate
    25 %     78 %     35 %     53 %     43 %
 
see accompanying notes to financial statements
 
28
2009 Annual Report
 
 
 

 
 
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
FIRSTHAND E-COMMERCE FUND

   
Year
   
Year
   
Year
   
Year
   
Year
 
   
Ended
   
Ended
   
Ended
   
Ended
   
Ended
 
   
12/31/09
   
12/31/08
   
12/31/07
   
12/31/06
   
12/31/05
 
                               
Net asset value at beginning of year
  $ 2.69     $ 4.67     $ 4.05     $ 3.40     $ 3.23  
Income from investment operations:
                                       
Net investment loss
    (0.06 )     (0.06 )     (0.06 )     (0.06 )     (0.06 )
Net realized and unrealized gains (losses) on investments
    2.05       (1.92 )     0.68       0.71       0.23  
Total from investment operations
    1.99       (1.98 )     0.62       0.65       0.17  
Net asset value at end of year
  $ 4.68     $ 2.69     $ 4.67     $ 4.05     $ 3.40  
Total return
    73.98 %     (42.40 %)     15.31 %     19.12 %     5.26 %
Net assets at end of year (millions)
  $ 34.9     $ 19.4     $ 40.7     $ 40.3     $ 42.9  
Ratio of gross expenses to average net assets before waiver
    1.92 %     2.14 %     1.96 %     1.98 %     1.95 %
Ratio of net expenses to average net assets after waiver
    1.90 %     1.95 %     1.95 %     1.95 %     1.95 %
Ratio of net investment loss to average net assets
    (1.66 %)     (1.58 %)     (1.28 %)     (1.51 %)     (1.66 %)
Portfolio turnover rate
    41 %     41 %     44 %     59 %     55 %
 

FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each period
FIRSTHAND ALTERNATIVE ENERGY FUND

   
Year
   
Year
   
Period
 
   
Ended
   
Ended
   
Ended
 
   
12/31/09
   
12/31/08
   
12/31/07**
 
                   
Net asset value at beginning of period
  $ 5.68     $ 10.89     $ 10.00  
Income from investment operations:
                       
Net investment income (loss)
    (0.10 )     (0.07 )     (A)
Net realized and unrealized gains (losses) on investments
    2.43       (5.14 )     0.89  
Total from investment operations
    2.33       (5.21 )     0.89  
Net asset value at end of period
  $ 8.01     $ 5.68     $ 10.89  
Total return
    41.02 %     (47.84 %)     8.90 % (B)
Net assets at end of period (millions)
  $ 7.4     $ 3.7     $ 1.9  
Ratio of gross expenses to average net assets before waiver
    2.27 %**     2.37 %**     2.10 % (C)
Ratio of net expenses to average net assets after waiver
    2.15 %**     2.11 %**     2.10 % (C)
Ratio of net investment loss to average net assets
    (1.68 %)     (1.26 %)     (0.07 %)(C)
Portfolio turnover rate
    41 %     44 %     (B)

*
For the period October 29, 2007 (inception) through December 31, 2007.
**
Ratio for years ended 2009 and 2008 includes dividend expenses on securities sold short of  0.11% and 0.01%, respectively.
(A)
Less than $0.005.
(B)
Not annualized.
(C)
Annualized.

see accompanying notes to financial statements
 
www.firsthandfunds.com
29
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS
December 31, 2009
 
1. Organization
Each of Firsthand Technology Value Fund, Firsthand Technology Leaders Fund, Firsthand e-Commerce Fund, and Firsthand Alternative Energy Fund (individually the “Fund”, and collectively the “Funds”) is a non-diversified series of Firsthand Funds (the “Trust”), an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust, a Delaware statutory trust, was organized on November 8, 1993. The inception dates for the Funds (the date on which a net asset value was first determined for that Fund) follow:

Fund
Inception Date
Firsthand Technology Value Fund
May 20, 1994*
Firsthand Technology Leaders Fund
December 10, 1997
Firsthand e-Commerce Fund
September 30, 1999
Firsthand Alternative Energy Fund
October 29, 2007

*
Firsthand Technology Value Fund Investor Class commenced operations on May 20, 1994; the SEC effective date for the Investor Class is December 15, 1994. Each Fund currently offers one class of shares—Investor Class shares.

Each Fund’s investment objective is long-term growth of capital.

Firsthand Technology Value Fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in high-technology companies that SiVest Group, Inc. (the “Investment Adviser”) believes are undervalued and have potential for capital appreciation.

Firsthand Technology Leaders Fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in high-technology companies that the Investment Adviser believes hold dominant competitive positions in high-growth industries.

Firsthand e-Commerce Fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in equity securities of companies that provide the products, services, and technologies to facilitate the growth of electronic commerce.

Firsthand Alternative Energy Fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in alternative energy and energy technology companies, both U.S. and international.

2. Significant Accounting Policies
The following is a summary of the Funds’ significant accounting policies:

Securities Valuation—A Fund’s portfolio of securities is valued as follows:

 
1.
Securities traded on stock exchanges, or quoted by NASDAQ, are valued according to the NASDAQ official closing price, if applicable, or at their last reported sale price as of the close of trading on the New York Stock Exchange (“NYSE”) (normally 4:00 P.M. Eastern Time). If a security is not traded that day, the security will be valued at its most recent bid price.
 
2.
Securities traded in the over-the-counter market, but not quoted by NASDAQ, are valued at the last sale price (or, if the last sale price is not readily available, at the most recent closing bid price as quoted by brokers that make markets in the securities) at the close of trading on the NYSE.
 
3.
Securities traded both in the over-the-counter market and on a stock exchange are valued according to the broadest and most representative market.
 
4.
Securities and other assets that do not have market quotations readily available are valued at their fair value as determined in good faith using procedures established by the Board of Trustees.
 
30
2009 Annual Report
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
In pricing illiquid, privately placed securities, the advisor follows well-accepted valuation techniques. Initial valuations are generally determined by the initial purchase price for each security. Subsequent to initial purchase, securities are repriced from time to time to reflect changes to the companies’ valuations caused by various events. Such events include, among others, a new round of financing establishing a new valuation for the company; material changes to a company’s business or business prospects, either due to company-specific internal issues (gaining or losing a major customer, missing a significant milestone, etc.) or macroeconomic events affecting the industry or the world. In analyzing a company’s valuation, factors that are also considered include a company’s cash flow, revenues, profitabilit y, financial forecasts, and probability of success in those measures. Other potential factors include the value of comparable public and private companies and general market conditions.

Fair Value Measurement — In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the Fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements).
 
The guidance establishes three levels of the fair value hierarchy as follows:

 
Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
 
Level 2
Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.
 
Level 3
Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Company’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the following Funds’ net assets as of December 31, 2009:
 
         
Level 2
   
Level 3
 
   
Level 1
   
Other Significant
   
Significant
 
   
Quoted Prices
   
Observable Inputs
   
Unobservable Inputs
 
   
Investments
   
Other Financial
   
Investments
   
Other Financial
   
Investments
   
Other Financial
 
Fund*
 
in Securities
   
Instruments**
   
in Securities
   
Instruments**
   
in Securities
   
Instruments**
 
TVFQX
                                   
Common Stocks
                                   
Advanced Materials
  $ 5,379,766     $     $     $     $     $  
Communications
    5,203,036                                
Communications Equipment
    12,289,231                                
Defense & Aerospace
    4,482,640                                
Electronics Mfg Services
                346,150                    
Energy Efficiency
    5,544,176                                
Intellectual Property
                            1,503,079        
Internet
    15,764,247                                
Networking
                                   
Other Electronics
    17,302,128                                
Peripherals
    4,838,540                                
Photonics
    2,637,530                                
 
www.firsthandfunds.com
31
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
         
Level 2
   
Level 3
 
   
Level 1
   
Other Significant
   
Significant
 
   
Quoted Prices
   
Observable Inputs
   
Unobservable Inputs
 
   
Investments
   
Other Financial
   
Investments
   
Other Financial
   
Investments
   
Other Financial
 
Fund*
 
in Securities
   
Instruments**
   
in Securities
   
Instruments**
   
in Securities
   
Instruments**
 
TVFQX (continued)
                                   
Renewable Energy
  $ 220,400     $     $     $     $ 47,044     $  
Semiconductors
    31,758,577             582,881                    
Services
    2,386,250                                
Software
    14,232,937                                
Total Common Stocks
    122,039,458             929,031             1,550,123        
Preferred Stocks
                                               
