[LOGO]
Semi-Annual Report
June 30, 1999 (unaudited)
Firsthand 1999
Q2
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[LOGO]
"We see those of experience succeeding more than those who have theory without
experience. The reason for this is that experience is knowledge of
particulars... and actions, and the effects produced, are all concerned with the
particular."
Aristotle
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ELECTRONIC REPORTS?
As the only science & technology mutual fund family in Silicon Valley, Firsthand
Funds strives to cater to the technological tastes of our investors. To that
end, our shareholders have the option of receiving shareholder reports, like
this one, electronically instead of on paper. It's convenient, saves costs and
natural resources, and you don't have to wait the seven to ten business days it
takes for the post office to deliver your report. All you need is an e-mail
account and access to the World Wide Web.
TO RECEIVE FIRSTHAND FUNDS REPORTS ELECTRONICALLY:
1. Locate the 13-character Enrollment Number on the address slip in this
report's envelope.
2. Log on to www.investordelivery.com.
3. Enter your assigned Enrollment Number plus the four digit personal
identification number (PIN) of your choice. The PIN should be the same for
all accounts using the same e-mail address, and will be necessary if you
decide to change your delivery preference. (If you hold Firsthand Funds
shares in more than one brokerage account, you may receive additional
copies of this report with a separate enrollment number for each account.
In that case, please provide the information that applies to each
enrollment number.)
You will then receive periodic e-mail notifications directing you to our web
site for all future shareholder mailings, including shareholder reports and
proxy votes. You can return to www.investordelivery.com at any time if you
decide to change your delivery preference.
We are proud to have been the first mutual fund family to offer the option of
electronic reporting to both our direct and brokerage clients. All of us at
Firsthand Funds appreciate your desire for flexibility, and we hope you will
enjoy using this service.
BROKERAGE CLIENTS: Once you select electronic delivery, reports or proxy
communications from any other companies or funds whose shares are held in the
same brokerage account will also be sent electronically, if such companies or
funds offer electronic delivery. If they do not offer electronic delivery, you
will continue to receive their communications in the mail.
Semi-Annual Report | 1
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PERFORMANCE SUMMARY
Period Returns (total returns as of 6/30/99)
Q2'99 YTD'99 1-Year 5-Year
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TVF 47.21% 66.84% 88.47% 50.62%*
TLF 20.80% 47.00% 104.11% n/a
TIF 37.11% 75.14% 154.22% n/a
MSF 11.94% 24.26% 40.56% n/a
DJIA 12.54% 20.45% 24.66% 27.41%*
S&P 500 7.04% 12.38% 22.76% 27.87%*
NASDAQ 9.22% 22.70% 42.28% 31.14%*
Composite
*Average annual total return
Returns Since Inception (average annual total returns as of 6/30/99)
TVF TLF TIF MSF
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Inception Date 5/20/94* 12/10/97 5/20/98 12/10/97
Avg. Annual 46.80% 86.48% 152.10% 12.45%
Total Return
VERSUS:
DJIA 25.93% 24.11% 20.84% 24.11%
S&P 500 26.58% 26.32% 22.72% 26.32%
NASDAQ 29.58% 38.81% 40.49% 38.81%
Composite
* TVF inception date is 5/20/94; TVF effectiveness date is 12/15/94.
TVF average annual total return since effectiveness: 48.40%
Returns assume reinvestment of dividends and distributions. Past performance is
not a guarantee of future results. Investment returns will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
Each Fund concentrates its investments in the technology industry. The Funds are
subject to greater risk because of their concentration of investments in a
single industry and within certain segments of the industry. In addition, each
Fund may, from time to time, invest a substantial portion of its assets in the
securities of small-capitalization companies. The securities of smaller
companies often involve higher risks and may be subject to wider price
fluctuations than securities of larger companies. There are certain risks
associated with investments in the technology and medical industries, such as
the risk that the products and services of companies in those industries are
subject to rapid obsolescence caused by scientific developments and
technological advances. Please read the prospectus carefully before investing.
To obtain a prospectus, call us at 888.884.2675.
Firsthand
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Q2
Second Quarter
Summary
Semi-Annual Report | 3
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SECOND
QUARTER SUMMARY
Each of our four Funds turned in solid performance for the second quarter of
1999. The table on page 2 highlights the Q2 and year-to-date (YTD) performance
for each Fund and shows that each of them beat the major market indices on a YTD
basis. Our investments in the Electronics and Medical technology sectors
continued to bear fruit in the second quarter, despite a very up-and-down market
for technology stocks in general. We believe that our focus on strong business
fundamentals has been a key driver of our Funds' performance.
ELECTRONICS
SECTOR
Q2 `99 may well be remembered as the quarter in which rationality began to creep
into stock prices in the Internet sector. Inflationary fears, driven by higher
than anticipated Consumer Price Index growth in April, pushed stock prices down
as the market awaited interest rate action by the Fed. The uncertainty in the
market seemed to hit the volatile Internet sector the hardest. Sectors that are
perceived as the "riskiest" are often the hardest hit during times of market
uncertainty. After peaking in late April, prices for many "dot com" stocks
eroded throughout much of the remainder of the quarter. Even Internet leaders
such as AOL, Amazon.com, and Yahoo! experienced price declines of more than 40%
during the quarter. Our strategy of investing in Internet infrastructure
companies has served us well through this sector correction, as they continued
to surge while "dot coms" dipped.
During the quarter, we witnessed a clear rebound among small-cap stocks as fears
of global economic instability seem to have receded.
Firsthand
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Investors began to forgo the stability of large-cap stocks in favor of the
higher growth potential of small-cap names. This was good news for our Funds
with small-cap exposure (Technology Value, Technology Innovators, and Medical
Specialists) as valuations began to more closely reflect our perception of the
tremendous opportunities available to these companies.
Business fundamentals for technology companies remain strong. Q1'99 earnings
results announced in Q2 showed strong performance across most sectors of the
industry. They were led, once again, by companies supplying infrastructure
components for the Internet. During the quarter, one of Firsthand Funds' largest
holdings, FORE Systems (ticker: FORE) was acquired by Britain's GEC, as GEC
attempts to diversify its existing telecommunications equipment business into
the data networking sector. We remain bullish on the Networking sector and have
made additional investments to replace our position in FORE. This is probably
not the last acquisition we will see of a networking equipment company by a
telecommunications provider.
The Semiconductor sector performed quite well during the quarter as worldwide
demand seems to have finally caught up to capacity, at least in the short term.
Improving fundamentals in the semiconductor memory business has helped boost
valuations throughout the industry. Our holdings in this sector performed
particularly well, and we continue to invest in what we believe are the fastest
growing segments of the specialty semi-conductor market. We continue to believe
that investing in chip companies that help to satisfy the ever-increasing demand
for Internet bandwidth is a less risky way to benefit from the amazing growth of
the Internet.
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The market treated software manufacturers more kindly in the second quarter than
in Q1, as we saw a rebound in the shares of many Enterprise Resource Planning
(ERP) software companies. The market for software tools, particularly those for
Internet application development, has also become very attractive. We believe
that valuations in the Software sector remain depressed by Y2K worries, and we
have been establishing new positions in small software companies to take
advantage of what we believe are ill-placed fears.
MEDICAL
SECTOR
HEALTHCARE STILL LAGGING
The Russell 3000 Healthcare Index, the broadest measure of healthcare stocks,
continued to lag the broad market indices by a significant margin in Q2.
NASDAQ S&P Russell
Composite 500 3000***
- --------------------------------------------------------------------------------
Q2`99 9.22% 7.04% -4.05%
Small-cap medical stocks beat the large-caps for the first time in seven
quarters. Prior to the second quarter, small-caps, as measured by the Russell
2000, were selling at lower valuations than at anytime during the past 20 years.
We believe that small-cap stocks still have a long way to go to overcome their
underperformance over the previous seven quarters.
Russell Russell Russell
1000* 2000** 3000***
- --------------------------------------------------------------------------------
Q2`99 -4.71% 8.88% -4.05%
YTD`99 -2.86% -3.14% -2.94%
* The Russell 1000 Healthcare Index is comprised of the 69 healthcare stocks
in the Russell 1000 (large-cap) Index
** The Russell 2000 Healthcare Index is comprised of the 186 healthcare stocks
in the Russell 2000 (small-cap) Index
*** The Russell 3000 Healthcare Index is comprised of the 255 healthcare stocks
in the Russell 3000 (large-cap & small-cap) Index
Firsthand
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SWIMMING AGAINST THE CURRENT
It is tough to deliver good performance when your sector is out of favor.
However, we are pleased to report that our Healthcare investments for the
Technology Value Fund (TVF) and the Medical Specialists Fund (MSF) both
significantly outperformed the Healthcare market indices this quarter and
year-to-date.
