Washington, D.C. 20549
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.
CONTENTS
| Performance Summary | 2 |
| President’s Letter | 4 |
| Shareholder Fee Example | 6 |
| Portfolio of Investments | 8 |
| Statements of Assets and Liabilities | 13 |
| Statements of Operations | 14 |
| Statements of Changes in Net Assets | 15 |
| Financial Highlights | 17 |
| Notes to Financial Statements | 19 |
| Additional Information | 34 |
PERFORMANCE SUMMARY
Period Returns (Average Annual Total Returns as of 6/30/13)
| FUND | YTD* | 1-YEAR | 3-YEAR | 5-YEAR | 10-YEAR | GROSS EXPENSE RATIO** |
| Firsthand Technology Opportunities Fund | -3.65% | 3.76% | 7.91% | 9.70% | 9.15% | 1.86% |
| Firsthand Alternative Energy Fund | 50.60% | 30.99% | -6.33% | -11.85% | • | 2.29% |
| NASDAQ Composite Index | 13.42% | 17.84% | 18.80% | 9.48% | 8.84% | • |
| S&P 500 Index | 13.82% | 20.59% | 18.45% | 7.00% | 7.29% | • |
| WilderHill Clean Energy Index | 32.43% | 21.83% | -11.91% | -22.21% | • | • |
| ** | After fee waivers, Firsthand Technology Opportunities Fund’s total net operating expenses are 1.85% and Firsthand Alternative Energy Fund’s total net operating expenses are 1.98%. Please see the Funds’ prospectus for more information about fund expenses. |
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 58 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 | | 2013 Semi-Annual Report |
Returns Since Inception (Average Annual Total Returns as of 6/30/13)
FUND (INCEPTION DATE) | AVERAGE ANNUAL TOTAL RETURNS | NASDAQ COMPOSITE INDEX | S&P 500 INDEX | WILDERHILL CLEAN ENERGY INDEX |
| Firsthand Technology Opportunities Fund (9/30/99) | -3.52% | 2.35% | 3.57% | • |
| Firsthand Alternative Energy Fund (10/29/07) | -11.41% | 4.56% | 3.00% | -23.49% |
Each Fund may invest in small-capitalization companies and Initial Public Offerings (“IPOs”). These investments will be more volatile than investments in large-capitalization companies and loss of principal could be greater. The Funds may invest in foreign securities, which will 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 6/30/13)
| INDUSTRY | FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND | FIRSTHAND ALTERNATIVE ENERGY FUND |
| Advanced Materials | 0.7% | 12.6% |
| Automotive | • | 1.6% |
| Basic Materials | • | 4.1% |
| Building Automation | • | 4.4% |
| Communications | 7.0% | • |
| Communications Equipment | 7.6% | • |
| Computer | 13.0% | • |
| Consumer Electronics | 1.5% | • |
| Electrical Equipment | • | 4.5% |
| Energy Efficiency | • | 5.3% |
| Engineering Service | • | 4.0% |
| Environmental Services | • | 2.1% |
| Exchange-Traded Fund | 0.2% | • |
| Industrials | • | 7.3% |
| Internet | 37.3% | • |
| Medical Device | 0.1% | • |
| Networking | 2.2% | • |
| Other Electronics | 2.2% | 6.1% |
| Peripherals | 1.6% | • |
| Power Conversion/Supply Equipment | • | 1.5% |
| Renewable Energy | • | 30.5% |
| Semiconductors | 10.0% | 5.1% |
| Social Networking | 2.7% | • |
| Software | 6.5% | • |
| Net Other Assets and Liabilities | 7.4% | 10.9% |
Portfolio holdings are subject to change.
PRESIDENT’S LETTER
Fellow Shareholders,
The broad markets finished up for the first half of 2013, thanks in large part to an improving macroeconomic outlook. Most of the gains for both the NASDAQ Composite Index and the S&P 500 Index came in the first quarter, with the market beginning to pull back slightly toward the end of Q2. With the U.S. economy improving, the Federal Reserve Bank began signaling that its monthly bond purchases may be tapering off in the near future. That news caused some investors to worry about a tightening monetary supply and led to a market pull back in June.
The technology sector lagged the broad market during Q1 and Q2; the technology portion of the S&P 500 trailed the broader S&P 500 Index, returning 6.35% for the six-month period, compared to the overall index’s return of 13.82%. The Nasdaq Composite Index finished the first six months of the year up 13.42%. Our funds were at two ends of the spectrum: Firsthand Technology Opportunities Fund finished down 3.65%, while Firsthand Alternative Energy Fund was up 50.60%. For details on fund performance, please see pages 2 and 3 of this report.
Clean Tech Making Inroads
Solar energy has been a big winner thus far in 2013, with companies that finance and install panels seeing tremendous growth. By eliminating the up-front costs of solar through leasing agreements, companies like SolarCity (SCTY) and SunPower (SPWR) are seeing significant returns. SolarCity, which started the year at $11.93, closed up at $37.75 on June 30, a 216.43% return. SunPower beat that—posting a 268.33% gain for the first six months of the year. SunPower has extended its business downstream from its core solar module business and has reignited growth by becoming a major installer of solar systems. The company recently won a 65-megawatt deal in France and signed a 5-megawatt deal with Verizon (VZ).1
Another renewable energy winner during the first half of 2013 was Tesla (TSLA), up 216.98% for the period. The electric carmaker’s flagship Model S sedan has been widely praised by the industry and consumers, and sales have pushed Tesla to a profit far sooner than many expected. Tesla also recently announced plans to expand its Supercharger Network—a system of charging stations meant to aid long-distance travel for drivers of the Model S.2 These chargers are 4.5x faster than standard electric vehicle chargers and can give drivers a 50% charge in 30 minutes (which translates to about 150 miles of range). Tesla aims to have more than 100 stations in place across the U.S. by 2015. The company’s success allowed it to pay off its $465 million loan from the Department of Energy—nine years early.3
Apple Treads Water
Apple (AAPL) struggled for the first six months of 2013, with inventory concerns keeping shares hovering around the $400 mark for much of the year. The company con-
| 4 | | 2013 Semi-Annual Report |
tinues its patent battle with Samsung (no U.S. symbol) and it has also been embroiled in a trial over price fixing in the electronic book industry. Although sales of its wildly popular iPad and iPhone have continued, the personal computer market is stalling. While Apple iPhone sales remain robust—up 20% year-over-year—sales of the company’s iMac fell 5% in fiscal Q3, compared with the year-ago quarter.4 Apple, which made up 13.00% of Firsthand Technology Opportunities Fund’s portfolio as of June 30, finished the period down 24.56% and weighed heavily on the Fund’s performance.