Advanced Materials
                            5,000,000        
Intellectual Property
                            20,027,910        
Networking
                            230,806        
Renewable Energy
                            18,598,037        
Services
                            15,753        
Total Preferred Stocks
                            43,872,506        
Rights
                                               
Communications
    119,440                                
Warrants
                                               
Advanced Materials
                            7,493        
Intellectual Property
                            2,154,634        
Networking
                            69        
Total Warrants
    119,440                         2,162,196        
Convertible Bonds
                                               
Services
                            71,753        
Participation Notes
                                               
Renewable Energy
                498,978                    
Total
  $ 122,158,898     $     $ 1,428,009     $     $ 47,656,578     $  
                                                 
TLFQX
                                               
Common Stocks
                                               
Advanced Materials
  $ 2,070,553     $     $     $     $     $  
Communications
    1,768,983                                
Communications Equipment
    3,461,019                                
Computer
    1,391,676                                
Internet
    2,266,027                                
Networking
    1,236,980                                
Other Electronics
    4,493,730                                
Peripherals
    2,643,409                                
Renewable Energy
    768,306                                
Semiconductors
    3,862,081             1,715,366                    
Software
    6,576,758                                
Total
  $ 30,539,522     $     $ 1,715,366     $     $     $  
                                                 
TEFQX
                                               
Common Stocks***
  $ 28,754,615     $     $     $     $     $  
Total
  $ 28,754,615     $     $     $     $     $  
                                                 
ALTEX
                                               
Common Stocks
                                               
Advanced Materials
  $ 365,878     $     $     $     $     $  
Basic Materials
    56,580                                
Building Automation
    250,608                                
Energy Efficiency
    676,203                                
 
32
2009 Annual Report
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009

         
Level 2
   
Level 3
 
   
Level 1
   
Other Significant
   
Significant
 
   
Quoted Prices
   
Observable Inputs
   
Unobservable Inputs
 
   
Investments
   
Other Financial
   
Investments
    Other Financial    
Investments
   
Other Financial
 
Fund*
 
in Securities
   
Instruments**
   
in Securities
    Instruments**    
in Securities
   
Instruments**
 
ALTEX (continued)
                                   
Environmental Services
  $ 57,340     $     $     $     $     $  
Industrials
    300,886                                
Intellectual Property
                            309,186        
Other Electronics
    602,241                                
Renewable Energy
    3,405,182       (135,400 )     197,893                    
Semiconductors
    396,240                                
Total Common Stocks
    6,111,158       (135,400 )     197,893             309,186        
Preferred Stocks
                                               
Intellectual Property
                            8,630        
Renewable Energy
                            10,865        
Total Preferred Stocks
                            19,495        
Total
  $ 6,111,158     $ (135,400 )   $ 197,893     $     $ 328,681     $  

*
TVFQX: Firsthand Technology Value Fund; TLFQX: Firsthand Technology Leaders Fund; TEFQX: Firsthand e-Commerce Fund; ALTEX: Firsthand Alternative Energy Fund.
**
Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as short sales, futures, forwards, and swap contracts.
***
See portfolio of investments detail for industry breakout.

Following is a reconciliation of Level 3 assets (at either the beginning or the ending of the period) for which significant unobservable inputs were used to determine fair value.

FIRSTHAND TECHNOLOGY VALUE FUND
 
Investments at Fair
                                   
Value Using Significant
 
Balance
   
Net
         
Net Unrealized
   
Transfers
   
Balance
 
Unobservable
 
as of
   
Purchases
   
Net Realized
   
Appreciation
   
in (Out)
   
as of
 
Inputs (Level 3)
 
12/31/08
   
(Sales)
   
Gains (Losses)
   
(Depreciation)
   
Level 3
   
12/31/09
 
Common Stocks
                                   
Intellectual Property
  $ 1,589,346     $     $     $ (86,267 )   $     $ 1,503,079  
Photonics
                (14,999,941 )     14,999,941              
Renewable Energy
                      (7,928,189 )           47,044  
Preferred Stocks
                                               
Advanced Materials
    7,500,000                   (2,500,000 )           5,000,000  
Intellectual Property
    21,420,268                   (1,392,358 )           20,027,910  
Networking
    230,806             (297,848 )     297,848             230,806  
Photonics
                (1,200,000 )     1,200,000              
Renewable Energy
    30,803,699                   (4,230,429 )           18,598,037  
Semiconductors
                  (14,383,854 )     14,383,854              
Services
    15,753                               15,753  
Warrants
                                               
Advanced Materials
    6,000                   1,493             7,493  
Intellectual Property
    2,382,247                   (227,613 )           2,154,634  
Networking
    69                               69  
Renewable Energy
    548,934                   (548,934 )            
Convertible Bonds
                                               
Networking
                (100,949 )     100,949              
Semiconductors
                (2,350,000 )     2,350,000              
Services
    105,806       (11,816 )     (83,116 )     60,879             71,753  
Total
  $ 64,602,928     $ (11,816 )   $ (33,415,708 )   $ 16,481,174     $     $ 47,656,578  
 
www.firsthandfunds.com
33
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
FIRSTHAND ALTERNATIVE ENERGY FUND

Investments at Fair
                                   
Value Using Significant
 
Balance
   
Net
         
Net Unrealized
   
Transfers
   
Balance
 
Unobservable
 
as of
   
Purchases
   
Net Realized
   
Appreciation
   
in (Out)
   
as of
 
Inputs (Level 3)
 
12/31/08
   
(Sales)
   
Gains (Losses)
   
(Depreciation)
   
Level 3
   
12/31/09
 
Common Stocks
                                   
Intellectual Property
  $ 330,681     $     $     $ (21,495 )   $     $ 309,186  
Preferred Stocks
                                               
Intellectual Property
    9,230                   (600 )           8,630  
Renewable Energy
    13,883                   (3,018 )           10,865  
Total
  $ 353,794     $     $     $ (25,113 )   $     $ 328,681  

The net change in unrealized appreciation (depreciation) from Level 3 investments held as of December 31, 2009, for Firsthand Technology Value Fund and Firsthand Alternative Energy Fund was ($18,208,588) and ($25,113), respectively, and is included in “Net change in unrealized appreciation on investments and foreign currency” on the Statement of Operations.

Share Valuation — The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash or other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding of the Fund, rounded to the nearest cent. A Fund’s shares will not be priced on the days on which the NYSE is closed for trading. The offering and redemption price per share of each Fund is equal to a Fund’s net asset value per share.

Investment Income — Dividend income is recorded on the ex-dividend date. Interest income is accrued as earned. Discounts and premiums on securities purchased are amortized over the lives of the respective securities.  Other non-cash dividends are recognized as investment income at the fair value of the property received.  Withholding taxes on foreign dividends have been provided for in accordance with the company’s understanding of the applicable country’s tax rules and rates.

Cash and Cash Equivalents — The Fund considers liquid assets deposited with a bank, money market funds, and certain short-term debt instruments with maturities of 3 months or less to be cash equivalents. These investments represent amounts held with financial institutions that are readily accessible to pay Fund expenses or puchase investments. Cash and cash equivalents are valued at cost plus accrued interest, which approximates market value.

Foreign Securities — Each Fund may invest in companies that trade on U.S. exchanges as American Depositary Receipts (“ADRs”), on foreign exchanges, or on foreign over-the-counter markets. Investing in the securities of foreign companies exposes your investment in a Fund to risk. Foreign stock markets tend to be more volatile than the U.S. market due to economic and/or political instability and the regulatory conditions in some countries. In addition, some of the securities in which the Funds may invest may be denominated in foreign currencies, the value of which may decline against the U.S. dollar. An investment in foreign securities may be subject to high levels of foreign taxation, including foreign taxes withheld at the source.  The Funds do not isol ate that portion of the results of operations resulting of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the company’s books and the U.S. dollar equivalent of the amounts actually received or paid.

Options — The Funds are subject to equity price risk in the normal course of pursuing their investment objectives and may enter into options written to hedge against changes in the value of equities. The Funds (other than Firsthand Technology Value Fund) may purchase put and call options to attempt to provide protection against adverse price effects from anticipated changes in prevailing prices of securities or stock indices.  The Funds (other than Firsthand Technology Value Fund) may also write put and call options.  When
 
34
2009 Annual Report
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has realized a gain or loss. The Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option. Firsthand Technology Leaders Fund realized a $36,336 loss from purchased option transactions and realized a $497,522 gain from written option transactions during the year ended December 31, 2009.

