As filed with the Securities and Exchange Commission on November 8, 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
THE PURISIMA FUNDS
------------------
(Exact name of registrant as specified in charter)
13100 SKYLINE BLVD.
WOODSIDE, CALIFORNIA 94062
--------------------------
(Address of principal executive offices) (Zip code)
U. S. BANCORP FUND SERVICES, LLC
2020 EAST FINANCIAL WAY, SUITE 100
GLENDORA, CALIFORNIA 91741
--------------------------
(Name and address of agent for service)
(650) 851-3334
--------------
Registrant's telephone number, including area code
Date of fiscal year end: AUGUST 31
---------
Date of reporting period: AUGUST 31, 2010
---------------
THE PURISIMA FUNDS
ANNUAL REPORT
AUGUST 31, 2010
The Purisima Total Return Fund
TABLE OF CONTENTS
A Letter to Our Shareholders 2
Sector Breakdown 6
Expense Example 6
Schedule of Investments 8
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
Report of Independent Registered Public Accounting Firm 25
Other Information 27
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 annual report for the Purisima Total Return Fund for the 12-month
period ending August 31, 2010. The primary investment objective of the Fund is
achieving high total return for shareholders.
MARKET REVIEW AND OUTLOOK
Global equities finished this one year period slightly positive, with the MSCI
World Index rising 2.1% through August 31, 2010. In our earlier communications,
we outlined expectations for a back-end loaded and overall positive 2010. We
maintain that view and, to us, 2010 has been typical of most positive years in
the last decade - volatility and muted net returns early on, with most of the
gains closer to year end. Of course, there are still several months left in the
calendar year but we think the positive momentum could continue.
Investor sentiment remains exceptionally dour, but doomsayers seem to be out of
fresh ideas. Instead, the same worries are rehashed over and over again.
Persistently high unemployment, a double-dip recession, European debt woes
leading to global contagion, inflation, deflation, debt, deficits, unemployment,
housing - all are old stories that mimic concerns following many past
recessions. In our view, few of the most common fears have real teeth. The
period ahead doesn't require a massive positive catalyst to drive stocks higher
- - the realization previous fears are false should be enough. Today's media reads
almost identically to that of late 1991 and early 1992 in the aftermath of the
S&L crisis and 1990 recession - same issues, same proportions, and same fears,
almost identically.
Political rhetoric is about to hit fever pitch in the US with midterms just
ahead and high expectations for congressional gridlock. But global politics have
been grid locking all year - Germany, Sweden, Australia, the UK, and Japan are
just a few examples of countries that had to cobble together coalitions recently
to maintain power, limiting dominant parties' abilities to pass controversial
legislation. This should be bullish not only for the remainder of 2010, but
likely also into 2011 - the third year of a presidential term and historically a
sweet spot for stocks.
FUND POSITIONING
Market and economic fundamentals have continued to signal recovery. The global
economy has been growing nicely, driven by developing economies. Stocks remain
attractively valued relative to fixed income alternatives. Monetary policies
globally have remained highly accommodative. Corporate earnings have grown at a
spectacular clip as top-line growth and lean cost structures boost firms' bottom
lines. Corporate balance sheets appear beyond exceptionally healthy including
current record cash levels. Global trade has begun to surge again along with a
bevy of new free trade agreements. Regulatory uncertainty is waning. These
forces have been building since the recovery began, and we remain fully invested
in equities to capture any potential stock market gains.
2
For the 12-month period ending August 31, 2010, the Fund slightly underperformed
the MSCI World Index benchmark. In aggregate, country positioning benefited
returns relative to the benchmark. The Fund's overweights to Emerging Markets
and Switzerland and underweights to Italy, Japan, and France helped relative
performance, while underweights to the UK, Singapore, Sweden, and Canada
detracted.
Sector positioning also had a slight positive impact on relative returns. The
Fund's overweights to Industrials, Materials, and Consumer Discretionary and
underweight to Financials contributed positively to relative returns.
Overweights to Information Technology and Energy and underweights to
Telecommunication Services and Consumer Staples detracted.
