As filed with the Securities and Exchange Commission on May 07, 2010
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
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THE PURISIMA FUNDS
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(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
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(Name and address of agent for service)
(650) 851-3334
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Registrant's telephone number, including area code
Date of fiscal year end: AUGUST 31
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Date of reporting period: FEBRUARY 28, 2010
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ITEM 1. REPORTS TO STOCKHOLDERS.
THE PURISIMA FUNDS
Semi-Annual Report
February 28, 2010
The Purisima All-Purpose Fund
A LETTER TO OUR SHAREHOLDERS
Welcome to the semi-annual report for the Purisima All-Purpose Fund for the
six-month period ended February 28, 2010. The Fund seeks to provide protection
against declines in the value of the US 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 INVESTMENT ADVICE.
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. 04/10
SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA ALL-PURPOSE FUND
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U.S. Treasury Obligations 96.7%
Mutual Funds 3.3%
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Total 100.0%
(1) Percentage of Total Investments as of February 28, 2010.
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 September 1, 2009 to
February 28, 2010 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 (9/01/08) $1,000.00 $1,000.00
Ending Account Value (02/28/10) $996.40 $1,017.36
Expenses Paid During Period(1) $7.42 $7.50
- --------------------------------------------------------------------------------
(1) Expenses are equal to the Fund's expense ratio for the six month period of
1.50% for the Purisima All-Purpose Fund multiplied by the average account value
over the period, multiplied by 181/365 (to reflect the one-half year period).
PURISIMA ALL-PURPOSE FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2010 (UNAUDITED)
PRINCIPAL AMOUNT VALUE
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U.S. TREASURY BILL - 49.5%
10,000 0.000%, 03/25/2010 $ 10,000
15,000 0.000%, 12/16/2010 14,971
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TOTAL U.S. TREASURY BILLS (COST $24,968) 24,971
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U.S. TREASURY NOTE - 41.4%
10,000 5.750%, 08/15/2010 $ 10,259
10,000 5.125%, 06/30/2011 10,627
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TOTAL U.S. TREASURY NOTES (COST $20,700) $ 20,886
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PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
MUTUAL FUNDS - 3.1%
1,545 SEI Daily Income Trust Government Fund 1,545
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TOTAL MUTUAL FUNDS (COST $1,545) $ 1,545
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TOTAL INVESTMENTS (COST $47,213) - 94.0% $ 47,402
Other Assets in Excess of Liabilities - 6.0% 3,041
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TOTAL NET ASSETS - 100.0% $ 50,443
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 2010 (UNAUDITED)
ALL-PURPOSE FUND
----------------
ASSETS
Investments in securities, at cost $ 47,213
===============
Investments in securities, at value $ 47,402
Receivables:
Dividends and interest 108
Due from Adviser (Note 3) 11,478
Prepaid expenses 12,929
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Total Assets 71,917
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LIABILITIES
Accrued administration fees (Note 3) 2,812
Accrued transfer agent fees 3,717
Accrued audit fees 5,983
Accrued fund accounting fees 7,437
Accrued reports to shareholders 783
Other accrued expenses 742
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Total Liabilities 21,474
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NET ASSETS $ 50,443
===============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 5,041
===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE $ 10.01
===============
COMPONENTS OF NET ASSETS
Paid-in capital $ 50,497
Accumulated net investment loss (243)
Net unrealized appreciation on investments 189
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Net assets $ 50,443
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
ALL-PURPOSE FUND
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INVESTMENT INCOME
Income
Interest $ 133
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Total income 133
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Expenses
Advisory fees 251
Administration fees 19,910
Transfer agent fees 7,421
Fund accounting fees 15,023
Custody fees 1,629
Reports to shareholders 1,629
Registration fees 11,583
Audit fees 5,973
Legal fees 2
Trustee fees 11,041
Miscellaneous 184
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Total expenses 74,646
Less: Expenses waived by Adviser (Note 3) (74,270)
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Net expenses 376
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NET INVESTMENT LOSS (243)
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REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investments -
Change in net unrealized appreciation on investments 21
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Net gain on investments 21
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (222)
===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
INCREASE IN NET ASSETS FROM: FEBRUARY 28, 2010 AUGUST 31, 2009
----------------- ---------------
(UNAUDITED)
OPERATIONS
Net investment income (loss) $ (243) $ 951
Net realized gain on investments -- 7
Change in net unrealized appreciation on investments 21 168
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NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (222) 1,126
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DISTRIBUTION TO SHAREHOLDERS
From net investment income (712) (1,006)
From net realized gains from investments -- (15)
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TOTAL DISTRIBUTIONS TO SHAREHOLDERS (712) (1,021)
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CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in outstanding shares (a) 712 21,021
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (222) 21,126
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NET ASSETS
Beginning of period 50,665 29,539
--------------- ---------------
END OF PERIOD $ 50,443 $ 50,665
=============== ===============
Undistributed net investment income $ (243) $ 712
=============== ===============
(a) A summary of capital share transactions is as follows:
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2010* AUGUST 31, 2009
--------------------------------- ----------------------------------
SHARES VALUE SHARES VALUE
--------------- --------------- --------------- ---------------
Shares sold -- $ -- 1,992 $ 20,000
Shares issued on reinvestment of distributions 71 712 101 1,021
Shares redeemed -- -- -- --
--------------- --------------- --------------- ---------------
Net increase 71 $ 712 2,093 $ 21,021
=============== =============== =============== ===============
* Unaudited
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS SEMI-ANNUAL REPORT.
FOR THE FOR THE FOR THE NOVEMBER 1,
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED 2005^ THRU
FEBRUARY 28, 2010++ AUGUST 31, 2009 AUGUST 31, 2008 AUGUST 31, 2007 AUGUST 31, 2006
------------------- --------------- --------------- --------------- ---------------
Net asset value, beginning of period $10.19 $10.27 $10.47 $10.50 $10.00
------------------- --------------- --------------- --------------- ---------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.05) 0.19 0.46 0.69 0.56
Net realized and unrealized gain
(loss) on investments 0.01 0.08 (0.03) 0.04 --
------------------- --------------- --------------- --------------- ---------------
Total from investment operations (0.04) 0.27 0.43 0.73 0.56
------------------- --------------- --------------- --------------- ---------------
LESS DISTRIBUTIONS:
From net investment income (0.14) (0.35) (0.63) (0.76) (0.06)
From net realized gain -- --*** -- -- --
------------------- --------------- --------------- --------------- ---------------
Total distributions (0.14) (0.35) (0.63) (0.76) (0.06)
------------------- --------------- --------------- --------------- ---------------
Net asset value, end of period $10.01 $10.19 $10.27 $10.47 $10.50
=================== =============== =============== =============== ===============
Total return (0.36%)** 2.71% 4.31% 7.27% 5.62%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $50.4 $50.7 $29.5 $28.3 $26.4
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived 297.78%* 357.92% 500.20% 545.57% 620.25%*
After fees waived 1.50%* 1.50% 1.50% 1.50% 1.50%*
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS # -0.97%* 2.28% 4.44% 6.66% 6.71%*
Portfolio turnover rate 0.00%** 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.
++ Unaudited
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2010 (UNAUDITED)
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
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 "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 or 2010 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.