Q2`99 YTD`99
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TVF-Medical 28.34% 34.25%
MSF 11.94% 24.26%
Morningstar-Healthcare 0.86% -0.75%
Year-to-date, as of June 30, 1999, MSF was the top performing Healthcare fund
(#1 out of 52 Healthcare sector funds), according to Morningstar. This quarter's
results show that a focus on strong company fundamentals can deliver good
investment returns even when market sentiment is negative.
Both the ongoing strength of the U.S. economy and the apparent turn-around in
worldwide economic conditions give us reason to be optimistic about continued
stability in financial markets. We see more evidence every day that technology
has become one of the most significant drivers of economic growth, and we
believe that our portfolio companies are well-positioned to capitalize on the
booming worldwide demand for technology products and services.
Semi-Annual Report | 7
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[PHOTO]
Firsthand
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Technology Value Fund
Technology Leaders Fund
Technology Innovators Fund
Medical Specialists Fund
Semi-Annual Report | 9
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TECHNOLOGY VALUE FUND
PERFORMANCE & PORTFOLIO DISCUSSION
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The Technology Value Fund (TVF, ticker symbol TVFQX) recorded one of its best
single-quarter performance marks in its 5-year history in Q2`99, with a return
of 47.21%. This performance clearly outpaced the broad market indices as well as
the Lipper Science & Technology Fund Index, which gained 14.24% in the quarter.
The Fund's Technology and Healthcare investments each outperformed their
respective peers in Q2, returning 54.27% and 28.34% for the quarter,
respectively.
TVF returned an outstanding 66.84% for the first half of 1999, one of its best
6-month periods ever. The Fund also closed the quarter as the #1-ranked mutual
fund in the country, out of the 4,669 U.S. mutual funds tracked by Morningstar,
based on 5-year total returns.
The Fund's investments in the Semiconductor sector performed the best in Q2,
posting a return of 77.00% for the quarter. Other top-performing sectors
included Peripherals (54.79%) and Networking (47.82%). The accompanying pie
chart shows the breakdown of the Fund's holdings by industry sector as of June
30.
During the quarter, the Fund established several new positions in companies in
the Communications Equipment and Telecom-munications sectors. These sectors now
represent 10.5% and 5.1% of net assets, respectively. TVF's largest holdings in
the Communications Equipment sector include Oak Industries (OAK) and ADC
Telecommunications (ADCT). AT&T (T) is the single Telecommunications sector
holding of the Fund.
RELATIVE PERFORMANCE:
TVF VS. MARKET INDICES
Hypothetical $10,000 Investment at Inception
[GRAPHIC OMITTED]
Jun '99
-------
TVF $71,246
S&P500
NASDAQ
DJIA
(inception May 20,`94)
Past performance is not a guarantee of future results.
Firsthand
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TVF HOLDINGS BY SECTOR*
Net Cash 6.6%
Semiconductors 35.8%
Comm Equip 10.5%
EDA 1.8%
Networking 9.5%
Peripherals 1.7%
Semi Equip 2.9%
Telecom 5.1%
Software 2.8%
Services 1.7%
Healthcare 21.6%
* Based on percentage of net assets as of June 30, 1999 (cash net of payables
and receivables)
The largest sector weighting of the Fund continues to be the Semiconductor
sector, representing 35.8% of net assets, down from 46.3% of net assets in Q1.
During the quarter, the Fund added new positions in Vitesse Semiconductor
(VTSS), Zoran (ZRAN), and GlobeSpan (GSPN), a manufacturer of semi-conductor
devices used in Digital Subscriber Line (DSL) communications equipment. DSL is a
relatively new "broadband" net-working technology that promises to enable
high-speed Internet access in the home and office environments.
The Semiconductor Equipment sector has remained a relatively constant portion of
the portfolio, falling slightly to 2.9% of net assets in Q2, from 3.6% in Q1.
The weighting for the Peripherals sector was also relatively unchanged, at 1.7%
of net assets. The companies comprising these sectors did not change during the
quarter.
The Networking sector grew from 2.6% of net assets in Q1 to 9.5% of net assets
in Q2. During the quarter, one of the Fund's most significant holdings, FORE
Systems (FORE) was acquired by Britain's GEC at a 43% premium over the
then-current market value. After tendering its shares for cash, TVF purchased
shares of two additional networking equipment companies, Cabletron Systems (CS)
and Newbridge Networks (NN). These companies are two of the last independent
networking equipment companies, and we believe that each may also be ripe for a
takeover.
The Fund's weighting in the Electronic Design Automation (EDA) sector shrank to
Semi-Annual Report | 11
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1.8% in Q2 as this segment experienced a major price correction in the market.
The Software sector also shrank slightly during the quarter, from 3.2% to 2.8%
of net assets, although the Fund established a new position in Concord
Communications (CCRD), a leading provider of network reporting software.
The portion of net assets represented by the Services sector increased from 0.8%
to 1.7% in Q2 as the Fund increased its stake in Globix (GBIX). GBIX provides
Internet hosting services to corporations, using highly secure, state-of-the-art
service centers equipped with high-speed Internet servers and routers.
TVF's weighting in Healthcare stocks (Biotech, Cardiac Medical Devices, Health
Services, and Medical sectors) declined to 21.6% of net assets, from 33.3% at
the end of Q1. The Fund established new positions in Biogen (BGEN), MedImmune
(MEDI), and Merck (MRK) and sold off its position in HCIA (HCIA). The Fund's net
cash position increased from 2.8% of net assets in Q1 to 6.6% in Q2.
TECHNOLOGY LEADERS FUND
PERFORMANCE & PORTFOLIO DISCUSSION
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The Technology Leaders Fund (TLF, ticker symbol TLFQX) appreciated 20.80% in the
second quarter, outperforming the broad market indices as well as the Lipper
Science & Technology Fund Index. Although small-cap tech stocks generally
outperformed their large-cap counterparts during the quarter, the Technology
Leaders Fund continued to post outstanding results. For the first half of 1999,
TLF posted a gain of 47.00%, easily beating the broad market indices.
While TLF achieved positive returns in nearly all sectors in Q2, the
Semiconductor sector fared the best, with a return of 39.15%. The Communications
Equipment sector also performed very well, posting a 33.78% return.
The accompanying pie chart illustrates the breakdown of the Fund's holdings as
of June 30. The sector showing the most dramatic weighting increase during the
quarter is the Semiconductor Equipment sector, which grew from 5.6% of net
assets at the end of Q1 to 12.6% at the end of Q2. The increased weighting in
this sector reflects our belief that the worldwide semiconductor industry is in
the midst of a solid recovery from the cyclical downturn we witnessed in 1998.
On the flip side, the most dramatic reduction in sector weighting was seen in
the Internet sector, represented by America Online (AOL), which shrank to 4.6%
of net assets at the end of Q2 from 10.2% at the end of Q1. While we have not
reduced our position in AOL, we have not increased our position as the Fund's
net assets have grown, thereby shrinking its relative weighting. We remain
bullish on the company's long-term prospects, but we do not feel comfortable
buying more at current prices.
Firsthand
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The Semiconductor sector continues to hold the largest sector weighting,
although it shrank from 34.8% of net assets in Q1 to 26.2% in Q2. The pending
acquisition of Level One (LEVL) by Intel (INTC) has given us the opportunity to
effectively own shares of INTC at a discount by purchasing LEVL shares instead.
This is why you will not see INTC in the current portfolio. Among the biggest
movers in the portfolio in Q2 was Conexant Systems (CNXT). Since being spun out
of Rockwell (ROK) earlier this year, CNXT has consistently dazzled the market by
exceeding earnings expectations and exhibiting a strong roadmap of new products.
The Communications Equipment sector grew from 7.5% of net assets in Q1 to 10.9%
in Q2, based in part on the Fund's establishing a new position in QUALCOMM
(QCOM). QCOM has emerged as a clear leader in the fast-growing market for
wireless telephony. The company supplies equipment as well as core technology to
cellular phone service providers worldwide.
The other new name in the Fund is AT&T (T), TLF's first holding in the
Telecommunications sector. A couple of years ago, AT&T looked like a stumbling
giant, getting tripped up by its smaller, more nimble competitors. Over the past
12 months, however, AT&T has begun to execute on a new corporate strategy, which
has made it, in our eyes, the force to be reckoned with in the communications
services world.
Relative weightings for the Computers and Networking sectors fell during the
quarter, to 7.2% and 5.4%, respectively, versus 9.3% and 8.6% in Q1. Meanwhile,
the Software and Electronic Design Automation (EDA).
