As filed with the Securities and Exchange Commission on November xx, 2008
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07737
THE PURISIMA FUNDS
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(Exact name of registrant as specified in charter)
13100 SKYLINE BLVD.
WOODSIDE, CALIFORNIA 94062
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(Address of principal executive offices) (Zip code)
U. S. BANCORP FUND SERVICES, LLC
2020 EAST FINANCIAL WAY, SUITE 100
GLENDORA, CALIFORNIA 91741
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(Name and address of agent for service)
(650) 851-3334
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Registrant's telephone number, including area code
Date of fiscal year end: AUGUST 31
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Date of reporting period: AUGUST 31, 2008
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ITEM 1. REPORTS TO STOCKHOLDERS.
The Purisima Funds
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Annual Report
August 31, 2008
The Purisima Total Return Fund
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Table of Contents
A Letter to Our Shareholders 2
Performance Summary 5
Sector Breakdown 6
Expense Example 6
Schedule of Investments 8
Statement of Assets and Liabilities 18
Statement of Operations 19
Statement of Changes in Net Assets 20
Financial Highlights 21
Notes to Financial Statements 22
Report of Independent Registered Public Accounting Firm 29
Other Information 30
Trustees and Officer Information 32
Privacy Notice 36
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INVESTMENT OBJECTIVES
PURISIMA TOTAL RETURN FUND
Seeks to provide investors with a high level of total return by
considering both domestic and foreign securities.
EACH FUND RESERVES THE RIGHT TO REJECT ANY ORDER FOR THE PURCHASE OF ITS SHARES
OR TO LIMIT OR SUSPEND, WITHOUT PRIOR NOTICE, THE OFFERING OF ITS SHARES. THE
REQUIRED MINIMUM INVESTMENTS MAY BE WAIVED IN THE CASE OF CERTAIN QUALIFIED
RETIREMENT PLANS. THE FUNDS WILL NOT ACCEPT YOUR ACCOUNT IF YOU ARE INVESTING
FOR ANOTHER PERSON AS ATTORNEY-IN-FACT. THE FUNDS ALSO WILL NOT ACCEPT ACCOUNTS
WITH A "POWER OF ATTORNEY" IN THE REGISTRATION SECTION OF THE PURCHASE
APPLICATION.
1
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A LETTER TO OUR SHAREHOLDERS
Welcome to the annual report for the Purisima Total Return Fund for the
twelve-month period ending August 31, 2008. The primary investment objective of
the Fund is achieving high total return for shareholders.
MARKET REVIEW AND OUTLOOK:
Global equities finished the period down, with the MSCI World Index posting a
decline of -12.07%. Looking forward, however, we firmly believe remaining fully
invested in equities is the proper portfolio positioning. The current bear
market has reached historical averages in duration and magnitude. History shows
there is the potential for the markets to see a significant recovery in the next
12 to 18 months. Trying to time additional downside from here can be fraught
with peril for investors who miss participating in what we expect to be a steep
recovery. Our research shows the period directly after bear market bottoms
usually sees fast and huge bounces off the trough.
Unquestionably there are problems today, but in our view sentiment tied to the
world economy remains overly dour. "Grow-cession" might best describe today. The
global economy is growing, yet people's moods are recessionary. For instance,
despite marked weakness in the financial sector, housing, and autos, the US
economy accelerated in Q1 and Q2 2008. While there are also pockets of weakness
in Europe, overall the non-US developed world should continue modest growth.
Meanwhile, emerging markets (representing nearly a third of the global economy
by GDP) continue to expand at a fast clip, and countries like Brazil, China, and
India continue to expand at a pace well ahead of the developed world. People
everywhere seem to be confusing slow global growth with a contraction, but a
global recession from here appears to us as a very low probability--despite it
being much discussed. At some point, investors will likely realize economic
Armageddon isn't upon us, and we believe stocks should respond dramatically.
A legitimate market risk is undue and harmful government intervention. In our
view, the US government's recent tactics attempting to shore up financial
markets have been often unfavorable to capital markets. In response to fears
that capital-constraining losses resulting from subprime mortgage defaults and
other risky forms of collateralized debt would cause a financial meltdown, both
the Federal Reserve and Treasury Department moved to nationalize assets as
opposed to traditional tactics including expanding the money supply, lowering
reserve requirements, brokering more "shotgun wedding" mergers between
distressed firms, and markedly increasing discount window activity. To be sure,
government involvement in extremely distressed financial markets is occasionally
necessary to prevent systemic failure. However, it remains to be seen if recent
unprecedented federal actions will ultimately help the financial industry
recover or produce further unintended negative consequences.
Lastly, fear tied to the upcoming US presidential election is also real but
largely overwrought. No matter the victor, neither Senators Obama nor McCain are
likely to have a super-majority in Congress, making the possibility of
overreaching legislation in their tenure unlikely. And while many fear severe
negative consequences should capital gains and dividend taxes revert upwards in
2010, our analysis shows such tax changes rarely have the toxic economic effects
many expect.
2
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This year's volatility has undoubtedly caused discomfort, and we understand it's
often difficult to bear. Unemotional analysis shows conditions appear ripe for
stocks to advance in the period ahead. We strongly believe staying invested at
this juncture is the best course of action to capture expected upside while
bailing out now puts long-term objectives at the greatest risk.
FUND POSITIONING
The upcoming months will likely see lingering uncertainty, but we maintain a
positive outlook for the global equity markets. We believe staying fully
invested in equities should capture the inevitable market bounce.
For the twelve-month period ending August 31, 2008, the Fund's country over- and
underweight decisions had a mildly overall positive effect on the portfolio
relative to the benchmark. Our underweight to the United Kingdom and overweight
to Brazil helped returns, while our overweight to South Korea and underweight to
Canada detracted from returns. Our sector positioning this period took advantage
of heightened global demand for raw materials. Overall, our sector over- and
underweight decisions outperformed the benchmark. Our overweight to Energy and
Materials contributed positively to returns. In addition, our underweight to
Financials and to Consumer Discretionary also benefited the portfolio relative
to the benchmark. Our underweight to Consumer Staples, however, detracted from
returns.
Stock selection in aggregate detracted from the Fund's returns. Stock selection
within the United States, the United Kingdom, and Energy boosted returns, while
decisions within Information Technology, Health Care, Switzerland, and Japan
hurt returns.
CLOSING REMARKS
Though the Fund outperformed the MSCI World benchmark over the twelve-month
period ending August 31, 2008, markets were subject to increased volatility over
uncertainties surrounding the health of the US financial system. At some point,
uncertainty should subside and the better than widely thought of global economy
will likely push shares higher. As it does, the Fund will hopefully be
positioned to take advantage of the bounce.
Thank you for your continued interest and support.
Sincerely,
/s/ KENNETH L. FISHER
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Kenneth L. Fisher
Chairman and Chief Investment Officer
Fisher Investments
OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO
CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY
OR SELL ANY SECURITY.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
FUND HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE AND ARE NOT
RECOMMENDATIONS TO BUY OR SELL ANY SECURITY.
3
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MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE. THE FUND MAY
USE SHORT SALES OF SECURITIES, WHICH INVOLVE THE RISK THAT LOSSES MAY EXCEED THE
ORIGINAL AMOUNT INVESTED. THE FUND MAY ALSO USE OPTIONS AND FUTURES CONTRACTS,
WHICH HAVE THE RISKS OF UNLIMITED LOSSES OF THE UNDERLYING HOLDINGS DUE TO
UNANTICIPATED MARKET MOVEMENTS AND FAILURE TO CORRECTLY PREDICT THE DIRECTION OF
SECURITIES PRICES, INTEREST RATES AND CURRENCY EXCHANGE RATES. THE FUND MAY
INVEST IN FOREIGN SECURITIES WHICH INVOLVE GREATER VOLATILITY AND POLITICAL,
ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS. THE FUND MAY
INVEST IN DEBT SECURITIES WHICH TYPICALLY DECREASE IN VALUE WHEN I NT EREST
RATES RISE. THIS RISK IS GREATER FOR LONGER-TERM DEBT SECURITIES.
THE MSCI WORLD INDEX IS A BROAD-BASED UNMANAGED CAPITALIZATION-WEIGHTED STOCK
INDEX DESIGNED TO MEASURE GLOBAL DEVELOPED MARKET EQUITY PERFORMANCE. IT
CONSISTS OF 23 DEVELOPED MARKET COUNTRY INDICES. ONE CANNOT INVEST DIRECTLY IN
AN INDEX.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS.
FISHER INVESTMENTS IS THE ADVISER TO THE PURISIMA FUNDS. THE PURISIMA FUNDS ARE
DISTRIBUTED BY QUASAR DISTRIBUTORS, LLC. 10/08
4
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PERFORMANCE SUMMARY
FOR YEAR ENDED AUGUST 31, 2008
PURISIMA TOTAL RETURN FUND
GROWTH OF $10,000
PURISIMA TOTAL RETURN FUND CUMULATIVE TOTAL RETURN VERSUS MSCI WORLD INDEX
$10,000 INVESTED FROM 9/1/98 TO 8/31/08*
9/1998 10,000 10,000
2/1999 13,051 12,255
8/1999 14,005 13,305
2/2000 15,365 14,550
8/2000 15,775 15,051
2/2001 15,183 12,472
8/2001 15,566 11,230
2/2002 15,683 10,686
8/2002 12,963 9,299
2/2003 11,507 8,485
8/2003 14,288 10,314
2/2004 16,489 12,248
8/2004 15,533 11,925
2/2005 17,566 13,717
8/2005 17,895 14,084
2/2006 20,002 15,534
8/2006 20,497 16,305
2/2007 22,000 17,997
8/2007 23,702 19,072
2/2008 22,684 17,902
8/2008 20,918 16,770
PURISIMA TOTAL RETURN FUND MSCI WORLD INDEX*
ONE-YEAR ONE-YEAR
Average Annual Total Return(2)** -11.75% Average Annual Total Return(2)** -12.07%
FIVE-YEAR FIVE-YEAR
Average Annual Total Return(2)** 7.92% Average Annual Total Return(2)** 10.21%
TEN-YEAR TEN-YEAR
Cumulative Total Return(1)** 109.18% Cumulative Total Return(1)** 67.70%
Average Annual Total Return(2)** 7.66% Average Annual Total Return(2)** 5.31%
PLEASE NOTE PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. SHARE PRICE
AND RETURN WILL FLUCTUATE, AND INVESTORS MAY EXPERIENCE A GAIN OR LOSS WHEN THEY
SELL THEIR SHARES. TO OBTAIN A PROSPECTUS ON THE PURISIMA FUNDS PLEASE CALL
1-800-841-0199. THE PROSPECTUS CONTAINS MORE INFORMATION, INCLUDING THE
POLITICAL, ECONOMIC, CURRENCY RISKS AND POTENTIAL VOLATILITY OF FOREIGN
INVESTING. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
(1) Cumulative total return measures the change in value of an investment over
the periods indicated and reflects all fund fees and expenses.
(2) Average annual total return represents the average annual change in value
of an investment over the periods indicated and reflects all fund fees and
expenses. Average annual total return and cumulative total return for the
one-year period would be identical.
* The MSCI World Index is an unmanaged global stock index comprised of
various world stock markets, including the U.S. The total return of a
$10,000 investment includes all expenses.
** The total returns shown do not reflect the deduction of taxes a shareholder
would pay on fund distributions or redemption of fund shares. The total
return reflects the rate an investment would have earned (or lost) on an
investment in the Fund, assuming reinvestment of all dividends and
distributions.
5
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SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA TOTAL RETURN FUND
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Consumer Discretionary ..................................... 2.3%
Consumer Staples ........................................... 7.7%
Energy ..................................................... 21.0%
Financials ................................................. 14.5%
Health Care ................................................ 7.0%
Industrials ................................................ 13.0%
Information Technology ..................................... 12.1%
Materials .................................................. 12.6%
Telecommunication Services ................................. 6.3%
Utilities .................................................. 2.2%
Mutual Funds ............................................... 1.3%
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Total ...................................................... 100.0%
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(1) Percentage of Total Investments as of August 31, 2008.
IMPORTANT INFORMATION
The following disclosure provides important information regarding the Fund's
Expense Example. Please refer to this information when reviewing the Expense
Example for the Fund.
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other fund expenses. This Example is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period indicated and held for the entire period from March 1, 2008 to August 31,
2008, for the Total Return Fund.