The number of option contracts written and the premiums received during the year ended December 31, 2009, were as follows:

   
Firsthand Technology Leaders Fund
 
   
Number of
   
Premiums
 
   
Contracts
   
Received
 
Options outstanding, beginning of year
        $  
Options written during year
    5,654       574,426  
Options expired during year
    (4,349 )     (481,208 )
Options closed during year
    (80 )     (16,716 )
Options exercised during year
    (1,225 )     (76,502 )
Options outstanding, end of year
        $  

Distributions to Shareholders — Each Fund expects to distribute its net investment income and net realized gains, if any, annually. Distributions from net investment income and capital gains are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States.

Short Positions — Firsthand Alternative Energy Fund may sell securities short for economic hedging purposes.  Short sales are transactions in which the Fund sells a security it does not own, in anticipation of a decline in the market value of that security. To initiate such a transaction, the Fund must borrow the security to deliver to the buyer upon the short sale; the Fund is then obligated to replace the security borrowed by purchasing it in the open market at some later date, completing the transaction. The Fund is liable for any dividends payable on securities while those securities are in a short position.

The 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. The Fund will realize a gain if the security declines in value between those dates.

All short sales must be fully collateralized. The Fund maintains the collateral in a segregated account consisting of cash, cash equivalents and/or liquid securities sufficient to collateralize the market value of its short positions. Typically, the segregated cash with brokers and other financial institutions exceeds the minimum required. Deposits with brokers for securities sold short are invested in money market instruments.
 
Reclassification of Capital Accounts — Permanent book and tax differences resulted in reclassifications for the year ended December 31, 2009 as follows:
 
   
Increase (Decrease)
 
         
Accumulated
       
   
Paid-in-Capital
   
Net Investment Loss
   
Accumulated
Net Realized Loss
 
Firsthand Technology Value Fund
  $ (1,094,738,335 )   $ 2,548,979     $ 1,092,189,356  
Firsthand Technology Leaders Fund
    (121,749,030 )     333,675       121,415,355  
Firsthand e-Commerce Fund
    (246,898,605 )     431,156       246,467,449  
Firsthand Alternative Energy Fund
    (87,336 )     86,910       426  
 
www.firsthandfunds.com
35
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
These reclassifications, related to different treatment of net investment losses, short-term capital gains, and expiration of capital loss carryforwards, have no effect on net asset value per share.

Security Transactions — Security transactions are accounted for no later than one business day following the trade date, however, for financial reporting purposes, security transactions are accounted for on trade date. Realized gains and losses are calculated on a specific identification basis.

Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Federal Income Tax — Each Fund has elected, and intends to qualify annually, for the special tax treatment afforded regulated investment companies under the Internal Revenue Code of 1986, as amended (the “Code”). As provided in the Code, in any fiscal year in which a Fund so qualifies and distributes at least 90% of its taxable net income, the Fund (but not the shareholders) will be relieved of federal income tax on the income distributed. Accordingly, no provision for income taxes has been made. To avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98% of its net realized capital gains (earn ed during the 12 months ended October 31) plus undistributed amounts, if any, from prior years. The following information is based upon the federal income tax cost of portfolio investments as of December 31, 2009.
 
   
Firsthand
Technology
Value Fund
   
Firsthand
Technology
Leaders
Fund
   
Firsthand
e-Commerce
Fund
   
Firsthand
Alternative
Energy
Fund
 
Gross unrealized appreciation
  $ 45,728,943     $ 5,830,887     $ 8,810,182     $ 1,481,852  
Gross unrealized depreciation
    (40,426,558 )     (4,821,502 )     (2,339,398 )     (1,377,570 )
Net unrealized appreciation (depreciation)
  $ 5,302,385       1,009,385       6,470,784       104,282  
Federal income tax cost, long positions
  $ 165,941,100     $ 31,245,503     $ 22,283,831     $ 6,519,465  
Federal income tax cost, short positions
                      (121,415 )
Total federal income tax cost
  $ 165,941,100     $ 31,245,503     $ 22,283,831     $ 6,398,050  
 
The difference between the acquisition cost and the federal income tax cost of portfolio investments is due to certain timing differences in the recognition of capital losses under accounting principles generally accepted in the United States and income tax regulations. As of December 31, 2009, the Funds had capital loss carryforwards for federal income tax purposes as follows:

   
Expiring
   
Expiring
   
Expiring
   
Expiring
   
Expiring
   
Expiring
 
   
2010
   
2011
   
2012
   
2013
   
2014
   
2015
 
TVFQX
  $ 634,016,220     $ 330,969,371     $ 333,067,019     $ 167,523,435     $ 64,782,991     $ 57,959,032  
TLFQX
    109,312,900       53,324,264       33,348,418       2,501,372              
TEFQX
    141,312,315       6,014,495                          
ALTEX
                                   

   
Expiring
   
Expiring
       
   
2016
   
2017
   
Total
 
TVFQX
  $ 7,972,313     $ 72,762,429     $ 1,669,052,810  
TLFQX
          2,394,837       200,881,791  
TEFQX
          851,713       148,178,523  
ALTEX
          181,999       181,999  
 
36
2009 Annual Report
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
For Firsthand Technology Value Fund, $2,310,150 of the $167,523,435 capital loss carryforward expiring in 2013 was acquired in the reorganization with Firsthand Global Technology Fund, $3,455,691 of the $64,782,991 capital loss carryforward expiring in 2014 was acquired in the reorganization with Firsthand Technology Innovators Fund and $261,564 of the $57,959,032 capital loss carryforward expiring in 2015 was acquired in the reorganization with Firsthand Technology Innovators Fund.
 
Components of Distributable Earnings

   
 
Firsthand
Technology
Value Fund
   
Firsthand
Technology
Leaders
Fund
   
 
Firsthand
e-Commerce
Fund
   
Firsthand
Alternative
Energy
Fund
 
Net Unrealized Appreciation (Depreciation)*
  $ 5,302,385     $ 1,009,385     $ 6,470,784     $ 107,924  
Post October Capital/Currency Loss**
    (29,078,581 )     (988,006 )           (61,447 )
Accumulated Capital Loss Carryforward
    (1,669,052,810 )     (200,881,791 )     (148,178,523 )     (181,999 )
Total Distributable Earnings
  $ (1,692,829,006 )   $ (200,860,412 )   $ (141,707,739 )   $ (135,522 )

*
The differences between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales and foreign currency exchange gain (loss).
**
Under current tax law, capital and currency losses realized after October 31 and prior to the Fund’s fiscal year end may be deferred as occurring on the first day of the following fiscal year.  The Funds are subject to tax provisions that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return.  Taxable years ending 2009, 2008, 2007 and 2006 remain open to federal and state audit.  As of December 31, 2009, management has evaluated the application of these provisions to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements for uncertain tax provisions.

3. Investment Transactions Investment transactions (excluding short-term investments) were as follows for the year ended December 31, 2009.

   
Firsthand
Technology
Value Fund
   
Firsthand
Technology
Leaders
Fund
   
Firsthand
e-Commerce
Fund
   
Firsthand
Alternative
Energy
Fund
 
Purchase of investment securities
  $ 34,138,593     $ 7,577,800     $ 9,249,483     $ 3,954,613  
Proceeds from sales and maturities of investment securities
  $ 72,673,412     $ 15,331,431     $ 12,625,188     $ 1,781,447  
 
4. Investment Advisory and Administration Agreements Certain trustees and officers of the Trust are also officers of the Investment Adviser.

INVESTMENT ADVISORY AGREEMENT
Each Fund’s investments are managed by the Investment Adviser pursuant to the terms of a master investment advisory agreement (the “Advisory Agreement”). Under the Advisory Agreement, the Investment Adviser provides each Fund with investment research, advice, management, and supervision and manages the investment and reinvestment of assets of each Fund consistent with each Fund’s investment objectives, policies, and limitations.  Subject to certain exceptions set forth in the Advisory Agreement, the Investment Adviser is responsible for (i) compensation of any of the Fund’s trustees, officers, and employees who are interested persons of the Investment Adviser; and (ii) compensation of the Investment Adviser’s
 
www.firsthandfunds.com
37
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
personnel and other expenses incurred in connection with the provision of portfolio management services under the Advisory Agreement.