RELATIVE PERFORMANCE:
TLF VS. MARKET INDICES
Hypothetical $10,000 Investment at Inception
[GRAPHIC OMITTED]
JUN '99
-------
TLF $26,371
S&P 500
NASDAQ
DJIA
(inception Dec 10,`97)
Past performance is not a guarantee of future results.
Semi-Annual Report | 13
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TLF HOLDINGS BY SECTOR*
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Telecom 4.3%
Software 8.8%
Semi Equip 12.6%
Semiconductors 26.2%
Networking 5.4%
Computers 7.2%
Comm Equip 10.9%
EDA 2.1%
Internet 4.6%
Net Cash 17.9%
* Based on percentage of net assets as of June 30, 1999 (cash net of payables
and receivables)
sector weightings remained relatively constant, representing 8.8% and 2.1% of
net assets, respectively. Strong cash inflows in late June contributed to an
increase in the quarter-end net cash position, which represented 17.9% of net
assets at the end of Q2.
TECHNOLOGY INNOVATORS FUND
PERFORMANCE & PORTFOLIO DISCUSSION
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The Technology Innovators Fund (TIF, ticker symbol TIFQX) has been Firsthand
Funds' best performing Fund over the past 12 months, returning 154.22% in that
period. TIF posted a 37.11% gain in Q2`99, handily outperforming the broad
market indices as well as the Lipper Science and Technology Fund Index. The Fund
gained 75.14% for the first six months of 1999, beating all of the relevant
benchmarks.
The greatest percentage growth in Q2 came from the Networking sector, posting a
79.48% growth rate. There was only one sector, Telecommunications, represented
solely by Qwest Communications (QWST), that showed declining performance during
the quarter.
TIF continued to add positions during the quarter, increasing the number of
holdings from 30 to 37 since the end of Q1. As a result, some of the sector
weightings have changed substantially. The accompanying pie chart shows the
relative weightings of TIF's holdings as of June 30.
Firsthand
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The largest increase in weighting during Q2 was seen in the Communications
Equipment sector, growing from 5.7% to 14.1% of net assets at the end of Q2. TIF
established new positions in Advanced Fibre Communications (AFCI), Aware (AWRE),
and CIENA (CIEN). AFCI and CIEN are engaged in the business of providing fiber
optic communications equipment. AWRE supplies Digital Subscriber Line (DSL)
technology for use in high-speed network connections. DSL is one of the emerging
technologies that promises to bring high speed Internet connections to the home.
The Software sector grew slightly from 15.4% to 15.7% of net assets during Q2.
Several new positions were added in this sector, including Intraware (ITRA),
Legato Systems (LGTO), Sterling Commerce (SE), and Vignette (VIGN). All of these
new holdings manufacture software tools for building e-commerce web sites.
The largest weighting decline occurred in the Semiconductor Equipment sector,
which fell to 3.4% of net assets at the end of Q2 from 9.9% at the close of Q1.
While the Fund's dollar investment in this sector actually increased, it did not
increase at the same rate as total net assets, resulting in a smaller relative
weighting. We remain bullish on this sector, but have chosen to focus new
investments in higher-growth areas.
The Internet sector also declined during the quarter, falling to 0.8% of net
assets from 3.6% at the end of Q1. Several of the Fund's previous Internet
positions were closed out, while a new position was established in At Home
(ATHM). We believe that ATHM is in an excellent position to benefit from the
RELATIVE PERFORMANCE:
TIF VS. MARKET INDICES
Hypothetical $10,000 Investment at Inception
[GRAPHIC OMITTED]
JUN '99
-------
TIF $28,040
S&P 500
NASDAQ
DJIA
(inception May 20,`98)
Past performance is not a guarantee of future results.
Semi-Annual Report | 15
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TIF HOLDINGS BY SECTOR*
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Telecom 0.3%
Semiconductors 27.8%
Semi Equip 3.4%
Photonics 1.2%
Services 5.6%
Software 15.7%
Comm Equip 14.1%
Internet 0.8%
Networking 1.6%
Net Cash 29.5%
* Based on percentage of net assets as of June 30, 1999 (cash net of payables
and receivables)
emerging trend toward broadband Internet access in the home.
The buyout of FORE Systems (FORE) by GEC of Great Britain reduced the Networking
sector weighting during Q2. The sector weighting fell from 8.6% at the end of Q1
to 1.6% at the close of Q2. Three new positions were established in this sector
during the quarter, including Extreme Networks (XTRM), Juniper Networks (JNPR),
and Newbridge Networks (NN). NN manufactures high-speed data networking
equipment. We believe it is well-positioned in the marketplace, and appears to
be a prime target for takeover by any of several "old line" telecommunications
suppliers.
The Semiconductor sector continues to hold the Fund's largest sector weighting,
at 27.8% of net assets. We remain bullish on the prospects for semiconductor
companies that supply product to the data communications infrastructure
providers. This quarter we established a few new positions in this sector,
including V3 Semiconductor (VVVI) and GlobeSpan (GSPN). GSPN is a supplier of
chips for use in DSL networks. VVVI is a provider of system control chips that
are cur-rently being used in Digital Television (DTV) and set-top box
applications.
The Photonics sector, represented by Uniphase (UNPH), represents 1.2% of net
assets, down from 2.5% at the end of Q1. The Telecommunications sector also
declined as a portion of net assets, falling to 0.3% from 1.2% at the end of Q1.
The relative weighting for the Services sector also declined in Q2, from 7.2% of
net assets to 5.6%, although we continued to purchase additional shares of
Exodus (EXDS) and Globix (GBIX), two companies that provide Internet hosting
services to corporate customers. Net cash rose from 17.5% at the end of Q1 to
29.5% at the close of Q2, as the Fund experienced large cash inflows near the
end of the quarter.
Firsthand
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MEDICAL SPECIALISTS FUND
PERFORMANCE & PORTFOLIO DISCUSSION
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The Medical Specialists Fund (MSF) returned 11.94% in the second quarter of
1999. Year-to-date, MSF has returned 24.26%, making it the number #1 Healthcare
mutual fund in the country for the first half of 1999, according to Morningstar.
For the quarter, MSF outperformed the S&P 500 Index and all three of the Russell
Healthcare Indices, but slightly lagged the Dow Jones Industrial Average.
As measured by the Russell 2000 Healthcare Index, small-cap medical stocks
performed well in Q2, rising 8.88% to regain almost all the losses from Q1.
Large-cap medical stocks, as measured by the Russell 1000 Healthcare Index,
declined 4.71%. This is the first time in the past seven quarters that the
small-caps outperformed the large-cap stocks. Small cap stocks still have a long
way to go to recover from their relative underperformance over the past 2 years.
At the end of Q2 the Fund was 34.9% in cash. The abnormally high cash percentage
is due primarily to the sale of our position in Immunex (IMNX). IMNX started the
quarter at $83.50 and reached a peak of nearly $146 during Q2. The sharp rise in
the company's stock price drove the value of IMNX to an uncomfortably high
percentage of the total portfolio, prompting us to start selling the position.
At the end of the quarter we had not yet reinvested the cash. The sale of IMNX
contributed to the reduction of the Biotech sector, as a percentage of net
assets, from 43.7% at the end of Q1 to 19.0% at the close of Q2.
RELATIVE PERFORMANCE:
MSF VS. MARKET INDICES
Hypothetical $10,000 Investment at Inception
[GRAPHIC OMITTED]
JUN '99
-------
MSF $12,004
S&P 500
NASDAQ
DJIA
(inception Dec 10,`97)
Past performance is not a guarantee of future results.
Semi-Annual Report | 17
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MSF HOLDINGS BY SECTOR*
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Biotech 19.0%
Other Med Devices 0.6%
Health Services 6.6%
Card Med Devices 38.9%
Net Cash 34.9%
* Based on percentage of net assets as of June 30, 1999 (cash net of payables
and receivables)
We significantly increased our investment in QuadraMed (QMDC) this quarter. As a
result, the Fund's weighting in the Health Services sector increased to 6.6%
from 2.1% at the end of Q1. At the beginning of Q2, QMDC was trading at $5 per
share with $3 per share in cash on its balance sheet. The company had reported
earnings-per-share of $0.24 for Q1 and guided analysts to expect 1999 earnings
to come in around $1.00 per share. This implies that management expects sales
for the next 3 quarters of 1999 to be relatively flat.
The blame for the sales slowdown was laid squarely on Y2K. Management said that
hospitals are spending their technology budgets on fixing their Y2K problems and
putting integration projects (QMDC's busi-ness) on the back-burner. The need for
these integration projects has not disappeared, it has just been deferred until
next year. Shortly after the turn of the year, when hospitals are on the other
side of the Y2K problem, we believe that integration projects will move higher
on their priority lists. Next year, we believe this deferred demand will fuel
QMDC's return to annual growth rates of 30+%. If the company's earnings are then
accorded a market P/E ratio, we believe that QMDC could be a $30 stock.