ACTUAL EXPENSES
The information in the table under the heading "Actual Performance" provides
information about actual account values and actual expenses. You may use the
information in these columns 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 row entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
6
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HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The information in the table under the heading "Hypothetical Performance (5%
return before expenses)" provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratios and assumed
rates of return of 5% per year before expenses, which are not the Fund's actual
returns. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and 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.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads), or redemption fees. Therefore, the information under the
heading "Hypothetical Performance (5% return before expenses)" is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
ACTUAL HYPOTHETICAL PERFORMANCE
PURISIMA TOTAL RETURN FUND PERFORMANCE (5% RETURN BEFORE EXPENSES)
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Beginning Account Value (03/01/08) $ 1,000.00 $ 1,000.00
Ending Account Value (08/31/08) $ 922.10 $ 1,018.05
Expenses Paid During Period(1) $ 6.81 $ 7.15
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(1) Expenses are equal to the Fund's expense ratio for the six month period of
1.41% for the Total Return Fund multiplied by the average account value
over the period, multiplied by 184/366 (to reflect the one-half year
period).
7
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PURISIMA TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 2008
SHARES OR PRINCIPAL VALUE VALUE
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COMMON STOCKS: 98.8%
ARGENTINA: 0.1%
8,000 Tenaris SA - ADR $ 437,520
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AUSTRALIA: 1.8%
114,800 BHP Billiton Ltd. - ADR 8,094,548
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BRAZIL: 4.0%
10,800 Banco Bradesco SA 198,828
11,222 Companhia Energetica de Minas Gerais - ADR 242,171
15,300 Companhia Siderurgica Nacional SA - ADR 531,063
27,100 Companhia Vale do Rio Doce 644,167
205,900 Companhia Vale do Rio Doce - ADR 5,466,645
7,800 Empresa Brasileira de Aeronautica SA (Embraer) - ADR 264,810
25,800 Gerdau SA - ADR 482,718
188,000 Petroleo Brasileiro SA - ADR 9,915,120
40,200 Weg SA 441,460
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18,186,982
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CANADA: 2.6%
70,000 Canadian Natural Resources, Ltd. 5,953,500
80,500 EnCana Corporation 6,029,450
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11,982,950
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CHINA: 2.7%
1,600 Aluminum Corporation of China, Ltd. - ADR 35,360
12,000 Anhui Conch Cement Company, Ltd. 62,732
650 Baidu.com - ADR (a) 203,918
35,000 China Communications Construction Company, Ltd. 59,913
183,500 China Cosco Holdings Company, Ltd. 353,617
5,500 China Life Insurance Company, Ltd. - ADR 315,150
165,500 China Mobile Hong Kong, Ltd. - ADR 9,387,160
86,000 China Oilfield Services, Ltd. 115,701
4,750 China Petroleum & Chemical Corporation - ADR 462,128
4,550 CNOOC, Ltd. - ADR 708,708
96,000 Datang International Power Generation Company, Ltd. 63,962
458,000 Industrial & Commercial Bank Of China, Ltd. 317,477
90,000 Lenovo Group, Ltd. 61,118
180,000 Shanghai Electric Company, Ltd. 74,956
47,000 Weichai Power Company, Ltd. 216,795
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12,438,695
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8 The accompanying notes are an integral part of these financial statements.
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SHARES OR PRINCIPAL VALUE VALUE
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CZECH REPUBLIC - 0.1%
3,000 Cez AS $ 226,870
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DENMARK: 0.1%
1,900 Vestas Wind System AS(a) 258,628
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FINLAND: 1.7%
5,600 Konecranes Oyj 185,752
296,400 Nokia Oyj - ADR 7,460,388
-----------
7,646,140
-----------
FRANCE: 4.3%
1,700 ArcelorMittal 133,977
25,700 AXA 824,192
173,550 AXA - ADR 5,537,981
45,600 BNP Paribas SA 4,112,857
2,300 Dassault Systemes SA 139,423
2,500 Electricite de France 214,189
375 Eramet 206,639
5,350 Groupe Danone - ADR 74,969
1,100 Lafarge SA 133,328
2,550 Technip SA 210,056
105,608 Total SA - ADR 7,591,103
900 Vallourec SA 251,975
1,400 Veolia Environnement 75,274
2,600 Vivendi Universal SA 100,851
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19,606,814
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GERMANY: 6.1%
3,300 Adidas AG 193,893
150,000 BASF AG - ADR 8,698,815
1,000 DaimlerChrysler AG 58,535
9,600 E.ON AG 561,235
129,900 E.ON AG - ADR 7,607,762
2,500 Q-Cells AG (a) 251,856
4,600 SAP AG 257,790
90,900 Siemens AG - ADR 9,889,920
2,400 Stada Arzneimittel AG 131,260
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27,651,066
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HONG KONG: 1.0%
253,800 Cheung Kong Holdings, Ltd. - ADR 3,648,603
21,500 CLP Holdings, Ltd. 174,929
32,000 Hang Lung Properties, Ltd. 102,504
9,500 Hang Seng Bank, Ltd. 188,792
7,200 MTR Corporation, Ltd. - ADR 233,397
106,000 Sun Hung Kai Company, Ltd. 80,268
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4,428,493
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The accompanying notes are an integral part of these financial statements. 9
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SHARES OR PRINCIPAL VALUE VALUE
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INDIA: 0.2%
3,000 HDFC Bank, Ltd. - ADR $ 271,470
8,500 ICICI Bank, Ltd. - ADR 263,670
1,700 Reliance Industries, Ltd. - ADR 165,314
1,800 Reliance Industries, Ltd. - GDR 144A 173,340
18,300 Sterlite Industries India, Ltd. - ADR (a) 260,226
-----------
1,134,020
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INDONESIA: 0.4%
379,500 Bank Rakyat Tbk PT 242,631
881,900 Bumi Resources Tbk PT 530,104
560,000 International Nickel Indonesia Tbk PT 227,978
632,000 Medco Energi Internasional Tbk PT 338,448
11,500 Telekomunikasi Indonesia Tbk PT - ADR 400,430
-----------
1,739,591
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ISRAEL: 0.1%
6,200 Teva Pharmaceutical Industries, Ltd. - ADR 293,508
-----------
ITALY: 1.0%
4,200 ENI SpA 136,973
126,532 Intesa Sanpaolo SpA - ADR 4,104,837
4,500 Italcementi SpA 63,244
5,200 Saipem SpA 206,813
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4,511,867
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JAPAN: 6.4%
5,100 Aeon Company, Ltd. 59,143
20,000 Asics Corporation 177,716
3,100 Astellas Pharmaceutical, Incorporated 141,291
6,500 Bridgestone Corporation 111,096
5,400 Canon, Incorporated 245,624
14 Central Japan Railway Company 146,272
23,000 Daiwa Securities Group, Incorporated 180,280
27 East Japan Railway Company 215,851
1,700 Electric Power Development Company, Ltd. 62,798
3,200 Fanuc, Ltd. 241,709
8,500 Fujitsu, Ltd. - ADR 298,018
5,500 Hitachi Construction Machinery Company, Ltd. 130,898
30,000 Hitachi Metals, Ltd. 449,621
4,200 Hoya Corporation - ADR 86,883
1,700 Ibiden Company, Ltd. 50,770
68,000 IHI Corporation 117,473
27 Inpex Holdings, Incorporated 295,245
10,800 Isetan Mitsukoshi Holdings, Ltd. (a) 121,671
2,000 Japan Petroleum Exploration Company 133,425
15,000 JGC Corporation 290,145
5,000 Kao Corporation 142,430
29 KDDI Corporation 170,549
10 The accompanying notes are an integral part of these financial statements.
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SHARES OR PRINCIPAL VALUE VALUE
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JAPAN: 6.4% (CONTINUED)
18,900 Kobe Steel, Ltd. - ADR (a) $ 229,883
2,450 Komatsu, Ltd. - ADR (a) 209,049
7,100 Kyushu Electric Power Company, Incorporated 156,908
6,900 Makita Corporation 180,703
237,900 Matsushita Electric Industrial Company, Ltd. - ADR 4,881,708
9,100 Mitsubishi Corporation 253,370
11,000 Mitsubishi Estate Company, Ltd. 246,129
34,000 Mitsubishi Heavy Industries, Ltd. 164,337
454,200 Mitsubishi UFJ Financial Group,
Incorporated - ADR (a) 3,470,088
715 Mitsui & Company, Ltd. - ADR (a) 243,164
38,000 Mitsui Engineering & Shipbuilding Company, Ltd. 77,519
10,000 Mitsui Fudosan Company, Ltd. 211,808
18,000 Mitsui OSK Lines, Ltd. 216,347
66 Mizuho Financial Group, Incorporated 285,045
4,100 Modec, Incorporated 131,110
26,000 Nippon Mining Holdings, Incorporated 146,933
49,000 Nippon Steel Corporation 235,488
283,800 Nomura Holdings, Incorporated 3,820,510
4,000 Olympus Corporation 131,220
2,450 ORIX Corporation - ADR 150,528
4,600 Seven & I Holdings Company, Ltd. 135,263
5,400 Shin-Etsu Chemical Company, Ltd. 304,176
4,000 Shiseido Company, Ltd. 94,464
1,000 SMC Corporation 103,745
86,200 Sony Corporation 3,358,493
15,000 Sumitomo Metal Mining Company, Ltd. 193,246
525 Sumitomo Mitsui Financial Group,
Incorporated - ADR 3,232,254
48,400 Sumitomo Mitsui Financial Group,
Incorporated - ADR (a) 298,807
7,000 Sumitomo Realty & Development Company, Ltd. 141,833
10,200 Suzuki Motor Corporation 216,981
2,900 Terumo Corporation 162,821
7,500 Tokio Marine Holdings, Incorporated - ADR 257,775
2,900 Tokyo Electron, Ltd. 166,285
4,100 Toray Industries, Incorporated - ADR 182,852
26,000 Toshiba Corporation 146,694
7,000 Toyota Motor Corporation 317,115
469 Yahoo Japan Corporation 181,222
10,000 Yamato Holdings Company, Ltd. 118,631
-----------
28,923,412
-----------
MALAYSIA: 0.1%
81,900 Bumiputra - Commerce Holdings BHD 201,522
13,200 Digi.com BHD 89,465
The accompanying notes are an integral part of these financial statements. 11
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SHARES OR PRINCIPAL VALUE VALUE
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MALAYSIA: 0.1% (CONTINUED)