PURISIMA ALL-PURPOSE FUND
D. SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS. Security
transactions are accounted for on the trade date. Dividend income
and distributions to shareholders are recorded on the ex-dividend
date and interest income is recognized on the accrual basis.
Realized gains and losses are evaluated on the bases of identified
costs.
E. USE OF ESTIMATES. The presentation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates and assumptions.
F. CONCENTRATION OF RISK. Investments in securities of non-U.S. issues
in certain countries involve special investment risks. These risks
may include, but are not limited to, investment restrictions,
adverse political, social and economic developments, government
involvement in the private sector, limited and less reliable
investor information, lack of liquidity, certain 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 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
February 28, 2010, 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.
PURISIMA ALL-PURPOSE FUND
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. The Fund adopted an accounting standard
involving disclosures of derivatives and hedging activities that is
effective for fiscal years beginning after November 14, 2008. The
standard 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 operations and financial position. The
standard does not have any impact on the Funds' financial
disclosures because the Funds have not maintained any positions in
derivative instruments or engaged in hedging activities.
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 six
months ended February 28, 2010, the Fund paid the Adviser $251.
PURISIMA ALL-PURPOSE FUND
As of February 28, 2010, the Adviser has reimbursed the Fund $74,270 to limit
its total expenses to not more than 1.50% of the average daily net assets.
At February 28, 2010 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 six
months ended February 28, 2010, Purisima All-Purpose Fund paid USBFS $19,910 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 six months ended February 28, 2010, the Fund
did not utilize the Plan.
NOTE 5 - INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of securities, excluding
short-term investments, for the six months ended February
28, 2010, were as follows:
FUND PURCHASES SALES
---- --------- -----
Purisima All-Purpose Fund $ 0 $ 0
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS PURISIMA ALL-PURPOSE FUND
The Fund follows a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Fund's own market
assumptions (unobservable inputs). These inputs are used in determining the
value of the Fund's investments and are summarized in the following fair value
hierarchy:
Level 1 - Quoted prices in active markets for identical securities.
Level 2 - Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 - Significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments).
The following is a summary of the inputs used, as of February 28, 2010, in
valuing the Fund's investments carried at fair value:
Level 1 - Quoted
prices in active Level 2 -
markets for Significant other Level 3 - Significant
Description Total identical assets observable inputs unobservable inputs
- --------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME
Federal Agency Obligations $ 45,857 $ -- $ 45,857 $ --
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED INCOME $ 45,857 $ -- $ 45,857 $ --
SHORT-TERM INVESTMENTS $ 1,545 $ 1,545 $ -- $ --
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES $ 47,402 $ 1,545 $ 45,857 $ --
- --------------------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL INSTRUMENTS* $ -- $ -- $ -- $ --
- --------------------------------------------------------------------------------------------------------------------------------
* 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:
PURISIMA ALL-PURPOSE FUND
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 character of distributions paid during the fiscal six months ended
February 28, 2010 and the fiscal year ended August 31, 2009 were as follows:
Ordinary Income Long Term Capital Gains
--------------- -----------------------
Purisima All-Purpose Fund
2/28/2010 $712 --
8/31/2009 $1,021 --
NOTE 8 - SUBSEQUENT EVENTS
No subsequent events or transactions had occurred that would have materially
impacted the financial statements.
NOTE 9 - ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board issued Accounting
Standards Update (ASU) No. 2010-6, FAIR VALUE MEASUREMENTS AND DISCLOSURES
(TOPIC 820): IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS. ASU No. 2010-6
enhances and clarifies existing fair value measurement disclosure requirements
and is effective for interim and annual periods beginning after December 15,
2009. The Funds currently evaluating the impact, if any, of applying the
provisions of ASU No. 2010-6.
OTHER INFORMATION - ALL PURPOSE FUND
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AGREEMENT
(UNAUDITED)
On October 22, 2009, the Board of Trustees performed its annual review and
renewal of the Investment Management Agreement for the All Purpose Fund for the
one-year period commencing November 1, 2009. The Board of Trustees, including
the Independent Trustees, took into consideration information provided at the
meeting, as well as a wide variety of materials relating to the services
provided by the Adviser. Extensive information was provided to the Board in
response to a detailed request for information sent to the Adviser by legal
counsel to the Fund. That information included reports on the financial
condition of the Adviser, the services, operations and personnel of the Adviser,
compliance procedures, investment performance, brokerage and portfolio
transactions, distribution and marketing plans and other information relating to
the nature, extent and quality of services provided by the Adviser to the Fund.
In addition, the Board discussed and reviewed information regarding the Fund's
investment results, as well as advisory fee and expense comparisons. The Board's
Independent Trustees met separately to discuss the various factors summarized
below, both without and then with legal counsel to the Fund, who is not
independent legal counsel.
In deciding to renew the Agreement, the Board of Trustees did not identify any
single factor or particular information that, in isolation, was the controlling
factor. This summary describes the most important, but not all, of the factors
considered by the Board.
The Board recognized that the Fund has engaged in only minimal investment
activities since its inception because its primary use has been reserved as an
investment when the Adviser takes a defensive posture with respect to the
securities markets. To date, the Fund has remained invested in U.S. Treasury
securities and cash, with only an executive officer of the Adviser as its
shareholder.
1. Nature, Extent and Quality of Services
THE ADVISER, ITS PERSONNEL AND ITS RESOURCES. The Board considered the depth and
quality of the Adviser's investment management process, including its
sophisticated methodology; the experience, capability and integrity of its
senior management and other personnel; the low turnover rates of its key
personnel; and the overall financial strength and stability of its organization.
The Board discussed the quality of the services provided by the Adviser and
noted that the quarterly report from the Adviser was extremely sophisticated and
thorough. The Board commented on the high quality of the independent capital
markets research conducted by the Adviser and reported to the Board on a regular
basis. The Board's consensus was that the Adviser was open about its thinking on
the management of the Fund and very available to address any questions or
concerns the Board may have from time to time. The Board also considered that
the Adviser made available to its investment professionals a variety of
resources and systems relating to investment management, compliance, trading,
performance and portfolio accounting. The Board further considered the Adviser's
continuing need to attract and retain qualified personnel and to maintain and
enhance its resources and systems. The Board also observed that there had been
no decline in the quality of services provided to the Fund despite the growth of
the Adviser's other client business and the continued DE MINIMIS size of the
Fund.
OTHER SERVICES. The Board considered the Adviser's policies, procedures and
systems to ensure compliance with applicable laws and regulations and its
commitment to these programs; its efforts to keep the Trustees informed; and its
attention to matters that may involve conflicts of interest with the Fund.
The Board concluded that the nature, extent and quality of the services provided
by the Adviser has benefited and should continue to benefit the Fund and its
shareholders, especially upon its broader use under the circumstances
contemplated by the Adviser.
2. Investment Performance
The Board considered the Fund's pursuit of its investment objective and the
investment results of the Fund in light of its objective. The Trustees compared
the Fund's total returns with a peer group of mutual funds objectively compiled
using data from Morningstar, Inc., and noted the favorable performance of the
Fund during various periods compared to those peer averages.
The Board recognized that the Fund's proposed defensive posture has not yet been
implemented and the peer group funds, referred to as specialty equity funds,
would serve as a better comparison at that time.
The Board concluded that the Adviser's performance record in managing the Fund
indicates that its continued management has benefited and should continue to
benefit the Fund and its shareholders.