Firsthand
<PAGE>
Technology Outlook
Semi-Annual Report | 19
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TECHNOLOGY OUTLOOK
ELECTRONICS SECTOR - IT'S NOT JUST THE INTERNET
Over the past year or two, the Internet has become one of the most talked-about
trends in technology, investing, and society. It is difficult to find an article
about technology investing that doesn't focus in some way on the Internet. While
we certainly count the Internet as one of the key technology themes driving our
investments, our investment reach extends into many other areas of technology.
Three non-Internet technology sectors that we are currently tracking are
developments in semiconductors, DVD, and digital photography.
With the hub of the semiconductor industry right outside our door here in
Silicon Valley, this sector is one that we have always followed very closely.
Our recent investments in chip companies which provide products for building
Internet infrastructure have done very well, but there is more to our investment
in this industry. Every few years, the chip industry makes a transition to a new
generation of chip-making technology. Each new generation delivers the ability
to manufacture more complex circuits on each chip and to squeeze more chips onto
each semiconductor wafer (a round disk of silicon which is the basic unit of
manufacturing).
Today, we are at the beginning of a double-shift in semiconductor manufacturing
technology. First, the industry-standard size of a single circuit on a chip is
starting a transition from 0.25 microns to 0.18 microns (a micron is
approximately one hundredth the width of a human hair). Second, the industry is
within a couple of years of beginning a transition from 200mm (8") to 300mm
(12") diameter wafers. Each of these transitions require a new generation of
hardware and software tools for designing and manufacturing these more complex
devices.
We have made investments in software design tool companies such as Cadence (CDN)
and Avant! (AVNT) as well as manufacturing equipment
Firsthand
<PAGE>
suppliers, including Applied Materials (AMAT), SpeedFam-IPEC (SFAM), Novellus
(NVLS), KLA-Tencor (KLAC), and Cymer (CYMR). Semiconductor technology is at the
core of the electronics sector's con-tinued trend toward faster, cheaper, and
smaller products. We expect to see the "Semiconductor Technology Treadmill"
continue for some time.
Another trend that we are following closely is the emergence of DVD as the next
generation video storage/playback medium. DVD promises consumers high-quality
video and CD-quality, surround-sound audio on a disc that is the same size as a
CD. No longer does digital video mean big Laserdiscs that need to be flipped
halfway through a movie. While today's generation of DVD offers playback only,
DVD will give consumers the ability to record and play video with digital
quality within the next couple of years. With prices for DVD players becoming
more attractive every day, we believe we are seeing the beginning of a shift
from VHS to DVD in the home. To capitalize on this trend, we have invested in
Zoran (ZRAN), a manufacturer of decoding chips used in DVD devices.
A third technology area that we are watching is the world of digital
photography. Less than two years ago, high-quality digital photography was
limited to people who could afford to spend several thousands of dollars on a
state-of-the-art digital camera. The continuous improvement cycle of the
semiconductor industry has now enabled digital camera manufacturers to sell
digital cameras, capable of very high-quality photos, for less than $500. In
addition to eliminating the need for developing photographic film, digital
cameras offer consumers the ability to easily retouch, crop, enlarge, and
enhance their pictures themselves on their personal computers. The fact that the
photos are already stored electronically makes them easy to e-mail to friends
and family.
Semi-Annual Report | 21
<PAGE>
We expect to see strong growth in the market for digital cameras that we believe
will, in turn, spur increased demand for personal computers, computer
peripherals, and Internet bandwidth for sending the pictures.
While the Internet sector continues to be the most visible example of the growth
of technology, other areas of technology haven't slowed down. We continue to
track all of the most exciting sectors of the high-tech world, and we believe
that we are well-positioned to take advantage of the potential growth in these
markets.
MEDICAL SECTOR - VALUING BIOTECHS
Consider the plight of the average biotech start-up firm. It spends millions of
dollars and struggles for years developing its first drug. Then, when the
clinical trials are over, and assuming the efficacy of the drug has been proven,
it has only one product to take to market. Unless the drug is a "blockbuster,"
the potential revenues often don't justify the expense of setting up a direct
sales force. Faced with this situation, many biotech firms have chosen to sign
distribution deals with other drug companies that already have an effective
sales force.
From the point of view of the distributor, these distribution deals look sweet.
Without having to put up any development money, and taking none of the clinical
risk, the distributor will often get 50 percent or more of the revenue generated
by the drug. A successful launch of a new drug may generate as much revenue for
the distributor as for the developer of that drug.
There are two investment implications to this observation. First, to get an
accurate picture of the value of a new drug to shareholders of a small biotech
company, the sales potential of the new drug should probably be reduced by half
unless the company has the resources to
Firsthand
<PAGE>
field their own sales force. Second, a pharmaceutical company with an effective
sales force has a rich "pipeline" of new drugs (from other companies) as long as
the market fails to award good biotech companies high enough valuations to
enable them to field a direct sales force.
Merck (MRK) is a good example of a company that we believe is under-valued right
now because the Street perceives that its pipeline is weak. However, we believe
that they have a first-rate sales force which they can use to execute
distribution deals with other companies to get 50 percent of the revenues from
some excellent biotech drugs. Based on this analysis, we have recently acquired
a position in MRK for the Technology Value Fund.
As always, if you have firsthand experience with a new medical product that is
dramatically better than existing products, please let us know by sending an
e-mail to: [email protected].
/s/ Kevin M. Landis
Kevin M. Landis
Portfolio Manager
Technology Value Fund
Technology Leaders Fund
Technology Innovators Fund
/s/ Kendrick W. Kam
Kendrick W. Kam
Portfolio Manager
Technology Value Fund
Medical Specialists Fund
Semi-Annual Report | 23
<PAGE>
[PHOTO]
Firsthand
<PAGE>
Financial Statements
(as of 6/30/99)
Semi-Annual Report | 25
<PAGE>
Financial Statements
Technology Value Fund Portfolio 27
Technology Leaders Fund Portfolio 30
Technology Innovators Fund Portfolio 32
Medical Specialist Fund Portfolio 34
Statements of Assets and Liabilities 35
Statements of Operations 36
Statements of Changes in Net Assets 37
Financial Highlights 39
Technology Value Fund
Financial Highlights 40
Technology Leaders Fund
Financial Highlights 41
Technology Innovators Fund
Financial Highlights 42
Medical Specialist Fund
Notes to Financial Statements 43
Firsthand
<PAGE>
Portfolio of Technology Value Fund
Investments June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
non-income
producing % shares value
- --------------------------------------------------------------------------------
COMMON STOCKS 93.4% $ 304,392,018
(Cost $220,346,473) -------------
BIOTECHNOLOGY 10.3% 33,588,550
-------------
Amgen, Inc. * 29,200 1,777,550
Centocor, Inc. * 175,000 8,159,375
Immunex Corp. * 184,000 23,448,500
Sepracor, Inc. * 2,500 203,125
CARDIAC MEDICAL DEVICES 10.0% 32,780,052
-------------
Boston Scientific Corp. * 143,800 6,318,212
Cardima, Inc. * 470,000 954,688
CardioThoracic Systems, Inc. * 553,000 7,742,000
Endocardial Solutions, Inc. (1) * 279,100 2,634,006
EndoSonics Corp. * 635,700 4,449,900
Guidant Corp. * 102,000 5,246,625
Medtronic, Inc. 34,453 2,683,027
Novoste Corp. * 63,200 1,327,200
Radiance Medical Systems, Inc. (1) * 484,900 1,424,394
COMMUNICATIONS EQUIPMENT 10.5% 34,301,844
-------------
ADC Telecommunications, Inc. * 120,000 5,467,500
CIENA Corp. * 310,000 9,358,125
Motorola, Inc. 79,500 7,532,625
Oak Industries, Inc. * 265,000 11,577,188
P-Com, Inc. * 70,000 366,406
ELECTRONIC DESIGN AUTOMATION 1.8% 5,733,458
-------------
Aspec Technology, Inc. * 356,000 311,500
Avant! Corp. * 429,462 5,421,958
HEALTH SERVICES 0.8% 2,547,187
-------------
QuadraMed Corp. * 313,500 2,547,187
MEDICAL 0.5% 1,585,625
-------------
Biogen, Inc. * 4,000 257,250
MedImmune, Inc. * 6,500 440,375
Merck & Company, Inc. 12,000 888,000
(1) Denotes affiliated issuer.