47,300 Genting BHD $ 81,540
335,600 MMC Corporation BHD 207,679
29,200 Telekom Malaysia BHD 30,805
29,200 TM International BHD (a) 53,779
-----------
664,790
-----------
MEXICO: 1.2%
91,900 America Movil SA de CV - ADR 4,721,822
207,475 Grupo Mexico SA de CV 342,000
17,700 Industrias Penoles SA de CV 291,782
6,000 Wal-Mart De Mexico SA de CV - ADR 218,713
-----------
5,574,317
-----------
NETHERLANDS: 2.3%
2,850 Heineken NV 133,962
122,827 ING Groep NV - ADR 3,826,061
240,400 Unilever NV - ADR 6,635,040
-----------
10,595,063
-----------
NORWAY: 0.1%
5,000 SeaDrill, Ltd. 137,154
4,397 Statoil ASA 135,823
-----------
272,977
-----------
PHILIPPINES: 0.1%
8,900 Philippine Long Distance Telephone - ADR 527,681
-----------
POLAND: 0.1%
1,900 Bank Pekao SA - GDR 151,648
900 Bre Bank SA (a) 140,675
2,800 KGHM Polska Miedz SA - GDR 188,160
-----------
480,483
-----------
PORTUGAL: 0.0%
16,700 Jeronimo Martins 142,833
-----------
RUSSIAN FEDERATION - 0.1%
3,000 LUKOIL - ADR 224,250
1,400 OAO Gazprom - ADR 54,110
9,900 OAO Gazprom Spon ADR 386,100
-----------
664,460
-----------
SINGAPORE - 0.1%
30,000 Capitaland, Ltd. 92,728
43,000 Cosco Corporation Singapore, Ltd. 69,793
13,000 DBS Group Holdings, Ltd. 165,866
73,000 Singapore Telecommunications, Ltd. 181,849
-----------
510,236
-----------
12 The accompanying notes are an integral part of these financial statements.
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SHARES OR PRINCIPAL VALUE VALUE
- --------------------------------------------------------------------------------
SOUTH AFRICA: 0.2%
2,550 Anglo Platinum, Ltd - ADR $ 323,177
15,300 MTN Group Ltd 235,816
5,500 Sasol, Ltd. - ADR 302,445
-----------
861,438
-----------
SOUTH KOREA: 1.0%
10,700 Daewoo Securities Company, Ltd. 162,136
3,900 Daewoo Shipbuilding & Marine Engineering
Company, Ltd. 125,177
3,500 Daewoo Shipbuilding & Marine Engineering
Company, Ltd. - GDR 224,700
1,200 Daewoo Shipbuilding & Marine Engineering
Company, Ltd. - Sponsored GDR 144A (a) 77,032
2,800 Dongkuk Steel Mill Company, Ltd. 100,799
4,500 Doosan Infracore Company, Ltd. 87,818
1,050 GS Engineering & Construction Corporation 81,963
10,100 Hynix Semiconductor - GDR 144A (a) 178,952
1,825 Hyundai Heavy Industries Company, Ltd. 401,403
5,200 Kookmin Bank - ADR 284,960
2,200 Korea Electric Power Corporation 66,875
4,200 LG Chemical, Ltd. - GDR 144A 183,343
800 LG Electronics, Incorporated 74,571
350 NHN Corporation (a) 48,214
4,625 POSCO - ADR 495,338
1,200 Samsung Electronic Company, Ltd. 282,000
500 Samsung Electronics Company, Ltd. - GDR 144A 118,468
1,700 Samsung Fire & Marine Insurance Company 310,680
3,500 Samsung Securities Company, Ltd. 191,891
3,100 Shinhan Financial Group Company, Ltd. - ADR 279,465
125 Shinsegae Company, Ltd. 62,448
4,600 SK Energy Company, Ltd. 363,302
2,400 Woori Finance Holdings Company, Ltd. - ADR 95,352
11,300 Woori Investment & Securities Company, Ltd. 198,209
-----------
4,495,096
-----------
SPAIN: 2.6%
3,300 Banco Bilbao Vizcaya Argentaria SA 55,965
445,675 Banco Santander Central Hispano SA - ADR 7,567,562
59,700 Telefonica SA - ADR 4,421,979
-----------
12,045,506
-----------
SWEDEN: 0.0%
9,000 Volvo AB-B Shares 102,547
-----------
SWITZERLAND: 7.4%
321,400 Abb, Ltd. - ADR 7,896,798
166,800 Credit Suisse Group - ADR 7,736,184
1,800 Julius Baer Holding AG 110,012
The accompanying notes are an integral part of these financial statements. 13
- --------------------------------------------------------------------------------
SHARES OR PRINCIPAL VALUE VALUE
- --------------------------------------------------------------------------------
SWITZERLAND: 7.4% (CONTINUED)
158,050 Nestle SA $ 6,975,644
1,900 Novartis AG - ADR 105,716
49,900 Roche Holding AG 8,428,824
108,833 UBS AG 2,382,344
-----------
33,635,522
-----------
TAIWAN: 0.3%
65,217 Advanced Semiconductor Engineering,
Incorporated - ADR 232,825
10,117 Asustek Computer, Incorporated - GDR 118,371
36,740 Hon Hai Precision - GDR 365,563
35,997 Siliconware Precision Industries, Ltd. - ADR 247,662
58,091 Taiwan Semiconductor Manufacturing
Company, Ltd. - ADR 564,064
-----------
1,528,485
-----------
TURKEY: 0.0%
10,000 Turkcell Iletisim Hizmet AS - ADR 165,500
-----------
UNITED KINGDOM: 4.0%
13,003 Anglo American Plc 694,960
140,000 Anglo American Plc - ADR 3,724,000
1,700 AstraZeneca Plc - ADR 82,790
14,500 BG Group Plc 322,199
88,250 GlaxoSmithKline Plc - ADR 4,145,102
9,150 Man Group Plc 94,904
21,625 Rio Tinto Plc - ADR 8,211,445
5,100 Royal Dutch Shell Plc A Shares 178,258
8,700 Schroders Plc 160,967
7,200 Standard Chartered Plc 195,687
39,300 Vodafone Group Plc 101,046
4,300 Vodafone Group Plc - ADR 109,865
2,800 Xstrata Plc 156,488
-----------
18,177,711
-----------
UNITED STATES: 46.6%
5,000 AGCO Corporation (a) 308,150
7,925 Ameriprise Financial, Incorporated 356,229
148,550 Anadarko Petroleum Corporation 9,169,991
4,800 Apache Corporation 549,024
248,100 AT&T, Incorporated 7,936,719
50 Berkshire Hathaway, Incorporated (a) 195,100
7,900 Biogen Idec, Incorporated (a) 402,347
113,500 Caterpillar, Incorporated 8,027,855
11,800 Chesapeake Energy Corporation 571,120
394,000 Cisco Systems, Incorporated (a) 9,475,700
154,000 The Coca-Cola Company 8,018,780
103,900 ConocoPhillips 8,572,789
14 The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
SHARES OR PRINCIPAL VALUE VALUE
- --------------------------------------------------------------------------------
UNITED STATES: 46.6% (CONTINUED)
5,000 Deere & Company $ 352,850
68,000 Devon Energy Corporation 6,939,400
352,550 EMC Corporation (a) 5,386,964
5,650 Emerson Electric Company 264,420
79,700 Exxon Mobil Corporation 6,376,797
5,700 FirstEnergy Corporation 414,048
105,300 Freeport-McMoRan Copper & Gold, Incorporated 9,405,396
271,150 General Electric Company 7,619,315
5,400 Genzyme Corporation (a) 422,820
46,325 Goldman Sachs Group, Incorporated 7,595,910
131,900 Hewlett-Packard Company 6,188,748
89,900 Honeywell International, Incorporated 4,510,283
310,700 Intel Corporation 7,105,709
11,100 Invitrogen Corporation (a) 471,306
4,900 Jacobs Engineering Group, Incorporated (a) 361,718
16,150 Janus Capital Group, Incorporated 435,566
94,800 Johnson & Johnson 6,676,764
63,400 Lockheed Martin Corporation 7,382,296
122,800 Merck & Company, Incorporated 4,380,276
278,500 Microsoft Corporation 7,600,265
101,500 Nucor Corporation 5,328,750
131,900 Occidental Petroleum Corporation 10,467,584
5,400 Oceaneering International, Incorporated (a) 337,014
336,400 Oracle Corporation (a) 7,377,252
297,600 Pfizer, Incorporated 5,687,136
5,900 PNC Financial Services Group 424,505
89,225 Procter & Gamble Company 6,225,228
10,400 Qualcomm, Incorporated 547,560
119,500 Schlumberger Ltd. 11,259,290
6,250 Sigma-Aldrich Corporation 354,750
30,300 Southern Copper Corporation 773,559
5,700 Techne Corporation (a) 439,869
6,550 Terex Corporation (a) 329,400
8,750 Tiffany & Company 386,488
44,806 Transocean, Incorporated (a) 5,699,323
3,900 United States Steel Corporation 518,973
90,600 United Technologies Corporation 5,942,454
13,225 Verizon Communications, Incorporated 464,462
100,900 Wal-Mart Stores, Incorporated 5,960,163
6,875 XTO Energy, Incorporated 346,569
-----------
212,344,984
-----------
TOTAL COMMON STOCKS
(Cost $401,001,768) 450,350,733
-----------
The accompanying notes are an integral part of these financial statements. 15
- --------------------------------------------------------------------------------
SHARES OR PRINCIPAL VALUE VALUE
- --------------------------------------------------------------------------------
PREFERRED STOCKS: 0.2%
BRAZIL: 0.2%
13,250 Banco Itau Holding Financeira SA $ 251,750
3,100 Companhia de Bebidas das Americas
(AmBev) - ADR 191,859
21,000 Lojas Americanas SA 133,086
2,000 Uniao de Bancos Brasileiros SA 239,120
------------
815,815
------------
GERMANY: 0.0%
2,900 Henkel AG & Company KGAA 113,849
------------
TOTAL PREFERRED STOCKS
(Cost $1,104,543) 929,664
------------
MUTUAL FUNDS: 1.3%
5,825,442 SEI Daily Income Trust Government Fund 5,825,442
------------
TOTAL MUTUAL FUNDS
(Cost $5,825,442) 5,825,442
------------
TOTAL INVESTMENTS
(Cost $407,931,753): 100.3% 457,105,839
Liabilities in Excess of Other Assets: (0.3)% (1,493,613)
------------
TOTAL NET ASSETS: 100.0% $455,612,226
============
- --------
ADR - American depositary receipt.
GDR - Global Depository Receipt.
(a) Non-income producing security.
INDUSTRY % OF NET ASSETS
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels 17.0%
Metals & Mining 10.5%
Pharmaceuticals 6.6%
Commercial Banks 5.9%
Capital Markets 5.2%
Energy Equipment & Services 4.1%
Aerospace & Defense 4.0%
Industrial Conglomerates 3.9%
Communications Equipment 3.8%
Wireless Telecommunication Services 3.4%
Software 3.4%
16 The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
INDUSTRY (CONTINUED % OF NET ASSETS
- --------------------------------------------------------------------------------
Food Products 3.0%
Diversified Telecommunication Services 2.9%
Machinery 2.7%
Computers & Peripherals 2.7%
Chemicals 2.1%
Electric Utilities 2.1%
Semiconductors & Semiconductor Equipment 2.0%
Electrical Equipment 1.9%
Household Durables 1.9%
Beverages 1.8%
Insurance 1.6%
Food & Staples Retailing 1.4%
Household Products 1.4%
Real Estate Management & Development 1.0%
Diversified Financial Services 0.9%
Life Sciences Tools & Services 0.2%
Biotechnology 0.2%
Construction & Engineering 0.2%
Road & Rail 0.1%
Automobiles 0.1%
Marine 0.1%
Electronic Equipment & Instruments 0.1%
Trading Companies & Distributors 0.1%
Internet Software & Services 0.1%
Specialty Retail 0.1%
Textiles, Apparel & Luxury Goods 0.1%
Health Care Equipment & Supplies 0.1%
Construction Materials 0.1%
Multiline Retail 0.1%
Office Electronics 0.1%
Consumer Finance 0.0%
Independent Power Producers & Energy Traders 0.0%
Air Freight & Logistics 0.0%
Auto Components 0.0%
Media 0.0%
Personal Products 0.0%
Hotels Restaurants & Leisure 0.0%
Multi-Utilities 0.0%
------
TOTAL INVESTMENT IN SECURITIES 99.0%
Cash Equivalent 1.3%
Liabilities in Excess of Other Assets (0.3)%
------
TOTAL NET ASSETS 100.0%
=====
The accompanying notes are an integral part of these financial statements. 17
- --------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2008
ASSETS
Investments in securities, at cost $ 407,931,753
=============
Investments in securities, at value $ 457,105,839
Receivables:
Dividends and interest 678,052
Fund shares sold 671,181
Investments sold 281,286
Other assets 34,081
-------------
Total Assets 458,770,439
-------------
LIABILITIES
Payables for fund shares redeemed 311,383
Payables for investments purchased 2,008,674
Accrued advisory fees (Note 3) 384,409
Accrued distribution fees (Note 4) 264,124
Accrued fund administration, fund accounting,
transfer agent and custody fees 123,425
Other accrued expenses and liabilities 66,198
-------------
Total Liabilities 3,158,213
-------------
NET ASSETS $ 455,612,226
=============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 22,500,371
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 20.25
=============
COMPONENTS OF NET ASSETS
Paid-in capital $ 398,387,062
Undistributed net investment income 2,083,758
Accumulated net realized gain on investments 5,969,937
Net unrealized appreciation on investments 49,174,086
Net unrealized depreciation on foreign currency (2,617)
-------------
Net assets $ 455,612,226
=============
18 The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2008
INVESTMENT INCOME
Income
Dividends (net of foreign taxes withheld of $1,040,357) $ 9,528,117
Interest income 169,800
------------
Total income 9,697,917
------------
Expenses
Advisory fees (Note 3) 4,788,244
Distribution fees (Note 4) 895,404
Administration fees (Note 3) 339,381
Transfer agent fees 219,710
Fund accounting fees 147,194
Custody fees 146,235
Insurance expense 86,642
Reports to shareholders 37,006
Registration fees 33,810
Audit fees 20,961
Legal fees 22,375
Trustee fees 23,810
Miscellaneous 12,938
------------
Total operating expenses 6,773,710
Interest expense 337
------------
Total expenses 6,774,047
------------
NET INVESTMENT INCOME 2,923,870
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 22,416,081
Net realized loss on foreign currency (141,008)
Change in net unrealized depreciation on investments (84,190,652)
Change in net unrealized depreciation on foreign currency (2,617)
------------
Net loss on investments (61,918,196)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(58,994,326)
============
The accompanying notes are an integral part of these financial statements. 19
- --------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
AUGUST 31, 2008 AUGUST 31, 2007
--------------- ---------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment income $ 2,923,870 $ 1,589,923
Net realized gain (loss) on investments
and foreign currency 22,275,073 22,935,435
Change in net unrealized depreciation on
investments (84,190,652) 36,347,412
Change in net unrealized depreciation on
foreign currency (2,617) --
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (58,994,326) 60,872,770
------------- -------------
DISTRIBUTION TO SHAREHOLDERS
From net investment income (1,298,261) (1,378,881)
From net realized gain on investments (34,522,389) --
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (35,820,650) (1,378,881)
------------- -------------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from
net change in outstanding shares (a) 84,703,220 18,931,734
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (10,111,756) 78,425,623
------------- -------------
NET ASSETS
Beginning of year 465,723,982 387,298,359
------------- -------------
END OF YEAR $ 455,612,226 $ 465,723,982
============= =============
Undistributed net investment income (loss) $ 2,083,758 $ (1,276,122)
============= =============
(a) A summary of capital share transactions is as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2008 AUGUST 31, 2007
------------------------- ------------------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
Shares sold 5,193,681 $ 118,169,093 3,607,216 $ 85,489,850
Shares issued on reinvestment
of distributions 1,428,514 $ 33,170,091 56,352 $ 1,288,215
Shares redeemed (2,906,534) (66,635,964) (2,884,946) (67,846,331)
---------- ------------- --------- -------------
Net increase (decrease) 3,715,661 $ 84,703,220 778,622 $ 18,931,734
========== ============= ========= =============
20 The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH YEAR.
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Annual Report.