Google, on the other hand, which is seeing gains from its Android operating system for smartphones, doesn’t have a PC business weighing down returns. The Internet giant finished the period up 24.46% and was Firsthand Technology Opportunities Fund’s top contributor. One of Google’s Chinese counterparts, Tencent Holdings (no U.S. symbol) also performed well in the first half of 2013, finishing up 22.09%. The online advertising market remains robust and we feel that it will remain a growth trend for many years.
Unfortunately, cloud computing took a hit in Q1 and Q2. Two companies we discussed in the Annual Report six months ago struggled in the first half of the year: VMWare (VMW) and Rackspace (RAX) both had earnings misses in the first quarter that helped send shares down 28.84% and 48.98%, respectively, for the period. Nonetheless, we believe the data center trend is a strong one and continue to monitor developments carefully.
In all, while we are encouraged by the stock market performance of the first half, the market’s footing seems tenuous here. Price appreciation seems to be coming from a rotation from bonds to stocks, rather than reflecting strong earnings growth. Several very strong trends remains in place, and we will continue to work hard to identify companies that we believe will be long-term growth stories for Firsthand Funds.
Thank you for your continued investment with us.
Sincerely,
Kevin Landis
President, Firsthand Funds
Data and statistics presented have been calculated using data from Yah
oo!Finance. All expressions of opinion are subject to change without notice.
| 1 | SunPower company press release, May 2, 2013 |
| 2 | Tesla company press release, May 30, 2013 |
| 3 | Telsa company press release, May 22, 2013 |
| 4 | Apple company press release, July 23, 2013 |
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 January 1, 2013 through June 30, 2013.
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
| 6 | | 2013 Semi-Annual Report |
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.
Firsthand Technology Opportunities Fund
| | BEGINNING ACCOUNT VALUE 1/1/13 | ENDING ACCOUNT VALUE 6/30/13 | EXPENSES PAID DURING PERIOD* 1/1/13 - 6/30/13 | ANNUALIZED EXPENSE RATIO |
| Actual | $1,000 | $963.50 | $9.01 | 1.85% |
| | | | |
Firsthand Alternative Energy Fund
| | BEGINNING ACCOUNT VALUE 1/1/13 | ENDING ACCOUNT VALUE 6/30/13 | EXPENSES PAID DURING PERIOD* 1/1/13 - 6/30/13 | ANNUALIZED EXPENSE RATIO |
| Actual | $1,000 | $1,506.00 | $12.30 | 1.98% |
| | | | |
| * | 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 181/365 (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. |
| FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND |
| Portfolio of Investment, June 30, 2013 (unaudited) |
| | | SHARES | | | MARKET VALUE | |
| COMMON STOCKS — 92.4% ($68,926,230) | | | | | | |
| Advanced Materials — 0.7% ($569,200) | | | | | | |
| Corning, Inc. | | | 40,000 | | | $ | 569,200 | |
| Communications — 7.0% ($5,210,000) | | | | | | | | |
| Equinix, Inc.* | | | 20,000 | | | | 3,694,400 | |
| Rackspace Hosting, Inc.* | | | 40,000 | | | | 1,515,600 | |
| Communications Equipment — 7.6% ($5,643,000) | | | | | | | | |
| QUALCOMM, Inc. | | | 85,000 | | | | 5,191,800 | |
| Telefonaktiebolaget Ericsson LM - SP ADR | | | 40,000 | | | | 451,200 | |
| Computer — 13.0% ($9,703,960) | | | | | | | | |
| Apple, Inc. | | | 24,500 | | | | 9,703,960 | |
| Consumer Electronics — 1.5% ($1,105,000) | | | | | | | | |
| TiVo, Inc.* | | | 100,000 | | | | 1,105,000 | |
| Internet — 37.3% ($27,805,169) | | | | | | | | |
| Akamai Technologies, Inc.* | | | 80,000 | | | | 3,404,000 | |
| Amazon.com, Inc.* | | | 20,000 | | | | 5,553,800 | |
| Baidu, Inc. - SP ADR* | | | 35,000 | | | | 3,308,550 | |
| Google, Inc., Class A* | | | 6,000 | | | | 5,282,220 | |
| Linkedin Corp.* | | | 5,000 | | | | 891,500 | |
| SINA Corp.* | | | 60,000 | | | | 3,343,800 | |
| Tencent Holdings, Ltd. | | | 150,000 | | | | 5,883,149 | |
| Yandex NV, Class A* | | | 5,000 | | | | 138,150 | |
| Medical Device — 0.1% ($48,200) | | | | | | | | |
| MAKO Surgical Corp.* | | | 4,000 | | | | 48,200 | |
| Networking — 2.2% ($1,666,400) | | | | | | | | |
| Palo Alto Networks, Inc.* | | | 10,000 | | | | 421,600 | |
| Riverbed Technology, Inc.* | | | 80,000 | | | | 1,244,800 | |
| Other Electronics — 2.2% ($1,681,000) | | | | | | | | |
| VeriFone Systems, Inc.* | | | 100,000 | | | | 1,681,000 | |
see accompanying notes to financial statements
| 8 | | 2013 Semi-Annual Report |
FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND - continued
Portfolio of Investment, June 30, 2013 (unaudited)
| | | SHARES | | MARKET VALUE | |
| Peripherals — 1.6% ($1,181,000) | | | | | | | | |
| EMC Corp. | | | 50,000 | | | $ | 1,181,000 | |
| Semiconductors — 10.0% ($7,502,700) | | | | | | | | |
| ARM Holdings, PLC - SP ADR | | | 105,000 | | | | 3,798,900 | |
| Exar Corp.* | | | 100,000 | | | | 1,077,000 | |
| Skyworks Solutions, Inc.* | | | 120,000 | | | | 2,626,800 | |
| Social Networking — 2.7% ($1,988,800) | | | | | | | | |
| Facebook, Inc.* | | | 80,000 | | | | 1,988,800 | |
| Software — 6.5% ($4,821,801) | | | | | | | | |
| Intuit, Inc. | | | 20,000 | | | | 1,220,600 | |
| Oracle Corp. | | | 30,000 | | | | 921,601 | |
| VMware, Inc., Class A* | | | 40,000 | | | | 2,679,600 | |
| EXCHANGE-TRADED FUND — 0.2% ($155,550) | | | | | | | | |
| Other — 0.2% ($155,550) | | | | | | | | |
| iPath S&P 500 VIX Short-Term Futures ETF* | | | 7,500 | | | | 155,550 | |
| INVESTMENT COMPANY — 7.3% ($5,449,636) | | | | | | | | |