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Semi-Annual Report | 27
<PAGE>
Portfolio of Technology Value Fund
Investments June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
... continued ... non-income
producing % shares value
- --------------------------------------------------------------------------------
NETWORKING 9.5% $ 31,034,000
-------------
Cabletron Systems, Inc. * 1,110,000 14,430,000
FVC.COM, Inc. * 223,500 1,452,750
Newbridge Networks Corp. * 527,000 15,151,250
PERIPHERALS 1.7% 5,473,438
-------------
Adaptec, Inc. * 155,000 5,473,438
SEMICONDUCTOR EQUIPMENT 2.9% 9,313,792
-------------
Applied Science & Technology, Inc. * 97,500 2,193,750
Cymer, Inc. * 124,000 3,100,000
SpeedFam-IPEC, Inc. * 250,275 4,020,042
SEMICONDUCTORS 35.8% 116,603,072
-------------
Applied Micro Circuits Corp. * 336,500 27,677,125
Celeritek, Inc. (1) * 522,200 3,263,750
Conexant Systems, Inc. * 143,950 8,358,097
Galileo Technology Ltd. * 325,000 14,726,562
GlobeSpan, Inc. * 115,500 4,591,125
PMC-Sierra, Inc. * 455,400 26,840,138
Stellar Semiconductor Series "B" (2) * 2,040,000 2,570,400
Stellar Semiconductor Series "C" (2) * 1,200,000 1,500,000
TriQuint Semiconductor, Inc. * 340,000 19,316,250
Vitesse Semiconductor Corp. * 10,000 674,375
Zoran Corp. * 423,000 7,085,250
SERVICES 1.7% 5,700,188
-------------
Globix Corp. * 129,000 5,700,188
SOFTWARE 2.8% 8,987,063
-------------
Concord Communications, Inc. * 8,750 393,750
i2 Technologies, Inc. * 37,000 1,591,000
Pervasive Software, Inc. * 281,500 7,002,313
TELECOMMUNICATIONS 5.1% 16,743,750
-------------
AT&T Corp. 300,000 16,743,750
CASH EQUIVALENTS 9.6% 31,352,140
-------------
(Cost $31,352,140)
Firstar Stellar Treasury Fund 31,352,140 31,352,140
(1) Denotes affiliated issuer.
(2) Restricted security.
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
Portfolio of Technology Value Fund
Investments June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
... continued ... non-income
producing % shares value
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES 103.0% $ 335,744,158
(Cost $251,698,613)
LIABILITIES IN EXCESS OF OTHER ASSETS (3.0%) (9,853,254)
-------------
NET ASSETS 100.0% $ 325,890,904
=============
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Semi-Annual Report | 29
<PAGE>
Portfolio of Technology Leaders Fund
Investments June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
non-income
producing % shares value
- --------------------------------------------------------------------------------
COMMON STOCKS 82.1% $ 79,011,216
(Cost $48,698,945) -------------
COMMUNICATIONS EQUIPMENT 10.9% 10,513,000
-------------
Lucent Technologies, Inc. 62,000 4,181,125
QUALCOMM, Inc. * 30,000 4,305,000
Tellabs, Inc. * 30,000 2,026,875
COMPUTERS 7.2% 6,905,000
-------------
Hewlett-Packard Co. 13,000 1,306,500
International Business Machines Corp. 22,000 2,843,500
Sun Microsystems, Inc. * 40,000 2,755,000
ELECTRONIC DESIGN AUTOMATION 2.1% 2,040,000
-------------
Cadence Design Systems, Inc. * 160,000 2,040,000
INTERNET 4.6% 4,420,000
-------------
America Online, Inc. * 40,000 4,420,000
NETWORKING 5.4% 5,160,000
-------------
Cisco Systems, Inc. * 80,000 5,160,000
SEMICONDUCTOR EQUIPMENT 12.6% 12,101,388
-------------
Applied Materials, Inc. * 62,500 4,617,188
KLA-Tencor Corp. * 74,000 4,800,750
Teradyne, Inc. * 37,400 2,683,450
SEMICONDUCTORS 26.2% 25,203,234
-------------
Altera Corp. * 80,000 2,945,000
Conexant Systems, Inc. * 77,500 4,499,844
Level One Communications, Inc. * 91,750 4,490,015
PMC-Sierra, Inc. * 80,000 4,715,000
Texas Instruments, Inc. 12,500 1,812,500
Vitesse Semiconductor Corp. * 66,000 4,450,875
Xilinx, Inc. * 40,000 2,290,000
SOFTWARE 8.8% 8,482,656
-------------
Microsoft Corp. * 38,500 3,472,219
Oracle Corp. * 127,500 4,733,437
SAP AG - ADR 8,000 277,000
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
Portfolio of Technology Leaders Fund
Investments June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
... continued ... non-income
producing % shares value
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS 4.3% $ 4,185,938
-------------
AT&T Corp. 75,000 4,185,938
CASH EQUIVALENTS 18.1% 17,481,923
(Cost $17,481,923) -------------
Firstar Stellar Treasury Fund 17,481,923 17,481,923
TOTAL INVESTMENT SECURITIES 100.2% 96,493,139
(Cost $66,180,868)
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2%) (229,647)
-------------
NET ASSETS 100.0% $ 96,263,492
=============
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Semi-Annual Report | 31
<PAGE>
Portfolio of Technology Innovators Fund
Investments June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
non-income
producing % shares value
- --------------------------------------------------------------------------------
COMMON STOCKS 70.5% $ 35,395,462
(Cost $27,855,741) -------------
COMMUNICATIONS EQUIPMENT 14.1% 7,090,500
-------------
Advanced Fibre Communications, Inc. * 80,000 1,250,000
Aware, Inc. * 10,000 461,250
CIENA Corp. * 156,000 4,709,250
P-Com, Inc. * 128,000 670,000
INTERNET 0.8% 417,625
-------------
At Home Corp. * 6,000 323,625
InfoSpace.com, Inc. * 2,000 94,000
NETWORKING 1.6% 805,063
-------------
Extreme Networks, Inc. * 1,000 58,063
FVC.COM, Inc. * 15,000 97,500
Juniper Networks, Inc. * 500 74,500
Newbridge Networks Corp. * 20,000 575,000
PHOTONICS 1.2% 581,000
-------------
Uniphase Corp. * 3,500 581,000
SEMICONDUCTOR EQUIPMENT 3.4% 1,728,838
-------------
Cymer, Inc. * 30,000 750,000
SpeedFam-IPEC, Inc. * 14,200 228,088
Novellus Systems, Inc. * 11,000 750,750
SEMICONDUCTORS 27.8% 13,935,824
-------------
Applied Micro Circuits Corp. * 5,000 411,250
Cree Research, Inc. * 9,500 730,906
Galileo Technology Ltd. * 21,300 965,156
Genesis Microchip, Inc. * 25,000 590,625
GlobeSpan, Inc. * 115,500 4,591,125
MMC Networks, Inc. * 22,500 1,006,875
TranSwitch Corp. * 36,150 1,712,606
TriQuint Semiconductor * 26,900 1,528,256
V3 Semiconductor, Inc. * 47,200 330,400
Zoran Corp. * 123,500 2,068,625
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
Portfolio of Technology Innovators Fund
Investments June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
... continued ... non-income
producing % shares value
- --------------------------------------------------------------------------------
SERVICES 5.6% $ 2,804,088
-------------
Critical Path, Inc. * 5,000 276,563
Exodus Communications, Inc. * 5,600 671,650
Globix Corp. * 42,000 1,855,875
SOFTWARE 15.7% 7,880,437
-------------
Check Point Software Technologies Ltd. * 13,000 697,125
Concord Communications, Inc. * 45,250 2,036,250
Concur Technologies, Inc. * 9,900 278,437
Intraware, Inc. * 30,000 720,000
Legato Systems, Inc. * 10,000 577,500
Pervasive Software, Inc. * 61,000 1,517,375
Sterling Commerce, Inc. * 20,000 730,000
VeriSign, Inc. * 11,000 948,750
Vignette Corp. * 5,000 375,000
TELECOMMUNICATIONS 0.3% 152,087
-------------
Qwest Communications Int'l, Inc. * 4,600 152,087
CASH EQUIVALENTS 31.2% 15,651,124
(Cost $15,651,124) -------------
Firstar Stellar Treasury Fund 15,651,124 15,651,124
TOTAL INVESTMENT SECURITIES 101.7% 51,046,586
(Cost $43,506,865)
LIABILITIES IN EXCESS OF OTHER ASSETS (1.7%) (841,539)
-------------
NET ASSETS 100.0% $ 50,205,047
=============
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Semi-Annual Report | 33
<PAGE>
Portfolio of Medical Specialists Fund
Investments June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
non-income
producing % shares value
- --------------------------------------------------------------------------------
COMMON STOCKS 65.1% $ 4,004,348
(Cost $3,461,587) -------------
BIOTECHNOLOGY 19.0% 1,168,673
-------------
Amgen, Inc. * 5,600 340,900
Centocor, Inc. * 6,000 279,750
IGEN International, Inc. * 8,460 246,398
Medco Research, Inc. * 5,300 139,125
Sepracor, Inc. * 2,000 162,500
CARDIAC MEDICAL DEVICES 38.9% 2,393,956
-------------
Boston Scientific Corp. * 11,700 514,069
Cardima, Inc. * 130,000 264,062
CardioThoracic Systems, Inc. * 50,000 700,000
EndoSonics Corp. * 21,500 150,500
Guidant Corp. * 5,800 298,337
Medtronic, Inc. 3,300 256,988
Novoste Corp. * 10,000 210,000
HEALTH SERVICES 6.6% 406,250
-------------
QuadraMed Corp. * 50,000 406,250
OTHER MEDICAL DEVICES 0.6% 35,469
-------------
PathoGenesis Corp. * 2,500 35,469
CASH EQUIVALENTS 16.2% 999,014
(Cost $999,014) -------------
Firstar Stellar Treasury Fund 999,014 999,014
TOTAL INVESTMENT SECURITIES 81.3% 5,003,362
(Cost $4,460,601)
OTHER ASSETS IN EXCESS OF LIABILITIES 18.7% 1,148,598
-------------
NET ASSETS 100.0% $ 6,151,960
=============
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
June 30, 1999 (unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY TECHNOLOGY TECHNOLOGY MEDICAL
VALUE LEADERS INNOVATORS SPECIALISTS
FUND FUND FUND FUND