Effective August 3, 2009, SiVest Group, Inc. became the Investment Adviser to the Funds. For the services it provides under the Advisory Agreement, the Investment Adviser receives from each Fund, on a monthly basis, an advisory fee at the annual rate of 1.40% of its average daily net assets (1.53% for ALTEX). The Advisory Agreement requires the Investment Adviser to waive fees and, if necessary, to reimburse expenses of each such Fund to the extent necessary to limit a Fund’s total operating expenses to 1.85% (1.98% for ALTEX) of its average net assets up to $200 million, 1.80% (1.93% for ALTEX) of such assets from $200 million to $500 million, 1.75% (1.88% for ALTEX) of such assets from $500 million to $1 billion, and 1.70% (1.83% for ALTEX) of such assets in excess of $1 billion.

Prior to August 3, 2009, Firsthand Capital Management, Inc. (“FCM”) served as the Investment Adviser to the Funds. For the services it provides under the Advisory Agreement, FCM received from each Fund, on a monthly basis, an advisory fee at the annual rate of 1.50% of its average daily net assets (1.65% for ALTEX). The Advisory Agreement requires the Investment Adviser to waive fees and, if necessary, to reimburse expenses of each such Fund to the extent necessary to limit a Fund’s total operating expenses to 1.95% (2.10% for ALTEX) of its average net assets up to $200 million, 1.90% (2.05% for ALTEX) of such assets from $200 million to $500 million, 1.85% (2.00% for ALTEX) of such assets from $500 million to $1 billion, and 1.80% (1.95% for ALTEX) of such assets in excess of $1 billion.

ADMINISTRATION AGREEMENT
The Trust has entered into a separate Administration Agreement with the Investment Adviser. The agreement obligates the Investment Adviser to provide administrative and general supervisory services to each Fund (the “Administration Agreement”). Under the Administration Agreement, the Investment Adviser renders supervisory and corporate administrative services to the Trust, as well as oversees the maintenance of all books and records with respect to each Fund’s securities transactions and each Fund’s book of accounts in accordance with all applicable federal and state laws and regulations. The Investment Adviser also arranges for the preservation of journals, ledgers, corporate documents, brokerage account records, and other records as required by the 1940 Act.

The Investment Adviser is responsible for the equipment, staff, office space, and facilities necessary to perform its obligations under the Administration Agreement. Under the Administration Agreement, the Investment Adviser has assumed responsibility for payment of all of each Fund’s operating expenses excluding brokerage and commission expenses; short sale expenses; fees payable under “Rule 12b-1 plans”, if any, and shareholder servicing plans, if any; litigation costs; and any extraordinary and non-recurring expenses. For the services it provides under the Administration Agreement, the Investment Adviser receives a fee from each Fund at the annual rate of 0.45% of its average daily net assets up to $200 million, 0.40% of such assets from $200 million to $500 million, 0.35% of such assets from $500 million to $1 bil lion, and 0.30% of such assets in excess of $1 billion.

Effective November 23, 2009, PNC Global Investment Servicing (U.S.), Inc. (“PNC”) has entered into a Sub-Administration Agreement with the Investment Adviser. Under this agreement, the Investment Adviser (not the Funds) pays to PNC the fees for the administrative services provided by PNC.  In the case of Firsthand Alternative Energy Fund, the Investment Adviser has also agreed to donate a portion of its management fees allocated, amounting to 0.20% of Firsthand Alternative Energy Fund’s average daily net assets, to various non-profit organizations as elected by Fund shareholders.

Additionally, effective November 23, 2009, PNC serves as the sub-administrator, investment accounting agent and shareholder servicing and transfer agent.  Prior to November 23, 2009, Citi Fund Services Ohio, Inc. served as the sub-administrator, investment accounting agent and shareholder servicing and transfer agent.  PFPC Trust Company serves as the custodian for the Trust.
 
38
2009 Annual Report
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009

 
5. Investments in Affiliates and Restricted Securities
Affiliated issuers, as defined by the 1940 Act, are those in which a Fund’s holdings represent 5% or more of the outstanding voting securities of the issuer. A summary of each Fund’s investments in affiliates, if any, for the year ended December 31, 2009, is noted below:
 
    Share Activity                    
    Balance          
Sales/
   
Balance
                   
   
at
   
Purchases/
   
Maturity/
   
at
   
Realized
   
Value
   
Acquisition
 
Affiliate
 
12/31/08
   
Merger
   
Expiration
   
12/31/09
   
Gain (Loss)
   
12/31/09
   
Cost
 
TVFQX
                                         
Clarisay, Inc. 8.00%
    500,000     $       500,000           $ (500,000 )   $     $  
Clarisay, Inc. 8.00%
    500,000             500,000             (500,000 )            
Clarisay, Inc. 8.00%
    250,000             250,000             (250,000 )            
Clarisay, Inc. 8.00%
    100,000             100,000             (100,000 )            
Clarisay, Inc. 8.00%
    500,000             500,000             (500,000 )            
Clarisay, Inc. 8.00%
    500,000             500,000             (500,000 )            
Clarisay, Inc., Series B
    2,605,306             2,605,306             (2,383,854 )            
Clarisay, Inc., Series C
    7,194,244             7,194,244             (2,000,000 )            
Clarisay, Inc., Warrant
    500,000             500,000                          
Clarisay, Inc., Warrant
    500,000             500,000                          
Clarisay, Inc., Warrant
    250,000             250,000                          
Clarisay, Inc., Warrant
    100,000             100,000                          
Clarisay, Inc., Warrant
    500,000             500,000                          
Clarisay, Inc., Warrant
    500,000             500,000                          
Silicon Genesis Corp.,Common (1)
    871,892       10,000 (2)           881,892             1,503,079       5,201,267  
Silicon Genesis Corp., Common warrant
    37,982                   37,982             45,365        
Silicon Genesis Corp.,Series 1-C (1)
    82,914                   82,914             823,412       1,731,250  
Silicon Genesis Corp., Series 1-D
    850,830                   850,830             3,265,877       4,315,500  
Silicon Genesis Corp., Corp.,Series 1-E (1)
   
5,704,480
                 
5,704,480
           
13,538,842
      6,046,749  
 
www.firsthandfunds.com
39
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
    Share Activity                    
     Balance          
Sales/
   
Balance
   
Realized
             
   
at
   
Purchases/
   
Maturity/
   
at
   
Gain
   
Value
   
Acquisition
 
Affiliate
 
12/31/08
   
Merger
   
Expiration
   
12/31/09
   
(Loss)
   
12/31/09
   
Cost
 
TVFQX (cont’d)
                                         
Silicon Genesis Corp.,Series 1-E Warrant
    1,257,859     $             1,257,859     $       1,985,367     $  
Silicon Genesis Corp.,Series 1-E Warrant (1)
    94,339                   94,339             123,902        
Silicon Genesis Corp., Series 1-F
    912,453                   912,453             2,399,779       2,007,397  
Solaicx, Series B
    7,396,238             (7,396,238 ) (3)                        
Solaicx, Series C
    2,916,581             (2,916,581 ) (3)                        
Solaicx, Series C Warrant
    670,081             (670,081 ) (3)                        
SoloPower, Series A
    2,721,088                   2,721,088             17,072,895       3,999,999  
SoloPower, Series B
    228,779                   228,779             1,525,142       1,002,052  
 
(1)
Amounts include shares from the merger of Firsthand Technology Innovators Fund into Firsthand Technology Value Fund.
(2)
Represents shares granted to Firsthand Technology Value Fund in connection with Kevin Landis serving on the board of directors of Silicon Genesis.
(3)
Reorganization of shares into Common Stock.

As of December 31, 2009, Kevin Landis represents the Funds and sits on the following private companies’ boards: Silicon Genesis Corporation, SoloPower, Inc., and UCT Coatings, Inc. Serving on the boards of directors of the portfolio companies may cause conflicts of interest. The Adviser has adopted various procedures to ensure that the Fund will not be unfavorably affected by these potential conflicts.
 
Restricted securities include securities that have not been registered under the Securities Act of 1933, as amended, and securities that are subject to restrictions on resale. A Fund may invest in restricted securities that are consistent with a Fund’s investment objective and investment strategies. A Fund will not invest in a restricted security if, immediately after and as a result of the investment in such security, more than 15% of the Fund’s net assets would be invested in illiquid securities. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer’s expense either upon demand by the Fund or in connection with another registered offering of the securities. Investments in restricted securities are valued at fair value as determined in good faith in accordance with procedures adopted by the Board of Trustees. It is possible that the estimated value may differ significantly from the amount that might ultimately be realized in the near term, and the difference could be material.
 
