As filed with the Securities and Exchange Commission on November 9, 2009
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
------------------
(Exact name of registrant as specified in charter)
13100 SKYLINE BLVD.
WOODSIDE, CALIFORNIA 94062
--------------------------
(Address of principal executive offices) (Zip code)
U. S. BANCORP FUND SERVICES, LLC
2020 EAST FINANCIAL WAY, SUITE 100
GLENDORA, CALIFORNIA 91741
--------------------------
(Name and address of agent for service)
(650) 851-3334
--------------
Registrant's telephone number, including area code
Date of fiscal year end: AUGUST 31
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Date of reporting period: AUGUST 31, 2009
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ITEM 1. REPORTS TO STOCKHOLDERS.
THE PURISIMA FUNDS
Annual Report
August 31, 2009
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 15
Statement of Operations 16
Statement of Changes in Net Assets 17
Financial Highlights 18
Notes to Financial Statements 19
Report of Independent Registered Public Accounting Firm 27
Other Information 28
Trustees and Officer Information 30
Privacy Notice 34
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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.
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A LETTER TO OUR SHAREHOLDERS
Welcome to the annual report for the Purisima Total Return Fund for the 12-month
period ending August 31, 2009. 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 falling
- -17.21%. Although the year was disappointing, recent market activity has been
much more encouraging. Looking forward, we believe remaining fully invested in
equities is the proper portfolio positioning.
In our view, March 9, 2009 marked the beginning of a new bull market. From the
March 9th low through August, global markets climbed nearly 60%. However, market
recovery won't be a smooth path upward. Minor pullbacks are quite normal parts
of a larger upward trend.
In many ways, the rally since March 9th has unfolded in typical new bull market
fashion. The initial bounce off the bottom of a bear market is usually
exceptionally strong, and the sectors and regions beaten down most in the final
stages of the bear generally lead in the bull's beginning. Financials,
Materials, Industrials, Information Technology, and Consumer Discretionary--the
hardest hit sectors at the tail end of this bear market--have indeed performed
best during the upswing. Similarly, Emerging Markets stocks have outpaced
developed markets by a wide margin thus far during the recovery.
Although economies show signs of improvement globally, economic data have been
far from stellar. But a rising market does not require strong economic
data--markets discount future conditions, not backward-looking economic
releases. Thus, we expect stocks to continue moving higher in the second half of
the year--albeit with volatility and pullbacks along the way--as eventual
economic recovery becomes reflected in share prices, even if official data
remain weak for some time.
Global monetary and fiscal stimulus continues to grow and is bullish. Yet
massive amounts of already approved fiscal stimulus have yet to be deployed. The
US, for instance, has disbursed only a fraction of its $787 billion stimulus
plan by some accounts. China's similarly huge stimulus package has been put to
work more quickly and efficiently, which bodes well for China leading the world
out of recession.
Capital markets are demonstrating encouraging signs of normality. Global credit
markets have eased considerably from last year's severe dysfunction. Many
interbank lending rates have dropped to their lowest levels on record, credit
spreads have narrowed, and firms with strong credit ratings are issuing debt at
or below pre-crisis interest rates.
Among pessimists' many concerns is massive money creation worldwide will soon
lead to explosive inflation. In our view, higher inflation won't become an
actionable risk for at least a couple years, and even then, a problematic
inflation level is far from inevitable. Today, central bankers are rightly
providing liquidity in an effort to stave off deflationary forces and bolster
financial institution balance sheets. Inflation is highly unlikely until a more
robust economic recovery causes money velocity to reaccelerate and manufacturing
and labor capacity to be more fully utilized. Then will be the time to closely
monitor central banks' monetary "exit strategy," but no sooner.
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FUND POSITIONING
Recession is retreating in many areas of the world. In particular, emerging
markets look poised to resume robust growth and will likely drive global
expansion going forward. As investors increasingly gain faith in the economic
recovery, we expect stocks to continue to benefit. Thus, we remain fully
invested in equities in an attempt to capture expected stock market gains.
For the 12-month period ending August 31, 2009, the Fund slightly underperformed
the MSCI World Index benchmark, returning -17.37%. In aggregate, country
positioning benefited return relative to the benchmark. The Fund's underweight
to the US and overweights to Switzerland and Germany helped portfolio returns,
while underweights to the UK and Sweden detracted from returns.
Sector positioning also had a slight positive impact on relative returns. The
Fund's overweight to Telecommunication Services and Information Technology
contributed positively to returns. An underweight to Utilities also helped
returns. Underweights to Financials and Consumer Discretionary and an overweight
to Industrials detracted from returns.
Stock selection in aggregate detracted from the Fund's returns. Stock selection
in Financials, Consumer Staples, and Health Care boosted returns, while stock
selection in Energy, Industrials, and Materials hurt returns.
CLOSING REMARKS
Although we are highly encouraged by recent market activity, the recovery will
not be without volatility. Nevertheless, we think remaining positioned for what
we anticipate will be an overall positive market is the best course ahead.
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.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
MUTUAL FUND INVESTING INVOLVES RISK OF LOSS. PRINCIPAL LOSS IS POSSIBLE. THE
FUND MAY USE SHORT SALES OF SECURITIES, WHICH INVOLVE THE RISK THAT LOSSES MAY
EXCEED THE ORIGINAL AMOUNT INVESTED. FOREIGN INVESTING INVOLVES SPECIAL RISKS,
INCLUDING A GREATER VOLATILITY AND POLITICAL, ECONOMIC AND CURRENCY RISKS AND
DIFFERENCES IN ACCOUNTING METHODS.
3
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SMALL- AND MEDIUM-CAPITALIZATION COMPANIES TEND TO HAVE LIMITED LIQUIDITY AND
GREATER PRICE VOLATILITY THAN LARGE CAPITALIZATION COMPANIES. GROWTH STOCKS
TYPICALLY ARE MORE VOLATILE THAN VALUE STOCKS; HOWEVER, VALUE STOCKS HAVE A
LOWER EXPECTED GROWTH RATE IN EARNINGS AND SALES. INVESTMENTS IN DEBT SECURITIES
TYPICALLY DECREASE IN VALUE WHEN INTEREST 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 09/09
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PERFORMANCE SUMMARY
FOR YEAR ENDED AUGUST 31, 2009
PURISIMA TOTAL RETURN FUND
GROWTH OF $10,000
PURISIMA TOTAL RETURN FUND CUMULATIVE TOTAL RETURN VERSUS MSCI WORLD INDEX
$10,000 INVESTED FROM 9/1/99 TO 8/31/09*
[The following table was represented as a line chart in the printed material.]