YEAR ENDED AUGUST 31,
----------------------------------------------------------
2008 2007 2006 2005 2004
---------- ---------- ---------- ---------- ----------
Net asset value,
beginning of year $ 24.79 $ 21.51 $ 19.03 $ 16.58 $ 15.31
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.15 0.09 0.04 0.10 0.07
Net realized and unrealized
gain (loss) on investments (2.82) 3.27 2.72 2.42 1.27
---------- ---------- ---------- ---------- ----------
Total from investment (2.67) 3.36 2.76 2.52 1.34
---------- ---------- ---------- ---------- ----------
operations
LESS DISTRIBUTIONS:
From net investment income (0.07) (0.08) (0.28) (0.07) (0.07)
From net realized gain (1.80) -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions (1.87) (0.08) (0.28) (0.07) (0.07)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 20.25 $ 24.79 $ 21.51 $ 19.03 $ 16.58
========== ========== ========== ========== ==========
Total return (11.75%) 15.63% 14.54% 15.20% 8.72%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $ 455.6 $ 465.7 $ 387.3 $ 325.4 $ 298.6
(millions)
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed or recouped 1.41% 1.39% 1.49% 1.46% 1.49%
After fees waived and expenses
absorbed or recouped 1.41% 1.39% 1.49% 1.49% 1.50%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS # 0.61% 0.37% 0.21% 0.52% 0.42%
Portfolio turnover rate 62.96% 16.38% 43.47% 16.68% 19.50%
# Net of fees waived.
The accompanying notes are an integral part of these financial statements. 21
- --------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2008
NOTE 1 - ORGANIZATION
The Purisima Funds (the "Trust") was organized as a Delaware business trust on
June 27, 1996 and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act") as an open-end management investment company issuing
its shares in series. Each series represents a distinct portfolio with its own
investment objectives and policies. The accompanying financial statements
include the Total Return Fund (the "Fund"), which commenced operations on
October 28, 1996, one of the two portfolios comprising the Trust. Fisher Asset
Management, LLC (doing business as Fisher Investments) (the "Adviser") serves as
the investment adviser to the Funds.
The investment objective of the Total Return Fund is as follows:
The Fund seeks a high total return. The Fund seeks to achieve its objective by
investing in a portfolio allocated between domestic and foreign common stocks,
fixed-income securities, money market instruments and other equity-type
securities. The Fund's investments in different types of securities may vary
significantly.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with accounting principles generally accepted in the
United States of America.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last sales price on the business
day as of which such value is being determined. If on a particular day,
an exchange-listed security does not trade, then the mean between the
bid and asked prices will be used. Foreign exchange traded equity
securities are valued based upon the price on the exchange or market on
which they trade as of the close of business of such market or exchange
immediately preceding the time the Fund's net asset value is determined.
Investments in securities traded on the NASDAQ Global Market, the NASDAQ
Global Select Market and the NASDAQ Capital Market will be valued at the
NASDAQ Official Closing Price ("NOCP"), which may not necessarily
represent the last sale price. Securities traded on an exchange or
NASDAQ for which there have been no sales and other over-the-counter
securities are valued at the closing price. Securities for which
quotations are not readily available are valued at their respective fair
values as determined in good faith by the Board of Trustees or their
designee, taking into consideration: (I) fundamental analytical data
relating to the investment; (II) the nature and duration of restrictions
on disposition of the securities; and (III) an evaluation of the forces
which influence the market in which these securities are purchased and
sold. Debt securities with remaining maturities of 60 days or less are
valued at amortized cost which, when combined with accrued interest,
approximates market value.
22
- --------------------------------------------------------------------------------
B. FOREIGN CURRENCY TRANSLATION. The Fund's records are maintained in U.S.
dollars. The value of securities, currencies and other assets and
liabilities denominated in currencies other than U.S. dollars are
translated into U.S. dollars based upon foreign exchange rates
prevailing at the end of the reporting period. Purchases and sales of
investment securities, income and expenses are translated on the
respective dates of such transactions.
The Fund does not isolate that portion of their net realized and
unrealized gains and losses on investments resulting from changes in
foreign exchange rates from the impact arising from changes in market
prices. Such fluctuations are included with net realized and unrealized
gain or loss from investments and foreign currency.
Net realized foreign currency transaction gains and losses arise from
sales of foreign currencies, currency gains or losses realized between
the trade and settlement dates on securities transactions, and the
differences between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency translation gains and losses arise from changes in the
value of assets and liabilities, other than investments in securities,
resulting from changes in the exchange rates.
C. FEDERAL INCOME AND EXCISE TAXES. The Fund intends to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its income
to its shareholders. Therefore, no federal income or excise tax
provision is required.
The Fund may be subject to foreign taxes on income, gains on investments
or currency repatriation, a portion of which may be recoverable. The
Fund will accrue such taxes and recoveries as applicable based upon its
current interpretations of the tax rules and regulation that exist in
the markets in which it invests.
On July 13, 2006, the Financial Accounting Standards Board (FASB)
released FASB Interpretation No. 48 "Accounting for Uncertainty in
Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax
positions should be recognized, measured, presented and disclosed in the
financial statements. FIN 48 requires the evaluation of tax positions
taken or expected to be taken in the course of preparing the Fund's tax
returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not
threshold would be recorded as a tax benefit or expense in the current
year. Adoption of FIN 48 is required as of the date of the last Net
Asset Value ("NAV") calculation in the first required financial
statement reporting period for fiscal years beginning after December 15,
2006 and is to be applied to all open tax years as of the effective
date. The Fund adopted FIN 48 effective February 29, 2008. Management of
the Fund has reviewed the tax positions for the fiscal years ending
August 31, 2005 through 2008 and has determined that the adoption of FIN
48 did not have a material impact on the Fund's financial statements.
23
- --------------------------------------------------------------------------------
D. SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS. Security
transactions are accounted for on trade date. Dividend income and
distributions to shareholders are recorded on the ex-dividend date and
interest income is recognized on the accrual basis. Realized gains and
losses are evaluated on the bases of identified costs.
E. USE OF ESTIMATES. The presentation 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 revenue and expenses
during the reporting period. Actual results could differ from those
estimates and assumptions.
F. CONCENTRATION OF RISK. Investments in securities of non-U.S. issues in
certain countries involve special investment risks. These risks may
include but are not limited to, investment restrictions, adverse
political, social and economic developments, government involvement in
the private sector, limited and less reliable investor information, lack
of liquidity, certain local tax law considerations, and limited
regulation of the securities markets.
G. SECURITIES SOLD SHORT. To the extent the Fund engages in selling
securities short, it is obligated to replace a security borrowed by
purchasing the same security at the current market value. The Fund would
incur a loss if the 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 would realize a gain if the price of the security
declines between those dates.
The Fund is required to establish a margin account with the broker
lending the security sold short. While the short sale is outstanding,
the broker retains the proceeds of the short sale and the Fund must also
maintain a deposit with the broker consisting of cash having a value
equal to a specified percentage of the value of the securities sold
short.
H. RECLASSIFICATION OF CAPITAL ACCOUNTS. Accounting principles generally
accepted in the United States of America require that certain components
of net assets relating to permanent difference be reclassified between
financial and tax reporting. These reclassifications have no effect on
net assets or net asset value per share. For the year ended August 31,
2008, the Total Return Fund increased accumulated undistributed net
investment income by $1,734,271, decreased accumulated net realized gain
on investments by $1,796,718, and increased paid-in capital by $62,447.
I. INDEMNIFICATION OBLIGATIONS. Under the Fund's organizational documents,
its current and former officers and trustees are indemnified against
certain liabilities arising out of the performance of their duties to
the Fund. In addition, in the normal course of business, the Fund enters
into contracts that contain a variety of representations and warranties
that provide general indemnifications. The Fund's maximum exposure under
these arrangements is unknown as this would involve future claims that
may be made against the Fund that have not yet occurred or that would be
covered by other parties.
24
- --------------------------------------------------------------------------------
J. LINE OF CREDIT. The Fund has a Loan Agreement with U.S. Bank N.A. Under
the terms of the Loan Agreement, the Fund's borrowings cannot exceed the
lesser of $8,000,000 or 33 1/3% of the net assets of the Fund. The
interest rate paid on the Loan equals the prime rate per annum, payable
monthly.
Borrowing activity under the Loan Agreement for the year ended August
31, 2008, was as follows:
MAXIMUM AMOUNT AVERAGE AVERAGE
AMOUNT INTEREST OUTSTANDING AT AMOUNT INTEREST
OUTSTANDING EXPENSE AUGUST 31, 2008 OUTSTANDING RATE
- ----------- ------- --------------- ----------- ----
$ 454,000 $ 337 $ 0 $ 4,653 6.750%
NOTE 3 - COMMITMENTS, OTHER RELATED PARTY TRANSACTIONS AND
OTHER SERVICE PROVIDERS
The Fund has an Investment Management Agreement with the Adviser to provide
investment advisory services to the Fund. The Adviser furnishes all investment
advice, office space, facilities, and most of the personnel needed by the Fund.
As compensation for its services, the Adviser is entitled to a monthly fee at
the annual rate of 1.00% of the Fund's average daily net assets.
The Fund is responsible for its own operating expenses. The Adviser has agreed
to limit the Fund's total expenses (exclusive of brokerage, interest, taxes,
dividends on securities sold short and extraordinary expenses) to not more than
1.50% of the average daily net assets.
Any fee withheld or voluntarily reduced and/or any Fund expense absorbed by the
Adviser pursuant to an agreed upon expense cap shall be reimbursed by the Fund
to the Adviser, if so requested by the Adviser, anytime before the end of the
third fiscal year following the year to which the fee reduction, waiver, or
expense absorption relates, provided the aggregate amount of the Fund's current
operating expenses for such fiscal year does not exceed the applicable
limitation on Fund expenses. Any such reimbursement is also contingent upon
Board of Trustees review and approval prior to the time the reimbursement is
initiated. The Fund must pay its current ordinary operating expenses before the
Adviser is entitled to any reimbursement of fees and/or expenses. For the year
ended August 31, 2008, the Adviser had previously recouped all fees previously
waived and expenses absorbed from the Total Return Fund.
U.S. Bank, N.A. serves as the Fund's Custodian. U.S. Bancorp Fund Services, LLC
("USBFS"), an affiliate of U.S. Bank, N.A., serves as the Administrator, Fund
Accountant and Transfer Agent. Certain officers of the Trust, including the
Trust's Treasurer, are employees of the Administrator. In its capacity as the
Fund's Administrator, USBFS provides general fund management including corporate
secretarial services, coordinates the preparation of materials for the Board of
Trustees, assists with the annual audit of the Fund's financial statements,
monitors the Fund's compliance with federal and state regulations as well as
investment restrictions, coordinates the payment of Fund expenses and monitors
expense accruals, prepares financial statements and non-investment related
statistical data and makes required tax reporting calculations. During the year
ended August 31, 2008, Purisima Total Return Fund paid USBFS $339,381 for
services rendered in its capacity as the Trust's Administrator.
25
- --------------------------------------------------------------------------------
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as
principal underwriter of the Fund and acts as the Fund's distributor in a
continuous public offering of the Fund's shares.
NOTE 4 - SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Total Return Fund is
authorized to pay expenses incurred for the purpose of financing activities,
including the employment of other dealers, intended to result in the sale of
shares of the Fund. The fee accrues at an annual rate not to exceed 0.25% of the
Fund's average daily net assets. For the year ended August 31, 2008, the Fund
incurred $895,404 in distribution fees. Quasar Distributors, LLC, an affiliate
of the Administrator, serves as distributor of the Fund pursuant to a
Distribution Agreement with the Trust.