Fidelity Institutional Money Market Fund (1) | | | 5,449,636 | | | | 5,449,636 | |
| Total Investments | | | | | | | | |
| (Cost $65,756,018) — 99.9% | | | | | | | 74,531,416 | |
| Other assets in excess of liabilities — 0.1% | | | | | | | 58,185 | |
| | | | | | | | | |
| NET ASSETS — 100.0% | | | | | | $ | 74,589,601 | |
| * | Non-income producing security. |
| (1) | The Fidelity Institutional Money Market Fund invest primarily in U.S. Treasury Securities. |
| ETF: Exchange Traded Fund |
| PLC: Public Limited Company |
| SP ADR: Sponsored American Depositary Receipt |
see accompanying notes to financial statements
FIRSTHAND ALTERNATIVE ENERGY FUND
Portfolio of Investment, June 30, 2013 (unaudited)
| | | SHARES | | MARKET VALUE | |
| COMMON STOCKS — 89.1% ($5,940,615) | | | | | | |
| Advanced Materials — 12.6% ($840,312) | | | | | | |
| Corning, Inc. | | | 19,460 | | | $ | 276,916 | |
| Praxair, Inc. | | | 2,400 | | | | 276,384 | |
| SunEdison, Inc.* | | | 35,130 | | | | 287,012 | |
| Automotive — 1.6% ($107,430) | | | | | | | | |
| Tesla Motors, Inc.* | | | 1,000 | | | | 107,430 | |
| Basic Materials — 4.1% ($269,920) | | | | | | | | |
| Metalico, Inc.* | | | 11,500 | | | | 13,800 | |
| Rockwood Holdings, Inc. | | | 4,000 | | | | 256,120 | |
| Building Automation — 4.4% ($293,478) | | | | | | | | |
| Johnson Controls, Inc. | | | 8,200 | | | | 293,478 | |
| Electrical Equipment — 4.5% ($303,240) | | | | | | | | |
| ABB, Ltd. – SP ADR | | | 14,000 | | | | 303,240 | |
| Energy Efficiency — 5.3% ($353,200) | | | | | | | | |
| Honeywell International, Inc. | | | 3,080 | | | | 244,367 | |
| Itron, Inc.* | | | 2,565 | | | | 108,833 | |
| Engineering Service — 4.0% ($264,600) | | | | | | | | |
| Quanta Services, Inc.* | | | 10,000 | | | | 264,600 | |
| Environmental Services — 2.1% ($143,208) | | | | | | | | |
| ADA-ES, Inc.* | | | 3,400 | | | | 143,208 | |
| Industrials — 7.3% ($483,855) | | | | | | | | |
| 3M Co. | | | 2,300 | | | | 251,505 | |
| United Technologies Corp. | | | 2,500 | | | | 232,350 | |
| Intellectual Property — 0.0% ($—) | | | | | | | | |
Silicon Genesis Corp., Common (1)* | | | 181,407 | | | | 0 | |
| Other Electronics — 6.1% ($408,728) | | | | | | | | |
| Cree, Inc.* | | | 5,000 | | | | 319,300 | |
| Intevac, Inc.* | | | 15,800 | | | | 89,428 | |
see accompanying notes to financial statements
| 10 | | 2013 Semi-Annual Report |
FIRSTHAND ALTERNATIVE ENERGY FUND - continued
Portfolio of Investment, June 30, 2013 (unaudited)
| | | SHARES | | MARKET VALUE | |
| Power Conversion/Supply Equipment — 1.5% ($99,224) | | | | | | | | |
| Power-One, Inc.* | | | 15,700 | | | $ | 99,224 | |
| Renewable Energy — 30.5% ($2,030,513) | | | | | | | | |
| Amtech Systems, Inc.* | | | 6,600 | | | | 41,976 | |
| First Solar, Inc.* | | | 5,000 | | | | 224,050 | |
| Gamesa Corp. Tecnologica S.A. | | | 7,271 | | | | 39,561 | |
| GT Advanced Technologies, Inc.* | | | 31,900 | | | | 132,385 | |
| Iberdrola S.A. | | | 17,740 | | | | 93,658 | |
| JA Solar Holdings Co., Ltd. - ADR* | | | 13,000 | | | | 93,600 | |
| JinkoSolar Holding Co., Ltd. - ADR* | | | 8,000 | | | | 72,320 | |
| Motech Industries, Inc.* | | | 58,069 | | | | 73,334 | |
| Orion Energy Systems, Inc.* | | | 14,000 | | | | 34,720 | |
| Sharp Corp.* | | | 11,000 | | | | 44,364 | |
| SolarCity Corp.* | | | 20,000 | | | | 755,400 | |
| SunPower Corp., Class B* | | | 10,931 | | | | 226,272 | |
| Trina Solar Ltd. - SP ADR* | | | 4,600 | | | | 27,416 | |
| ULVAC, Inc.* | | | 2,700 | | | | 21,397 | |
| Vestas Wind Systems A.S.* | | | 6,000 | | | | 85,260 | |
| Yingli Green Energy Holding Co. - ADR* | | | 20,000 | | | | 64,800 | |
| Semiconductors — 5.1% ($342,907) | | | | | | | | |
| Exar Corp.* | | | 10,000 | | | | 107,700 | |
| Power Integrations, Inc. | | | 5,799 | | | | 235,207 | |
| PREFERRED STOCK — 0.0% ($203) | | | | | | | | |
| Intellectual Property — 0.0% ($203) | | | | | | | | |
Silicon Genesis Corp., Series 1-C (1)* | | | 152 | | | | 0 | |
Silicon Genesis Corp., Series 1-E (1)* | | | 3,000 | | | | 203 | |
| Renewable Energy — 0.0% ($—) | | | | | | | | |
SoloPower, Series C-1 (1)* | | | 2,142 | | | | 0 | |
see accompanying notes to financial statements
| www.firsthandfunds.com | | 11 |
FIRSTHAND ALTERNATIVE ENERGY FUND - continued
Portfolio of Investment, June 30, 2013 (unaudited)
| | | SHARES | | MARKET VALUE | |
| INVESTMENT COMPANY — 16.1% ($1,070,509) | | | | | | | | |
Fidelity Institutional Money Market Fund (2) | | | 1,070,509 | | | $ | 1,070,509 | |
| Total Investments | | | | | | | | |
| (Cost $8,367,184) — 105.2% | | | | | | | 7,011,327 | |
| Liabilities in excess of other assets — (5.2)% | | | | | | | (347,493 | ) |
| | | | | | | | | |
| NET ASSETS — 100.0% | | | | | | $ | 6,663,834 | |
| * | Non-income producing security. |
| (2) | The Fidelity Institutional Money Market Fund invests primarily in U.S. Treasury securities. |
| ADR: American Depositary Receipt |
| SP ADR: Sponsored American Depositary Receipt |
see accompanying notes to financial statements
| 12 | | 2013 Semi-Annual Report |
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2013 (unaudited)
| | | FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND | | | FIRSTHAND ALTERNATIVE ENERGY FUND | |
| ASSETS | | | | | | |
| Investment securities: | | | | | | |
| | $ | 65,756,018 | | | $ | 8,367,184 | |
| | | 74,531,416 | | | | 7,011,327 | |
| Foreign currency at value (at cost $42,287 and $3,951) | | | 42,354 | | | | 3,787 | |
| Receivable from dividends, interest, and reclaims | | | 5,008 | | | | 430 | |
Receivable for capital shares sold | | | 347,717 | | | | 392,356 | |