40
2009 Annual Report
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009

As of December 31, 2009, the Funds were invested in the following restricted securities:
 
                           
% of
 
                           
Net
 
Security
 
Acquisition Date
   
Shares
   
Cost
   
Value
   
Assets
 
TVFQX
                             
Innovion Corp., C/N
 
December 30, 2003
      434,099     $ 434,099     $ 71,753       0.04 %
Innovion Corp., Series C P/S
 
February 23, 2001
      1,500,000       3,000,000       15,000       0.01 %
Innovion Corp., Series C P/S
 
November 20, 2007
      75,322       75       753       0.00 %
IP Unity, Inc., Series C P/S
 
July 27, 2001
      1,932,222       3,478,000       19,322       0.01 %
IP Unity, Inc., Series E P/S
 
August 4, 2004
      193,042       313,307       211,484       0.12 %
IP Unity, Inc., Series E Warrants
 
August 4, 2004
      69,496       69       69       0.00 %
Silicon Genesis Corp., Common Stock
 
March 8, 2001
      102,135       1,516,773       174,077       0.10 %
Silicon Genesis Corp., Common Stock
 
April 30, 2002
      726,424       3,684,494       1,238,102       0.70 %
Silicon Genesis Corp., Common Stock (1)
 
November 21, 2005
      23,333       -       39,768       0.02 %
Silicon Genesis Corp., Common Stock (1)
 
June 10, 2008
      20,000       -       34,088       0.02 %
Silicon Genesis Corp., Common Stock (1)
 
May 19, 2009
      10,000       -       17,044       0.01 %
Silicon Genesis Corp., Common Warrants
 
November 4, 2003
      37,982       -       45,365       0.03 %
Silicon Genesis Corp., Series 1-C P/S
 
March 8, 2001
      82,914       1,731,250       823,412       0.46 %
Silicon Genesis Corp., Series 1-D P/S
 
April 30, 2002
      850,830       4,315,500       3,265,877       1.84 %
Silicon Genesis Corp., Series 1-E P/S
 
November 4, 2003
      5,704,480       6,046,749       13,538,842       7.61 %
Silicon Genesis Corp., Series 1-E Warrants
 
February 26, 2003
      94,339       -       123,902       0.07 %
Silicon Genesis Corp., Series 1-E Warrants
 
October 31, 2003
      1,257,859       -       1,985,367       1.12 %
Silicon Genesis Corp., Series 1-F P/S
 
June 29, 2007
      912,453       2,007,397       2,399,779       1.35 %
Solaicx Common
   2005 - 2007       4,704,401       7,975,233       47,044       0.02 %
Solaicx, Common Warrants
 
April 23, 2007
      67,081       -       -       0.00 %
SoloPower, Series A P/S
 
June 29, 2006
      2,721,088       3,999,999       17,072,895       9.60 %
SoloPower, Series B P/S
 
July 9, 2007
      228,779       1,002,052       1,525,142       0.86 %
UCT Coatings, Inc., Common Warrants (2)
 
October 5, 2004
      600,000       -       6,000       0.00 %
UCT Coatings, Inc., Common Warrants
   2008 - 2009       4,722       -       47       0.00 %
UCT Coatings, Inc., Common Warrants
 
May 13, 2009
      144,542       -       1,446       0.00 %
UCT Coatings, Inc., Series B P/S
 
October 5, 2004
      500,000       5,000,000       5,000,000       2.81 %
                    $ 44,504,997     $ 47,656,578       26.80 %
 
www.firsthandfunds.com
41
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009

     
 
                % of  
                       
Net
 
Security
Acquisition Date
 
Shares
   
Cost
   
Value
   
Assets
 
ALTEX
                         
Silicon Genesis Corp., Common Stock
September 2, 2008
    109,855     $ 32,957     $ 187,234       2.52 %
Silicon Genesis Corp., Common Stock
September 26, 2008
    71,552       21,466       121,952       1.64 %
Silicon Genesis Corp., Series 1-C P/S
September 2, 2008
    152       46       1,510       0.02 %
Silicon Genesis Corp., Series 1-E P/S
September 2, 2008
    3,000       3,180       7,120       0.10 %
SoloPower, Series C-1 P/S
September 23, 2008
    1,331       21,425       10,865       0.15 %
              $ 79,074     $ 328,681       4.43 %

(1)
Shares granted at no cost by issuer. (2) 3:1 stock split P/S Preferred Stock  C/N Convertible Note
 
Each Fund, consistent with SEC guidelines, has an investment restriction providing that it cannot purchase additional restricted securities once such securities comprise 15% of a Fund’s net assets. The SEC considers a security to be illiquid if it cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which a Fund has valued the security. The restriction stems from the concern that, for an open-end mutual fund with daily redemption obligations, a high level of illiquid securities would increase the risk that a Fund may not be able to meet its daily redemption needs, because illiquid securities often take a longer period of time to sell, and may not necessarily be sold at that Fund’s then carrying value.

6. Subsequent Event

On February 2, 2010, The PNC Financial Services Group, Inc. entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with The Bank of New York Mellon Corporation (“BNY Mellon”). Upon the terms and subject to the conditions set forth in the Stock Purchase Agreement, which has been approved by the board of directors of each company, The PNC Financial Services Group, Inc. will sell to BNY Mellon (the “Stock Sale”) 100% of the issued and outstanding shares of PNC Global Investment Servicing Inc.,  an indirect, wholly-owned subsidiary of PNC. The Stock Sale includes PNC and is expected to close in the third quarter of 2010.

Management has evaluated the impact of all subsequent events on the Funds through February 19, 2010, the date the financial statements were issued, and has determined they had no material impact on the financial statements.

7. Fund Reorganization

On May 21, 2008, Firsthand Technology Value Fund (the “Acquiring Fund”), acquired the assets and assumed the liabilities of Firsthand Technology Innovators Fund and Firsthand Global Technology Fund (the “Acquired Funds”), in a tax-free reorganization in exchange for shares of the Acquiring Fund, pusuant to a plan of reorganization approved by the Acquired Funds’ shareholders. When funds merge, capital loss carryforwards may be limited under section 382 of the Internal Revenue Code. The number and value of shares issued by the Acquiring Fund are presented in the Statement of Changes in Net Assets. Net assets and unrealized depreciation as of the reorganization date were as follows:
 
42
2009 Annual Report
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
     
Acquiring Fund
   
Total Net Assets of
Unrealized
Total net Assets of
Total net Assets of
Acquiring Fund After
Appreciation/
Acquired Fund
Acquiring Fund
Acquisition
(Depreciation)
TIFQX
GTFQX
TIFQX
GTFQX
TIFQX
GTFQX
TIFQX
GTFQX
$15,784,526
$9,809,545
$306,066,492
$306,066,492
$331,660,563
$331,660,563
($6,087,254)
$847,505
 
8. New Accounting Pronouncement

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “Improving Disclosures about Fair Value Measurements” that requires additional disclosures regarding fair value measurements. Certain required disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, and other required disclosures are efective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Management is currently evaluating the impact it will have on its financial statement disclosures.

9. Investment Advisory and Administration Agreements (Unaudited)

Below is a description of the specific materials provided, factors considered, and conclusions reached by the Board, including a majority of non-interested Trustees, relating to the selection of SiVest Group, Incorporated (the “Adviser”) as Investment Adviser and the approval of an Interim Master Investment Advisory Agreement and a Master Investment Advisory Agreement.  Pursuant to Rule 15a-4 under the Investment Company Act of 1940, as amended, the Interim Master Investment Advisory Agreement was only valid for 150 days while the Fund sought shareholder approval for the Master Investment Advisory Agreement. At a shareholder meeting on November 9, 2009, the shareholders of each Fund approved the Master Investment Advisory Agreement.

Nature, Extent and Quality of Services
The Board received and considered various data and information regarding the nature, extent and quality of services to be provided to the Funds by the Adviser.  The most recent investment adviser registration form (“Form ADV”) for the Adviser was provided to the Board, as were written and oral responses of the Adviser to an information request submitted by independent counsel on behalf of the Independent Trustees.  The Board reviewed these responses, which included, among other things, information about the background and experience of the investment personnel of the Adviser primarily responsible for day-to-day portfolio management services for the Funds.  The Board also reviewed the reputation, qualification and background of Mr. Landis (including his history of managing Firsthand Capital Mana gement, Inc. (“FCM”). The Board also considered the Adviser’s separate administration agreement with the Funds and the Adviser’s overall ability to manage and administer the Funds, as well as to oversee the service providers to the Funds.