NOTE 5 - INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of securities, excluding U.S.
Government securities and short-term investments, for the year ended August 31,
2008 were as follows:
FUND PURCHASES SALES
---- --------- -----
Total Return Fund $350,038,111 $298,801,980
NOTE 6 - FEDERAL INCOME TAX MATTERS
The difference between the book and tax basis components of the distributable
earnings relate principally to the timing of recognition of income and gains for
federal income tax purposes. These differences are primarily attributable to the
tax deferral of losses on wash sales, the realization for tax purposes of
unrealized gains on passive foreign investment companies and return of capital
distributions and income adjustments recognized for tax purposes on real estate
investment trusts. Short-term gains distributions reported in the Statements of
Changes of Net Assets, if any, are reported as ordinary income for federal tax
purposes.
As of August 31, 2008, the components of distributable earnings on a tax basis
were as follows:
TOTAL RETURN
-------------
Cost of investments for tax purposes $ 408,276,580
=============
Gross tax unrealized appreciation $ 88,671,810
Gross tax unrealized depreciation (39,842,551)
-------------
Net tax unrealized appreciation 48,829,259
-------------
Undistributed ordinary income 2,197,327
Undistributed Long Term Capital Gains 6,295,144
-------------
Total distributable earnings 8,492,471
-------------
Other accumulated earnings (96,566)
-------------
Total accumulated earnings $ 57,225,164
=============
26
- --------------------------------------------------------------------------------
Under current tax law, capital losses realized after October 31 may be deferred
and treated as occurring on the first day of the following fiscal year. At
August 31, 2008, the Fund deferred, on a tax basis, $93,949 of Post-October
losses.
The tax composition of dividends are as follows:
ORDINARY LONG TERM
INCOME CAPITAL GAINS
------ -------------
Total Return Fund
8/31/2008 $ 1,298,261 $ 34,522,389
8/31/2007 $ 1,378,881 --
The Fund designated as long-term capital gain dividend, pursuant to Internal
Revenue Code Section 852(b)(3), the amount necessary to reduce the earnings and
profits of the Fund related to net capital gain to zero for the tax year ended
August 31, 2008.
NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS
In September, 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value
Measurements", which will expand the disclosure requirements for fair value
measurements. The new standard defines fair value as the price that would be
received upon the sale of an asset or transfer of a liability in an orderly
transaction between market participants. As a basis for considering market
participant assumptions in fair value measurements, this Statement also
establishes a fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained from sources
independent of the reporting entity (observable inputs) and (2) the reporting
entity's own assumptions about marketing participant assumptions developed based
on the best information available in the circumstances (unobservable inputs).
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and earlier adoption is permitted.
(Management is currently evaluating the impact of adoption of SFAS No. 157 on
its financial statements.)
In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures
about Derivative Instruments and Hedging Activities" ("SFAS 161") was issued and
is effective for fiscal years beginning after November 15, 2008. SFAS 161 is
intended to improve financial reporting for derivative instruments by requiring
enhanced disclosure that enables investors to understand how and why an entity
uses derivatives, how derivatives are accounted for, and how derivative
instruments affect an entity's results of operation and financial position.
Management is currently evaluating the implications of SFAS 161. The impact on
the Fund's financial statement disclosures, if any, is currently being assessed.
27
This page is intentionally left blank.
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
THE PURISIMA FUNDS
WOODSIDE, CALIFORNIA
We have audited the accompanying statement of assets and liabilities of the
Purisima Total Return Fund, a series of The Purisima Funds (the "Trust"),
including the schedule of investments as of August 31, 2008, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Trust
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Trust's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of August 31, 2008, by correspondence with the custodian
and brokers or by other auditing procedures where replies from brokers were not
received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly in all material respects, the financial position of the
Purisima Total Return Fund as of August 31, 2008, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
October 29, 2008
29
- --------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
OTHER INFORMATION
PROXY VOTING PROCEDURES (UNAUDITED)
The Adviser votes proxies relating to portfolio securities in accordance with
procedures that have been approved by the Trust's Board of Trustees. You may
obtain a description of these procedures, free of charge, by calling toll-free
1-800-841-0199. This information is also available through the Securities and
Exchange Commission's website at http://www.sec.gov. Information regarding how
the Fund voted proxies relating to the portfolio securities during the most
recent 12-month period ended June 30 is available without charge, upon request,
by calling toll-free 1-800-841-0199. This information is also available through
the Securities and Exchange Commission's website at http://www.sec.gov.
FORM N-Q DISCLOSURE (UNAUDITED)
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third fiscal quarters on Form N-Q. The Fund's Form N-Q is available
without charge, upon request, by calling 1-800-841-0199. Furthermore, you can
obtain the Form N-Q on the SEC's website at www.sec.gov.
TAX NOTICE (UNAUDITED)
For the fiscal year ended August 31, 2008, certain dividends paid by the Fund
may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth
Tax Relief Reconciliation Act of 2003. The Fund designates 100% of dividends
declared from ordinary income as qualified dividend income.
30
- --------------------------------------------------------------------------------
(UNAUDITED)
The percentage of dividend income distributed for the year ended August 31, 2008
designated as qualified dividends received deduction available to corporate
shareholders is 94.4% for the Total Return Fund. For the year ended August 31,
2008, the Total Return Fund earned foreign source income and paid foreign taxes,
which they intend to pass through to their shareholders pursuant to Section 853
of the Internal Revenue Code as follows:
GROSS DIVIDENDS TAXES WITHHELD
--------------- --------------
Australia 110,104.00 --
Brazil 195,724.55 20,156.55
Canada 160,744.97 24,111.75
Chile 865.02 --
China 18,647.54 859.08
Czech 7,450.32 1,117.55
Denmark 6,767.93 1,015.19
France 937,842.27 208,952.56
Finland 223,827.58 33,574.14
Germany 1,027,733.78 212,834.12
Hong Kong 234,648.03 5,364.00
India 25,451.63 3,112.34
Indonesia 62,733.70 9,410.05
Italy 462,420.02 123,579.26
Israel 2,777.36 458.27
Japan 748,798.31 83,928.90
Luxembourg 6,717.50 95.63
Malaysia 27,533.05 3,418.97
Mexico 114,372.61 --
Netherlands 460,708.16 71,288.32
Netherlands Antellies 96,197.50 --
Norway 23,418.60 3,512.79
Philippines 40,362.58 6,276.90
Poland 31,440.20 4,829.10
Portugal 2,517.90 377.69
Republic of Korea 92,517.36 14,447.41
Singapore 17,613.87 --
South Africa 13,359.83 86.00
Spain 629,846.82 112,860.28
Sweden 12,017.93 3,047.20
Switzerland 451,746.76 68,285.97
Taiwan 77,321.03 18,668.74
Turkey 5,898.81 --
31
- --------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
TRUSTEES AND OFFICER INFORMATION (UNAUDITED)
The Board of Trustees is responsible for the overall management of the Trust's
business. The Board of Trustees approves all significant agreements between the
Trust and persons or companies furnishing services to it, including all
agreements with the Adviser, Administrator, Custodian and Transfer Agent. The
Board of Trustees delegates the day-to-day operations of the Trust to its
Officers, subject to the Fund's investment objective and policies and to general
supervision by the Board of Trustees. The Statement of Additional Information
includes additional information about the Trust's Trustees and is available,
without charge, by calling 1-800-841-0199.
The Trustees and Officers of the Trust, their business addresses and principal
occupations during the past five years are:
Name, Address, Position(s) Held Date
of Birth with Trust Year Elected(1)
Kenneth L. Fisher* (born 1950) President and Trustee 1996
13100 Skyline Blvd.
Woodside, CA 94062
- --------------------------------------------------------------------------------
Pierson E. Clair III (born 1948) Trustee 1996
13100 Skyline Blvd.
Woodside, CA 94062
- --------------------------------------------------------------------------------
Scott LeFevre (born 1957) Trustee 2001
13100 Skyline Blvd.
Woodside, CA 94062
- --------------------------------------------------------------------------------
Alfred D. McKelvy, Jr. (born 1948) Trustee 2003
13100 Skyline Blvd.
Woodside, CA 94062:
- --------------------------------------------------------------------------------
Bryan F. Morse (born 1952) Trustee 1996
13100 Skyline Blvd.
Woodside, CA 94062
- --------------------------------------------------------------------------------
Grover T. Wickersham (born 1949) Trustee 1996
13100 Skyline Blvd.
Woodside, CA 94062
- --------------------------------------------------------------------------------
32
- --------------------------------------------------------------------------------
Number of
Portfolios in
Fund Complex Other
Principal Occupation(s) Overseen by Directorships
During Past Five Years Director Held
- --------------------------------------------------------------------------------
Chief Executive Officer and majority 2 None
shareholder of Fisher Investment, Inc.,
the sole shareholder of the Adviser,
and has served in such capacities since
the incorporation of the Adviser in 1986.
Prior thereto, he was the founder of Fisher
Investments, a sole proprietorship which
commenced operations in 1979.
- --------------------------------------------------------------------------------
President and Chief Executive Officer of 2 Signature
Brown & Haley since 1998 (fine confectioners); Foods, Inc.
Vice President of Blummer Chocolate Company
from 1980 to 1997, where he had been
employed since 1970.
- --------------------------------------------------------------------------------
Sole proprietor of LeFevre Capital 2 None
Management, a registered investment
adviser.
- --------------------------------------------------------------------------------
Executive Director of the law firm of 2 Bay BOMA;
Berding & Weil, LLP since 1990. BOMA California;
Heritage Bank
(Advisory Board).
- --------------------------------------------------------------------------------
Sole proprietor of Bryan F. Morse, RIA, 2 None
a registered investment adviser since 1990.
- --------------------------------------------------------------------------------
Attorney in private practice in Palo Alto, 2 None
California. Prior to entering private practice
in June of 1981, served as a Branch Chief of the
Los Angeles Regional Office of the U.S.
Securities and Exchange Commission.
- --------------------------------------------------------------------------------
33
- --------------------------------------------------------------------------------
Position(s) Held
Name, Address, Age with Trust Year Elected(1)
- --------------------------------------------------------------------------------
Tom Fishel (born 1960) Chief 2005
13100 Skyline Blvd. Compliance
Woodside, CA 94062 Officer
- --------------------------------------------------------------------------------
Keith Shintani (born 1963) Secretary and 2006
2020 East Financial Way Assistant
Glendora, CA 91741 Treasurer
- --------------------------------------------------------------------------------
Michael Ricks (born 1977) Treasurer 2006
2020 East Financial Way
Glendora, CA 91741
- --------------------------------------------------------------------------------
- ----------
(1) Trustees and officers of the Funds serve until their resignation, removal or
retirement.
* "Interested person" of the Trust, as defined in the 1940 Act.
34
- --------------------------------------------------------------------------------
Number of
Portfolios in
Fund Complex Other
Principal Occupation(s) Overseen by Directorships
During Past Five Years Director Held
- --------------------------------------------------------------------------------
Vice President and Chief Compliance N/A None
Officer of the Adviser. Vice President
of Charles Schwab & Co., Inc. from
1995 to 2004, where he had been
employed since 1983.
- --------------------------------------------------------------------------------
Vice President of U.S. Bancorp Fund N/A None
Services, LLC and its predecessor,
Investment Company Administration, LLC since 1998.
- --------------------------------------------------------------------------------
Assistant Vice President of U.S. Bancorp Fund N/A None
Services, LLC since 2001.
- --------------------------------------------------------------------------------
35
- --------------------------------------------------------------------------------
PRIVACY NOTICE
FISHER ASSET MANAGEMENT, LLC (doing business as Fisher Investments) and THE
PURISIMA FUNDS collect non-public information about you from the following
sources:
o Information we receive about you on applications or other forms;
o Information you give us orally; and
o Information about your transactions with us or others.
We are committed to protecting your privacy and your non-public personal
information. We do not sell or market your non-public personal information to
unaffiliated organizations. We maintain physical, electronic and procedural
safeguards to guard your non-public personal information. We hold our employees
to strict standards of conduct regarding confidentiality, and employees who
violate our Privacy Policy are subject to disciplinary process. We restrict
access to your information to those employees who need to know that information
to carry out their duties.
We do not disclose any non-public personal information about our clients or
former clients without the client's authorization, except as permitted by law.
We may disclose the non-public information we collect to employees and
affiliates, and unaffiliated third parties as permitted by law. Third parties
may include law enforcement agencies, government and regulatory authorities, and
professionals such as our legal counsel and auditors, and we may disclose
information for reasons such as audit purposes, prevention of fraud or money
laundering, protection of confidentiality, compliance with laws, and to provide
agreed upon products and services to you. Third parties may also include service
providers performing financial services for us (such as brokers and custodians)
and service providers performing non-financial services for us (such as third
parties performing computer related or data maintenance, marketing or other
services for us or to assist us in offering our products and services to you).