| | | 74,926,495 | | | | 7,407,900 | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Payable for securities purchased | | | — | | | | 636,820 | |
| Payable to affiliates (Note 4) | | | 117,983 | | | | 9,936 | |
Payable for capital shares redeemed | | | 218,757 | | | | 97,310 | |
| | | 154 | | | | — | |
| | | 336,894 | | | | 744,066 | |
| | $ | 74,589,601 | | | $ | 6,663,834 | |
| | | | | | | | | |
| Net Assets consist of: | | | | | | | | |
| Paid-in-capital | | $ | 67,375,118 | | | $ | 9,545,334 | |
| Accumulated net investment loss | | | (542,621 | ) | | | (25,107 | ) |
| Accumulated net realized losses from security transactions, foreign currency transactions, purchased options and written options | | | (1,018,361 | ) | | | (1,500,383 | ) |
| Net unrealized appreciation (depreciation) on investments, purchased options and foreign currency | | | 8,775,465 | | | | (1,356,010 | ) |
| | $ | 74,589,601 | | | $ | 6,663,834 | |
| | | | | | | | | |
| | | 12,281,666 | | | | 1,326,329 | |
Net asset value, redemption price and offering price per share (Note 2) | | $ | 6.07 | | | $ | 5.02 | |
see accompanying notes to financial statements
| www.firsthandfunds.com | | 13 |
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2013 (unaudited)
| | | FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND | | | FIRSTHAND ALTERNATIVE ENERGY FUND | |
| INVESTMENT INCOME | | | | | | |
| Dividends | | $ | 259,942 | | | $ | 8,585 | |
| | | (6,296 | ) | | | — | |
| | | 253,646 | | | | 8,585 | |
| EXPENSES | | | | | | | | |
| Investment advisory fees (Note 4) | | | 602,580 | | | | 26,035 | |
| Administration fees (Note 4) | | | 193,687 | | | | 7,657 | |
| | | 4,500 | | | | 5,300 | |
| GROSS EXPENSES | | | 800,767 | | | | 38,992 | |
Trustees fees reimbursement | | | (4,500 | ) | | | (5,300 | ) |
| | | 796,267 | | | | 33,692 | |
| | | | | | | | | |
| | | (542,621 | ) | | | (25,107 | ) |
| | | | | | | | | |
| Net Realized and Unrealized Gain (Loss) on Investments: | | | | | | | | |
| Net realized gains (losses) from security transactions | | | 3,188,838 | | | | (50,237 | ) |
Net realized losses from purchased options(1) | | | (391,867 | ) | | | — | |
| Net realized losses on foreign currency | | | (4 | ) | | | (8 | ) |
Net realized gains from written option transactions(1) | | | 640,152 | | | | — | |
| Net change in unrealized appreciation (depreciation) on investments and foreign currency | | | (6,275,223 | ) | | | 1,309,602 | |
Net change in unrealized appreciation on purchased options(1) | | | 371,867 | | | | — | |
Net Realized and Unrealized Gain (Loss) on Investments | | | (2,466,237 | ) | | | 1,259,357 | |
Net Increase (Decrease) In Net Assets Resulting From Operations | | $ | (3,008,858 | ) | | $ | 1,234,250 | |
| (1) | Primary risk exposure is equity contracts. |
see accompanying notes to financial statements
| 14 | | 2013 Semi-Annual Report |
STATEMENTS OF CHANGES IN NET ASSETS
| | | FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND | |
| | | Six Months Ended 6/30/13 (Unaudited) | | | Year Ended 12/31/12 | |
| FROM OPERATIONS: | | | | | | |
| Net investment loss | | $ | (542,621 | ) | | $ | (1,239,351 | ) |
| Net realized gains from security transactions, purchased options, foreign currency and written options | | | 3,437,119 | | | | 3,423,215 | |
| Net change in unrealized appreciation (depreciation) on investments, purchased options, and foreign currency | | | (5,903,356 | ) | | | 12,527,445 | |
| Net increase (decrease) in net assets from operations | | | (3,008,858 | ) | | | 14,711,309 | |
| | | | | | | | | |
| FROM CAPITAL SHARE TRANSACTIONS: | | | | | | | | |
| Proceeds from shares sold | | | 5,670,730 | | | | 16,225,658 | |
| Proceeds received in merger (Note 6) | | | — | | | | 25,002,665 | |
| Payment for shares redeemed | | | (23,212,733 | ) | | | (40,186,648 | ) |
| Net increase (decrease) in net assets from capital share transactions | | | (17,542,003 | ) | | | 1,041,675 | |
| TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (20,550,861 | ) | | | 15,752,984 | |
| | | | | | | | | |
| NET ASSETS: | | | | | | | | |
| Beginning of period | | | 95,140,462 | | | | 79,387,478 | |
| End of period | | $ | 74,589,601 | | | $ | 95,140,462 | |
| Accumulated Net Investment Loss | | $ | (542,621 | ) | | $ | — | |
| | | | | | | | | |
| CAPITAL SHARE ACTIVITY: | | | | | | | | |
| Shares sold | | | 893,199 | | | | 2,713,289 | |
| Shares received in merger (Note 6) | | | — | | | | 4,346,937 | |
| Shares redeemed | | | (3,711,354 | ) | | | (6,658,848 | ) |
| Net increase (decrease) in shares outstanding | | | (2,818,155 | ) | | | 401,378 | |
| Shares outstanding, beginning of period | | | 15,099,821 | | | | 14,698,443 | |
| Shares outstanding, end of period | | | 12,281,666 | | | | 15,099,821 | |
see accompanying notes to financial statements
| www.firsthandfunds.com | | 15 |
STATEMENTS OF CHANGES IN NET ASSETS
| | | FIRSTHAND ALTERNATIVE ENERGY FUND | |
| | | Six Months Ended 6/30/13 (Unaudited) | | | Year Ended 12/31/12 | |
| FROM OPERATIONS: | | | | | | |
| Net investment loss | | $ | (25,107 | ) | | $ | (26,423 | ) |
| Net realized losses from security transactions and foreign currency | | | (50,245 | ) | | | (656,766 | ) |
| Net change in unrealized appreciation on investments, and foreign currency | | | 1,309,602 | | | | 4,167 | |
| Net increase (decrease) in net assets from operations | | | 1,234,250 | | | | (679,022 | ) |
| | | | | | | | | |
| FROM CAPITAL SHARE TRANSACTIONS: | | | | | | | | |
| Proceeds from shares sold | | | 5,504,808 | | | | 275,864 | |