Total MSCI World
Return Index
------ -----
9/1/1999 10,000 10,000
2/29/2000 10,971 10,936
8/31/2000 11,264 11,312
2/28/2001 10,841 9,374
2/28/2002 11,198 8,031
8/31/2002 9,256 6,989
2/28/2003 8,216 6,377
8/31/2003 10,202 7,752
2/29/2004 11,774 9,206
8/31/2004 11,091 8,963
2/28/2005 12,542 10,309
8/31/2005 12,777 10,586
2/28/2006 14,282 11,675
8/31/2006 14,636 12,255
2/28/2007 15,709 13,527
8/31/2007 16,924 14,335
2/29/2008 16,197 13,455
8/31/2008 14,936 12,605
2/28/2009 8,139 7,115
8/31/2009 12,342 10,435
PURISIMA TOTAL RETURN FUND
ONE-YEAR
Average Annual Total Return(2)** -17.37%
FIVE-YEAR
Average Annual Total Return(2)** 2.16%
TEN-YEAR
Cumulative Total Return(1)** 23.42%
Average Annual Total Return(2)** 2.13%
MSCI WORLD INDEX*
ONE-YEAR
Average Annual Total Return(2)** -17.21%
FIVE-YEAR
Average Annual Total Return(2)** 3.09%
TEN-YEAR
Cumulative Total Return(1)** 4.35%
Average Annual Total Return(2)** 0.43%
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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Energy 15.5%
Information Technology 15.4%
Industrials 13.3%
Financials 13.2%
Materials 12.6%
Consumer Discretionary 11.0%
Consumer Staples 6.6%
Health Care 5.8%
Telecommunication Services 3.8%
Utilities 1.8%
Mutual Fund 1.0%
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Total 100.0%
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(1) Percentage of Total Investments as of August 31, 2009.
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, 2009 to August 31,
2009 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.
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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 (03/01/09) $ 1,000.00 $ 1,000.00
Ending Account Value (08/31/09) $ 1,516.30 $ 1,017.64
Expenses Paid During Period(1) $ 9.51 $ 7.63
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(1) Expenses are equal to the Fund's expense ratio for the six month period of
1.50% for the Total Return Fund multiplied by the average account value
over the period, multiplied by 184/365 (to reflect the one-half year
period).
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PURISIMA TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 2009
SHARES OR PRINCIPAL VALUE VALUE
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COMMON STOCKS: 98.6%
AUSTRALIA: 1.7%
101,000 BHP Billiton, Ltd. - ADR $ 6,292,300
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BRAZIL: 3.7%
10,800 Banco Bradesco SA 175,068
5,527 Companhia Energetica de Minas Gerais - ADR 80,749
15,300 Companhia Siderurgica Nacional SA - ADR 399,177
11,000 Empresa Brasileira de Aeronautica SA 233,640
(Embraer) - ADR
15,500 Gafisa SA 224,601
25,800 Gerdau SA - ADR 303,150
184,700 Petroleo Brasileiro SA - ADR 7,321,508
230,900 Vale SA - ADR 4,435,589
40,200 Weg SA 332,743
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13,506,225
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CANADA: 1.0%
72,500 EnCana Corporation 3,769,275
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CHINA: 2.9%
450 Baidu.com - ADR (a) 148,527
138,500 China Cosco Holdings Company, Ltd. 167,799
3,400 China Life Insurance Company, Ltd. - ADR 215,424
174,200 China Mobile Hong Kong, Ltd. - ADR 8,574,124
162,000 China Oilfield Services, Ltd. 141,507
3,450 China Petroleum & Chemical Corporation - 289,627
ADR
2,600 CNOOC, Ltd. - ADR 339,690
366,000 Industrial & Commercial Bank Of China, Ltd. 249,810
46,400 Weichai Power Company, Ltd. 206,543
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10,333,051
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CZECH REPUBLIC: 0.0%
1,500 Cez AS 78,350
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FINLAND: 1.2%
296,400 Nokia Oyj - ADR 4,152,564
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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
- --------------------------------------------------------------------------------
FRANCE: 4.0%
25,700 AXA $ 585,079
173,550 AXA - ADR 3,969,089
46,708 BNP Paribas SA 3,761,201
104,708 Total SA - ADR 5,996,627
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14,311,996
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GERMANY: 6.2%
139,400 BASF AG - ADR 7,282,256
17,600 E.ON AG 744,582
129,900 E.ON AG - ADR 5,501,265
100,900 Siemens AG - ADR 8,762,156
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22,290,259
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HONG KONG: 0.9%
283,800 Cheung Kong Holdings, Ltd. - ADR 3,363,030
-------------
INDIA: 0.2%
1,600 HDFC Bank, Ltd. - ADR 157,616
5,400 ICICI Bank, Ltd. - ADR 164,808
1,800 Reliance Industries, Ltd. - GDR 144A (a) 153,000
11,100 Sterlite Industries India, Ltd. - ADR (a) 148,629
-------------
624,053
-------------
INDONESIA: 0.3%
264,500 Bank Rakyat Tbk PT 199,425
964,400 Bumi Resources Tbk PT 277,456
385,000 International Nickel Indonesia Tbk PT (a) 161,372
456,500 Medco Energi Internasional Tbk PT 132,466
5,600 Telekomunikasi Indonesia Tbk PT - ADR 182,168
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952,887
-------------
ISRAEL: 0.1%
4,900 Teva Pharmaceutical Industries, Ltd. -
ADR 252,350
-------------
ITALY: 1.0%
141,532 Intesa Sanpaolo SpA - ADR (a) 3,683,314
-------------
JAPAN: 5.4%
156,700 Honda Motor Company, Ltd. - ADR 4,909,411
454,200 Mitsubishi UFJ Financial Group, Incorporated 2,879,628
- ADR
283,800 Nomura Holdings, Incorporated 2,510,128
260,900 Panasonic Corporation - ADR 4,156,137
86,200 Sony Corporation 2,329,855
57,500 Sumitomo Mitsui Financial Group, 2,477,969
Incorporated
48,400 Sumitomo Mitsui Financial Group,
Incorporated - ADR (a) 206,184
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19,469,312
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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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MALAYSIA: 0.1%