3. Advisory Fees and Total Expenses
The Board reviewed the advisory fees and total expenses of the Fund and compared
such amounts with the average fee and expense levels of other funds in an
applicable group of peer funds compiled using data from Morningstar, Inc. The
Board observed that the Fund's advisory fees and total expenses were reasonable
compared to the median fee and expense levels of the comparable funds in the
indices (meaning at or below the median). The Board noted that the Adviser had
waived (and its continuing to waive) significant fees in respect of the Fund to
maintain an overall expense limitation, thus indicating a substantial investment
by the Adviser in that Fund. The Board concluded that the reasonable level of
the fees charged by the Adviser benefits the Fund and its shareholders. The
Board then considered the fees charged to the Fund versus the Adviser's private
clients, but agreed it was not an applicable comparison given the unique nature
of the fund and the extra burden of administration, compliance, deadlines, risk
and regulations associated with the Fund that do not apply to the private
accounts. The Board determined that the respective peer groups provided a better
comparison and it found the Fund's fees reasonable.
4. Adviser, Costs, Level of Profits and Economies of Scale
The Board discussed the Adviser's costs of providing services to the Fund, as
well as the resulting level of profits to the Adviser. The Board considered the
Adviser's need to invest in technology, infrastructure and staff to reinforce
and offer new services and to accommodate changing regulatory requirements. The
Trustees noted that at its present asset size, breakpoints in the Fund's
advisory fee structure were not practicable, and that no economies of scale
applied. The Board concluded that the Fund's cost structure is reasonable.
5. Ancillary Benefits
The Board considered a variety of other benefits received by the Adviser,
including possible ancillary benefits to itself or its institutional management
business. The Board noted that the Adviser ceased the use of third-party soft
dollar products from trades by the Fund, and noted that the small relative size
of the Fund compared to the Adviser's other business would suggest minimal
possible fallout benefits.
6. Conclusions
Based on its review, including consideration of each of the factors referred to
above, the Board concluded that the Agreement is fair and reasonable to the Fund
and its shareholders, that the Fund's shareholders received, and should receive,
reasonable value in return for the advisory fees paid to the Adviser by the
Fund, and that the renewal of the Agreement was in the best interests of the
Fund and its shareholders.
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.
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 and 1996 Chief Executive Officer and majority 2 None
(born 1950) Trustee shareholder of Fisher Investments, Inc.,
13100 Skyline Blvd. the sole shareholder of the Adviser, and
Woodside, CA 94062 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 Officer of 2 Signature Foods,
(born 1948) Brown & Haley since 1998 (fine Inc.
13100 Skyline Blvd. confectioners); Vice President of Blummer
Woodside, CA 94062 Chocolate Company from 1980 to 1997,
where he had been employed since 1970.
Scott LeFevre Trustee 2001 Sole proprietor of LeFevre Capital 2 None
(born 1957) Management, a registered investment
13100 Skyline Blvd. adviser.
Woodside, CA 94062
Alfred D. McKelvy, Jr. Trustee 2003 President and Chief Executive Officer of 2 East Bay BOMA;
(born 1948) Omnimetric Services, LLC. since 2009, BOMA California;
13100 Skyline Blvd. Executive Director of the law firm of Heritage Bank
Woodside, CA 94062: Berding & Weil, LLP since 1990. (Advisory Board).
Bryan F. Morse Trustee 1996 Sole proprietor of Bryan F. Morse, RIA, a 2 None
(born 1952) registered investment adviser since 1990.
13100 Skyline Blvd.
Woodside, CA 94062
Grover T. Wickersham (born Trustee 1996 Attorney in private practice in Palo 2 None
1949) Alto, California. Prior to entering
13100 Skyline Blvd. private practice in June of 1981, served
Woodside, CA 94062 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 President of
13100 Skyline Blvd. Officer Charles Schwab & Co., Inc. from 1995 to
Woodside, CA 94062 2004, where he had been employed since
1983.
Keith Shintani (born 1963) Secretary and 2006 Vice President of U.S. Bancorp Fund N/A None
2020 East Financial Way Assistant Services, LLC and its predecessor,
Glendora, CA 91741 Treasurer Investment Company Administration, 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 1977) Treasurer 2006 Vice President of U.S. Bancorp Fund N/A None
2020 East Financial Way Services, LLC since 2001.
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.
THE PURISMIA FUNDS
SEMI=ANNUAL REPORT (UNAUDITED)
FEBRUARY 28, 2010
The Purisima Total Return Fund
TABLE OF CONTENTS
A Letter to Our Shareholders 2
Sector Breakdown 5
Expense Example 5
Schedule of Investments 7
Statement of Assets and Liabilities 14
Statement of Operations 15
Statement of Changes in Net Assets 16
Financial Highlights 17
Notes to Financial Statements 18
Other Information 25
Trustees and Officer Information 28
Privacy Notice 32
INVESTMENT OBJECTIVES
PURISIMA TOTAL RETURN FUND
Seeks to provide investors with a high level of total return by considering both
domestic and foreign securities.
EACH FUND RESERVES THE RIGHT TO REJECT ANY ORDER FOR THE PURCHASE OF ITS SHARES
OR TO LIMIT OR SUSPEND, WITHOUT PRIOR NOTICE, THE OFFERING OF ITS SHARES. THE
REQUIRED MINIMUM INVESTMENTS MAY BE WAIVED IN THE CASE OF CERTAIN QUALIFIED
RETIREMENT PLANS. THE FUNDS WILL NOT ACCEPT YOUR ACCOUNT IF YOU ARE INVESTING
FOR ANOTHER PERSON AS ATTORNEY=IN=FACT. THE FUNDS ALSO WILL NOT ACCEPT ACCOUNTS
WITH A "POWER OF ATTORNEY" IN THE REGISTRATION SECTION OF THE PURCHASE
APPLICATION.
1
A LETTER TO OUR SHAREHOLDERS
Welcome to the semi=annual report for the Purisima Total Return Fund for the
six=month period ended February 28, 2010. The primary investment objective of
the Fund is achieving high total return for shareholders.
MARKET REVIEW AND OUTLOOK
While stock markets are well below their 2007 all=time highs, 2009 was an
encouraging beginning to a new bull market. 2009 played out almost exactly as we
foresaw. The initial rebound mirrored the late bear market decline almost
perfectly, fulfilling our V=shaped bounce forecast. Many categories that fared
worst at the end of the bear bounced back most, including Emerging Markets,
Materials, Technology, and Consumer Discretionary stocks.
2009 brought to a close an unusual decade bookended by two big bear markets,
leaving stock indexes with little to no net gain for the period. Some
reflexively herald a "new normal" going forward = a period of sluggish economic
growth and restrained stock returns. Though rare, 10=year periods of flat or
negative returns historically have been followed by periods of strong returns =
both in the US and globally. But rather than dwelling on unactionable long=term
predictions, we focus on the year ahead and believe 2010 should play out like a
typical second year of a bull market. As far back as we can measure (more than
100 years), US stocks have been consistently positive the second year after a
huge bear decline = overwhelmingly so. (The sole exception was the second year
after the 1932 bottom = the S&P 500 fell a mere 0.4% before resuming a steep
upward trajectory for the next three years.)*
FUND POSITIONING
Our outlook for stocks is positive in the period ahead, thus the Fund remains
fully invested in equities. Surging liquidity and rebounding sentiment drove
2009's gains. Revenue and earnings growth should instead be paramount in 2010,
with sentiment a secondary feature. Top=line growth will likely stem from two
main forces. First, the largest emerging economies will almost undoubtedly
increase consumption as their populations move further up steep parts of the
development curve. Second, business investment should rebound as companies play
catch=up after skimping on capital expenditures and inventories during the
recession.