| Payment for shares redeemed | | | (2,077,883 | ) | | | (1,112,385 | ) |
| Net increase (decrease) in net assets from capital share transactions | | | 3,426,925 | | | | (836,521 | ) |
| TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 4,661,175 | | | | (1,515,543 | ) |
| | | | | | | | | |
| NET ASSETS: | | | | | | | | |
| Beginning of period | | | 2,002,659 | | | | 3,518,202 | |
| End of period | | $ | 6,663,834 | | | $ | 2,002,659 | |
| Accumulated Net Investment Loss | | $ | (25,107 | ) | | $ | — | |
| | | | | | | | | |
| CAPITAL SHARE ACTIVITY: | | | | | | | | |
| Shares sold | | | 1,176,830 | | | | 72,509 | |
| Shares redeemed | | | (449,649 | ) | | | (277,646 | ) |
| Net increase (decrease) in shares outstanding | | | 727,181 | | | | (205,137 | ) |
| Shares outstanding, beginning of period | | | 599,148 | | | | 804,285 | |
| Shares outstanding, end of period | | | 1,326,329 | | | | 599,148 | |
see accompanying notes to financial statements
| 16 | | 2013 Semi-Annual Report |
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year/period
FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND
| | | SIX MONTHS ENDED 6/30/13* | YEAR ENDED 12/31/12 | | | YEAR ENDED 12/31/11 | | | YEAR ENDED 12/31/10** | | | YEAR ENDED 12/31/09 | | | YEAR ENDED 12/31/08 | |
Net asset value at beginning of year/period | | $ | 6.30 | | | $ | 5.40 | | | $ | 6.05 | | | $ | 4.68 | | | $ | 2.69 | | | $ | 4.67 | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment loss | | | (0.04 | ) | | | (0.08 | ) | | | (0.09 | ) | | | (0.05 | ) | | | (0.06 | ) | | | (0.06 | ) |
Net realized and unrealized gain (losses) on investments | | | (0.19 | ) | | | 0.98 | | | | (0.56 | ) | | | 1.42 | | | | 2.05 | | | | (1.92 | ) |
Total from investment operations | | | (0.23 | ) | | | 0.90 | | | | (0.65 | ) | | | 1.37 | | | | 1.99 | | | | (1.98 | ) |
Net asset value at end of year/period | | $ | 6.07 | | | $ | 6.30 | | | $ | 5.40 | | | $ | 6.05 | | | $ | 4.68 | | | $ | 2.69 | |
| | | (3.65 | )% | (A) | | 16.67 | % | | | (10.74 | %) | | | 29.27 | % | | | 73.98 | % | | | (42.40 | %) |
Net assets at end of year/period (millions) | | $ | 74.6 | | | $ | 95.1 | | | $ | 79.4 | | | $ | 85.3 | | | $ | 34.9 | | | $ | 19.4 | |
Ratio of gross expenses to average net assets before waiver | | | 1.86 | % | (B) | | 1.86 | % | | | 1.86 | % | | | 1.86 | % | | | 1.92 | % | | | 2.14 | % |
| Ratio of net expenses to average net assets after waiver | | | 1.85 | % | (B) | | 1.85 | % | | | 1.85 | % | | | 1.85 | % | | | 1.90 | % | | | 1.95 | % |
| Ratio of net investment loss to average net assets | | | (1.26 | )% | (B) | | (1.28 | %) | | | (1.21 | %) | | | (1.42 | %) | | | (1.66 | %) | | | (1.58 | %) |
| Portfolio turnover rate | | | 9 | % | (A) | | 81 | % *** | | | 128 | % | | | 164 | % | | | 41 | % | | | 41 | % |
| ** | Prior to 5/1/10 Firsthand Technology Opportunities Fund was named Firsthand e-Commerce Fund. |
| *** | Portfolio turnover excludes the purchase and sales of the merger (see Note 6). If these transactions were included, portfolio turnover would have been higher. |
see accompanying notes to financial statements
| www.firsthandfunds.com | | 17 |
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year/period
FIRSTHAND ALTERNATIVE ENERGY FUND
| | | SIX MONTHS ENDED 6/30/13* | YEAR ENDED 12/31/12 | | | YEAR ENDED 12/31/11 | | | YEAR ENDED 12/31/10 | | | YEAR ENDED 12/31/09 | | | YEAR ENDED 12/31/08 | |
Net asset value at beginning of year/period | | $ | 3.34 | | | $ | 4.37 | | | $ | 7.27 | | | $ | 8.01 | | | $ | 5.68 | | | $ | 10.89 | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment loss | | | (0.02 | ) | | | (0.04 | ) | | | (0.10 | ) | | | (0.12 | ) | | | (0.10 | ) | | | (0.07 | ) |
Net realized and unrealized gains (losses) on investments | | | 1.70 | | | | (0.99 | ) | | | (2.80 | ) | | | (0.62 | ) | | | 2.43 | | | | (5.14 | ) |
Total from investment operations | | | 1.68 | | | | (1.03 | ) | | | (2.90 | ) | | | (0.74 | ) | | | 2.33 | | | | (5.21 | ) |
Net asset value at end of year/period | | $ | 5.02 | | | $ | 3.34 | | | $ | 4.37 | | | $ | 7.27 | | | $ | 8.01 | | | $ | 5.68 | |
| | | 50.60 | % | (A) | | (23.57 | )% | | | (39.89 | )% | | | (9.24 | )% | | | 41.02 | % | | | (47.84 | )% |
Net assets at end of year/period (millions) | | $ | 6.7 | | | $ | 2.0 | | | $ | 3.5 | | | $ | 5.9 | | | $ | 7.4 | | | $ | 3.7 | |
Ratio of gross expenses to average net assets before waiver | | | 2.29 | % | (B) | | 2.38 | % | | | 2.11 | % | | | 2.10 | % | | | 2.27 | % ** | | | 2.37 | % ** |
| Ratio of net expenses to average net assets after waiver | | | 1.98 | % | (B) | | 1.98 | % | | | 1.98 | % | | | 1.98 | % | | | 2.15 | % ** | | | 2.11 | % ** |
| Ratio of net investment loss to average net assets | | | (1.48 | )% | (B) | | (0.98 | )% | | | (1.43 | )% | | | (1.48 | )% | | | (1.68 | %) | | | (1.26 | %) |
| Portfolio turnover rate | | | 23 | % | (A) | | 10 | % | | | 16 | % | | | 58 | % | | | 41 | % | | | 44 | % |
| ** | Ratio for years ended 2009 and 2008 includes dividend expenses on securities sold short of 0.11% and 0.01% respectively. |
see accompanying notes to financial statements
| 18 | | 2013 Semi-Annual Report |
NOTES TO FINANCIAL STATEMENTS
June 30, 2013 (unaudited)
1. ORGANIZATION
Each of Firsthand Technology Opportunities 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. Each Fund currently offers one class of shares—Investor Class shares. 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 Opportunities Fund | September 30, 1999 |
| Firsthand Alternative Energy Fund | October 29, 2007 |
Each Fund’s investment objective is long-term growth of capital.