It is our policy to require all third party service providers that will receive
information to sign strict confidentiality agreements agreeing to safeguard such
information and use it only for the purpose it was provided.
36
This page is intentionally left blank.
The Purisima Funds
- --------------------------------------------------------------------------------
Annual Report
August 31, 2008
The Purisima All-Purpose Fund
- --------------------------------------------------------------------------------
A LETTER TO OUR SHAREHOLDERS
Welcome to the annual report for the Purisima All-Purpose Fund for the
twelve-month period ending August 31, 2008. The Fund seeks to provide protection
against declines in the value of the U.S. and foreign equity markets. During the
period, the Fund was primarily invested in US government securities.
Thank you for your continued interest and support.
Sincerely,
/s/ KENNETH L. FISHER
- ----------------------
Kenneth L. Fisher
Chairman and Chief Investment Officer
Fisher Investments
OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO
CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY
OR SELL ANY SECURITY.
FUND HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE AND ARE NOT
RECOMMENDATIONS TO BUY OR SELL ANY SECURITY.
MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE. THE FUND MAY
USE SHORT SALES OF SECURITIES, WHICH INVOLVE THE RISK THAT LOSSES MAY EXCEED THE
ORIGINAL AMOUNT INVESTED. THE FUND MAY ALSO USE OPTIONS AND FUTURES CONTRACTS,
WHICH HAVE THE RISKS OF UNLIMITED LOSSES OF THE UNDERLYING HOLDINGS DUE TO
UNANTICIPATED MARKET MOVEMENTS AND FAILURE TO CORRECTLY PREDICT THE DIRECTION OF
SECURITIES PRICES, INTEREST RATES AND CURRENCY EXCHANGE RATES. THE FUND MAY
INVEST IN FOREIGN SECURITIES WHICH INVOLVE GREATER VOLATILITY AND POLITICAL,
ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS. THE FUND MAY
INVEST IN DEBT SECURITIES WHICH TYPICALLY DECREASE IN VALUE WHEN INTEREST RATES
RISE. THIS RISK IS GREATER FOR LONGER-TERM DEBT SECURITIES.
THE FUND IS NON-DIVERSIFIED, MEANING IT MAY CONCENTRATE ITS ASSETS IN FEWER
INDIVIDUAL HOLDINGS THAN A DIVERSIFIED FUND. THEREFORE, THE FUND IS MORE EXPOSED
TO INDIVIDUAL STOCK VOLATILITY THAN A DIVERSIFIED FUND. AN INVESTMENT IN THE
FUND IS NOT SUITABLE FOR ALL INVESTORS.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS.
FISHER INVESTMENTS IS THE ADVISER TO THE PURISIMA FUNDS. THE PURISIMA FUNDS ARE
DISTRIBUTED BY QUASAR DISTRIBUTORS, LLC. 10/08
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
FOR YEAR ENDED AUGUST 31, 2008
PURISIMA ALL-PURPOSE FUND
GROWTH OF $10,000.
PURISIMA ALL-PURPOSE FUND CUMULATIVE TOTAL RETURN VERSES MERRILL LYNCH U.S.
TREASURY BILLS 0-3 MONTHS INDEX $10,000 INVESTED FROM FUND INCEPTION ON 11/01/05
TO 8/31/08 *
MONTH PURISIMA ALL-PURPOSE FUND MERRILL LYNCH U.S. TREASURY BILLS
PURISIMA ALL-PURPOSE FUND 0-3 MONTHS INDEX
- ---------- ------------------------- ----------------
11/1/2005 10,000 10,000
2/28/2006 10,160 10,129
5/31/2006 10,351 10,247
8/31/2006 10,562 10,375
11/30/2006 10,743 10,507
2/28/2007 10,908 10,637
5/31/2007 11,103 10,780
8/31/2007 11,330 10,924
11/30/2007 11,481 11,050
2/29/2008 11,692 11,154
5/31/2008 11,749 11,194
8/31/2008 11,818 11,251
ONE-YEAR ONE-YEAR
Average Annual Total Return(2)** 4.31% Average Annual Total Return(2)** 2.99%
SINCE INCEPTION (11/01/2005) SINCE FUND INCEPTION (11/01/2005)
Cumulative Total Return1** 18.18% Cumulative Total Return1** 12.50%
Average Annual Total Return(2)** 6.08% Average Annual Total Return(2)** 4.25%
PLEASE NOTE PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. SHARE PRICE
AND RETURN WILL FLUCTUATE, AND INVESTORS MAY EXPERIENCE A GAIN OR LOSS WHEN THEY
SELL THEIR SHARES. TO OBTAIN A PROSPECTUS ON THE PURISIMA FUNDS PLEASE CALL
1-800-841-0199. THE PROSPECTUS CONTAINS MORE INFORMATION, INCLUDING THE
POLITICAL, ECONOMIC, CURRENCY RISKS AND POTENTIAL VOLATILITY OF FOREIGN
INVESTING. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
1. Cumulative total return measures the change in value of an investment over
the periods indicated and reflects all fund fees and expenses.
2. Average annual total return represents the average annual change in value
of an investment over the periods indicated and reflects all fund fees and
expenses. Average annual total return and cumulative total return for the
one-year period would be identical.
* The Merrill Lynch US Treasury Bills 0-3 Months Index is an unmanaged index
of Treasury securities that assumes reinvestment of all income.
** The total returns shown do not reflect the deduction of taxes a shareholder
would pay on fund distributions or redemption of fund shares. The total
return reflects the rate an investment would have earned (or lost) on an
investment in the Fund, assuming reinvestment of all dividends and
distributions.
-2-
SECTOR BREAKDOWN(1)
(Unaudited)
PURISIMA ALL-PURPOSE FUND
- --------------------------------------------------------------------------------
U.S. Treasury Obligations 86.2%
Mutual Funds 13.8%
- --------------------------------------------------------------------------------
Total 100.0%
(1)Percentage of Total Investments as of August 31, 2008.
-3-
IMPORTANT INFORMATION
The following disclosure provides important information regarding the Fund's
Expense Example. Please refer to this information when reviewing the Expense
Example for the Fund.
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs; and (2) ongoing costs, i n cluding management fees; and other fund
expenses. This Example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period indicated and held for the entire period from March 1, 2008 to August 31,
2008 for the Purisima All-Purpose Fund.
ACTUAL EXPENSES
The information in the table under the heading "Actual Performance" provides
information about actual account values and actual expenses. You may use the
information in these columns 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 row entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The information in the table under the heading "Hypothetical Performance (5%
return before expenses)" provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratios and assumed
rates of return of 5% per year before expenses, which are not the Fund's actual
returns. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and 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.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads), or redemption fees. Therefore, the n i formation under the
heading "Hypothetical Performance (5% return before expenses)" is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
-4-
EXPENSE EXAMPLE (UNAUDITED)
PURISIMA ALL-PURPOSE FUND ACUTAL HYPOTHETICAL PERFORMANCE
(Inception date: 11/01/2005) PERFORMANCE (5% RETURN BEFORE EXPENSES)
- --------------------------------------------------------------------------------
Beginning Account Value (03/01/08) $1,000.00 $1,000.00
Ending Account Value (08/31/08) $1,010.80 $1,017.60
Expenses Paid During Period(1) $7.58 $7.61
- --------------------------------------------------------------------------------
(1) Expenses are equal to the Fund's expense ratio for the four month period of
1.50% for the Purisima All-Purpose Fund multiplied by the average account value
over the period, multiplied by 184/366 (to reflect the four month period).
-5-
SCHEDULE OF INVESTMENTS
AUGUST 31, 2008
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS: 84.4%
25,000 1.772%, 10/09/2008
TOTAL U.S. TREASURY BILLS (COST $24,952) $ 24,952
---------
U.S. TREASURY NOTES: 33.9%
10,000 4.875%, 08/31/2008
TOTAL U.S. TREASURY NOTES (COST $10,000) 10,000
---------
SHARES
- ------
MUTUAL FUNDS: 18.9%
5,577 SEI Daily Income Trust Government Fund 5,577
---------
TOTAL MUTUAL FUNDS (COST $5,577)
TOTAL INVESTMENTS (COST $40,529): 137.2% $ 40,529
LIABILITIES IN EXCESS OF OTHER ASSETS: (37.2)% (10,990)
---------
TOTAL NET ASSETS: 100.0% $ 29,539
=========
The accompanying notes are an integral part of these financial statements.
-6-
PURISIMA ALL-PURPOSE FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2008
================================================================================
ALL-PURPOSE FUND
----------------
ASSETS
Investments in securities, at cost $ 40,529
============
Investments in securities, at value $ 40,529
Receivables:
Dividends and interest 273
Due from Adviser (Note 3) 16,523
Prepaid expenses 16,547
------------
Total Assets 73,872
------------
LIABILITIES
Accrued administration fees (Note 3) 3,262
Accrued transfer agent fees 404
Accrued audit fees 33,540
Accrued fund accounting fees 5,197
Accrued reports to shareholders 505
Other accrued expenses 1,425
------------
Total Liabilities 44,333
------------
NET ASSETS $ 29,539
============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 2,877
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE $ 10.27
============
COMPONENTS OF NET ASSETS
Paid-in capital $ 28,764
Accumulated net investment income 767
Accumulated net realized gain on investments 8
------------
Net assets $ 29,539
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-7-
PURISIMA ALL-PURPOSE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2008
================================================================================
ALL-PURPOSE
FUND
-----------
INVESTMENT INCOME
Income
Interest $ 1,725
---------
Total income 1,725
---------
Expenses
Advisory fees 291
Administration fees 39,559
Transfer agent fees 13,730
Fund accounting fees 29,947
Custody fees 2,992
Reports to shareholders 3,302
Registration fees 12,691
Audit fees 20,328
Legal fees 35
Trustee fees 22,176
Miscellaneous 289
---------
Total expenses 145,340
Less: Reimbursement by Adviser (Note 3) (144,904)
---------
Net expenses 436
---------
NET INVESTMENT INCOME 1,289
---------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investments 9
Change in net unrealized appreciation on investments (96)
---------
Net loss on investments (87)
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,202
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-8-
PURISIMA ALL-PURPOSE FUND
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
YEAR ENDED YEAR ENDED
AUGUST 31, 2008 AUGUST 31, 2007
--------------- ---------------
DECREASE IN NET ASSETS FROM:
OPERATIONS
Net investment income $ 1,289 $ 1,820
Net realized gain on investments 9 5
Change in net unrealized appreciation on investments (96) 96
-------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,202 1,921
-------- --------
DISTRIBUTION TO SHAREHOLDERS
From net investment income (1,717) (1,899)
-------- --------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (1,717) (1,899)
-------- --------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from
net change in outstanding shares (a) 1,717 1,899
-------- --------
TOTAL INCREASE IN NET ASSETS 1,202 1,921
-------- --------
NET ASSETS
Beginning of period 28,337 26,416
-------- --------
END OF PERIOD $ 29,539 $ 28,337
======== ========
Undistributed net investment income $ 767 $ 1,195
======== ========
(a) A summary of capital share transactions is as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2008 AUGUST 31, 2007
--------------- -----------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
Shares sold -- $ -- -- $ --
Shares issued on reinvestment
of distributions 172 1,717 190 1,899
Shares redeemed -- -- -- --
------ ------ ------ ------
Net increase 172 $1,717 190 $1,899
====== ====== ====== ======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-9-
PURISIMA ALL-PURPOSE FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
================================================================================
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS ANNUAL REPORT.
FOR THE FOR THE NOVEMBER 1, 2005^
YEAR ENDED YEAR ENDED THRU
AUGUST 31, 2008 AUGUST 31, 2007 AUGUST 31, 2006
--------------- --------------- ---------------
Net asset value, beginning of period $ 10.47 $ 10.50 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.46 0.69 0.56
Net realized and unrealized gain
(loss) on investments (0.03) 0.04 0.00
------- ------- -------
Total from investment operations 0.43 0.73 0.56
------- ------- -------
LESS DISTRIBUTIONS:
From net investment income (0.63) (0.76) (0.06)
------- ------- -------
Total distributions (0.63) (0.76) (0.06)
------- ------- -------
Net asset value, end of period $ 10.27 $ 10.47 $ 10.50
======= ======= =======
Total return 4.31% 7.27% 5.62%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 29.5 $ 28.3 $ 26.4
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived 500.20% 545.57% 620.25%*
After fees waived 1.50% 1.50% 1.50%*
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS # 4.44% 6.66% 6.71%*
Portfolio turnover rate 0.00% 0.00% 0.00%**
# Net of fees waived.
* Annualized.