52,200 CIMB Group Holdings BHD $ 147,491
106,000 Genting BHD 201,073
226,600 MMC Corporation BHD 151,217
-------------
499,781
-------------
MEXICO: 1.5%
99,500 America Movil SA de CV - ADR 4,492,425
221,308 Grupo Mexico SA de CV 320,670
17,700 Industrias Penoles SA de CV 274,495
6,000 Wal-Mart De Mexico SA de CV - ADR 211,500
-------------
5,299,090
-------------
NETHERLANDS: 2.9%
197,827 ING Groep NV - ADR 2,981,253
264,400 Unilever NV - ADR 7,384,692
-------------
10,365,945
-------------
NORWAY: 0.0%
0 Statoil ASA 5
-------------
PHILIPPINES: 0.1%
3,100 Philippine Long Distance Telephone - ADR 159,495
-------------
POLAND: 0.1%
1,900 Bank Pekao SA - GDR 97,107
900 Bre Bank SA (a) 78,722
2,800 KGHM Polska Miedz SA - GDR 167,815
-------------
343,644
-------------
RUSSIAN FEDERATION: 0.1%
3,000 LUKOIL - ADR 147,750
11,300 OAO Gazprom - Sponsored ADR 238,272
-------------
386,022
-------------
SOUTH AFRICA: 0.2%
3,400 Anglo Platinum, Ltd. - ADR (a) 301,716
10,300 MTN Group Ltd. 168,809
5,500 Sasol, Ltd. - ADR 207,845
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678,370
-------------
SOUTH KOREA: 0.7%
7,000 Daewoo Securities Company, Ltd. 128,633
4,700 Daewoo Shipbuilding & Marine
Engineering Company, Ltd. - GDR 150,391
2,800 Hyundai Dept Store 214,333
1,400 Hyundai Heavy Industries Company, Ltd. 213,548
2,800 KB Financial Group, Incorporated - 114,156
ADR (a)
800 Lotte Shopping Company 182,240
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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SOUTH KOREA: 0.7% (CONTINUED)
3,425 POSCO - ADR $ 313,250
1,250 Samsung Electronics Company, Ltd. - 384,586
GDR 144A
900 Samsung Fire & Marine Insurance Company 161,422
2,500 Samsung Securities Company, Ltd. 149,732
1,800 Shinhan Financial Group Company, Ltd. - ADR 117,576
3,600 SK Energy Company, Ltd. 289,695
2,400 Woori Finance Holdings Company, Ltd. - 80,448
ADR (a)
7,500 Woori Investment & Securities Company, Ltd. 105,092
-------------
2,605,102
-------------
SPAIN: 2.1%
495,675 Banco Santander Central Hispano SA - ADR 7,648,265
-------------
SWITZERLAND: 9.7%
321,800 Abb, Ltd - ADR 6,168,906
166,800 Credit Suisse Group - ADR 8,488,452
168,050 Nestle SA 6,979,733
48,400 Roche Holding AG 7,692,624
44,306 Transocean, Ltd (a) 3,360,167
133,833 UBS AG (a) 2,451,811
-------------
35,141,693
-------------
TAIWAN: 0.3%
35,480 Advanced Semiconductor Engineering,
Incorporated - ADR 124,180
23,246 Asustek Computer Incorporated - GDR 185,041
46,519 Hon Hai Precision - GDR 316,327
20,342 Siliconware Precision Industries, Ltd - ADR 128,155
43,735 Taiwan Semiconductor Manufacturing
Company, Ltd. - ADR 467,964
-------------
1,221,667
-------------
TURKEY: 0.0%
6,800 Turkcell Iletisim Hizmet AS - ADR 109,548
-------------
UNITED KINGDOM: 2.7%
13,003 Anglo American Plc 427,810
170,000 Anglo American Plc - ADR 2,752,300
74,350 GlaxoSmithKline Plc - ADR 2,907,085
24,625 Rio Tinto Plc - ADR 3,820,815
-------------
9,908,010
-------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 11
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SHARES OR PRINCIPAL VALUE VALUE
- --------------------------------------------------------------------------------
UNITED STATES: 49.5%
147,150 Anadarko Petroleum Corporation $ 7,779,820
343,000 Applied Materials, Incorporated 4,520,740
139,200 Carnival Corporation 4,071,600
120,500 Caterpillar, Incorporated 5,459,855
394,000 Cisco Systems, Incorporated (a) 8,510,400
155,500 Coach, Incorporated 4,399,095
104,700 ConocoPhillips 4,714,641
72,000 Devon Energy Corporation 4,419,360
119,500 Dover Corporation 4,133,505
221,700 Electronic Arts, Incorporated (a) 4,039,374
352,550 EMC Corporation (a) 5,605,545
133,000 Fortune Brands, Incorporated 5,294,730
125,300 Freeport-McMoRan Copper & Gold, 7,891,394
Incorporated
238,850 General Electric Company 3,320,015
151,900 Hewlett-Packard Company 6,818,791
89,900 Honeywell International, Incorporated 3,304,724
330,700 Intel Corporation 6,719,824
94,000 Johnson & Johnson 5,681,360
131,200 Merck & Co., Incorporated 4,254,816
269,600 Microsoft Corporation 6,645,640
209,200 Nordstrom, Incorporated 5,865,968
102,700 Nucor Corporation 4,574,258
131,700 Occidental Petroleum Corporation 9,627,270
336,400 Oracle Corporation 7,357,068
129,500 PACCAR, Incorporated 4,684,015
99,200 PPG Industries, Incorporated 5,495,680
69,225 Procter & Gamble Company 3,745,765
121,300 Schlumberger Ltd. 6,817,060
85,900 Target Corporation 4,037,300
24,766 Time Warner Cable, Incorporated 914,361
98,666 Time Warner, Incorporated 2,753,768
78,400 Union Pacific Corporation 4,689,104
92,900 United Technologies Corporation 5,514,544
100,900 Wal-Mart Stores, Incorporated 5,132,783
-------------
178,794,173
-------------
TOTAL COMMON STOCKS
(Cost $366,976,792) 356,239,776
-------------
12 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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SHARES OR PRINCIPAL VALUE VALUE
- --------------------------------------------------------------------------------
PREFERRED STOCKS: 0.4%
BRAZIL: 0.4%
3,100 Companhia de Bebidas das
Americas (AmBev) - ADR $ 231,167
27,225 Itau Unibanco Holding SA - ADR 456,019
34,000 Lojas Americanas SA 202,950
27,100 Vale SA - ADR 466,391
-------------
1,356,527
-------------
TOTAL PREFERRED STOCKS
(Cost $1,396,559) 1,356,527
-------------
MUTUAL FUNDS: 0.9%
3,543,764 SEI Daily Income Trust Government Fund 3,543,764
-------------
TOTAL MUTUAL FUNDS
(Cost $3,543,764) 3,543,764
-------------
TOTAL INVESTMENTS
(Cost $371,917,115): 99.9% 361,140,067
Other Assets in Excess of Liabilities: 0.1% 243,161
-------------
TOTAL NET ASSETS: 100.0% $ 361,383,228
=============
- -------------
ADR - American depositary receipt.
GDR - Global Depository Receipt.