Firsthand Technology Opportunities Fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in equity securities of high-technology companies in the industries and markets that the Investment Adviser believes hold the most growth potential within the technology sector.
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. |
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NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
| | 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. |
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, profitability, 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, each 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 Funds have 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 risks, 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 Funds’ 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. |
| 20 | | 2013 Semi-Annual Report |
NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
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 June 30, 2013:
| FUND* | | LEVEL 1 QUOTED PRICES | | | LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS | | | LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS | |
| TEFQX | | | | | | | | | |
| Common Stocks | | | | | | | | | |
| Advanced Materials | | $ | 569,200 | | | $ | — | | | $ | — | |
| Communications | | | 5,210,000 | | | | — | | | | — | |
| Communications Equipment | | | 5,643,000 | | | | — | | | | — | |
| Computer | | | 9,703,960 | | | | — | | | | — | |
| Consumer Electronics | | | 1,105,000 | | | | — | | | | — | |
| Internet | | | 27,805,169 | | | | — | | | | — | |
| Medical Device | | | 48,200 | | | | — | | | | — | |
| Networking | | | 1,666,400 | | | | — | | | | — | |
| Other Electronics | | | 1,681,000 | | | | — | | | | — | |
| Peripherals | | | 1,181,000 | | | | — | | | | — | |
| Semiconductors | | | 7,502,700 | | | | — | | | | — | |
| Social Networking | | | 1,988,800 | | | | — | | | | — | |
| Software | | | 4,821,801 | | | | — | | | | — | |
| Total Common Stock | | | 68,926,230 | | | | — | | | | — | |
| Exchanged-Traded Fund | | | 155,550 | | | | — | | | | — | |
| Investment Company | | | 5,449,636 | | | | — | | | | — | |
| Total | | $ | 74,531,416 | | | $ | — | | | $ | — | |
| www.firsthandfunds.com | | 21 |
NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
| FUND* | | LEVEL 1 QUOTED PRICES | | | LEVEL 2 OTHER SIGNIFICANT OBSERVABLE INPUTS | | | LEVEL 3 SIGNIFICANT UNOBSERVABLE INPUTS | |
| ALTEX | | | | | | | | | |
| Common Stocks | | | | | | | | | |
| Advanced Materials | | $ | 840,312 | | | $ | — | | | $ | — | |
| Automotive | | | 107,430 | | | | — | | | | — | |
| Basic Materials | | | 269,920 | | | | — | | | | — | |
| Building Automation | | | 293,478 | | | | — | | | | — | |
| Electrical Equipment | | | 303,240 | | | | — | | | | — | |
| Energy Efficiency | | | 353,200 | | | | — | | | | — | |
| Engineering Service | | | 264,600 | | | | — | | | | — | |
| Environmental Services | | | 143,208 | | | | — | | | | — | |
| Industrials | | | 483,855 | | | | — | | | | — | |
| Other Electronics | | | 408,728 | | | | — | | | | — | |
| Power Conversion/ Supply Equipment | | | 99,224 | | | | — | | | | — | |
| Renewable Energy | | | 2,030,513 | | | | — | | | | — | |
| Semiconductors | | | 342,907 | | | | — | | | | — | |
| Total Common Stocks | | | 5,940,615 | | | | — | | | | — | |
| Preferred Stocks | | | | | | | | | | | | |
| Intellectual Property | | | — | | | | — | | | | 203 | |
| Total Preferred Stocks | | | — | | | | — | | | | 203 | |
| Investment Company | | | 1,070,509 | | | | — | | | | — | |
| Total | | $ | 7,011,124 | | | $ | — | | | $ | 203 | |
| * | TEFQX: Firsthand Technology Opportunities Fund; ALTEX: Firsthand Alternative Energy Fund. |
At the end of each calendar quarter, management evaluates the Level 2 and 3 assets and liabilities for changes in liquidity, including but not limited to: whether a broker is willing to execute at the quoted price, the depth and consistency of prices from third party services, and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the Level 1 and 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges. Transfers in and out of the levels are recognized at the value at the end of the period. There were no transfers between Levels during the period ended June 30, 2013.