Governments may be massively bloated, but public companies are overwhelmingly
lean and mean. Non=bank cash balances are at all=time highs, borrowing costs are
low, and productivity is hyper=efficient following extraordinary cost=cutting
actions. The net effect: Huge earnings growth, especially when compared to
depressed prior year results.
Additionally positive, the Fed should in all likelihood keep credit conditions
easy through most of if not the entire year, and 2009's huge fiscal programs'
stimulatory effects should be more meaningfully felt as more of the previously
appropriated funds is actually deployed. Very little has been spent so far, but
we expect that changes fast immediately ahead.
========
* Source: Thomas Reuters
2
For the six=month period ending February 28, 2010, the Fund's country and sector
allocation decisions overall benefited the portfolio relative to the MSCI World
Index benchmark. The Fund's overweight to Emerging Markets and underweight to
Japan added to returns, while underweights to Australia and Canada and an
overweight to Germany hurt returns. From a sector standpoint, underweights to
Financials and Utilities and an overweight to Materials benefited returns, while
underweights to Health Care and Consumer Staples detracted.
The Fund's stock selection overall benefited portfolio returns relative to the
benchmark. Stock selection in the United Kingdom and United States helped
returns, while stock selection in Switzerland hurt returns. Stock selection in
Materials, Consumer Discretionary, and Energy helped returns, while stock
selection in Financials, Utilities, and Health Care detracted.
The categories that led during the initial bounce should still lead into early
2010. However, as the bull market matures and new fundamental trends emerge, a
change in leadership among categories is likely, requiring some material
portfolio realignment, though this rotation is doubtful in the first quarter =
more likely later in the year. We are far into the contemporary market research
to determine specifically which categories should lead that next phase.
CLOSING REMARKS
The Fund outperformed the MSCI World Index benchmark over the six=month period
ending February 28, 2010. Despite last year's huge advance, sentiment remains
starkly skeptical, which is good = bull markets thrive on the proverbial "wall
of worry." Perhaps more precisely, there's what we have come to call a broad
spectrum "pessimism of disbelief" = how can markets do well with so many
problems in the world? Bad things are seen as bad and good things are seen as
likely to turn bad. Prevalent concerns include monetary and fiscal stimulus exit
strategies, regulatory reforms, US midterm elections, inflation, unemployment,
commercial real estate, geopolitical troubles, and a general disgust with all
things political. By and large, we believe these concerns are already reflected
in stock prices or are less impactful than feared = and thus lack the power to
derail the bull market in our view.
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 INVESTMENT ADVICE.
3
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
FUND HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE AND ARE NOT
RECOMMENDATIONS TO BUY OR SELL ANY SECURITY.
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. 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 04/10
4
SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA TOTAL RETURN FUND
=====================================================
Information Technology 17.0%
Energy 14.7%
Industrials 13.9%
Materials 13.7%
Financials 12.1%
Consumer Discretionary 11.9%
Consumer Staples 7.0%
Health Care 5.6%
Telecommunication Services 2.5%
Utilities 1.4%
Mutual Funds 0.2%
=====================================================
Total 100.0%
========
(1) Percentage of Total Investments as of February 28, 2010.
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 September 1, 2009 to
February 28, 2010, 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.
5
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)
===========================================================================
Beginning Account Value $ 1,000.00 $ 1,000.00
(09/01/09)
Ending Account Value (02/28/10) $ 1,078.90 $ 1,017.80
Expenses Paid During Period(1) $ 7.27 $ 7.05
===========================================================================
========
(1) Expenses are equal to the Fund's expense ratio for the six month period of
1.41% for the Total Return Fund multiplied by the average account value
over the period, multiplied by 181/365 (to reflect the one=half year
period).
6
PURISIMA TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2010 (UNAUDITED)
SHARES/PRINCIPAL VALUE VALUE
================================================================================
COMMON STOCKS: 99.1%
Australia: 1.9%
98,500 BHP Billiton, Ltd. = ADR $ 7,223,005
============
Brazil: 4.0%
14,200 Companhia Siderurgica Nacional SA = ADR 464,198
9,800 Empresa Brasileira de Aeronautica SA
(Embraer) = ADR (a) 215,208
28,000 Gafisa SA 212,268
180,025 Petroleo Brasileiro SA = ADR 7,678,066
230,900 Vale SA = ADR 6,432,874
38,100 Weg SA 372,324
============
15,374,938
============
Canada: 2.7%
131,000 Bank of Nova Scotia 5,951,330
72,500 Cenovus Energy, Inc. 1,776,250
72,500 EnCana Corporation 2,376,550
============
10,104,130
============
China: 3.1%
10,600 Baidu.com = ADR (a) 5,498,008
128,500 China Cosco Holdings Company, Ltd. 160,084
3,100 China Life Insurance Company, Ltd. = ADR 206,026
87,750 China Mobile Hong Kong, Ltd. = ADR 4,337,483
146,000 China Oilfield Services, Ltd. 200,882
3,250 China Petroleum & Chemical Corporation = 257,335
ADR
2,400 CNOOC, Ltd. = ADR 377,496
385,000 Industrial & Commercial Bank Of China, 272,302
Ltd.
42,400 Weichai Power Company, Ltd. 321,462
============
11,631,078
============
Czech Republic: 0.0%
1,300 Cez AS 59,447
============
Finland: 1.0%
296,400 Nokia Oyj = ADR 3,992,508
============
The accompanying notes are an integral part of these financial statements.
7
SHARES/PRINCIPAL VALUE VALUE
================================================================================
France: 3.5%
18,200 AXA $ 366,404
189,550 AXA = ADR 3,815,641
46,708 BNP Paribas SA 3,379,080
104,708 Total SA = ADR 5,828,047
============
13,389,172
============
Germany: 5.6%
136,300 BASF AG = ADR 7,677,779
13,600 E.ON AG 484,352
129,900 E.ON AG = ADR 4,628,337
98,900 Siemens AG = ADR 8,531,114
============
21,321,582
============
Hong Kong: 0.9%
283,800 Cheung Kong Holdings, Ltd. = ADR 3,453,846
============
India: 0.2%
1,425 HDFC Bank, Ltd. = ADR 173,408
4,800 ICICI Bank, Ltd. = ADR 183,600
3,950 Reliance Industries, Ltd. = GDR 144A 167,480
10,150 Sterlite Industries India, Ltd. = ADR 171,434
============
695,922
============
Indonesia: 0.2%
259,500 Bank Rakyat Tbk PT 198,760
874,400 Bumi Resources Tbk PT 210,755
293,000 International Nickel Indonesia Tbk PT 118,487
426,500 Medco Energi Internasional Tbk PT 113,078
5,400 Telekomunikasi Indonesia Tbk PT = ADR 194,076
============
835,156
============
Israel: 0.1%
4,600 Teva Pharmaceutical Industries, Ltd. = ADR 276,046
============
Italy: 0.8%
141,532 Intesa Sanpaolo SpA = ADR (a) 2,990,571
============
Japan: 4.8%
156,700 Honda Motor Company, Ltd. = ADR 5,423,387
454,200 Mitsubishi UFJ Financial Group,
Incorporated = ADR 2,325,504
283,800 Nomura Holdings, Incorporated 2,095,479
260,900 Panasonic Corporation = ADR 3,616,074
86,200 Sony Corporation 2,959,198
57,500 Sumitomo Mitsui Financial Group,
Incorporated 1,848,388
============
18,268,030
============
The accompanying notes are an integral part of these financial statements.