(a) Non Income Producing.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 13
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INDUSTRY % OF NET ASSETS
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels 12.6%
Metals & Mining 9.1%
Commercial Banks 6.3%
Pharmaceuticals 5.8%
Software 5.0%
Machinery 4.2%
Food Products 4.0%
Capital Markets 3.8%
Wireless Telecommunication Services 3.7%
Chemicals 3.5%
Communications Equipment 3.5%
Computers & Peripherals 3.5%
Industrial Conglomerates 3.4%
Semiconductors & Semiconductor Equipment 3.4%
Household Durables 3.3%
Multiline Retail 2.9%
Energy Equipment & Services 2.9%
Aerospace & Defense 2.5%
Electric Utilities 1.8%
Electrical Equipment 1.7%
Food & Staples Retailing 1.5%
Insurance 1.4%
Automobiles 1.4%
Road & Rail 1.3%
Textiles, Apparel & Luxury Goods 1.2%
Hotels, Restaurants & Leisure 1.2%
Household Products 1.0%
Media 1.0%
Real Estate Management & Development 0.9%
Diversified Financial Services 0.8%
Electronic Equipment & Instruments 0.2%
Beverages 0.1%
Diversified Telecommunication Services 0.1%
Marine 0.0%
Internet Software & Services 0.0%
------
TOTAL INVESTMENT IN SECURITIES 99.0%
Cash Equivalent 0.9%
Other Assets in Excess of Liabilities 0.1%
------
TOTAL NET ASSETS 100.0%
======
14 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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PURISIMA TOTAL RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2009
ASSETS
Investments at value (cost $371,917,115) $ 361,140,067
=============
Cash 12,968
Receivables:
Interest and dividends 759,569
Fund shares sold 205,703
Prepaid expenses 15,500
-------------
Total Assets 362,133,807
-------------
LIABILITIES
Payable for fund shares redeemed 63,228
Payable to the adviser (Note 3) 333,451
Accrued distribution fees (Note 4) 198,333
Accrued fund administration, fund accounting,
transfer agent and custody fees 98,996
Accrued expenses 56,571
-------------
Total Liabilities 750,579
-------------
NET ASSETS $ 361,383,228
=============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 22,248,130
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 16.24
=============
COMPONENTS OF NET ASSETS
Paid-in capital 396,545,618
Undistributed net investment income 3,797,914
Accumulated net realized loss on investments (28,187,965)
Net unrealized depreciation on investments (10,777,048)
Net unrealized appreciation on foreign currency 4,709
-------------
NET ASSETS $ 361,383,228
=============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 15
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PURISIMA TOTAL RETURN FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2009
INVESTMENT INCOME
Dividend income(1) $ 8,845,612
Interest income 29,275
------------
Total Investment Income 8,874,887
------------
EXPENSES
Investment advisory fees (Note 3) 3,094,624
Distribution fees (Note 4) 661,923
Administration fees (Note 3) 254,121
Transfer agent fees 225,545
Fund accounting fees 103,100
Miscellaneous expenses 101,893
Custody fees 94,925
Registration fees 32,858
Audit fees 31,890
Reports to shareholders 29,545
Legal fees 26,786
Trustees fees 21,569
Interest expense 251
------------
Total expenses before waiver and reimbursement 4,679,030
Waiver and reimbursement of expenses by adviser (Note 3) (36,690)
------------
Net expenses 4,642,340
------------
NET INVESTMENT INCOME 4,232,547
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (27,858,277)
Net realized gain on foreign currency translation 19,636
Change in net unrealized appreciation/depreciation on (59,951,134)
investments
Change in net unrealized appreciation/depreciation on 7,326
------------
foreign currency
Net Realized and Unrealized Loss on Investments (87,782,449)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(83,549,902)
============
- ------------
(1) Net of $775,856 in foreign withholding taxes.
16 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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PURISIMA TOTAL RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
AUGUST 31, 2009 AUGUST 31, 2008
--------------- ---------------
OPERATIONS
Net investment income $ 4,232,547 $ 2,923,870
Net realized gain (loss) on investments and
foreign currency translation (27,838,641) 22,275,073
Change in net unrealized appreciation/
depreciation on investments (59,951,134) (84,190,652)
Change in net unrealized appreciation/
depreciation on foreign currency 7,326 (2,617)
------------- -------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS (83,549,902) (58,994,326)
------------- -------------
DISTRIBUTION TO SHAREHOLDERS
From net investment income (2,541,948) (1,298,261)
From net realized gain on investments (6,295,704) (34,522,389)
------------- -------------
NET DECREASE IN NET ASSETS RESULTING
FROM DISTRIBUTIONS PAID (8,837,652) (35,820,650)
------------- -------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 45,738,924 118,169,093
Proceeds from reinvestment of distributions 8,228,346 33,170,091
Cost of shares redeemed (55,808,714) (66,635,964)
------------- -------------
NET INCREASE (DECREASE) FROM CAPITAL
SHARE TRANSACTIONS (1,841,444) 84,703,220
------------- -------------
TOTAL DECREASE IN NET ASSETS (94,228,998) (10,111,756)
------------- -------------
NET ASSETS
Beginning of year 455,612,226 465,723,982
------------- -------------
End of year (includes undistributed net
investment income of $3,797,914
and $2,083,758 respectively) $ 361,383,228 $ 455,612,226
============= =============
CHANGE IN CAPITAL SHARES
Shares outstanding, beginning of year 22,500,371 18,784,710
------------- -------------
Shares sold 3,274,955 5,193,681
Shares issued on reinvestment of 620,071 1,428,514
distributions
Shares repurchased (4,147,267) (2,906,534)
------------- -------------
Net increase (decrease) in capital shares (252,241) 3,715,661
------------- -------------
Shares Outstanding, end of year 22,248,130 22,500,371
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 17
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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,
-------------------------------------------------------------------
2009 2008 2007 2006 2005
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year $ 20.25 $ 24.79 $ 21.51 $ 19.03 $ 16.58
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.19 0.15 0.09 0.04 0.10
Net realized and unrealized
gain (loss) on investments (3.79) (2.82) 3.27 2.72 2.42
---------- ---------- ---------- ---------- ----------
Total from investment operations (3.60) (2.67) 3.36 2.76 2.52
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
From net investment income (0.12) (0.07) (0.08) (0.28) (0.07)
From net realized gain (0.29) (1.80) -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions (0.41) (1.87) (0.08) (0.28) (0.07)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 16.24 $ 20.25 $ 24.79 $ 21.51 $ 19.03
========== ========== ========== ========== ==========
Total return (17.37%) (11.75%) 15.63% 14.54% 15.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions) $ 361.4 $ 455.6 $ 465.7 $ 387.3 $ 325.4
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed or recouped 1.51% 1.41% 1.39% 1.49% 1.46%
After fees waived and expenses
absorbed or recouped 1.50% 1.41% 1.39% 1.49% 1.49%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS # 1.37% 0.61% 0.37% 0.21% 0.52%
Portfolio turnover rate 22.04% 62.96% 16.38% 43.47% 16.68%
- ----------
# Net of fees waived.
18 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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PURISIMA TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2009
NOTE 1 - ORGANIZATION
The Purisima Funds (the "Trust") was organized as a Delaware statutory 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
19
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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.