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.
| 22 | | 2013 Semi-Annual Report |
NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
FIRSTHAND ALTERNATIVE ENERGY FUND
| INVESTMENTS AT FAIR VALUE USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | | BALANCE AS OF 12/31/12 | | | GROSS PURCHASES | | | GROSS SALES | | | NET REALIZED GAINS (LOSSES) | | | NET UNREALIZED APPRECIATION (DEPRECIATION) | | | TRANSFERS IN (OUT) OF LEVEL 3 | | | BALANCE AS OF 6/30/13 | |
| Preferred Stocks | | | | | | | | | | | | | | | | | | | | | |
| Intellectual Property | | $ | 94 | | | $ | — | | | $ | — | | | $ | — | | | $ | 109 | | | $ | — | | | $ | 203 | |
| Renewable Energy | | | 2,707 | | | | — | | | | — | | | | — | | | | (2,707 | ) | | | — | | | | — | |
| Total | | $ | 2,801 | | | $ | — | | | $ | — | | | $ | — | | | $ | (2,598 | ) | | $ | — | | | $ | 203 | |
The net change in unrealized appreciation (depreciation) from Level 3 investments held as of June 30, 2013, Firsthand Alternative Energy Fund was $(2,598) and is included in “Net change in unrealized appreciation on investments and foreign currency” on the Statement of Operations.
The below chart represents quantitative disclosure about significant unobservable inputs for level 3 fair value measurements:
| | FAIR VALUE AT 6/30/13 | VALUATION TECHNIQUES | UNOBSERVABLE INPUTS | RANGE (WEIGHTED AVERAGE) |
| Direct venture capital investments: Intellectual Property | $203 | Market Comparable Companies | Revenue Multiple EBITDA Multiple Volatility Risk-Free Rate Discount for Lack of Marketability | 1.3x - 1.5x 10.5x - 12.4x 53.37% 0.36% 0.0% - 28.9%x |
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 Funds’ understanding
| www.firsthandfunds.com | | 23 |
NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
of the applicable country’s tax rules and rates.
Cash and Cash Equivalents — The Funds consider 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 purchase 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 Fund 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 Fund does not isolate the portion of the results 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 Funds’ 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 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 may also write put and call options. When 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.
| 24 | | 2013 Semi-Annual Report |
NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
The market value of the Fund’s purchased and written options as of June 30, 2013 can be found on the Portfolio of Investments. The net realized gains/(loss) from purchased and written options and the net change in unrealized appreciation (depreciation) on purchased and written options for the six months ended June 30, 2013 can be found on the Statements of Operations.
The number of option contracts written and the premiums received during the six months ended June 30, 2013, were as follows:
| | | FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND | |
| | | Contracts | | | Premiums Received | |
| Options outstanding, beginning of period | | | — | | | $ | — | |
| Options written during period | | | 3,800 | | | | 1,620,136 | |
| Options expired during period | | | (1,985 | ) | | | (630,198 | ) |
| Options closed during period | | | (420 | ) | | | (627,490 | ) |
| Options exercised during period | | | (1,395 | ) | | | (362,448 | ) |
| Options outstanding, end of period | | | — | | | $ | — | |
The average volume of derivatives during the six months ended June 30, 2013 is as follows:
| | PURCHASED OPTIONS (CONTRACTS) | WRITTEN OPTIONS (CONTRACTS) |
| Firsthand Technology Opportunities Fund | 667 | 53 |
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.
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NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
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. The fund did not invest in short sales for the six months ended June 30, 2013.
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 (earned 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 June 30, 2013.
| | | FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND | | | FIRSTHAND ALTERNATIVE ENERGY FUND | |
| Gross unrealized appreciation | | $ | 14,638,495 | | | $ | 738,974 | |
| Gross unrealized depreciation | | | (5,863,097 | ) | | | (2,094,831 | ) |
| Net unrealized appreciation (depreciation) | | $ | 8,775,398 | | | $ | (1,355,857 | ) |
| Federal income tax cost | | $ | 65,756,018 | | | $ | 8,367,184 | |
| 26 | | 2013 Semi-Annual Report |
NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
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, 2012, the Funds had capital loss carryforwards for federal income tax purposes as follows:
| | | SHORT-TERM EXPIRING 2016 | | | SHORT-TERM EXPIRING 2017 | | | SHORT-TERM EXPIRING 2018 | |
TEFQX* | | $ | (2,394,837 | ) ** | | | — | | | | — | |
ALTEX* | | | — | | | | (181,999 | ) | | | (108,018 | ) |
| | | SHORT-TERM NO EXPIRATION*** | | | LONG-TERM NO EXPIRATION*** | | | TOTAL | |
TEFQX* | | $ | (68,590 | ) ** | | $ | (63,155 | ) ** | | $ | (2,526,582 | ) |
ALTEX* | | | — | | | | (767,884 | ) | | | (1,057,901 | ) |
| * | TEFQX: Firsthand Technology Opportunities Fund; ALTEX: Firsthand Alternative Energy Fund. |
| ** | Subject to annual limitations from the Reorganization (See Note 6) |
| *** | The Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted on December 22, 2010. The Act makes changes to several tax rules impacting the Funds. The provisions of the Act became effective for the Funds’ fiscal year ending December 31, 2012. Although the Act provides several benefits, including the unlimited carryovers of future capital losses, there may be a greater likelihood that all or a portion of each Funds’ pre-enactment capital loss carryovers may expire without being utilized due to the fact that post-enactment capital losses must be utilized before pre-enactment capital loss carryovers may be utilized. Under the Act, new capital losses may now be carried forward indefinitely, and retain the character of the original loss as compared with pre-enactment law where capital losses could be carried forward for eight years, and carried forward as short-term capital losses, irrespective of the character of the original loss. |
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NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
Components of Distributable Earnings
(as of December 31, 2012)
| | | FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND | | | FIRSTHAND ALTERNATIVE ENERGY FUND | |
| Net Unrealized Appreciation (Depreciation)* | | $ | 12,749,923 | | | | (2,763,848 | ) |
| Qualified Late Year Ordinary Losses Deferred** | | | — | | | | (294,001 | ) |
| Accumulated Capital Loss Carryforward | | | (2,526,582 | ) | | | (1,057,901 | ) |
| Total Distributable Earnings | | $ | 10,223,341 | | | $ | (4,115,750 | ) |
| * | The differences between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to tax deferral of losses on wash sales and straddle losses. |
| ** | 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 2012, 2011 and 2010 remain open to federal and state audit. As of June 30, 2013, 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 (EXCLUDING SHORT-TERM INVESTMENTS) WERE AS FOLLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2013.
| | | FIRSTHAND TECHNOLOGY OPPORTUNITIES FUND | | | FIRSTHAND ALTERNATIVE ENERGY FUND | |
| Purchase of investment securities | | $ | 7,137,213 | | | $ | 3,374,494 | |
| Proceeds from sales and maturities of investment securities | | $ | 19,271,473 | | | $ | 648,155 | |
4. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS; CERTAIN TRUSTEES AND OFFICERS OF THE TRUST ARE ALSO OFFICERS OF THE INVESTMENT ADVISER AND BNY MELLON.