8
SHARES/PRINCIPAL VALUE VALUE
================================================================================
Malaysia: 0.1%
44,700 CIMB Group Holdings BHD $ 170,898
97,000 Genting BHD 179,730
215,600 MMC Corporation BHD 154,475
============
505,103
============
Mexico: 1.4%
99,500 America Movil SA de CV = ADR 4,434,715
198,108 Grupo Mexico SA de CV 473,007
16,800 Industrias Penoles SA de CV 336,344
5,400 Wal=Mart De Mexico SA de CV = ADR 268,230
============
5,512,296
============
Netherlands: 2.5%
197,827 ING Groep NV = ADR (a) 1,766,595
258,400 Unilever NV = ADR 7,775,256
============
9,541,851
============
Norway: 0.0%
0 Statoil ASA 5
============
Philippines: 0.0%
2,800 Philippine Long Distance Telephone = ADR 157,640
============
Poland: 0.1%
1,650 Bank Pekao SA = GDR (a) 89,757
900 Bre Bank SA (a) 71,843
4,600 KGHM Polska Miedz SA = GDR 153,106
============
314,706
============
Russian Federation: 0.1%
3,000 LUKOIL = ADR 159,570
10,100 OAO Gazprom = Sponsored ADR (a) 225,296
============
384,866
============
South Africa: 0.2%
2,500 Anglo Platinum, Ltd. = ADR (a) 233,625
10,300 MTN Group Ltd. 149,248
4,900 Sasol, Ltd. = ADR 179,487
============
562,360
============
South Korea: 0.7%
6,500 Daewoo Securities Company, Ltd. 108,436
1,100 Daewoo Shipbuilding & Marine Engineering
Company, Ltd. (a) 19,110
4,700 Daewoo Shipbuilding & Marine Engineering
Company, Ltd. = GDR (a) 164,152
2,725 Hyundai Dept Store 233,759
1,350 Hyundai Heavy Industries Company, Ltd. 240,344
2,625 KB Financial Group, Incorporated = ADR (a) 109,909
The accompanying notes are an integral part of these financial statements.
9
SHARES/PRINCIPAL VALUE VALUE
================================================================================
South Korea: 0.7% (continued)
800 Lotte Shopping Company $ 220,019
3,250 POSCO = ADR 375,245
1,175 Samsung Electronics Company, Ltd. = GDR 144A (a) 376,022
825 Samsung Fire & Marine Insurance Company 131,229
2,300 Samsung Securities Company, Ltd. 122,743
1,800 Shinhan Financial Group Company, Ltd. = ADR 130,860
3,250 SK Energy Company, Ltd. 299,810
1,900 Woori Finance Holdings Company, Ltd. = ADR (a) 64,296
7,500 Woori Investment & Securities Company, Ltd. 96,021
============
2,691,955
============
Spain: 1.7%
490,121 Banco Santander Central Hispano SA = ADR 6,391,178
============
Switzerland: 9.3%
321,800 ABB, Ltd = ADR 6,519,668
163,300 Credit Suisse Group = ADR 7,283,180
172,050 Nestle SA 8,560,459
47,200 Roche Holding AG 7,882,411
44,306 Transocean, Ltd (a) 3,536,505
133,833 UBS AG (a) 1,854,918
============
35,637,141
============
Taiwan: 0.3%
31,980 Advanced Semiconductor Engineering,
Incorporated = ADR 128,560
21,246 Asustek Computer Incorporated = GDR 187,500
36,519 Hon Hai Precision = GDR 310,043
18,542 Siliconware Precision Industries, Ltd = ADR 108,285
42,035 Taiwan Semiconductor Manufacturing
Company, Ltd. = ADR 409,841
============
1,144,229
============
Turkey: 0.0%
6,800 Turkcell Iletisim Hizmet AS = ADR 100,708
============
United Kingdom: 2.9%
170,000 Anglo American Plc = ADR (a) 3,087,200
74,350 GlaxoSmithKline Plc = ADR 2,761,359
24,625 Rio Tinto Plc = ADR 5,117,075
============
10,965,634
============
The accompanying notes are an integral part of these financial statements.
10
SHARES/PRINCIPAL VALUE VALUE
================================================================================
United States: 51.0%
144,050 Anadarko Petroleum Corporation $ 10,102,226
343,000 Applied Materials, Incorporated 4,198,320
139,200 Carnival Corporation 5,005,632
117,500 Caterpillar, Incorporated 6,703,375
386,000 Cisco Systems, Incorporated (a) 9,391,380
155,500 Coach, Incorporated 5,666,420
72,000 Devon Energy Corporation 4,957,920
119,500 Dover Corporation 5,408,570
221,700 Electronic Arts, Incorporated (a) 3,675,786
352,550 EMC Corporation (a) 6,166,100
133,000 Fortune Brands, Incorporated 5,829,390
123,000 Freeport=McMoRan Copper & Gold, Incorporated 9,244,680
238,850 General Electric Company 3,835,931
155,100 Hewlett=Packard Company 7,877,529
89,900 Honeywell International, Incorporated 3,610,384
330,700 Intel Corporation 6,789,271
91,200 Johnson & Johnson 5,745,600
131,200 Merck & Co., Incorporated 4,838,656
275,800 Microsoft Corporation 7,904,428
214,300 Nordstrom, Incorporated 7,916,242
102,700 Nucor Corporation 4,251,780
129,300 Occidental Petroleum Corporation 10,324,605
342,700 Oracle Corporation 8,447,555
129,500 PACCAR, Incorporated 4,577,825
99,200 PPG Industries, Incorporated 6,104,768
69,225 Procter & Gamble Company 4,380,558
118,300 Schlumberger Ltd. 7,228,130
85,900 Target Corporation 4,425,568
117,666 Time Warner, Incorporated 3,417,021
78,400 Union Pacific Corporation 5,281,808
90,300 United Technologies Corporation 6,199,095
100,900 Wal=Mart Stores, Incorporated 5,455,663
============
194,962,216
============
TOTAL COMMON STOCKS
(Cost $362,916,144) 378,487,319
============
The accompanying notes are an integral part of these financial statements.