===========================================================================================================================
ASSETS
Investment securities:
<S> <C> <C> <C> <C>
At acquisition cost $ 251,698,613 $ 66,180,868 $ 43,506,865 $ 4,460,601
===================================================================
At market value (Note 1) $ 335,744,158 $ 96,493,139 $ 51,046,586 $ 5,003,362
Dividends receivable 81,055 17,186 19,714 2,033
Receivable for capital shares sold 3,345,690 3,491,993 3,476,182 34,213
Receivable for securities sold 945,828 -- 114,946 1,122,678
-------------------------------------------------------------------
TOTAL ASSETS 340,116,731 100,002,318 54,657,428 6,162,286
-------------------------------------------------------------------
LIABILITIES
Payable for capital shares redeemed 3,323,109 311,352 4,208 1,288
Payable for securities purchased 10,457,050 3,308,380 4,405,597 --
Payable to affiliates (Note 1) 445,668 119,094 42,576 9,038
-------------------------------------------------------------------
TOTAL LIABILITIES 14,225,827 3,738,826 4,452,381 10,326
-------------------------------------------------------------------
NET ASSETS $ 325,890,904 $ 96,263,492 $ 50,205,047 $ 6,151,960
===================================================================
Net assets consist of:
Paid-in capital $ 220,830,288 $ 61,992,274 $ 39,529,127 $ 5,360,682
Accumulated net investment loss (1,622,846) (436,274) (78,441) (41,647)
Accumulated net realized gains from
security transactions 22,637,917 4,395,221 3,214,640 290,164
Net unrealized appreciation on investments 84,045,545 30,312,271 7,539,721 542,761
-------------------------------------------------------------------
Net assets $ 325,890,904 $ 96,263,492 $ 50,205,047 $ 6,151,960
===================================================================
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 6,058,214 3,651,062 1,790,371 512,542
===================================================================
Net asset value, offering price and redemption
price per share (Note 1) $ 53.79 $ 26.37 $ 28.04 $ 12.00
===================================================================
</TABLE>
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Semi-Annual Report | 35
<PAGE>
<TABLE>
<CAPTION>
Statements of Operations
For the Six Months Ended June 30, 1999 (unaudited)
- -----------------------------------------------------------------------------------------------------------------------
TECHNOLOGY TECHNOLOGY TECHNOLOGY MEDICAL
VALUE LEADERS INNOVATORS SPECIALISTS
FUND FUND FUND FUND
=======================================================================================================================
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Interest $ 136,611 $ 79,566 $ -- $ --
Dividends 140,294 50,911 66,950 7,626
-------------------------------------------------------------------
TOTAL INVESTMENT INCOME 276,905 130,477 66,950 7,626
-------------------------------------------------------------------
EXPENSES
Investment advisory fees (Note 3) 1,464,218 435,962 111,839 37,902
Administrative fees (Note 3) 435,533 130,789 33,552 11,371
-------------------------------------------------------------------
TOTAL EXPENSES 1,899,751 566,751 145,391 49,273
-------------------------------------------------------------------
NET INVESTMENT LOSS (1,622,846) (436,274) (78,441) (41,647)
-------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS
ON INVESTMENTS
Net realized gains from security transactions 26,810,891 3,689,491 3,070,183 756,989
Net change in unrealized appreciation/
depreciation on investments 79,724,456 19,195,545 6,576,675 159,673
-------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS 106,535,347 22,885,036 9,646,858 916,662
-------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 104,912,501 $ 22,448,762 $ 9,568,417 $ 875,015
===================================================================
</TABLE>
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Periods Ended June 30, 1999 and December 31, 1998
- --------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY VALUE FUND TECHNOLOGY LEADERS FUND
--------------------- -----------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
6/30/99 12/31/98 6/30/99 12/31/98
(Unaudited) (Unaudited)
================================================================================================================================
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment loss $ (1,622,846) $ (3,280,860) $ (436,274) $ (197,497)
Net realized gains (losses) from security transactions 26,810,891 (1,125,096) 3,689,491 903,227
Net change in unrealized appreciation/
depreciation on investments 79,724,456 40,388,492 19,195,545 11,093,756
-------------------------------------------------------------------
Net increase in net assets from operations 104,912,501 35,982,536 22,448,762 11,799,486
-------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- -- -- (2,257)
-------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 217,878,035 149,553,020 65,467,939 53,787,109
Payments for shares redeemed (175,030,729) (201,778,002) (34,487,930) (26,330,447)
-------------------------------------------------------------------
Net increase (decrease) in net assets from
capital share transactions 42,847,306 (52,224,982) 30,980,009 27,456,662
-------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 147,759,807 (16,242,446) 53,428,771 39,253,891
NET ASSETS:
Beginning of period 178,131,097 194,373,543 42,834,721 3,580,830
-------------------------------------------------------------------
End of period $ 325,890,904 $ 178,131,097 $ 96,263,492 $ 42,834,721
===================================================================
CAPITAL SHARE ACTIVITY:
Shares sold 4,958,300 5,313,423 2,963,245 3,830,812
Shares redeemed (4,425,073) (7,247,403) (1,699,545) (1,798,882)
-------------------------------------------------------------------
Net increase (decrease) in shares outstanding 533,227 (1,933,980) 1,263,700 2,031,930
Shares outstanding, beginning of period 5,524,987 7,458,967 2,387,362 355,432
-------------------------------------------------------------------
Shares outstanding, end of period 6,058,214 5,524,987 3,651,062 2,387,362
===================================================================
</TABLE>
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Semi-Annual Report | 37
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets (continued)
For the Periods Ended June 30, 1999 and December 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY INNOVATORS FUND MEDICAL SPECIALISTS FUND
-------------------------- ------------------------
Six Months Period Six Months Year
Ended Ended Ended Ended
6/30/99 12/31/98 (A) 6/30/99 12/31/98
(Unaudited) (Unaudited)
============================================================================================================================
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment loss $ (78,411) $ (5,965) $ (41,647) $ (45,476)
Net realized gains (losses) from security transactions 3,070,183 150,422 756,989 (466,825)
Net change in unrealized appreciation/
depreciation on investments 6,576,675 963,046 159,673 347,325
---------------------------------------------------------------
Net increase (decrease) in net assets from operations 9,568,417 1,107,503 875,015 (164,976)
---------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- -- -- (1,557)
---------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 59,345,833 8,790,653 6,071,734 5,205,850
Payments for shares redeemed (25,198,302) (3,409,057) (5,284,707) (2,911,609)
---------------------------------------------------------------
Net increase in net assets from capital share
transactions 34,147,531 5,381,596 787,027 2,294,241
---------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 43,715,948 6,489,099 1,662,042 2,127,708
NET ASSETS:
Beginning of period 6,489,099 -- 4,489,918 2,362,210
---------------------------------------------------------------
End of period $ 50,205,047 $ 6,489,099 $ 6,151,960 $ 4,489,918
===============================================================
CAPITAL SHARE ACTIVITY:
Shares sold 2,711,663 649,555 549,062 551,990
Shares redeemed (1,326,593) (244,254) (501,524) (320,299)
---------------------------------------------------------------
Net increase in shares outstanding 1,385,070 405,301 47,538 231,691
Shares outstanding, beginning of period 405,301 -- 465,004 233,313
---------------------------------------------------------------
Shares outstanding, end of period 1,790,371 405,301 512,542 465,004
===============================================================
</TABLE>
(A) Represents the period from the commencement of operations (May 20, 1998)
through December 31, 1998.