The Board evaluated the ability of the Adviser, considering its financial condition, resources, and other attributes, to attract and retain highly qualified investment professionals, including research, advisory, supervisory and administrative personnel and to provide the financial resources necessary to manage the Funds and to fulfill its obligations under the various agreements with the Trust.  The Board also noted that the Adviser proposes to render the same nature, extent and quality of services to the Funds as those provided by FCM, including its ability to continue to monitor the illiquid securities held by Firsthand Technology Value Fund (“TVF”) and Firsthand Alternative Energy Fund and the ability of the Adviser to continue to implement the illiquid securities percentage reduction plan of TVF. The Board al so noted that for Firsthand Alternative Energy Fund, which has a program whereby the investment adviser donates a portion of its investment advisory fees to various non-profit organizations as election by Fund shareholders, the Adviser has advised the Board it would continue the same practice.
 
www.firsthandfunds.com
43
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
The Board considered the effectiveness of policies of the Funds in achieving the best execution of portfolio transactions, whether and to what extent “soft dollar” benefits are sought, the extent to which efforts are made to recapture transaction costs, and the controls applicable to brokerage allocation procedures.  The Board reviewed the policies of the Adviser regarding the allocation of portfolio investment opportunities among the Funds and other clients.  The Board noted that the Adviser does not use “traditional soft-dollar” arrangements where soft-dollar credits are generated based on the level of trades and then used for products or services from third-parties.

The Board also considered the markets for the Funds, including the principal channels through which the Funds’ shares are offered and sold, and the potential future activities of the Adviser in connection with the marketing of the Funds.

In addition, the Board received and reviewed information on SEC and other inquiries, examinations and proceedings relating to the Funds, FCM and the Adviser.  The Board considered the investment and legal compliance programs of the Adviser and noted that they were substantially similar to that of FCM.

Based on the above factors, together with those referenced below, the Board, including a majority of Independent Trustees, concluded that it was generally satisfied with the nature, extent and quality of the investment advisory services to be provided to each of the Funds by the Adviser.

Fund Performance
The Board considered each Fund’s performance results over one-year, three-year, five-year and ten-year periods, or shorter periods, as relevant.  It also considered these results in comparison to the performance results of various benchmark indices and of the funds in relevant Morningstar sectors.

Investment Advisory Fee Rates and Other Expenses
The Board reviewed and considered the proposed contractual investment advisory fee rates (the “Advisory Agreement Rates”) payable by the Funds to the Adviser for investment advisory services.  The Board noted the reduction in advisory fees proposed by the Adviser and considered the Adviser’s reasoning for the proposed reduction.  Additionally, the Board received and considered information comparing the Advisory Agreement Rates (both on a stand-alone basis and on a combined basis with the Funds’ administration fee rates) and the total expense ratios of the Funds with those of other funds in appropriate peer universes provided by Lipper.  The Board concluded that the respective Advisory Agreement Rates were higher than the median rates of each Fund’s peer universe, but that the total expense ratio of each Fund was not significantly above the median total expense ratio of the respective peer universe.  The Board deemed the comparison of total expense ratios to be more relevant than the comparison of Advisory Agreement Rates because of the unitary fee structure of the Funds.

Profitability
The Board received and considered a profitability analysis of the Adviser with respect to the Funds.  The Board concluded that, in light of the costs of providing investment management and other services to the Funds, the profits and other ancillary benefits that the Adviser would receive with regard to providing these services to the Funds would not be excessive.

Economies of Scale
The Board received and considered information regarding whether there have been economies of scale with respect to the previous management of the Funds and whether there is potential for realization of any further economies of scale with respect to the existing Funds.  The Board observed that the Interim Advisory Agreement and Master Advisory Agreement limits each Fund’s total annual operating expenses to a percentage of the Fund’s assets, that this percentage is reduced as the Fund’s assets grow (known as “breakpoints”) and further noted that the fee structure of the Adviser is lower than that of FCM.  The Board concluded that no change was necessary to the current breakpoints to reflect any economies of scale.
 
44
2009 Annual Report
 
 
 

 

NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009
 
Information about Services to Other Clients
The Board also received and considered information about the services and fee rates offered by the Adviser and noted that the Adviser does not currently have other clients.

Other Benefits to the Adviser
The Board received and considered information regarding potential “fall-out” or ancillary benefits to the Adviser as a result of its relationship with the Funds.  Such benefits could include, among others, benefits directly attributable to the relationship of the Adviser with the Funds (such as “soft dollar” benefits) and benefits potentially derived from an increase in the business of the Adviser as a result of its relationship with the Funds (such as the ability to market to shareholders other financial products offered by the Adviser). The Board also considered the legal and financial structures of the Adviser, including potential benefits to the owner of the Adviser, who is also the owner of FCM, as a result of FCM terminating its relationship with the Trust.

10. Shareholder Proxy Vote (unaudited)

At a special meeting of shareholders, held on March 26, 2009, shares were voted as follows on the proposals presented to shareholders:

1. To approve the election of Mr. Greg Burglin to serve as a disinterested Trustee of the Trust:
 
For
Withheld
 
11,282,030
881,201

2. To approve the election of Mr. Kevin P. Tanner to serve as a disinterested Trustee of the Trust:
 
For
Withheld
   
 
11,287,707
875,524
   

3. To approve the change in fundamental investment restrictions of Firsthand Technology Value Fund to allow it to invest in options:
 
For
Against
Abstained
Broker Non-Votes
 
761,726
216,436
333,459
4,238,584

At a special meeting of shareholders, held on November 9, 2009, shares were voted as follows on the proposals presented to shareholders:

1. To approve the Investment Advisory Agreement with SiVest Group, Inc. with respect to Firsthand Technology Value Fund:
 
For
Against
Abstained
 
 
2,952,375
126,161
175,812
 
2. To approve the Investment Advisory Agreement with SiVest Group, Inc. with respect to Firsthand Technology Leaders Fund:
 
For
Against
Abstained
 
 
1,092,976
38,376
62,981
 

3. To approve the Investment Advisory Agreement with SiVest Group, Inc. with respect to Firsthand e-Commerce Fund:
 
For
Against
Abstained
 
 
3,368,535
108,023
192,989
 

4. To approve the Investment Advisory Agreement with SiVest Group, Inc. with respect to Firsthand Alternative Energy Fund:
 
For
Against
Abstained
 
433,071
2,860
23,216
 
www.firsthandfunds.com
45
 
 
 

 
 
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2009

11. Risks (unaudited)

Because the return on and value of an investment in each Fund will fluctuate in response to stock market movements, the most significant risk of investing in a Fund is that you may lose money. Stocks and other equity securities are subject to market risks and fluctuations in value due to earnings, as well as economic, political, or regulatory events, and other factors beyond the Investment Adviser’s control. The Funds are designed for long-term investors who can accept the risks of investing in a fund with significant common stock holdings in high-technology industries.

Each Fund is non-diversified. A risk of being non-diversified is that a significant change in the value of one company will have a greater impact on the Fund than it would if the Fund diversified its investments. Another risk for the Fund is its concentration of investments in companies within high-technology industries. The value of high-technology companies can, and often does, fluctuate dramatically and may expose you to greater-than-average financial and market risk.

12. Proxy Voting Policy and Procedures (unaudited)

The Funds have adopted proxy voting procedures pursuant to which the Funds delegate the responsibility for voting proxies relating to portfolio securities held by the Funds to the Investment Adviser as part of the Investment Adviser’s general management of the Funds, subject to the Board of Trustees’ continuing oversight. A copy of the Funds’ proxy voting policy and procedures is available without charge, upon request, by calling 1.888.884.2675. Information regarding how the Investment Adviser voted these proxies during the most recent one-year period ended June 30 is available by calling the same number and on the website of the U.S. Securities and Exchange Commission at http://www.sec.gov on Form N-PX. The Funds’ voting record is also available on the Funds’ website at www.firsthandfunds.com/proxy.

13. Portfolio Holdings (unaudited)

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q will be available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1.800.SEC.0330.
 