Certain trustees and officers of the Trust are also officers of the Investment Adviser or BNY Mellon. BNY Mellon serves as the sub-administrator, investment accounting agent, and shareholder servicing and transfer agent.
| 28 | | 2013 Semi-Annual Report |
NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
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 personnel and other expenses incurred in connection with the provision of portfolio management services under the Advisory Agreement.
Firsthand Capital Management, Inc. is 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% for TEFQX and 1.53% for ALTEX of its average daily net assets, respectively. The Advisory Agreement requires the Investment Adviser to waive fees and, if necessary, to reimburse expenses of each Fund to the extent necessary to limit a Fund’s total operating expenses to 1.85%, for TEFQX and 1.98% for ALTEX, excluding any extraordinary fees, of its average net assets up to $200 million, 1.80% for TEFQX and 1.93% for ALTEX of such assets from $200 million to $500 million, 1.75% for TEFQX and 1.88% for ALTEX of such assets from $500 million to $1 billion, and 1.70% for TEFQX and 1.83% 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
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NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
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 billion, and 0.30% of such assets in excess of $1 billion.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”), has a Sub-Administration Agreement with the Investment Adviser. Under this agreement, the Investment Adviser (not the Funds) pays to BNY Mellon the fees for the administrative services provided by BNY Mellon. 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, BNY Mellon serves as the sub-administrator, investment accounting agent and shareholder servicing and transfer agent. The Bank of New York Mellon, serves as the custodian for the Trust.
5. INVESTMENTS IN RESTRICTED SECURITIES
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.
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NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
As of June 30, 2013, Firsthand Alternative Energy Fund was invested in the following restricted securities:
| SECURITY | ACQUISITION DATE | | SHARES | | | COST | | | VALUE | | | % OF NET ASSETS | |
| Silicon Genesis Corp., Common Stock | September 2, 2008 | | | 109,855 | | | $ | 32,957 | | | $ | — | | | | — | % |
| Silicon Genesis Corp., Common Stock | September 26, 2008 | | | 71,552 | | | | 21,466 | | | | — | | | | — | % |
| Silicon Genesis Corp., Series 1-C P/S | September 2, 2008 | | | 152 | | | | 46 | | | | — | | | | — | % |
| Silicon Genesis Corp., Series 1-E P/S | September 2, 2008 | | | 3,000 | | | | 3,180 | | | | 203 | | | | — | % * |
| SoloPower, Series C-1 P/S | September 23, 2008 | | | 2,142 | | | | 21,425 | | | | — | | | | — | % |
| | | | | | | | $ | 79,074 | | | $ | 203 | | | | — | % * |
| * - Percentages are less than 0.05%. |
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.
As of June 30, 2013, Kevin Landis represents the Funds and sits on the following private company’s board: Silicon Genesis Corporation. 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.
6. REORGANIZATION
On May 22, 2012, shareholders of Firsthand Technology Leaders Fund approved the merger of Firsthand Technology Leaders Fund (“TLFQX”) into Firsthand Technology Opportunities Fund (the “Fund”). The merger was completed on May 25, 2012. The merger was a non-taxable event. The reasons for the reorganization were the changing market environment for technology stocks, performance and achieving economies of
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NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
scale. TLFQX was credited with 4,346,937 shares of beneficial interest of the Fund at $5.75 net asset value per share. As a result of the reorganization, each shareholder of TLFQX received shares of the Fund with an aggregate net asset value that is equal to the aggregate net asset value of the shares of TLFQX held by that shareholder as of close of business on May 25, 2012.
The shares outstanding of TLFQX immediately before the merger and shares of the Fund issued to TLFQX shareholders were:
| MERGED FUND | SHARES EXCHANGED | ACQUIRING FUND | SHARES ISSUED | NET ASSET VALUE | CONVERSION RATIO |
| Firsthand Technology Leaders Fund | 1,278,111 | Firsthand Technology Opportunities Fund | 4,346,937 | $5.75 | 3.40106 |
The net assets and net unrealized appreciation (depreciation) of TLFQX and the net assets of the Fund immediately before the merger were as follows:
| MERGED FUND | NET ASSETS | UNREALIZED APPRECIATION/ DEPRECIATION | ACQUIRING FUND | NET ASSETS |
| Firsthand Technology Leaders Fund | $25,002,665 | $1,674,417 | Firsthand Technology Opportunities Fund | $77,430,627 |
The net assets and shares outstanding of the Fund upon completion of the reorganization were $102,433,292 and $17,808,943 respectively.
Assuming the reorganization had been completed on January 1, 2012, the Fund’s results of operation for the year ended December 31, 2012 would have been as follows:
| Net investment income/(loss) | | $ | (1,375,110 | ) |
| Net realized and unrealized gain/(loss) on investments | | | 16,139,392 | |
| Net increase in assets from operations | | $ | 14,764,282 | |
Because the combined investment portfolio have been managed as a single portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of TLFQX that have been included in the Fund’s Statement of Operations since May 25, 2012.
| 32 | | 2013 Semi-Annual Report |
NOTES TO FINANCIAL STATEMENTS - continued
June 30, 2013 (unaudited)
7. NEW ACCOUNTING PRONOUNCEMENTS
In June 2013, the Financial Accounting Standards Board issued guidance that creates a two-tiered approach to assess whether an entity is an investment company. The guidance will also require an investment company to measure noncontrolling ownership interests in other investment companies at fair value and will require additional disclosures relating to investment company status, any changes thereto and information about financial support provided or contractually required to be provided to any of the investment company’s investees. The guidance is effective for financial statements with fiscal years beginning on or after December 15, 2013 and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Funds’ financial statement disclosures.
8. RISKS
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.
9. SUBSEQUENT EVENT
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
| www.firsthandfunds.com | | 33 |
Additional Information
June 30, 2013 (unaudited)
PROXY VOTING POLICIES 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.
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.
| 34 | | 2013 Semi-Annual Report |
NOTES
| www.firsthandfunds.com | | 35 |
NOTES
| 36 | | 2013 Semi-Annual Report |
NOTES
| www.firsthandfunds.com | | 37 |
NOTES
| 38 | | 2013 Semi-Annual Report |
NOTES
| www.firsthandfunds.com | | 39 |
Item 2. Code of Ethics.
Not applicable- only for annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable- only for annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable- only for annual reports.
Item 5. Audit Committee of Listed registrants.
Not applicable.
Item 6. Investments.
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.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
Item 12. Exhibits.
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.
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.