** Not annualized.
^ Commencement of operations.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-10-
PURISIMA ALL-PURPOSE FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2008
NOTE 1 - ORGANIZATION
The Purisima Funds (the "Trust") was organized as a Delaware business trust on
June 27, 1996 and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company issuing
its shares in a series. Each series represents a distinct portfolio with its own
investment objectives and policies. The accompanying financial statements n i
clude the Purisima All-Purpose Fund (the "Fund"), a non-diversified fund which
commenced operations on November 1, 2005. The Fund is one of the two portfolios
comprising the Trust. Fisher Asset Management, LLC (doing business as Fisher
Investments) (the "Adviser") serves as the investment adviser to the Fund.
The investment objective of the Purisima All-Purpose Fund is as follows:
The Fund seeks to provide protection against declines in the value of the U.S.
and foreign equity markets. It invests in derivative securities, money market
instruments and other securities, including U.S. and foreign common stocks, and
fixed income securities.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. These
policies are in conformity with accounting principles generally accepted in the
United States of America.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last sales price on the business
day as of which such value is being determined. If on a particular
day, an exchange-listed security does not trade, then the mean between
the bid and asked prices will be used. Foreign exchange traded equity
securities are valued based upon the price on the exchange or market
on which they trade as of the close of business of such market or
exchange immediately preceding the time the Fund's net asset value is
determined. Investments in securities traded on the NASDAQ Global
Market, the NASDAQ Global Select Market and the NASDAQ Capital Market
will be valued at the NASDAQ Official Closing Price ("NOCP"), which
may not necessarily represent the last sale price. Securities traded
on an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the closing price.
Securities for which quotations are not readily available are valued
at their respective fair values as determined in good faith by the
Board of Trustees or their designee, taking into consideration: (I)
fundamental analytical data relating to the investment; (II) the
nature and duration of restrictions on disposition of the securities;
and (III) an evaluation of the forces which influence the market in
which these securities are purchased and sold. Debt securities with
remaining maturities of 60 days or less are valued at amortized cost
which, when combined with accrued interest, approximates market value.
-11-
PURISIMA ALL-PURPOSE FUND
B. FOREIGN CURRENCY TRANSLATION. The Fund's records are maintained in
U.S. dollars. The value of securities, currencies and other assets and
liabilities denominated in currencies other than U.S. dollars are
translated into U.S. dollars based upon foreign exchange rates
prevailing at the end of the reporting period. Purchases and sales
of investment securities, income and expenses are translated on the
respective dates of such transactions.
The Fund does not isolate that portion of their net realized and
unrealized gains and losses on investments resulting from changes in
foreign exchange rates from the impact arising from changes in market
prices. Such fluctuations are included with net realized and
unrealized gain or loss from investments and foreign currency.
Net realized foreign currency transaction gains and losses arise from
sales of foreign currencies, currency gains or losses realized between
the trade and settlement dates on securities transactions, and the
differences between the amounts of dividends, interest, and f o reign
withholding taxes recorded on the Fund books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency translation gains and losses arise from changes in
the value of assets and liabilities, other than investments in
securities, resulting from changes in the exchange rates.
C. FEDERAL INCOME AND EXCISE TAXES. The Fund has elected to be taxed as a
"regulated i nv estment company" and intends to distribute
substantially all taxable income to its shareholders and otherwise
comply with the provisions of the Internal Revenue Code applicable to
regulated investment companies. Therefore, no federal income or excise
tax provision is required.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, the Fund intends to declare each year 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, if any, from prior years.
The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be
recoverable. The Fund will accrue such taxes and recoveries as
applicable based upon its current interpretations of the tax rules and
regulation t h at exist in the markets in which it invests.
On July 13, 2006, the Financial Accounting Standards Board (FASB)
released FASB Interpretation No. 48 "Accounting for Uncertainty in
Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain
tax positions should be recognized, measured, presented and disclosed
in the financial statements. FIN 48 requires the evaluation of tax
positions t a ken or expected to be taken in the course of preparing
the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not
threshold would be recorded as a tax benefit or expense in the current
year. Adoption of FIN 48 is required as of t h e date of the last Net
Asset Value ("NAV") calculation in the first required financial
-12-
PURISIMA ALL-PURPOSE FUND
statement reporting period for fiscal years beginning after December
15, 2006 and is to be applied to all open tax years as of the
effective date. The Fund adopted FIN 48 effective February 29, 2008.
Management of the Fund has reviewed the tax positions for the fiscal
years ending August 31, 2005 through 2008 and has determined that the
adoption of FIN 48 did not have a material impact on the Fund's
financial statements.
D. SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS. Security
transactions are accounted for on the trade date. Dividend income and
distributions to shareholders are recorded on the ex-dividend date and
interest income is recognized on the accrual basis. Realized gains and
losses are evaluated on the bases of identified costs.
E. USE OF ESTIMATES. The presentation 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
revenue and expenses during the reporting period. Actual results could
differ from those estimates and assumptions.
F. CONCENTRATION OF RISK. Investments in securities of non-U.S. issues in
certain countries involve special investment risks. These risks may
include, but are not limited to, investment restrictions, adverse
political, social and economic developments, government involvement
in the private sector, limited and less reliable investor information,
lack of liquidity, certain l o cal tax law considerations, and limited
regulation of the securities markets.
G. OPTIONS. Exchange traded options are valued at the last reported sale
price at the close of the exchange on which the security is primarily
traded. Certain markets are not closed at the time that a Fund
prices portfolio securities. In these situations, snapshot prices are
provided by the individual pricing services or other alternate sources
at the close of the NYSE as appropriate. If no sales are reported, the
mean between the last reported bid and asked prices will be used.
Non-exchange traded options will also be valued at the mean between
bid and asked prices. "Fair value" of other private options are valued
after consulting with the Adviser using a mathematical model.
Options purchased are recorded as investments; options written (sold)
are accounted for as liabilities. When an option expires, the
premium (original option value) is realized as a gain i f the option
was written or as a loss if the option was purchased. When the
exercise of an option result in a cash settlement, the difference
between the premium and the settlement proceeds is realized as a gain
or loss. When securities are acquired or delivered upon exercise of an
option, the acquisition cost or sale proceeds are adjusted by the
amount of the premium. When an option is closed, the difference
between the premium and the cost to close the position is realized as
a gain or loss. The Fund may purchase options which are n i cluded in
the Fund's Schedules of Investments and subsequently marked to market
to reflect the current value of the option. At August 31, 2008, the
Fund had no options outstanding.
-13-
PURISIMA ALL-PURPOSE FUND
H. SECURITIES SOLD SHORT. To the extent the Fund engages in selling
securities short, they are obligated to replace a security borrowed by
purchasing the same security at the current market value. The Fund
would incur a loss if the 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 would realize a gain if the price of the
security declines between those dates.
The Fund is required to establish a margin account with the broker
lending the security sold short. While the short sale is outstanding,
the broker retains the proceeds of the short sale and the Fund must
also maintain a deposit with the broker consisting of cash having a
value equal to a specified percentage of the value of the securities
sold short.
I. INDEMNIFICATION OBLIGATIONS. Under the Fund's organizational
documents, its current and former officers and trustees are
indemnified against certain liabilities arising out of the performance
of their duties to the Fund. In addition, in the normal course of
business, the Fund enters into contracts that contain a variety of
representations and warranties that provide general indemnifications.
The Fund's maximum exposure under these arrangements is unknown as
this would involve future claims that may be made against the Fund
that have not yet occurred or that would be covered by other parties.
NOTE 3 - COMMITMENTS, OTHER RELATED PARTY TRANSACTIONS AND OTHER
SERVICE PROVIDERS
The Fund has an Investment Management Agreement with the Adviser to provide
investment advisory services to the Fund. The Adviser furnishes all investment
advice, office space, facilities, and most of h t e personnel needed by the
Fund. As compensation for its services, the Adviser is entitled to a monthly fee
at the annual rate of 1.00% of the Fund's average daily net assets.
The Fund is responsible for its own operating expenses. The Adviser has agreed
to limit the Fund's total expenses (exclusive of brokerage, interest, taxes,
dividends on securities sold short and extraordinary expenses) to not more than
1.50% of the average daily net assets.
Any fee withheld or voluntarily reduced and/or any Fund expense absorbed by the
Adviser pursuant to an agreed upon expense cap shall be reimbursed by the Fund
to the Adviser, if so requested by the Adviser, anytime before the end of the
third fiscal year following the year to which the fee reduction, waiver, or
expense absorption relates, provided the aggregate amount of the Fund's current
operating expenses for such fiscal year does not exceed the applicable
limitation on Fund expenses. Any such reimbursement is also contingent upon
Board of Trustees review and approval prior to the time the reimbursement is
initiated. The Fund must pay its current ordinary operating expenses before the
Adviser is entitled to any reimbursement of fees and/or expenses. For the year
ended August 31, 2008, the Fund paid the Adviser $291.
As of August 31, 2008, the Adviser has reimbursed the Fund $144,904 to limit its
total expenses to not more than 1.50% of the average daily net assets.
-14-
PURISIMA ALL-PURPOSE FUND
At August 31, 2008 the Adviser may recapture a portion of the following amounts
that have been paid and/or waived on behalf of the Fund no later than the date
as stated below:
FUND AUGUST 31, 2009 AUGUST 31, 2010 AUGUST 31, 2011
- --------------------------------------------------------------------------------
Purisima All-Purpose
Fund $ 131,092 $ 148,574 $ 144,904
U.S. Bank, N.A. serves as the Fund's Custodian. U.S. Bancorp Fund Services, LLC
("USBFS"), an affiliate of U.S. Bank, N.A., serves as the Administrator, Fund
Accountant and Transfer Agent. Certain officers of the Trust, including the
Trust's Treasurer, are employees of the Administrator. In its capacity as the
Fund's Administrator, USBFS provides general fund management including corporate
secretarial services, coordinates the preparation of materials for the Board of
Trustees, assists with the annual audit of the Fund's financial statements,
monitors the Fund's compliance with federal and state regulations as well as
investment restrictions, coordinates the payment of Fund expenses and monitors
expense accruals, prepares financial statements and non-investment related
statistical data and makes required tax reporting calculations. During the
year ended August 31, 2008, Purisima All-Purpose Fund paid USBFS $39,559 for
services rendered in its capacity as the Fund's Administrator.
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as
principal underwriter of the Fund and acts as the Fund's distributor, pursuant
to a Distribution Agreement with the Trust, in a continuous public offering of
the Fund's shares.
NOTE 4 - SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Fund is authorized to pay
expenses incurred for the purpose of distribution activities, including the
engagement of other dealers, intended to result in the sale of shares of the
Fund. The fee accrues at an annual rate not to exceed 0.25% of the Fund's
average daily net assets. For the year ended August 31, 2008, the Fund did not
utilize the Plan.
NOTE 5 - INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of securities, excluding
short-term investments, for the year ended August 31, 2008, were as follows:
FUND PURCHASES SALES
- --------------------------------------------------------------------------------
Purisima All-Purpose Fund $ 0 $ 0
NOTE 6 - FEDERAL INCOME TAX MATTERS
The difference between the book and tax basis components of the distributable
earnings relates principally to the timing of recognition of income and gains
for federal income tax purposes. These differences, if any, are primarily
attributable to the tax deferral of losses on wash sales, the realization of r
tax purposes of unrealized gains on passive foreign investment companies and
return of capital distributions and income adjustments recognized for tax
purposes on real estate investment trusts. Short-term gains distributions
reported in the Statements of Changes of Net Assets, if any, are reported
as ordinary income for federal tax purposes.
-15-
PURISIMA ALL-PURPOSE FUND
As of August 31, 2008, the components of distributable earnings on a tax basis
were as follows:
All-Purpose
-----------
Cost of investments for tax purposes $ 40,529
========
Gross tax unrealized appreciation $ --
Gross tax unrealized depreciation $ --
--------
Net tax unrealized appreciation $ --
Undistributed ordinary income $ 776
Other accumulated losses * $ (1)
--------
Total accumulated earnings (losses) $ 775
========
The tax compositions of dividends are as follows:
Ordinary Long Term
Income Capital Gains
------ -------------
Purisima All-Purpose
Fund
8/31/2008 $1,717 --
8/31/2007 $1,899 --
* Under current tax law capital 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.
NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS
In September, 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value
Measurements", which will expand the disclosure requirements for fair value
measurements. The new standard defines fair value as the price that would be
received upon the sale of an asset or transfer of a liability in an orderly
transaction between market participants. As a basis for considering market
participant assumptions in fair value measurements, this Statement also
establishes a fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained from sources
independent of the reporting entity (observable inputs) and (2) the reporting
entity's own assumptions about market participant assumptions developed based on
the best information available in the circumstances (unobservable inputs). SFAS
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007 and earlier adoption is permitted. Management is
currently evaluating the impact of adoption of SFAS No. 157 on its financial
statements.