The Funds adopted the provisions of Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("SFAS 157"), effective with
the beginning of the Portfolio's fiscal year. SFAS 157 establishes a
hierarchy that prioritizes the inputs to valuation techniques giving the
highest priority to readily available unadjusted quoted prices in
unobservable inputs (level 3 measurements) when market prices are not
readily available or reliable. See Note 6 - Fair Value of Financial
Instruments for further disclosure.
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.
20
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The Fund recognizes the tax benefits of uncertain tax positions only where
the position is "more likely then not" to be sustained assuming examination
by tax authorities. Management has analyzed the Fund's tax positions, and
has concluded that no liability for unrecognized tax benefits should be
recorded related to uncertain tax positions taken on returns filed for open
tax years (2006 - 2008), or expected to be taken in the Fund's 2009 tax
returns. The Fund identifies its major tax jurisdictions as U.S. Federal
and State of California. The Fund is not aware of any tax positions for
which it is reasonably possible that the total amounts of unrecognized tax
benefits will change materially in the next twelve months.
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. In preparing these financial statements, the Trust has
evaluated events and transactions for potential recognition or disclosure
through October 30, 2009, the date the financial statements were available
to be issued.
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.
21
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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, 2009,
the Total Return Fund increased accumulated undistributed net investment
income by $23,557, and increased accumulated net realized loss on
investments by $23,557.
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.
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,
2009, was as follows:
MAXIMUM AMOUNT AVERAGE AVERAGE
AMOUNT INTEREST OUTSTANDING AT AMOUNT INTEREST
OUTSTANDING EXPENSE AUGUST 31, 2009 OUTSTANDING RATE
- ----------- ------- --------------- ----------- ----
$ 748,000 $ 251 $ 0 $ 8,918 2.750%
K. ACCOUNTING FOR DERIVATIVES. 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.
Because the Fund holds no derivative positions, the adoption of SFAS 161
had no impact on the Fund's financial statement.
22
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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
contractually 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, 2009, the Adviser waived fees of $36,690.
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, 2009, Purisima Total Return Fund paid USBFS $254,121 for
services rendered in its capacity as the Trust'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 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, 2009, the Fund
23
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incurred $661,923 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,
2009 were as follows:
FUND PURCHASES SALES
---- --------- -----
Total Return Fund $69,810,605 $74,876,824
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Trust has adopted authoritative fair valuation accounting standards which
establish an authoritative definition of fair value and set out a hierarchy for
measuring fair value. These standards require additional disclosures about the
various inputs and valuation techniques used to develop the measurements of fair
value and a discussion in changes in valuation techniques and related inputs
during the period. These inputs are summarized in the three board levels listed
below.
The Trust has performed an analysis of all existing investments to determine the
significance and character of all inputs to their fair value determination.
Level 1 - Quoted unadjusted prices for identical instruments in active
markets to which the Trust has access at the date of measurement.
Level 2 - Quoted prices for similar instruments in active markets; quoted
prices for identical or similar instruments in markets that are
not active; and model-derived valuations in which all significant
inputs and significant value drivers are observable in active
markets. Level 2 inputs are those in markets for which there are
few transactions, the prices are not current, little public
information exists or instances where prices vary substantially
over time or among brokered market makers.
Level 3 - Model derived valuations in which one or more significant inputs
or significant value drivers are unobservable. Unobservable
inputs are those inputs that reflect the Trust's own assumptions
that market participants would use to price the asset or
liability based on the best available information.
The following table provides the fair value measurements of applicable Fund
assets by level within the fair value hierarchy for each Fund as of August 31,
2009. These assets are measured on a recurring basis.
24
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LEVEL 1 -- LEVEL 2 -- LEVEL 3 --
QUOTED PRICES SIGNIFICANT SIGNIFICANT
IN ACTIVE MARKETS OTHER OBSERVABLE UNOBSERVABLE
DESCRIPTIION TOTAL FOR IDENTICAL ASSETS INPUTS INPUTS
- -------------------------------------------------------------------------------------------------------
EQUITY
Capital Good $ 42,850,134 $ 42,699,743 $ 150,391 $ --
Consumer Discretionary 39,710,904 39,543,089 167,815 --
Consumer Staples 23,685,640 23,685,640 -- --
Energy 55,987,618 55,987,618 -- --
Financials 47,925,668 47,828,561 97,107 --
Health Care 20,788,235 20,788,235 -- --
Information Technology 56,124,726 55,939,685 185,041 --
Materials 45,574,959 45,574,959 -- --
Telecommunication Services 13,686,569 13,686,569 -- --
Transportation 4,856,903 4,856,903 -- --
Utilities 6,404,947 6,404,947 -- --
- -------------------------------------------------------------------------------------------------------
TOTAL EQUITY $357,596,303 $356,995,949 $ 600,354 $ --
SHORT-TERM INVESTMENTS $ 3,543,764 $ 3,543,764 $ -- $ --
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN $361,140,067 $360,539,713 $ 600,354 $ --
SECURITIES
- -------------------------------------------------------------------------------------------------------
OTHER FINANCIAL INSTRUMENTS* $ -- $ -- $ -- $ --
- -------------------------------------------------------------------------------------------------------
* Other financial instruments are derivative instruments not reflected in the
Schedule of Investments, such as futures, forwards, swaps contracts, and
written options. Futures, forwards, and swap contracts are valued at the
unrealized appreciation (depreciation) on the instrument while written
options are valued at market value.
NOTE 7 - 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, 2009, the components of distributable earnings on a tax basis
were as follows:
TOTAL RETURN
----------------
Cost of investments for tax purposes $ 372,208,861
================
Gross tax unrealized appreciation $ 52,536,526
Gross tax unrealized depreciation (63,605,320)
----------------
Net tax unrealized depreciation (11,068,794)
----------------
Undistributed ordinary income 3,797,914
Undistributed Long Term Capital Gains 175,283
----------------
Total distributable earnings 3,973,197
----------------
Other accumulated loss (28,066,793)
----------------
Total accumulated loss $ (35,162,390)
================
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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, 2009, the Fund deferred, on a tax basis, $28,071,502 of Post-October
losses.
The tax composition of dividends are as follows:
ORDINARY LONG TERM
INCOME CAPITAL GAINS
------ -------------
Total Return Fund
8/31/2009 $2,541,948 $ 6,295,704
8/31/2008 $1,298,261 $34,522,389
The Fund designated $6,295,704 as long-term capital gain dividend, pursuant to
Internal Revenue Code Section 852(b)(3).
26 The accompanying notes are an integral part of these financial statements.
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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, 2009, 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 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, 2009, 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 Total Return Fund as of August 31, 2009, 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 30, 2009
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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, 2009, 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.
28
- --------------------------------------------------------------------------[LOGO]
(UNAUDITED)
The percentage of dividend income distributed for the year ended August 31, 2009
designated as qualified dividends received deduction available to corporate
shareholders is 85.65% for the Total Return Fund.