11
SHARES/PRINCIPAL VALUE VALUE
================================================================================
PREFERRED STOCKS: 0.6%
Brazil: 0.6%
11,440 Banco Bradesco S.A. $ 198,026
2,775 Companhia de Bebidas das Americas
(AmBev) = ADR 269,036
5,027 Companhia Energetica de Minas Gerais = ADR 82,292
23,200 Gerdau S.A. = ADR 342,200
24,825 Itau Unibanco Holding SA = ADR 495,507
30,000 Lojas Americanas SA 215,810
25,550 Vale SA = ADR 628,530
============
2,231,401
============
TOTAL PREFERRED STOCKS
(Cost $1,850,276) 2,231,401
============
MUTUAL FUNDS: 0.2%
864,160 SEI Daily Income Trust Government Fund 864,160
============
TOTAL MUTUAL FUNDS
(Cost $864,160) 864,160
============
TOTAL INVESTMENTS
(Cost $365,630,580): 99.9% 381,582,880
Other Assets in Excess of Liabilities: 0.1% 326,204
============
TOTAL NET ASSETS: 100.0% $381,909,084
============
========
ADR = American Depositary Receipt.
GDR = Global Depository Receipt.
(a) Non Income Producing.
The accompanying notes are an integral part of these financial statements.
12
Industry % of Net Assets
================================================================================
Oil, Gas & Consumable Fuels 11.8%
Metals & Mining 10.1%
Commercial Banks 6.6%
Pharmaceuticals 5.6%
Software 5.2%
Machinery 4.7%
Food Products 4.3%
Computers & Peripherals 3.7%
Chemicals 3.6%
Communications Equipment 3.5%
Multiline Retail 3.4%
Household Durables 3.3%
Industrial Conglomerates 3.3%
Semiconductors & Semiconductor Equipment 3.1%
Capital Markets 3.0%
Energy Equipment & Services 2.9%
Aerospace & Defense 2.6%
Wireless Telecommunication Services 2.4%
Electrical Equipment 1.7%
Food & Staples Retailing 1.5%
Textiles, Apparel & Luxury Goods 1.5%
Internet Software & Services 1.4%
Automobiles 1.4%
Road & Rail 1.4%
Electric Utilities 1.4%
Hotels, Restaurants & Leisure 1.4%
Insurance 1.2%
Household Products 1.1%
Real Estate Management & Development 0.9%
Media 0.9%
Diversified Financial Services 0.5%
Electronic Equipment & Instruments 0.1%
Beverages 0.1%
Diversified Telecommunication Services 0.1%
Marine 0.0%
=====
Total Investment in Securities 99.7%
Cash Equivalent 0.2%
Other Assets in Excess of Liabilities 0.1%
=====
TOTAL NET ASSETS 100.0%
=====
The accompanying notes are an integral part of these financial statements.
13
PURISIMA TOTAL RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 2010 (UNAUDITED)
ASSETS
Investments at value (cost $365,630,580) $ 381,582,880
Receivables:
Interest and dividends receivable 808,817
Receivable for Fund shares sold 369,201
Prepaid expenses 67,411
=============
Total Assets 382,828,309
=============
LIABILITIES
Payable for fund shares redeemed 95,349
Payable to custodian 88,182
Payable to the adviser (Note 3) 288,346
Accrued distribution fees (Note 4) 288,773
Accrued fund administration, fund accounting, transfer agent and custody fees 121,035
Accrued expenses 37,540
=============
Total Liabilities 919,225
=============
NET ASSETS $ 381,909,084
=============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 22,025,304
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 17.34
=============
COMPONENTS OF NET ASSETS
Paid=in capital 392,675,938
Undistributed net investment income 509,744
Accumulated net realized loss on investments (27,234,513)
Net unrealized appreciation on investments 15,952,300
Net unrealized appreciation on foreign currency 5,615
=============
NET ASSETS $ 381,909,084
=============
The accompanying notes are an integral part of these financial statements.
14
PURISIMA TOTAL RETURN FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2010 (UNAUDITED)
INVESTMENT INCOME
Dividend income1 $ 3,215,128
Interest income 310
============
Total Investment Income 3,215,438
============
EXPENSES
Investment advisory fees (Note 3) 1,912,603
Distribution fees (Note 4) 286,890
Administration fees (Note 3) 145,165
Transfer agent fees 100,975
Fund accounting fees 55,810
Miscellaneous expenses 51,770
Custody fees 49,075
Registration fees 14,050
Audit fees 15,928
Reports to shareholders 13,385
Legal fees 11,989
Trustees fees 10,610
Interest expense 243
============
Total expenses before waiver and reimbursement 2,668,493
Reimbursement of expenses by adviser (Note 3) 36,690
============
Net expenses 2,705,183
============
NET INVESTMENT INCOME 510,255
============
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 1,131,947
Net realized loss on foreign currency translation (2,947)
Change in net unrealized appreciation on investments 26,729,348
Change in net unrealized appreciation on foreign currency 906
Net Realized and Unrealized Gain on Investments 27,859,254
============
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 28,369,509
============
==========
(1) Net of $245,734 in foreign withholding taxes.
The accompanying notes are an integral part of these financial statements.
15
PURISIMA TOTAL RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2010 AUGUST 31, 2009
================= ===============
(UNAUDITED)
OPERATIONS
Net investment income $ 510,255 $ 4,232,547
Net realized gain (loss) on investments and
foreign currency translation 1,129,000 (27,838,641)
Change in net unrealized appreciation/depreciation
on investments 26,729,348 (59,951,134)
Change in net unrealized appreciation/depreciation
on foreign currency 906 7,326
============= =============
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 28,369,509 (83,549,902)
============= =============
DISTRIBUTION TO SHAREHOLDERS
From net investment income (3,798,425) (2,541,948)
From net realized gain on investments (175,548) (6,295,704)
============= =============
NET DECREASE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS PAID (3,973,973) (8,837,652)
============= =============
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 25,072,307 45,738,924
Proceeds from reinvestment of distributions 3,841,013 8,228,346
Cost of shares redeemed (32,783,000) (55,808,714)
============= =============
NET DECREASE FROM CAPITAL SHARE TRANSACTIONS (3,869,680) (1,841,444)
============= =============
TOTAL INCREASE (DECREASE) IN NET ASSETS 20,525,856 (94,228,998)
============= =============
NET ASSETS
Beginning of year 361,383,228 455,612,226
============= =============
End of year (includes undistributed net investment
income of $509,744 and $3,797,914 respectively) $ 381,909,084 $ 361,383,228
============= =============
CHANGE IN CAPITAL SHARES
Shares outstanding, beginning of year 22,248,130 22,500,371
============= =============
Shares sold 1,430,387 3,274,955
Shares issued on reinvestment of distributions 221,129 620,071
Shares repurchased (1,874,342) (4,147,267)
============= =============
Net decrease in capital shares (222,826) (252,241)
============= =============
Shares Outstanding, end of year 22,025,304 22,248,130
============= =============
The accompanying notes are an integral part of these financial statements.
16
PURISIMA TOTAL RETURN FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Semi=Annual Report.