46
2009 Annual Report
 
 
 

 
 
ADDITIONAL INFORMATION
December 31, 2009
Information about the trustees and officers* of the Funds is set forth in the following table.  The Statement of Additional Information (the “SAI”) includes additional information about the Funds’ trustees and officers and is available free of charge, upon request, by calling 1.888.884.2675.

Name, Year of Birth, Position(s) Held With Funds
Term of Office
and Length of Time Served1
Principal Occupation(s) During Past Five Years
Number of Funds in Fund Complex Overseen by Trustee
Other Trusteeships
Held by
Trustees
DISINTERESTED TRUSTEES
Greg Burglin (1960) Trustee
469 El Camino Real, Ste. 227
Santa Clara, CA 95050
SINCE
2008
Mr. Burglin is a Tax Consultant and has been for more than 5 years.
FOUR
NONE
Kevin P. Tanner (1962)
Trustee
469 El Camino Real, Ste. 227
Santa Clara, CA 95050
SINCE
2008
Mr. Tanner is President, Chief Investment Officer and Chief Compliance Officer of Saratoga Research and Investment Management (formerly Tanner & Associates Asset Management) (an SEC registered investment adviser) and has been for more than 5 years.
FOUR
NONE
INTERESTED TRUSTEE
Kevin M. Landis2 (1961)
Trustee/President/
Secretary/Treasurer
469 El Camino Real, Ste. 227
Santa Clara, CA 95050
SINCE
1994
Mr. Landis is President and Chief Investment Officer and a Director of SiVest Group, Inc. and had been a portfolio manager with Firsthand Capital Management, Inc. from May 1994 to August 2009.
FOUR
NONE3
OFFICERS WHO ARE NOT TRUSTEES
Nicholas P. Petredis (1951)
Chief Compliance Officer
469 El Camino Real, Ste. 227
Santa Clara, CA 95050
SINCE
2008
Mr. Petredis has been a principal of Petredis Law Offices from 1993 to present. He was Managing Director and Senior Counsel of Firsthand Capital Management, Inc. from 2000 to 2001.
N/A
N/A
 
*
The term “officer” means the president, vice president, secretary, treasurer, chief compliance officer, controller, or any other officer who performs policy-making functions.
1
Each trustee shall serve for the lifetime of Firsthand Funds or until he dies, resigns, or is removed. Each officer shall serve a one-year term subject to annual reappointment by the trustees.
2
Mr. Landis is an interested person of the Funds by reason of his position with the Investment Adviser.
3
As of December 31, 2009, Mr. Landis sat on the board of directors for three private companies: Silicon Genesis Corp., SoloPower, Inc., and UCT Coatings, Inc.
 
www.firsthandfunds.com
47
 
 
 

 
 
 
 
Firsthand Funds
P.O. Box 9836
Providence, RI 02940-8036
www.firsthandfunds.com


Investment Adviser
SiVest Group, Inc.
469 El Camino Real
Suite 227
Santa Clara, CA 95050
www.sivestgroup.com


Distributor
ALPS Distributors, Inc.
1290 Broadway
Suite 1100
Denver, CO 80203


Transfer Agent
PNC Global Investment Servicing
P.O. Box 9836
Providence, RI 02940-8036
1.888.884.2675


 
This report is provided for the general information of the shareholders of Firsthand Funds. This report is not intended for distribution to prospective investors in the Funds, unless preceded or accompanied by an effective prospectus. For more complete information about Firsthand Funds, please call toll free 1.888.884.2675 or visit www.firsthandfunds.com for a prospectus, which contains more information, including risks, fees, and expenses. Read the prospectus carefully before investing or sending money.

Firsthand Funds are distributed by ALPS Distributors, Inc.

Firsthand, Technology Value Fund, and the interlocking “F” design are registered trademarks of SiVest Group, Inc.

FHF000499, exp. 3/15/2011
 
 
 

 
 
Item 2. Code of Ethics.
 
 
(a)
The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.

 
(c)
There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description.

 
(d)
The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions.
 
Item 3. Audit Committee Financial Expert.
 
Registrant’s Board of Trustees has determined that it does not have an “audit committee financial expert” serving on its audit committee. While Registrant believes that each of the members of its audit committee has sufficient knowledge of accounting principles and financial statements to serve on the audit committee, none has the requisite experience to qualify as an “audit committee financial expert”; as such term is defined by the Securities and Exchange Commission.
 
Item 4. Principal Accountant Fees and Services.
 
Audit Fees
 
 
(a)
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $60,000 for 2008 and $60,000 for 2009.
 
Audit-Related Fees
 
 
(b)
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $0 for 2008 and $0 for 2009.
 
 
 

 
 
Tax Fees
 
 
(c)
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $12,000 for 2008 and $8,000 for 2009.
 
All Other Fees
 
 
(d)
The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2008 and $1,500 for 2009.
 
  (e)(1)
Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
 
The registrant's Audit Committee Charter states the following with respect to pre-approval procedures:

The Committee hereby delegates to the Chairman of the Committee the authority to grant pre-approvals of audit and "permissible" non-audit services to be provided by the Auditors to the Funds, subject to the ratification of the full Committee at its next regularly scheduled meeting.  Both the Auditors and Fund counsel will be responsible for informing the Committee whether they believe that a particular non-audit service is permissible or prohibited pursuant to applicable regulations and standards.

The specific types of non-audit services that the Chairman may pre-approve include, but are not limited to:  reviewing the Funds' internal controls over financial reporting; providing tax-related services; reviewing and/or developing an anti-money laundering program; and issuing comfort letters, based on agreed-upon procedures, in connection with any Fund reorganization.

Pre-approval for a non-audit service provided to a Fund is not required if:  (i) the aggregate amount of all such non-audit services provided to the Fund constitutes not more than 5% of the total amount of revenues paid by the Fund to the Auditors during the fiscal year in which the non-audit services are provided; (ii) such services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and are approved by the Committee or by one or more members of the Committee to whom authority to grant such approvals has been delegated by the Committee prior to the completion of the audit (the "De Minimus Exceptions").

The Committee shall also pre-approve any non-audit services proposed to be provided by the Auditors to (i) a Fund's investment adviser and (ii) any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Fund, if the Auditors' engagement with the investment adviser or any such control persons relates directly to the operations and financial reporting of the Fund.  The De Minimus Exceptions applies to pre-approvals under this paragraph as well, except that the "total amount of revenues" calculation is based on the total amount of revenues paid to the Auditors by the Fund and any other entity that has its services approved under this paragraph (i.e., the investment adviser or any control person).

 
 

 
 
  (e)(2)
The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
 
 
(b) N/A
 
 
(c) 100%
 
 
(d) 100%
 
 
(f)
The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than fifty percent.
 
 
(g)
The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $0 for 2008 and $0 for 2009.
 
 
(h)
Not applicable.
 
Item 5. Audit Committee of Listed registrants.
 
Not applicable.
 
Item 6. Investments.
 
(a)
Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.
 
(b)
Not Applicable.
 
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
 
Not applicable.
 
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
 
Not applicable.
 
 
 

 
 
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
 
Not applicable.
 
Item 10. Submission of Matters to a Vote of Security Holders.
 
Not applicable.
 
Item 11. Controls and Procedures.
 
 
(a)
The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

 
(b)
There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
Item 12. Exhibits.
 
 
(a)(1)
Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto.

 
(a)(2)
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

 
(a)(3)
Not applicable.

 
(b)
Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
 
 
 

 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(registrant)
Firsthand Funds                        
   
By (Signature and Title)*
/s/ Kevin M. Landis          
 
Kevin M. Landis, President, Treasurer and Secretary
(principal executive officer and principal financial officer)
   
Date
March 9, 2010             


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By (Signature and Title)*
/s/ Kevin M. Landis         
 
Kevin M. Landis, President, Treasurer and Secretary
(principal executive officer and principal financial officer)
   
Date
March 9, 2010                                         


* Print the name and title of each signing officer under his or her signature.
 