For the year ended August 31, 2009, 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 188,272.00 -- 0%
Brazil 482,560.00 54,688.36 11%
Canada 137,739.31 20,660.90 15%
China 27,577.63 3,021.74 11%
Cayman Islands (13.00) --
Czech 7,579.30 1,136.89 15%
France 491,447.92 107,710.72 22%
Finland 161,789.05 25,305.74 16%
Germany 884,681.62 230,313.01 26%
Hong Kong 413,517.44 25,668.43 6%
India 3,412.40 21.02 1%
Indonesia 26,895.43 4,093.95 15%
Italy 4,050.75 607.61 15%
Israel 3,255.57 626.92 19%
Japan 376,167.85 31,625.32 8%
Luxembourg 2,712.51 94.87 3%
Malaysia 7,769.19 1,399.59 18%
Mexico 55,982.45 -- 0%
Netherlands 264,742.89 40,015.55 15%
Netherlands Antellies 107,436.00 -- 0%
Norway 4,500.00 -- 0%
Philippines 24,175.37 3,769.78 16%
Poland 20,651.40 3,209.64 16%
Republic of Korea 32,376.33 5,250.98 16%
South Africa 9,024.80 51.00 1%
Spain 756,473.13 127,610.38 17%
Russia 10,147.16 1,988.88 20%
Switzerland 595,230.43 71,607.21 12%
Taiwan 34,872.93 9,944.62 29%
Turkey 5,198.22 138.71 3%
29
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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
30
- --------------------------------------------------------------------------[LOGO]
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.
- --------------------------------------------------------------------------------
31
[LOGO]--------------------------------------------------------------------------
Name, Address, Position(s) Held
Date of Birth 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.
32
- --------------------------------------------------------------------------[LOGO]
Number of
Portfolios in
Fund Complex Other
Principal Occupation(s) Overseen by Directorships
During Past Five Years Director Held
- --------------------------------------------------------------------------------
Vice President and Chief Compliance Officer of N/A None
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.
- --------------------------------------------------------------------------------
Vice President of U.S. Bancorp Fund N/A None
Services, LLC since 2001.
- --------------------------------------------------------------------------------
33
[LOGO]--------------------------------------------------------------------------
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.
34
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THE PURISIMA FUNDS
Annual Report
August 31, 2009
The Purisima All-Purpose Fund
A LETTER TO OUR SHAREHOLDERS
Welcome to the annual report for the Purisima All-Purpose Fund for the 12-month
period ending August 31, 2009. 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. 09/09
PERFORMANCE SUMMARY
FOR YEAR ENDED AUGUST 31, 2009
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 8/31/09*
[The following table was represented as a line chart in the printed material.]
MERRILL LYNCH U.S. TREASURY BILLS
PURISIMA ALL-PURPOSE FUND 0-3 MONTHS INDEX
------------------------- ----------------
11/1/2005 10,000 10,000
11/30/2005 10,020 10,032
12/31/2005 10,049 10,064
1/31/2006 10,100 10,095
2/28/2006 10,160 10,128
3/31/2006 10,220 10,167
4/30/2006 10,281 10,205
5/31/2006 10,351 10,246
6/30/2006 10,421 10,285
7/31/2006 10,492 10,329
8/31/2006 10,562 10,374
9/30/2006 10,623 10,421
10/31/2006 10,683 10,461
11/30/2006 10,743 10,506
12/31/2006 10,800 10,553
1/31/2007 10,865 10,596
2/28/2007 10,908 10,636
3/31/2007 10,973 10,684
4/30/2007 11,027 10,731
5/31/2007 11,103 10,779
6/30/2007 11,168 10,821
7/31/2007 11,232 10,863
8/31/2007 11,330 10,923
9/30/2007 11,352 10,965
10/31/2007 11,416 10,998
11/30/2007 11,481 11,049
12/31/2007 11,530 11,081
1/31/2008 11,657 11,136
2/29/2008 11,692 11,153
3/31/2008 11,726 11,178
4/30/2008 11,738 11,190
5/31/2008 11,749 11,193
6/30/2008 11,772 11,213
7/31/2008 11,807 11,233
8/31/2008 11,818 11,250
9/30/2008 11,841 11,283
10/31/2008 11,864 11,296
11/30/2008 11,956 11,308
12/31/2008 11,996 11,308
1/31/2009 11,948 11,307
2/28/2009 11,936 11,310
3/31/2009 11,948 11,314
4/30/2009 11,936 11,317
5/31/2009 12,175 11,318
6/30/2009 12,151 11,320
7/31/2009 12,139 11,322
8/31/2009 12,139 11,325
PURISIMA ALL-PURPOSE FUND
ONE-YEAR
Average Annual Total Return(2**) 2.71%
SINCE INCEPTION (11/01/2005)
Cumulative Total Return(1**) 21.39%
Average Annual Total Return(2**) 5.19%
MERRILL LYNCH U.S. TREASURY BILLS 0-3 MONTHS INDEX
ONE-YEAR
Average Annual Total Return(2**) 0.66%
SINCE FUND INCEPTION (11/01/2005)
Cumulative Total Return(1**) 13.25%
Average Annual Total Return(2**) 3.30%
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.
SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA ALL-PURPOSE FUND
- --------------------------------------------------------------------------------
U.S. Treasury Obligations 67.3%
Mutual Funds 32.7%
- --------------------------------------------------------------------------------
Total 100.0%
(1) Percentage of Total Investments as of August 31, 2009.
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; 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, 2009 to August 31,
2009 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 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.
EXPENSE EXAMPLE (UNAUDITED)
PURISIMA ALL-PURPOSE FUND ACUTAL HYPOTHETICAL PERFORMANCE
(Inception date: 11/01/2005) PERFORMANCE (5% RETURN BEFORE EXPENSES)
- --------------------------------------------------------------------------------
Beginning Account Value (03/01/09) $1,000.00 $1,000.00
Ending Account Value (08/31/09) $1,017.00 $1,017.64
Expenses Paid During Period(1) $7.63 $7.63
- --------------------------------------------------------------------------------
(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 184/365 (to reflect the four
month period).