Year Ended August 31,
Six Months Ended ============================================================
Feb. 29, 2010++ 2009 2008 2007 2006 2005
Net asset value,
beginning of period $ 16.24 $ 20.25 $ 24.79 $ 21.51 $ 19.03 $ 16.58
======== ======== ======== =------- -------- --------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.03 0.19 0.15 0.09 0.04 0.10
Net realized and unrealized
gain (loss) on investments 1.25 (3.79) (2.82) 3.27 2.72 2.42
-------- -------- -------- -------- -------- --------
Total from investment
operations 1.28 (3.60) (2.67) 3.36 2.76 2.52
-------- -------- -------- -------- -------- --------
Less distributions:
From net investment income (0.17) (0.12) (0.07) (0.08) (0.28) (0.07)
From net realized gain (0.01) (0.29) (1.80) -- -- --
-------- -------- -------- -------- -------- --------
Total distributions (0.18) (0.41) (1.87) (0.08) (0.28) (0.07)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 17.34 $ 16.24 $ 20.25 $ 24.79 $ 21.51 $ 19.03
======== ======== ======== ======== ======== ========
Total return 7.89%** (17.37%) (11.75%) 15.63% 14.54% 15.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (millions) $ 381.9 $ 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 1.40%* 1.51% 1.41% 1.39% 1.49% 1.46%
After fees waived and
expenses absorbed
or recouped 1.41%* 1.50% 1.41% 1.39% 1.49% 1.49%
RATIO OF NET INVESTMENT
INCOME TO AVERAGE
NET ASSETS # 0.27%* 1.37% 0.61% 0.37% 0.21% 0.52%
Portfolio turnover rate 5.40%** 22.04% 62.96% 16.38% 43.47% 16.68%
- ----------
* Annualized.
** Not annualized.
++ Unaudited.
# Net of fees waived.
The accompanying notes are an integral part of these financial statements.
17
PURISIMA TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2010 (UNAUDITED)
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 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.
18
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.
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 or 2010 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.
19
E. USE OF ESTIMATES. The presentation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates and assumptions.
F. CONCENTRATION OF RISK. Investments in securities of non-U.S. issues
in certain countries involve special investment risks. These risks
may include but are not limited to, investment restrictions, adverse
political, social and economic developments, government involvement
in the private sector, limited and less reliable investor
information, lack of liquidity, certain local tax law
considerations, and limited regulation of the securities markets.
G. SECURITIES SOLD SHORT. To the extent the Fund engages in selling
securities short, it is obligated to replace a security borrowed by
purchasing the same security at the current market value. The Fund
would incur a loss if the price of the security increases between
the date of the short sale and the date on which the Fund replaces
the borrowed security. The Fund would realize a gain if the price of
the security declines between those dates.
The Fund is required to establish a margin account with the broker
lending the security sold short. While the short sale is
outstanding, the broker retains the proceeds of the short sale and
the Fund must also maintain a deposit with the broker consisting of
cash having a value equal to a specified percentage of the value of
the securities sold short.
H. RECLASSIFICATION OF CAPITAL ACCOUNTS. Accounting principles
generally accepted in the United States of America require that
certain components of net assets relating to permanent difference be
reclassified between financial and tax reporting. These
reclassifications have no effect on net assets or net asset value
per share. For the year ended August 31, 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.
20
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 six months ended
February 28, 2010, was as follows:
MAXIMUM AMOUNT AVERAGE AVERAGE
AMOUNT INTEREST OUTSTANDING AT AMOUNT INTEREST
OUTSTANDING EXPENSE FEBRUARY 28, 2010 OUTSTANDING RATE
----------- ------- ----------------- ----------- ----
$661,000 $243 $0 $19,713 2.750%
K. ACCOUNTING FOR DERIVATIVES. The Trust adopted an accounting standard
involving disclosures of derivatives and hedging activities that is
effective for fiscal years beginning after November 15, 2008. The
standard 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 operations and financial position. The
standard does not have any impact on the Fund's financial
disclosures because the Fund has not maintained any positions in
derivative instruments or engaged in hedging activities.
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 six
months ended February 28, 2010 the Advisor had previously recouped all fees
previously waived and expenses absorbed from the Total Return Fund.
U.S. Bank, N.A. serves as the Fund's Custodian. U.S. Bancorp Fund Services, LLC
("USBFS"), an affiliate of U.S. Bank, N.A., serves as the Administrator, Fund
Accountant and Transfer Agent. Certain officers of the Trust, including the
Trust's Treasurer, are employees of the
21
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 six months ended February 28, 2010, Purisima
Total Return Fund paid USBFS $145,165 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 six months ended February 28, 2010, the
Fund incurred $286,890 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 $20,338,812 $22,992,339
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Fund follows a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Fund's own market
assumptions (unobservable inputs). These inputs are used in determining the
value of the Fund's investments and is summarized in the following fair value
hierarchy:
Level 1 - Quoted prices in active markets for identical securities.
Level 2 - Other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds,
credit risk, etc.)
Level 3 - Significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments).
22
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securieies.
The following is a summary of the inputs used, as of February 28, 2010, in
valuing the Fund's investments carried at fair value:
LEVEL 1 - LEVEL 2 -
QUOTED PRICES SIGNIFICANT LEVEL 3 -
IN ACTIVE OTHER SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION TOTAL IDENTICAL ASSETS INPUTS INPUTS
- -------------------------------------------------------------------------------------------------------
EQUITY
Capital Good $ 46,873,03 $ 46,708,885 $ 164,152 $ --
Consumer Discretionary 45,320,518 45,320,518 -- --
Consumer Staples 26,709,202 26,709,202 -- --
Energy 55,999,495 55,999,495 -- --
Financials 46,345,736 46,184,136 161,600 --
Health Care 21,504,072 21,504,072 -- --
Information Technology 65,461,135 65,273,635 187,500 --
Materials 52,435,336 52,435,336 -- --
Telecommunication Services 9,373,870 9,373,870 -- --
Transportation 5,441,892 5,441,892 -- --
Utilities 5,254,427 5,254,427 -- --
- -------------------------------------------------------------------------------------------------------
TOTAL EQUITY $380,718,720 $380,205,468 $ 513,252 $ --
SHORT-TERM INVESTMENTS $ 864,160 $ 864,160 $-- $ --
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES $381,582,880 $381,069,628 $ 513,252 $ --
- -------------------------------------------------------------------------------------------------------
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.
23
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)
=============
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 character of distributions paid during the fiscal six months ended
February 28, 2010 and the fiscal year ended August 31, 2009 were as follows:
ORDINARY LONG TERM
INCOME CAPITAL GAINS
------ -------------
Total Return Fund
2/28/2010 $3,798,425 $ 175,548
8/31/2009 $2,541,948 $6,295,704
NOTE 8 - SUBSEQUENT EVENTS
No subsequent events or transactions had occurred that would have materially
impacted the financial statements.
NOTE 9 - ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board issued Accounting
Standards Update (ASU) No. 2010-6, Fair Value Measurements and Disclosures
(Topic 820): Improving Disclosures about Fair Value Measurements. ASU No. 2010-6
enhances and clarifies existing fair value measurement disclosure requirements
and is effective for interim and annual periods beginning after December 15,
2009. The Fund is currently evaluating the impact, if any, of applying the
provisions of ASU No. 2010-6.
24
PURISIMA TOTAL RETURN FUND
OTHER INFORMATION
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AGREEMENT
(UNAUDITED)
On October 22, 2009, the Board of Trustees performed its annual review and
renewal of the Investment Management Agreement for the Total Return Fund for the
one-year period commencing November 1, 2009. The Board of Trustees, including
the Independent Trustees, took into consideration information provided at the
meeting, as well as a wide variety of materials relating to the services
provided by the Adviser. Extensive information was provided to the Board in
response to a detailed request for information sent to the Adviser by legal
counsel to the Fund. That information included reports on the financial
condition of the Adviser, the services, operations and personnel of the Adviser,
compliance procedures, investment performance, brokerage and portfolio
transactions, distribution and marketing plans and other information relating to
the nature, extent and quality of services provided by the Adviser to the Fund.