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights - Technology Value Fund
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
- -----------------------------------------------------------------------------------------------------------------------
Six Months Year Year Year Year Period
Ended Ended Ended Ended Ended Ended
6/30/99 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94(A)
(Unaudited)
=======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 32.24 $ 26.06 $ 26.66 $ 18.44 $ 11.70 $ 10.00
---------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.27) (0.59) (0.26) (0.08) (0.14) (0.03)
Net realized and unrealized gains
on investments 21.82 6.77 1.90 11.20 7.28 2.56
---------------------------------------------------------------------------
Total from investment operations 21.55 6.18 1.64 11.12 7.14 2.53
---------------------------------------------------------------------------
Less distributions:
Distributions from net realized gains -- -- (1.80) (2.90) (0.40) (0.83)
Distributions in excess of net
realized gains -- -- (0.44) -- -- --
---------------------------------------------------------------------------
Total distributions -- -- (2.24) (2.90) (0.40) (0.83)
---------------------------------------------------------------------------
Net asset value at end of period $ 53.79 $ 32.24 $ 26.06 $ 26.66 $ 18.44 $ 11.70
===========================================================================
Total return 66.84%(B) 23.71% 6.46% 60.55% 61.17% 25.30%(B)
===========================================================================
Net assets at end of period (millions) $ 325.9 $ 178.1 $ 194.4 $ 35.1 $ 2.7 $ 0.2
===========================================================================
Ratio of expenses to average net assets 1.94%(C) 1.95% 1.93% 1.81% 1.98% 1.96%(C)
Ratio of net investment loss to average
net assets (1.66%)(C) (1.80%) (1.43%) (0.55%) (1.45%) (1.29%)(C)
Portfolio turnover rate 57%(B) 126% 101% 43% 45% 56%(B)
</TABLE>
(A) Represents the period from the commencement of operations (May 20, 1994)
through December 31, 1994.
(B) Not annualized.
(C) Annualized.
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Semi-Annual Report | 39
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights - Technology Leaders Fund
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------------------------
Six Months Year Period
Ended Ended Ended
6/30/99 12/31/98 12/31/97(A)
(Unaudited)
===================================================================================================
<S> <C> <C> <C>
Net asset value at beginning of period $ 17.94 $ 10.07 $ 10.00
------------------------------------
Income from investment operations:
Net investment income (loss) (0.12) (0.09) 0.01
Net realized and unrealized gains on investments 8.55 7.96 0.06
------------------------------------
Total from investment operations 8.43 7.87 0.07
------------------------------------
Less distributions:
Dividends from net investment income -- -- --
Distributions from net realized gains -- -- --
------------------------------------
Total distributions -- -- --
------------------------------------
Net asset value at end of period $ 26.37 $ 17.94 $ 10.07
====================================
Total return 47.00%(B) 78.15% 0.70%(B)
====================================
Net assets at end of period (millions) $ 96.3 $ 42.8 $ 3.6
====================================
Ratio of expenses to average net assets 1.94%(C) 1.94% 1.80%(C)
Ratio of net investment income (loss) to average net assets (1.49%)(C) (1.03%) 1.77%(C)
Portfolio turnover rate 29%(B) 105% 0%
</TABLE>
(A) Represents the period from the commencement of operations (December 10,
1997) through December 31, 1997.
(B) Not annualized.
(C) Annualized.
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
Financial Highlights - Technology Innovators Fund
Selected Per Share Data and Ratios for a
Share Outstanding Throughout Each Period
- --------------------------------------------------------------------------------
Six Months Period
Ended Ended
6/30/99 12/31/98 (A)
(Unaudited)
================================================================================
Net asset value at beginning of period $ 16.01 $ 10.00
-----------------------
Income from investment operations:
Net investment loss (0.04) (0.01)
Net realized and unrealized gains on investments 12.07 6.02
-----------------------
Total from investment operations 12.03 6.01
-----------------------
Less distributions:
Dividends from net investment income -- --
Distributions from net realized gains -- --
-----------------------
Total distributions -- --
-----------------------
Net asset value at end of period $ 28.04 $ 16.01
=======================
Total return 75.14%(B) 60.10%(B)
=======================
Net assets at end of period (millions) $ 50.2 $ 6.5
=======================
Ratio of expenses to average net assets 1.92%(C) 1.92%(C)
Ratio of net investment loss to average net assets (1.04%)(C) (0.59%)(C)
Portfolio turnover rate 80%(B) 188%(B)
(A) Represents the period from the commencement of operations (May 20, 1998)
through December 31, 1998.
(B) Not annualized.
(C) Annualized.
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Semi-Annual Report | 41
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights - Medical Specialists Fund
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
- -------------------------------------------------------------------------------------
Six Months Year Period
Ended Ended Ended
6/30/99 12/31/98 12/31/97 (A)
(Unaudited)
=====================================================================================
<S> <C> <C> <C>
Net asset value at beginning of period $ 9.66 $ 10.12 $ 10.00
------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.10) 0.01
Net realized and unrealized gains (losses)
on investments 2.42 (0.36) 0.11
------------------------------------
Total from investment operations 2.34 (0.46) 0.12
------------------------------------
Less distributions:
Dividends from net investment income -- -- --
Distributions from net realized gains -- -- --
------------------------------------
Total distributions -- -- --
------------------------------------
Net asset value at end of period $ 12.00 $ 9.66 $ 10.12
====================================
Total return 24.26%(B) (4.55%) 1.20%(B)
====================================
Net assets at end of period (millions) $ 6.2 $ 4.5 $ 2.4
====================================
Ratio of expenses to average net assets 1.95%(C) 1.95% 1.81%(C)
Ratio of net investment income (loss)
to average net assets (1.64%)(C) (1.33%) 1.75%(C)
Portfolio turnover rate 53%(B) 160% 0%
</TABLE>
(A) Represents the period from the commencement of operations (December 10,
1997) through December 31, 1997.
(B) Not annualized.
(C) Annualized.
- --------------------------------------------------------------------------------
see accompanying notes to financial statements
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
Notes to Financial Statements
June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Technology Value Fund, the Technology Leaders Fund, the Technology
Innovators Fund and the Medical Specialists Fund (the Funds) are each a
non-diversified series of Firsthand Funds (formerly Interactive Investments)
(the Trust), an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Trust was
organized as a Delaware business trust on November 8, 1993. The Technology Value
Fund commenced operations on May 20, 1994. The public offering of shares of the
Technology Value Fund commenced on January 3, 1995. The public offering of
shares of the Medical Specialists Fund and the Technology Leaders Fund commenced
on December 10, 1997. The public offering of shares of the Technology Innovators
Fund commenced on May 20, 1998.
Each Fund's investment objective is long-term capital appreciation.
The Technology Value Fund seeks to achieve its objective by investing primarily
in securities of companies in the electronic technology and medical technology
fields which Interactive Research Advisers, Inc. (the Adviser) considers to be
undervalued and have potential for capital appreciation.
The Technology Leaders Fund seeks to achieve its objective by investing
primarily in securities of companies in the high technology field which the
Adviser considers to have the strongest competitive position.
The Technology Innovators Fund seeks to achieve its objective by investing
primarily in securities of companies in the high technology field which the
Adviser considers to be best positioned to introduce successful new products.
The Medical Specialists Fund seeks to achieve its objective by investing
primarily in securities of companies in the health and biotechnology fields
which the Adviser considers to have a strong earnings growth outlook and
potential for capital appreciation.
The following is a summary of the Funds' significant accounting policies:
Securities valuation -- Each Fund's portfolio securities are valued as of the
close of the regular session of trading on the New York Stock Exchange, normally
4:00 p.m., Eastern time. Securities which are traded on stock exchanges or are
quoted by NASDAQ are valued at the last reported sale price as of the close of
the regular session of trading on the New York Stock Exchange, or, if not
traded, at the most recent bid price. Securities which are traded in the
over-the-counter market, and which are not quoted by NASDAQ, are valued at the
most recent bid price, as obtained from one or more of the major market makers
for such securities. Securities for which market quotations are not readily
available are valued at their fair value as determined in good faith in
accordance with consistently applied procedures established by and under the
general supervision of the Board of Trustees.