EX-99.CODE ETH 2 fp0001475_ex99code.htm fp0001475_ex99code.htm

 
 

 
Firsthand Funds
 
 
 
Code of Ethics for Principal Executive and Senior Financial Officers
 
 

Last Updated:
November 8, 2003
 
 

 
Revision 0   
Code of Ethics for Principal Executive and Senior Financial Officers
 

TABLE OF CONTENTS

I.
Covered Officers/Purpose of the Code
   
II.
Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest
   
III.
Disclosure and Compliance
   
IV.
Reporting and Accountability
   
V.
Other Policies and Procedures
   
VI.
Amendments
   
VII.
Confidentiality
   
VIII.
Internal Use
   
Exhibit A
Persons Covered by this Code of Ethics
   
Exhibit B
Initial Certification Form
   
Exhibit C
Annual Certification Form


 
Revision 0   
Code of Ethics for Principal Executive and Senior Financial Officers
 
 
FIRSTHAND FUNDS

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS

I. 
Covered Officers/Purpose of the Code

This Code of Ethics (the “Code”) shall apply to the Firsthand Funds’ (the “Trust”) Principal Executive Officer, Principal Financial Officer, Controller, Principal Accounting Officer and persons performing similar functions (the “Covered Officers,” each of whom is named in Exhibit A attached hereto) for the purpose of promoting:

·
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

·
full, fair, accurate, timely and understandable disclosure in reports and documents that the Trust files with, or submits to, the Securities and Exchange Commission (the “SEC”) and in other public communications made by the Trust;

·
compliance with applicable laws and governmental rules and regulations;

·
the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

·
accountability for adherence to the Code.

Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

II.
Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest
 
Overview.  A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his or her service to, the Trust.  For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of his or her position with the Trust.  Covered Officers must avoid conduct that conflicts, or appears to conflict, with their duties to the Trust.  All Covered Officers should conduct themselves such that a reasonable observer would have no grounds for belief that a conflict of interest exists.  Covered Officers are not permitted to self-deal or otherwise to use their positions with the Trust to further their own or any other related person’s business opportunities.
 

 
Revision 0   
Code of Ethics for Principal Executive and Senior Financial Officers
 
 
This Code does not, and is not intended to, repeat or replace the programs and procedures or codes of ethics of the Trust’s investment adviser or distributor.
 
Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between the Trust and its service providers, including the investment adviser, of which the Covered Officers may be officers or employees.  As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Trust, the investment adviser, or other service providers), be involved in establishing policies and implementing decisions that will have different effects on the service providers and the Trust.  The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Trust and its service providers and is consistent with the performance by the Covered Officers of their duties as officers of the Trust.  Thus, if performed in conformity with the provisions of the Investment Company Act of 1940, as amended (the “Investment Company Act”) and the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”), such activities will be deemed to have been handled ethically.  In addition, it is recognized by the Trust’s Board of Trustees (the “Board”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.
 
The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive.  The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Trust.
 
*                      *                      *                      *

Each Covered Officer must not:

·
use his or her personal influence or personal relationship improperly to influence investment decisions or financial reporting by the Trust whereby the Covered Officer would benefit personally to the detriment of the Trust;

·
cause the Trust to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Trust; or

·
retaliate against any other Covered Officer or any employee of the Trust or their affiliated persons for reports of potential violations by the Trust of applicable rules and regulations that are made in good faith.

Each Covered Officer must discuss certain material conflict of interest situations with the Trust’s Audit Committee.  Examples of such situations include:

·
service as a director, trustee, general partner, or officer of any unaffiliated business organization.  This rule does not apply to charitable, civic, religious, public, political, or social organizations, the activities of which do not conflict with the interests of the Trust;
 

 
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Code of Ethics for Principal Executive and Senior Financial Officers

 
·
the receipt of any non-nominal gifts;

·
the receipt of any entertainment from any company with which the Trust has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as raise any question of impropriety;

·
any ownership interest in, or any consulting or employment relationship with, any of the Trust’s service providers, other than its investment adviser, principal underwriter, administrator, transfer agent, custodian or any affiliated person thereof; and

·
a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Trust for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

III.
Disclosure and Compliance

·
Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Trust.

·
Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Trust to others, whether within or outside the Trust, including to the Trust’s Board, the Trust’s Audit Committee and the Trust’s independent auditors, and to governmental regulators and self-regulators and self-regulatory organizations.

·
Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Trust and its service providers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Trust files with, or submits to, the SEC and in other public communications made by the Trust.

·
It is the responsibility of each Covered Officer to promote and encourage professional integrity in all aspects of the Trust’s operations.

IV.
Reporting and Accountability

Each Covered Officer must:

·
upon adoption of this Code (or thereafter as applicable, upon becoming a Covered Officer), sign and return a report in the form of Exhibit B to the Trust’s compliance officer affirming that he or she has received, read, and understands the Code;
 

 
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Code of Ethics for Principal Executive and Senior Financial Officers

 
·
annually sign and return a report in the form of Exhibit C to the Trust’s compliance officer as an affirmation that he or she has complied with the requirements of the Code; and

·
notify the Trust’s Audit Committee promptly if he or she knows of any violation of this Code.  Failure to do so is itself a violation of this Code.

 
The Trust’s Audit Committee is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation including any approvals or waivers sought by the Covered Persons.

 
The Audit Committee will follow these procedures in investigating and enforcing this Code:

·
The Audit Committee will take all appropriate actions to investigate any potential violations reported to the Committee.

·
If, after such investigation, the Audit Committee believes that no violation has occurred, the Audit Committee is not required to take any further action.

·
Any matter that the Audit Committee believes is a violation of this Code will be reported to the full Board.

·
If the Board concurs that a violation has occurred, it will notify the appropriate personnel of the applicable service provider and may dismiss the Covered Officer as an officer of the Trust.

·
The Audit Committee will be responsible for granting waivers of provisions of this Code, as appropriate.

·
Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

V.
Other Policies and Procedures
 
This Code shall be the sole code of ethics adopted by the Trust for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the rules and forms applicable to registered investment companies thereunder.  Insofar as other policies or procedures of the Trust, the Trust’s investment adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code.  The Trust’s, investment adviser’s and principal underwriter’s codes of ethics under Rule 17j-1 under the Investment Company Act and the investment
 

 
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Code of Ethics for Principal Executive and Senior Financial Officers
 
 
adviser’s more detailed policies and procedures are separate requirements applying to the Covered Officers and others, and are not part of this Code.

VI.
Amendments
 
Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of independent Trustees.

VII.
Confidentiality
 
All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly.  Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Trust’s Board or Audit Committee.

VIII.
Internal Use
 
The Code is intended solely for the internal use by the Trust and does not constitute an admission, by or on behalf of the Trust, as to any fact, circumstance, or legal conclusion.
 

Date: November 8, 2003
 

 
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Code of Ethics for Principal Executive and Senior Financial Officers

 
EXHIBIT A


PERSONS COVERED BY THIS CODE OF ETHICS:
(last revised as of: November 21, 2008)

Kevin M. Landis
President and Treasurer
 

 
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Code of Ethics for Principal Executive and Senior Financial Officers

 
EXHIBIT B

INITIAL CERTIFICATION FORM

 
This is to certify that I have read and understood the Code of Ethics for Principal Executive and Senior Financial Officers of Firsthand Funds, dated November 8, 2003, and that I recognize that I am subject to the provisions thereof and will comply with the policy and procedures stated therein.


Please sign your name here:                         
 
 
Please print your name here:                         
 
 
Please date here:                              
 

 
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Code of Ethics for Principal Executive and Senior Financial Officers

 
EXHIBIT C

ANNUAL CERTIFICATION FORM

 
This is to certify that I have read and understood the Code of Ethics for Principal Executive and Senior Financial Officers of Firsthand Funds, dated November 8, 2003 (the “Code”), and that I recognize that I am subject to the provisions thereof and will comply with the policy and procedures stated therein.
 
This is to further certify that I have complied with the requirements of the Code during the period of _____________ through ______________.
 

Please sign your name here:                         
 
 
Please print your name here:                         
 
 
Please date here:                              

 
EX-99.CERT 3 fp0001475_ex99cert.htm fp0001475_ex99cert.htm
 
Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act
 
I, Kevin M. Landis, certify that:
 
1.
I have reviewed this report on Form N-CSR of Firsthand Funds;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 
Date:   March 9, 2010   
/s/ Kevin M. Landis        
 
Kevin M. Landis, President, Treasurer and Secretary
(principal executive officer and principal financial officer)
EX-99.906 CERT 4 fp0001475_ex99906cert.htm fp0001475_ex99906cert.htm
 
Certification Pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act

I, Kevin M. Landis, President, Treasurer and Secretary of Firsthand Funds (the “Registrant”), certify that:

 
1.
The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


Date:   March 9, 2010   
/s/ Kevin M. Landis          
 
Kevin M. Landis, President, Treasurer and Secretary
(principal executive officer and principal financial officer)



 
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-----END PRIVACY-ENHANCED MESSAGE-----