PURISIMA ALL-PURPOSE FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 2009
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY NOTE - 61.1%
10,000 3.500%, 02/15/2010 $ 10,149
10,000 5.125%, 06/30/2011 10,774
10,000 4.000%, 09/30/2009 10,033
---------
TOTAL U.S. TREASURY NOTES (COST $30,788) $ 30,956
---------
SHARES VALUE
- --------------------------------------------------------------------------------
MUTUAL FUNDS - 29.7%
15,069 SEI Daily Income Trust Government Fund 15,069
---------
TOTAL MUTUAL FUNDS (COST $15,069) $ 15,069
---------
TOTAL INVESTMENTS (COST $45,857) - 90.8% $ 46,025
Other Assets in Excess of Liabilities - 9.2% 4,640
---------
TOTAL NET ASSETS - 100.0% $ 50,665
=========
PURISIMA ALL-PURPOSE FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2009
ALL-PURPOSE
FUND
------------
ASSETS
Investments in securities, at cost $ 45,857
============
Investments in securities, at value $ 46,025
Receivables:
Dividends and interest 275
Due from Adviser (Note 3) 13,446
Prepaid expenses 15,135
------------
Total Assets 74,881
------------
LIABILITIES
Accrued administration fees (Note 3) 3,066
Accrued transfer agent fees 2,553
Accrued audit fees 12,010
Accrued fund accounting fees 5,098
Accrued reports to shareholders 946
Other accrued expenses 543
------------
Total Liabilities 24,216
------------
NET ASSETS $ 50,665
============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 4,970
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE $ 10.19
============
COMPONENTS OF NET ASSETS
Paid-in capital $ 49,785
Accumulated net investment income 712
Net unrealized appreciation on investments 168
------------
Net assets $ 50,665
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2009
ALL-PURPOSE
FUND
------------
INVESTMENT INCOME
Income
Interest $ 1,578
------------
Total income 1,578
------------
Expenses
Advisory fees 417
Administration fees 40,058
Transfer agent fees 15,064
Fund accounting fees 30,374
Custody fees 3,182
Reports to shareholders 3,435
Registration fees 22,276
Audit fees 12,070
Legal fees 5
Trustee fees 22,057
Miscellaneous 495
------------
Total expenses 149,433
Less: Expenses waived by Adviser (Note 3) (148,806)
------------
Net expenses 627
------------
NET INVESTMENT INCOME 951
------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investments 7
Change in net unrealized appreciation on investments 168
------------
Net gain on investments 175
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,126
============
PURISIMA ALL-PURPOSE FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
INCREASE IN NET ASSETS FROM: AUGUST 31, 2009 AUGUST 31, 2008
--------------- ---------------
OPERATIONS
Net investment income $ 951 $ 1,289
Net realized gain on investments 7 9
Change in net unrealized appreciation (depreciation) on investments 168 (96)
-------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,126 1,202
-------- --------
DISTRIBUTION TO SHAREHOLDERS
From net investment income (1,006) (1,717)
From net realized gains from investments (15) --
-------- --------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (1,021) (1,717)
-------- --------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding shares (a) 21,021 1,717
-------- --------
TOTAL INCREASE IN NET ASSETS 21,126 1,202
-------- --------
NET ASSETS
Beginning of period 29,539 28,337
-------- --------
END OF PERIOD $ 50,665 $ 29,539
======== ========
Undistributed net investment income $ 712 $ 767
======== ========
(a) A summary of capital share transactions is as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2009 AUGUST 31, 2008
SHARES VALUE SHARES VALUE
------ ------ ------ -----
Shares sold 1,992 $20,000 -- $ --
Shares issued on reinvestment of distributions 101 1,021 172 1,717
Shares redeemed -- -- -- --
Net increase 2,093 $21,021 172 $1,717
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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.
PURISIMA ALL-PURPOSE FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED NOVEMBER 1, 2005^ THRU
AUGUST 31, 2009 AUGUST 31, 2008 AUGUST 31, 2007 AUGUST 31, 2006
Net asset value, beginning of period $ 10.27 $ 10.47 $ 10.50 $ 10.00
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.19 0.46 0.69 0.56
Net realized and unrealized gain
(loss) on investments 0.08 (0.03) 0.04 --
-------- -------- -------- --------
Total from investment operations 0.27 0.43 0.73 0.56
-------- -------- -------- --------
LESS DISTRIBUTIONS:
From net investment income (0.35) (0.63) (0.76) (0.06)
From net realized gain --*** -- -- --
-------- -------- -------- --------
Total distributions (0.35) (0.63) (0.76) (0.06)
-------- -------- -------- --------
Net asset value, end of period $ 10.19 $ 10.27 $ 10.47 $ 10.50
======== ======== ======== ========
Total return 2.71% 4.31% 7.27% 5.62%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 50.7 $ 29.5 $ 28.3 $ 26.4
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived 357.92% 500.20% 545.57% 620.25%*
After fees waived 1.50% 1.50% 1.50% 1.50%*
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS # 2.28% 4.44% 6.66% 6.71%*
Portfolio turnover rate 0.00% 0.00% 0.00% 0.00%**
- ----------
# Net of fees waived.
* Annualized.
** Not annualized.
*** Amount represents less than $0.01 per share.
^ Commencement of operations.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2009
NOTE 1 - ORGANIZATION
The Purisima Funds (the "Trust") was organized as a Delaware statutory 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
include 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. From its inception through August 31, 2009, the Fund
has invested exclusively in money-market instruments.
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.
PURISIMA ALL-PURPOSE FUND
The Funds adopted the provisions of Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("SFAS 157"), effective with
the beginning of the Portfolios' fiscal year. SFAS 157 establishes a
hierarchy that prioritizes the inputs to valuation techniques giving the
highest priority to readily available unadjusted quoted prices in
unobservable inputs (level 3 measurements) when market prices are not
readily available or reliable. See Note 6 - Fair Value of Financial
Instruments for further disclosure.
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 has elected to be taxed as
a "regulated investment 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 that exist in the markets
in which it invests.
The Fund recognizes the tax benefits of uncertain tax positions only where
the position is
PURISIMA ALL-PURPOSE FUND
"more likely then not" to be sustained assuming examination by tax
authorities. Management has analyzed the Fund's tax positions, and has
concluded that no liability for unrecognized tax benefits should be
recorded related to uncertain tax positions taken on returns filed for
open tax years (2006 - 2008), or expected to be taken in the Fund's 2009
tax returns. The Fund identifies its major tax jurisdictions as U.S.
Federal and State of California. The Fund is not aware of any tax
positions for which it is reasonably possible that the total amounts of
unrecognized tax benefits will change materially in the next twelve
months.
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. In
preparing these financial statements, the Trust has evaluated events
and transactions for potential recognition or disclosure through
October 30, 2009, the date the financial statements were available
to be issued.
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. 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 if 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
PURISIMA ALL-PURPOSE FUND
close the position is realized as a gain or loss. The Fund may
purchase options which are included in the Fund's Schedules of
Investments and subsequently marked to market to reflect the current
value of the option. At August 31, 2009, the Fund had no options
outstanding.
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.
J . ACCOUNTING FOR DERIVATIVES. 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. Because the
Fund holds no derivative positions, the adoption of SFAS 161 had no
impact on the Fund's financial statement.
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
contractually 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.
PURISIMA ALL-PURPOSE FUND
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, 2009, the Fund paid the Adviser $417.
As of August 31, 2009, the Adviser has reimbursed the Fund $148,806 to limit its
total expenses to not more than 1.50% of the average daily net assets.