In addition, the Board discussed and reviewed information regarding the Fund
investment results, as well as advisory fee and expense comparisons. The Board's
Independent Trustees met separately to discuss the various factors summarized
below, both without and then with legal counsel to the Fund, who is not
independent legal counsel.
In deciding to renew the Agreement, the Board of Trustees did not identify any
single factor or particular information that, in isolation, was the controlling
factor. This summary describes the most important, but not all, of the factors
considered by the Board.
1. Nature, Extent and Quality of Services
THE ADVISER, ITS PERSONNEL AND ITS RESOURCES. The Board considered
the depth and quality of the Adviser's investment management
process, including its sophisticated methodology; the experience,
capability and integrity of its senior management and other
personnel; the low turnover rates of its key personnel; and the
overall financial strength and stability of its organization. The
Board discussed the quality of the services provided by the Adviser
and noted that the quarterly report from the Adviser was extremely
sophisticated and thorough. The Board commented on the high quality
of the independent capital markets research conducted by the Adviser
and reported to the Board on a regular basis. The Board's consensus
was that the Adviser was open about its thinking on the management
of the Fund and very available to address any questions or concerns
the Board may have from time to time. The Board also considered that
the Adviser made available to its investment professionals a variety
of resources and systems relating to investment management,
compliance, trading, performance and portfolio accounting. The Board
further considered the Adviser's continuing need to attract and
retain qualified personnel and to maintain and enhance its resources
and systems. The Board also observed that the Adviser had maintained
the quality of services provided to the Fund despite the continued
relatively small share of the Adviser's assets under management
represented by the Fund, typically around one percent.
25
OTHER SERVICES. The Board considered the Adviser's policies,
procedures and systems to ensure compliance with applicable laws and
regulations and its commitment to these programs; its efforts to
keep the Trustees informed; and its attention to matters that may
involve conflicts of interest with the Fund.
The Board concluded that the nature, extent and quality of the
services provided by the Adviser has benefited and should continue
to benefit the Fund and its shareholders.
2. Investment Performance
The Board considered the Fund's pursuit of its investment objective
and the investment results of the Fund in light of its objective.
The Trustees compared the Fund's total returns with various
independent securities price indexes (the Standard & Poor's 500
Stock Price Index, the Morgan Stanley Capital Institutional World
Index and the Morgan Stanley Capital International EAFE Index) and
mutual fund peer groups objectively compiled using data from
Morningstar, Inc., and noted the satisfactory performance of the
Fund during various periods compared to those indexes over various
periods. The Board noted the wide range of funds and strategies
against which the Fund was being compared, and emphasized
performance over longer periods. The Board found that for most
relevant periods, the Fund's performance was in the middle portion
of its peer group. The Board will continue to monitor performance in
light of improved relative performance over the most recent period
compared to the prior contract renewal period, but also understands
the challenges of recent market conditions.
The Board concluded that the Adviser's performance record in
managing the Fund indicates that its continued management has
benefited and should continue to benefit the Fund and its
shareholders.
3. Advisory Fees and Total Expenses
The Board reviewed the advisory fees and total expenses of the Fund
and compared such amounts with the average fee and expense levels of
other funds in an applicable group of peer funds compiled using data
from Morningstar, Inc. The Board observed that the Fund's advisory
fees and total expenses were reasonable compared to the median fee
and expense levels of the comparable funds in the indices (meaning
roughly in line with the median). The Board noted that, in the past,
the Adviser had waived significant fees in respect of the Fund to
maintain an overall expense limitation, which the Adviser would not
be able to recoup, thus indicating a substantial prior investment by
the Adviser in that Fund. The Board noted that the Fund operating
slightly below its expense limit in some recent fiscal periods. The
Board concluded that the reasonable level of the fees charged by the
Adviser benefits the Fund and its shareholders. The Board then
considered the fees charged to the Fund versus the Adviser's private
clients. The Board considered the extra burden of administration,
compliance, deadlines, risk and regulations associated with the Fund
that do not apply to the private accounts. The Board determined that
the respective peer groups provided a better comparison and it found
the Fund's fees reasonable.
26
4. Adviser, Costs, Level of Profits and Economies of Scale
The Board discussed the Adviser's costs of providing services to the
Fund, as well as the resulting level of profits to the Adviser. The
Board considered the Adviser's need to invest in technology,
infrastructure and staff to reinforce and offer new services and to
accommodate changing regulatory requirements. The Trustees noted
that at its present asset size, breakpoints in the Fund's advisory
fee structure were not practicable, but that economies of scale in
the cost of operations, to the extent they exist, effectively were
being shared given the Adviser's past waiver of fees in respect of
the Fund. The Board received an oral presentation from the Adviser
on its overall level of profitability and specifically with respect
to the Fund, and acknowledged the limited usefulness of the
information given the Fund's relatively small size compared to the
rest of the Adviser's assets under management and the reasonability
of the Fund's fees and expenses compared to peer funds. The Board
concluded that the Fund's cost structure is reasonable.
5. Ancillary Benefits
The Board considered a variety of other benefits received by the
Adviser, including possible ancillary benefits to itself or its
institutional management business. The Board noted that the Adviser
ceased the use of third-party soft dollar products from trades by
the Fund, and noted that the small relative size of the Fund
compared to the Adviser's other business would suggest minimal
possible fallout benefits.
6. Conclusions
Based on its review, including consideration of each of the factors
referred to above, the Board concluded that the Agreement is fair
and reasonable to the Fund and its shareholders, that the Fund's
shareholders received, and should receive, reasonable value in
return for the advisory fees paid to the Adviser by the Fund, and
that the renewal of the Agreement was in the best interests of the
Fund and its shareholders.
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.
27
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
28
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 Foods, Inc.
confectioners); 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 2 None
Alto, 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.
- --------------------------------------------------------------------------------
29
Position(s) Held
Name, Address, Age with Trust Year Elected(1)
- --------------------------------------------------------------------------------
Tom Fishel (born 1960) Chief 2005
13100 Skyline Blvd. Compliance
Woodside, CA 94062 Officer
- --------------------------------------------------------------------------------
Keith Shintani (born 1963) Secretary and 2006
2020 East Financial Way Assistant
Glendora, CA 91741 Treasurer
- --------------------------------------------------------------------------------
Michael Ricks (born 1977) Treasurer 2006
2020 East Financial Way
Glendora, CA 91741
- --------------------------------------------------------------------------------
- ----------
(1) Trustees and officers of the Funds serve until their resignation,
removal or retirement.
* "Interested person" of the Trust, as defined in the 1940 Act.
30
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.
- --------------------------------------------------------------------------------
31
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 servic 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. This page is
intentionally left blank.
32
ITEM 2. CODE OF ETHICS.
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
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.
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
---------------------------------------------
Kenneth L. Fisher, President
Date May 4, 2010
---------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ KENNETH L. FISHER
---------------------------------------------
Kenneth L. Fisher, President
Date May 4, 2010
---------------------------------------------
By /s/ MICHAEL RICKS
---------------------------------------------
Michael Ricks, Treasurer
Date May 4, 2010
---------------------------------------------