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost which, together with accrued
interest, approximates market. At the time each Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement.
- --------------------------------------------------------------------------------
Semi-Annual Report | 43
<PAGE>
Notes to Financial Statements (continued)
June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Share valuation -- The net asset value per share of each Fund is calculated
daily by dividing the total value of each Fund's assets, less liabilities, by
the number of shares outstanding, rounded to the nearest cent. The offering and
redemption price per share of each Fund is equal to the net asset value per
share.
Investment income -- Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
Distributions to shareholders -- Distributions to shareholders arising from net
investment income and net realized capital gains, if any, are distributed at
least once each year. Dividends from net investment income and capital gain
distributions are determined in accordance with income tax regulations.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are determined on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles 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 -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code (the Code) available to regulated
investment companies. As provided therein, 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.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention 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
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon federal income tax cost of portfolio
investments (excluding repurchase agreements) as of June 30, 1999.
<TABLE>
<CAPTION>
TECHNOLOGY TECHNOLOGY TECHNOLOGY MEDICAL
VALUE LEADERS INNOVATORS SPECIALISTS
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
Gross unrealized appreciation $ 108,547,945 $ 31,473,006 $ 8,755,698 $ 928,119
Gross unrealized depreciation (25,307,870) (1,181,936) (1,350,269) (408,451)
-------------------------------------------------------------------
Net unrealized appreciation $ 83,240,075 $ 30,291,070 $ 7,405,429 $ 519,668
===================================================================
Federal income tax cost $ 252,504,083 $ 66,202,069 $ 43,641,157 $ 4,483,694
===================================================================
</TABLE>
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
Notes to Financial Statements (continued)
June 30, 1999 (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 generally accepted accounting principles and income tax
regulations.
As of December 31, 1998, the Technology Value Fund and the Medical Specialists
Fund had capital loss carryforwards for federal income tax purposes of
$2,393,785 and $392,711, respectively, which expire on December 31, 2006. In
addition, the Technology Value Fund realized net capital losses of $946,562
during the period from November 1, 1998 through December 31, 1998, which are
treated for federal income tax purposes as arising in the tax year ending
December 31, 1999.
2. Investment Transactions
Investment transactions (excluding short-term investments) were as follows for
the six months ended June 30, 1999.
<TABLE>
<CAPTION>
TECHNOLOGY TECHNOLOGY TECHNOLOGY MEDICAL
VALUE LEADERS INNOVATORS SPECIALISTS
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
Purchases of investment securities $136,348,054 $ 30,740,437 $ 31,608,839 $ 2,474,390
============================================================
Proceeds from sales and maturities
of investment securities $112,551,170 $ 16,191,352 $ 11,437,266 $ 3,436,286
============================================================
</TABLE>
3. Transactions with Related Parties
Certain trustees and officers of the Trust are also officers of the Adviser, or
of Countrywide Fund Services, Inc., the administrative services agent,
shareholder servicing and transfer agent, and accounting services agent for the
Trust, or of CW Fund Distributors, Inc., which provides distribution services to
the Funds under the terms of an Underwriting Agreement.
INVESTMENT ADVISORY AGREEMENT
Each Fund's investments are managed by the Adviser pursuant to the terms of an
Investment Advisory Agreement (the Advisory Agreement). Under the Advisory
Agreement, the Adviser furnishes advice and recommendations with respect to each
Fund's portfolio of investments and provides persons satisfactory to the Trust's
Board of Trustees to act as officers and employees of the Trust responsible for
the overall management and administration of the Trust, subject to the
supervision of the Trust's Board of Trustees. The Adviser is responsible for (i)
the compensation of any of the Trust's trustees, officers and employees who are
directors, officers, employees or shareholders of the Adviser, (ii) compensation
of the Adviser's personnel and payment of other expenses in connection with the
provision of portfolio management services under the Advisory Agreement, and
(iii) expenses of printing and distributing each Fund's Prospectus and sales and
advertising materials to prospective clients.
- --------------------------------------------------------------------------------
Semi-Annual Report | 45
<PAGE>
Notes to Financial Statements (continued)
June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
For the services provided by the Adviser under the Advisory Agreement, the
Adviser receives from each Fund a management fee, computed and accrued daily and
paid monthly, equal to 1.50% per annum of each Fund's average daily net assets.
The Advisory Agreement requires the Adviser to waive its management fees and, if
necessary, reimburse expenses of the Funds to the extent necessary to limit each
Fund's total operating expenses to 1.95% of its average net assets up to $200
million, 1.90% of such assets from $200 million to $500 million, 1.85% of such
assets from $500 million to $1 billion, and 1.80% of such assets in excess of $1
billion.
ADMINISTRATION AGREEMENT
The Trust has entered into a separate contract with the Adviser for the Adviser
to provide administrative and supervisory services to each Fund (the
Administration Agreement). Under the Administration Agreement, the Adviser
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 Adviser also arranges for
the preservation of journals, ledgers, corporate documents, brokerage account
records and other records which are required to be maintained pursuant to the
1940 Act.
Under the Administration Agreement, the Adviser is responsible for the
equipment, staff, office space and facilities necessary to perform its
obligations. The Adviser has also assumed responsibility for payment of all of
each Fund's operating expenses except for brokerage and commission expenses and
any extraordinary and non-recurring expenses.
For the services rendered by the Adviser under the Administration Agreement, the
Adviser receives a fee at the annual rate of 0.45% of each Fund's 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.
The Adviser has retained Countrywide Fund Services, Inc. (the Transfer Agent) to
serve as each Fund's transfer agent, dividend paying agent and shareholder
servicing agent, to provide accounting and pricing services to each Fund, and to
assist the Adviser in providing executive, administrative and regulatory
services to each Fund. The Transfer Agent is an indirect wholly-owned subsidiary
of Countrywide Credit Industries, Inc., a New York Stock Exchange listed company
principally engaged in the business of residential mortgage lending. The Adviser
(not the Funds) pays the Transfer Agent's fees for these services.
4. 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 six
months ended June 30, 1999 is noted on the following page.
- --------------------------------------------------------------------------------
Firsthand
<PAGE>
Notes to Financial Statements (continued)
June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Share Activity
---------------------------------------------------------- Market
Balance Balance Realized Value Acquisition
Affiliate 12/31/98 Purchases Sales 6/30/99 Loss 6/30/99 Cost
- ---------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY VALUE FUND
<S> <C> <C> <C> <C> <C> <C> <C>
Celeritek, Inc. 522,200 -- -- 522,200 $ -- $3,263,750 $6,035,926
Endocardial Solutions, Inc. 513,900 -- 234,800 279,100 977,572 2,634,006 2,746,878
Radiance Medical Systems, Inc. 554,800 -- 69,900 484,900 374,757 1,424,394 4,276,727
MEDICAL SPECIALISTS FUND
Endocardial Solutions, Inc. 13,600 -- 13,600 -- 41,477 -- --
Radiance Medical Systems, Inc. 15,000 -- 15,000 -- 39,391 -- --
</TABLE>
Restricted securities are securities which have not been registered under the
Securities Act of 1933, as amended, and are subject to restrictions on resale.
Investments in restricted securities are valued at fair value as determined in
good faith in accordance with consistently applied procedures established by and
under the genreal supervision of the Board of Trustees. As of June 30, 1999, the
Techology Value Fund had a 2,040,000 share investment in Stellar Semiconductor
Series "B" valued at $2,570,400 (or 0.79% of net assets), which was acquired on
November 16, 1998 at a cost of $2,448,000. As of that date the Technology Value
Fund also had a 1,200,000 share investment in Stellar Semiconductor Series "C"
valued at $1,500,000 (or 0.46% of net assets), which was acquired on June 22,
1999 at a cost of $1,500,000.
- --------------------------------------------------------------------------------
Semi-Annual Report | 47
<PAGE>
[PHOTO]
Firsthand
<PAGE>
[LOGO] Firsthand
This report is provided for the general information of the shareholders of the
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 information regarding any of the Funds, including charges
and expenses, visit our web site at www.FirsthandFunds.com or call
1.888.884.2675 for a free prospectus.
Please read it carefully before you invest or send money.
1999
Q2
<PAGE>
[LOGO]
FIRSTHAND FUNDS
101 Park Center Plaza
Suite 1300
San Jose, CA 95113
INVESTMENT ADVISER
Interactive Research Advisers, Inc.
101 Park Center Plaza
Suite 1300
San Jose, CA 95113
TRANSFER AGENT/ADMINISTRATOR
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, OH 45201
(Toll-Free) 1-888-884-2675
DISTRIBUTOR
CW Fund Distributors, Inc.
312 Walnut Street, 21st Floor
Cincinnati, OH 45202
Firsthand