At August 31, 2009 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, 2010 AUGUST 31, 2011 AUGUST 31, 2012
- ---- --------------- --------------- ---------------
Purisima All-Purpose Fund $148,574 $144,904 $148,806
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, 2009, Purisima All-Purpose Fund paid USBFS $40,058 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, 2009, the Fund did not
utilize the Plan.
PURISIMA ALL-PURPOSE FUND
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, 2009, were as follows:
FUND PURCHASES SALES
Purisima All-Purpose Fund $ 0 $ 0
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Trust has adopted authoritative fair valuation accounting standards which
establish an authoritative definition of fair value and set out a hierarchy for
measuring fair value. These standards require additional disclosures about the
various inputs and valuation techniques used to develop the measurements of fair
value and a discussion in changes in valuation techniques and related inputs
during the period. These inputs are summarized in the three board levels listed
below.
The Trust has performed an analysis of all existing investments to determine the
significance and character of all inputs to their fair value determination.
Level 1 - Quoted unadjusted prices for identical instruments in active
markets to which the Trust has access at the date of measurement.
Level 2 - Quoted prices for similar instruments in active markets; quoted
prices for identical or similar instruments in markets that are not
active; and model-derived valuations in which all significant inputs and
significant value drivers are observable in active markets. Level 2 inputs
are those in markets for which there are few transactions, the prices are
not current, little public information exists or instances where prices
vary substantially over time or among brokered market makers.
Level 3 - Model derived valuations in which one or more significant inputs
or significant value drivers are unobservable. Unobservable inputs are
those inputs that reflect the Trust's own assumptions that market
participants would use to price the asset or liability based on the best
available information.
The following table provides the fair value measurements of applicable Fund
assets by level within the fair value hierarchy for the Fund as of August 31,
2009. These assets are measured on a recurring basis.
Level 1 - Quoted
prices in active Level 2 -
markets for identical Significant other Level 3 - Significant
Description Total assets observable inputs unobservable inputs
- ---------------------------------------------------------------------------------------------------------------
FIXED INCOME
Federal Agency Obligations $30,956 $ -- $30,956 $ --
- ---------------------------------------------------------------------------------------------------------------
TOTAL FIXED INCOME $30,956 $ -- $30,956 $ --
- ---------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS $15,069 $15,069 $ -- $ --
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES $46,025 $15,069 $30,956 $ --
- ---------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL INSTRUMENTS* $ -- $ -- $ -- $ --
- ---------------------------------------------------------------------------------------------------------------
PURISIMA ALL-PURPOSE FUND
*Other financial instruments are derivative instruments not reflected in the
Schedule of Investments, such as futures, forwards, swap contracts, and written
options. Futures, forwards, and swap contracts are valued at the unrealized
appreciation (depreciation) on the instrument while written options are valued
at market value.
NOTE 7 - 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 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, 2009, the components of distributable earnings on a tax basis
were as follows:
All-Purpose
-----------
Cost of investments for tax purposes $45,857
=======
Gross tax unrealized appreciation $ 169
Gross tax unrealized depreciation $ (1)
-------
Net tax unrealized appreciation $ 168
Undistributed ordinary income $ 712
-------
Total accumulated earnings $ 880
=======
The tax compositions of dividends are as follows:
Ordinary Long Term
Income Capital Gains
------ -------------
Purisima All-Purpose Fund
8/31/2009 $1,021 --
8/31/2008 $1,717 --
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, 2009, 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 three 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 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, 2009, 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, 2009, 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 & BAKERLLP
PHILADELPHIA, PENNSYLVANIA
OCTOBER 30, 2009
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)
Additional Information applicable to foreign shareholders only: The percentage
of taxable ordinary income distributions that are designated as short-term
capital gain distributions under Internal Revenue Code Section 871(k)(2)(C) for
the year ended August 31, 2009 is 11.86%.
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 OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH WITH TRUST ELECTED(1) OCCUPATION(S) 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,
13100 Skyline Blvd. Inc., the sole shareholder of the
Woodside, CA 94062 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.
Pierson E. Clair III Trustee 1996 President and Chief Executive 2 Signature Foods,
(born 1948) Officer of Brown & Haley since 1998 Inc.
13100 Skyline Blvd. (fine confectioners); Vice President
Woodside, CA 94062 of Blummer 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 President and Chief Executive 2 East Bay BOMA;
(born 1948) Officer of Omnimetric Services, LLC. BOMA California;
13100 Skyline Blvd. since 2009, Executive Director of Heritage Bank
Woodside, CA 94062: the law firm of Berding & Weil, LLP (Advisory Board).
since 1990.
Bryan F. Morse Trustee 1996 Sole proprietor of Bryan F. Morse, 2 None
(born 1952) RIA, a registered investment adviser
13100 Skyline Blvd. since 1990.
Woodside, CA 94062
Grover T. Wickersham Trustee 1996 Attorney in private practice in Palo 2 None
(born 1949) Alto, California. Prior to entering
13100 Skyline Blvd. private practice in June of 1981,
Woodside, CA 94062 served as a Branch Chief of the Los
Angeles Regional Office of the U.S.
Securities and Exchange Commission.
Tom Fishel Chief 2005 Vice President and Chief Compliance N/A None
(born 1960) Compliance Officer of the Adviser. Vice
13100 Skyline Blvd. Officer President of Charles Schwab & Co.,
Woodside, CA 94062 Inc. from 1995 to 2004, where he had
been employed since 1983.
Keith Shintani (born Secretary and 2006 Vice President of U.S. Bancorp Fund N/A None
1963) Assistant Services, LLC and its predecessor,
2020 East Financial Way Treasurer Investment Company Administration,
Glendora, CA 91741 LLC since 1998.
- ----------
(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.
NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX OTHER
NAME, ADDRESS, POSITION(S) HELD YEAR PRINCIPAL OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH WITH TRUST ELECTED(2) OCCUPATION(S) DURING PAST FIVE YEARS DIRECTOR HELD
- ------------------------------------------------------------------------------------------------------------------------------------
Michael Ricks (born Treasurer 2006 Vice President of U.S. Bancorp N/A None
1977) Fund 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.
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.
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 08/31/2009 FYE 08/31/2008
--------------------------------------------------------------------
Audit Fees 38,000 36,000
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 08/31/2009 FYE 08/31/2008
--------------------------------------------------------------------
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/directors 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 08/31/2009 FYE 08/31/2008
--------------------------------------------------------------------
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) ANY CODE OF ETHICS OR AMENDMENT THERETO, THAT IS THE SUBJECT OF THE
DISCLOSURE REQUIRED BY ITEM 2, TO THE EXTENT THAT THE REGISTRANT INTENDS
TO SATISFY ITEM 2 REQUIREMENTS THROUGH FILING AN EXHIBIT. 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.
The Purisima Funds
By /S/ KENNETH L. FISHER
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Kenneth L. Fisher, President
Date 11/6/09
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 11/6/09
By /S/ MICHAEL RICKS
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Michael Ricks, Treasurer
Date 11/6/09