-16-
PURISIMA ALL-PURPOSE FUND
In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures
about Derivative Instruments and Hedge Activities" ("SFAS 161") was issued and
is effective for fiscal years beginning after November 15, 2008. SFAS 161 is
intended to improve financial reporting for derivative instruments by requiring
enhanced disclosure that enables investors to understand how and why an entity
uses derivatives, how derivatives are accounted for, and how derivative
instruments affect an entity's results of operation and financial position.
Management is currently evaluating the implications of SFAS 161. The impact on
the Fund's financial statement disclosures, if any, is currently being assessed.
-17-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
THE PURISIMA FUNDS
WOODSIDE, CALIFORNIA
We have audited the accompanying statement of assets and liabilities of the
Purisima All-Purpose Fund, a series of The Purisima Funds (the "Trust"),
including the schedule of investments as of August 31, 2008, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the two years in the period then ended and for the period
November 1, 2005 (commencement of operations) to August 31, 2006. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Trust
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for t h e purpose
of expressing an opinion on the effectiveness of the Trust's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
n i cludes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of August 31, 2008, by correspondence with the custodian.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Purisima All-Purpose Fund as of August 31, 2008, the results of its operations,
the changes in its net assets, and the financial highlights for the periods
indicated above, in conformity with accounting principles generally accepted in
the United States of America.
TAIT, WELLER & BAKER LLP
PHILADELPHIA, PENNSYLVANIA
OCTOBER 29, 2008
-18-
OTHER INFORMATION -
PROXY VOTING PROCEDURES (UNAUDITED)
The Adviser votes proxies relating to portfolio securities in accordance with
procedures that have been approved by the Trust's Board of Trustees. You may
obtain a description of these procedures, free of charge, by calling toll-free
1-800-841-0199. This information is also available through the Securities and
Exchange Commission's website at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to the portfolio
securities during the most recent 12-month period ended June 30 is available
without charge, upon request, by calling t o ll-free 1-800-841-0199. This
information is also available through the Securities and Exchange Commission's
website at HTTP://WWW.SEC.GOV.
FORM N-Q DISCLOSURE (UNAUDITED)
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third fiscal quarters on Form N-Q. The Fund's Form N-Q is available
without charge, upon request, by calling 1-800-841-0199. Furthermore, you can
obtain the Form N-Q on the SEC's website at www.sec.gov.
TAX NOTICE (UNAUDITED)
Additional Information applicable to foreign shareholders only: The percentage
of income distributed for the year ended August 31, 2008, designated qualified
interest income under Internal Revenue Code Section 871(k)(1)(C), is 100% for
the Fund.
-19-
TRUSTEES AND OFFICER INFORMATION (Unaudited)
The Board of Trustees is responsible for the overall management of the
Trust's business. The Board of Trustees approves all significant agreements
between the Trust and persons or companies furnishing services to it, including
all agreements with the Adviser, Administrator, Custodian and Transfer Agent.
The Board of Trustees delegates the day-to-day operations of the Trust to its
Officers, subject to the Fund's investment objective and policies and to general
supervision by the Board of Trustees. The Statement of Additional Information
includes additional information about the Trust's Trustees and is available,
without charge, by calling 1-800-841-0199.
The Trustees and Officers of the Trust, their business addresses and
principal occupations during the past five years are:
NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX OTHER
NAME, ADDRESS, POSITION(S) HELD YEAR PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH WITH TRUST ELECTED(1) DURING PAST FIVE YEARS DIRECTOR HELD
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth L. Fisher* President 1996 Chief Executive Officer and majority 2 NONE
(born 1950) and Trustee shareholder of Fisher Investments, Inc.,
13100 Skyline Blvd. the sole shareholder of the Adviser,
Woodside, CA 94062 and has served insuch capacities since
the incorporation of the Adviser in 1986.
Prior thereto, he was the founder of Fisher
Investments, a sole proprietorship which
commenced operations in 1979.
Pierson E. Clair III Trustee 1996 President and Chief Executive Officer 2 Signature
(born 1948) of Brown & Haley since 1998 (fine Foods, Inc.
13100 Skyline Blvd. confectioners); Vice President of Blummer
Woodside, CA 94062 Chocolate Company from 1980 to 1997,
where he had been employed since 1970.
Scott LeFevre Trustee 2001 Sole proprietor of LeFevre Capital 2 NONE
(born 1957) Management, a registered investment
13100 Skyline Blvd. adviser.
Woodside, CA 94062
Alfred D. McKelvy, Jr. Trustee 2003 Executive Director of the law firm of 2 East Bay
(born 1948) Berding & Weil, LLP since 1990. BOMA; BOMA
13100 Skyline Blvd. California;
Woodside, CA 94062: Heritage Bank
(Advisory
Board).
Bryan F. Morse Trustee 1996 Sole Bryan F.Morse,RIA, a proprietor of 2 NONE
(born 1952) registered investment adviser since
13100 Skyline Blvd. 1990.
Woodside, CA 94062
Grover T. Wickersham Trustee 1996 Attorney in private practice in Palo Alto, 2 NONE
(born 1949) California. Prior to entering private
13100 Skyline Blvd. practice in June of 1981, served as a Branch
Woodside, CA 94062 Chief of the Los Angeles Regional Office of the
U.S. Securities and Exchange Commission.
Tom Fishel Chief Compliance 2005 Vice President and Chief Compliance Officer N/A NONE
(born 1960) Officer of the Adviser. Vice President of Charles Schwab
13100 Skyline Blvd. & Co., Inc. from 1995 to 2004, where he had
Woodside, CA 94062 been employed since 1983.
Keith Shintani Secretary and 2006 Vice President of U.S. Bancorp Fund Services, N/A NONE
(born 1963) Assistant LLC and its predecessor, Investment Company
2020 East Financial Way Treasurer Administration, LLC since 1998.
Glendora, CA 91741
- -----------------
(1) Trustees and officers of the Funds serve until their resignation, removal or
retirement.
*" Interested person" of the Trust, as defined in the 1940 Act.
-22-
NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX OTHER
NAME, ADDRESS, POSITION(S) HELD YEAR PRINCIPAL OCCUPATION(S) OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH WITH TRUST ELECTED(1) DURING PAST FIVE YEARS DIRECTOR HELD
- ------------------------------------------------------------------------------------------------------------------------------------
Michael Ricks (born Treasurer 2006 Assistant Vice President of U.S. Bancorp Fund N/A None
1977) Services, LLC since 2001.
2020 East Financial Way
Glendora, CA 91741
(2) Trustees and officers of the Funds serve until their resignation, removal or retirement.
-21-
PRIVACY NOTICE
Fisher Asset Management, LLC (doing business as Fisher Investments) and the
Purisima Funds collect non-public information about you from the following
sources:
o Information we receive about you on applications or other forms;
o Information you give us orally; and
o Information about your transactions with us or others.
We are committed to protecting your privacy and your non-public personal
information. We do not sell or market your non-public personal information to
unaffiliated organizations. We maintain physical, electronic and procedural
safeguards to guard your non-public personal information. We hold our employees
to strict standards of conduct regarding confidentiality, and employees who
violate our Privacy Policy are subject to disciplinary process. We restrict
access to your information to those employees who need to know that information
to carry out their duties.
We do not disclose any non-public personal information about our clients or
former clients without the client's authorization, except as permitted by law.
We may disclose t h e non-public information we collect to employees and
affiliates, and unaffiliated third parties as permitted by law. Third parties
may include law enforcement agencies, government and regulatory authorities, and
professionals such as our legal counsel and auditors, and we may disclose
information for reasons such as audit purposes, prevention of fraud or money
laundering, protection of confidentiality, compliance with laws, and to provide
agreed upon products and services to you. Third parties may also include service
providers performing financial services for us (such as brokers and custodians)
and service providers performing non-financial services for us (such as third
parties performing computer related or data maintenance, marketing or other
services for us or to assist us in offering our products and services to you).
It is our policy to require all third party service providers that will receive
information to sign strict confidentiality agreements agreeing to safeguard such
information and use it only for the purpose it was provided.
-22-
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer and principal financial officer. The registrant has
not made any amendments to its code of ethics during the period covered by this
report. The registrant has not granted any waivers from any provisions of the
code of ethics during the period covered by this report.
The registrant undertakes to provide to any person without charge, upon request,
a copy of its code of ethics by mail when they call the registrant at
1-800-851-8845.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of trustees has determined that it does not have an audit
committee financial expert serving on its audit committee. At this time, the
registrant believes that the experience provided by each member of the audit
committee together offers the registrant adequate oversight for the registrant's
level of financial complexity.]
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The registrant has engaged its principal accountant to perform audit services,
audit-related services, tax services and other services during the past two
fiscal years. "Audit services" refer to performing an audit of the registrant's
annual financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years. "Audit-related services" refer to the assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit. "Tax services" refer to professional services rendered
by the principal accountant for tax compliance, tax advice, and tax planning.
There were no "Other services" provided by the principal accountant . The
following table details the aggregate fees billed or expected to be billed for
each of the last two fiscal years for audit fees, audit-related fees, tax fees
and other fees by the principal accountant.
- ----------------------------- ----------------------- -----------------------
FYE 8/31/2008 FYE 8/31/2007
- ----------------------------- ----------------------- -----------------------
Audit Fees $36,000 $34,000
Audit-Related Fees - -
Tax Fees $6,000 $6,000
All Other Fees - -
- ----------------------------- ----------------------- -----------------------
The audit committee has adopted pre-approval policies and procedures that
require the audit committee to pre-approve all audit and non-audit services of
the registrant, including services provided to any entity affiliated with the
registrant.
The percentage of fees billed by TAIT, WELLER AND BAKER LLP applicable to
non-audit services pursuant to waiver of pre-approval requirement were as
follows:
- ----------------------------- ----------------------- -----------------------
FYE 12/31/2008 FYE 12/31/2007
- ----------------------------- ----------------------- -----------------------
Audit-Related Fees 0% 0%
Tax Fees 0% 0%
All Other Fees 0% 0%
- ----------------------------- ----------------------- -----------------------
All of the principal accountant's hours spent on auditing the registrant's
financial statements were attributed to work performed by full-time permanent
employees of the principal accountant.
The following table indicates the non-audit fees billed or expected to be billed
by the registrant's accountant for services to the registrant and to the
registrant's investment adviser (and any other controlling entity, etc.--not
sub-adviser) for the last two years. The audit committee of the board of
trustees has considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser is compatible with maintaining
the principal accountant's independence and has concluded that the provision of
such non-audit services by the accountant has not compromised the accountant's
independence.
- ------------------------------------ ------------------------ ------------------
Non-Audit Related Fees FYE 12/31/2008 FYE 12/31/2007
- ------------------------------------ ------------------------ ------------------
Registrant - -
Registrant's Investment Adviser - -
- ------------------------------------ ------------------------ ------------------
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to registrants who are not listed issuers (as defined in Rule
10A-3 under the Securities Exchange Act of 1934).
ITEM 6. INVESTMENTS.
(a) Schedule of Investments is included as part of the report to shareholders
filed under Item 1 of this Form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's President and Treasurer have reviewed the Registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as of a date within 90 days of
the filing of this report, as required by Rule 30a-3(b) under the Act and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934.
Based on their review, such officers have concluded that the disclosure
controls and procedures are effective in ensuring that information required
to be disclosed in this report is appropriately recorded, processed,
summarized and reported and made known to them by others within the
Registrant and by the Registrant's service provider.
(b) There were no changes in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Incorporated by reference to the Registrant's Form N-CSR filed November
10, 2003.
(2) A SEPARATE CERTIFICATION FOR EACH PRINCIPAL EXECUTIVE AND PRINCIPAL
FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF
2002. Filed herewith.
(3) ANY WRITTEN SOLICITATION TO PURCHASE SECURITIES UNDER RULE 23C-1 UNDER
THE ACT SENT OR GIVEN DURING THE PERIOD COVERED BY THE REPORT BY OR ON
BEHALF OF THE REGISTRANT TO 10 OR MORE PERSONS. Not applicable to
open-end investment companies.
(B) CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Purisima Funds
By /s/ KENNETH L FISHER
----------------------------------------------
Kenneth L. Fisher, President
Date 11/07/08
-------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /S/ KENNETH L. FISHER
---------------------------------------------
Kenneth L. Fisher, President
Date 11/7/08
-------------------------------------------
By /S/ MICHAEL RICKS
---------------------------------------------
Michael Ricks, Treasurer
Date 11/7/08
--------------------------------------------