Stock selection in aggregate detracted from the Fund's returns. Stock selection
in the UK, Emerging Markets, Industrials, and Materials boosted relative
returns, while stock selection in Japan, Switzerland, Financials, and Energy
hurt.
CLOSING REMARKS
Risks do exist as always, and lightning strikes can always knock things astray
temporarily. But in our view, the fundamental positives far outweigh the
negatives, and we expect the bull market to continue ahead.
Thank you for your continued interest and support.
Sincerely,
/s/ Kenneth L. Fisher
Kenneth L. Fisher
Chairman and Chief Investment Officer
Fisher Investments
OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO
CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY
OR SELL ANY SECURITY.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
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
3
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
4
PERFORMANCE SUMMARY
FOR YEAR ENDED AUGUST 31, 2010
PURISIMA TOTAL RETURN FUND
GROWTH OF $10,000
PURISIMA TOTAL RETURN FUND CUMULATIVE TOTAL RETURN VERSUS MSCI WORLD INDEX
$10,000 INVESTED FROM 9/1/00 TO 8/31/10*
[The following table was represented as a line chart in the printed material.]
TOTAL MSCI WORLD
RETURN INDEX
------ -----
8/31/2000 10,000 10,000
2/28/2001 9,625 8,286
8/31/2001 9,867 7,461
2/28/2002 9,942 7,100
8/31/2002 8,218 6,178
2/28/2003 7,294 5,637
8/31/2003 9,057 6,853
2/29/2004 10,453 8,138
8/31/2004 9,847 7,923
2/28/2005 11,135 9,113
8/31/2005 11,344 9,358
2/28/2006 12,680 10,321
8/31/2006 12,994 10,833
2/28/2007 13,946 11,957
8/31/2007 15,025 12,672
2/29/2008 14,380 11,894
8/31/2008 13,260 11,142
2/28/2009 7,226 6,290
8/31/2009 10,958 9,224
2/28/2010 11,822 9,705
8/31/2010 11,004 9,367
PURISIMA TOTAL RETURN FUND
ONE-YEAR
Average Annual Total Return(2)** 0.42%
FIVE-YEAR
Average Annual Total Return(2)** -0.61%
TEN-YEAR
Cumulative Total Return(1)** 10.32%
Average Annual Total Return(2)** 0.96%
MSCI WORLD INDEX*
ONE-YEAR
Average Annual Total Return(2)** 1.54%
FIVE-YEAR
Average Annual Total Return(2)** 0.02%
TEN-YEAR
Cumulative Total Return(1)** -6.33%
Average Annual Total Return(2)** -0.65%
PLEASE NOTE PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. SHARE PRICE
AND RETURN WILL FLUCTUATE, AND INVESTORS MAY EXPERIENCE A GAIN OR LOSS WHEN THEY
SELL THEIR SHARES. TO OBTAIN A PROSPECTUS ON THE PURISIMA FUNDS PLEASE CALL
1-800-841-0199. THE PROSPECTUS CONTAINS MORE INFORMATION, INCLUDING THE
POLITICAL, ECONOMIC, CURRENCY RISKS AND POTENTIAL VOLATILITY OF FOREIGN
INVESTING. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
1 Cumulative total return measures the change in value of an investment over
the periods indicated and reflects all fund fees and expenses.
2 Average annual total return represents the average annual change in value
of an investment over the periods indicated and reflects all fund fees and
expenses. Average annual total return and cumulative total return for the
one-year period would be identical.
* The MSCI World Index is an unmanaged global stock index comprised of
various world stock markets, including the U.S. The total return of a
$10,000 investment includes all expenses.
** The total returns shown do not reflect the deduction of taxes a
shareholder would pay on fund distributions or redemption of fund shares.
The total return reflects the rate an investment would have earned (or
lost) on an investment in the Fund, assuming reinvestment of all dividends
and distributions.
5
SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA TOTAL RETURN FUND
----------------------------------------------------
Industrials 17.8%
Information Technology 17.7%
Materials 14.5%
Financials 12.9%
Consumer Discretionary 12.1%
Energy 12.0%
Consumer Staples 7.3%
Health Care 4.1%
Telecommunication Services 1.5%
Mutual Funds 0.1%
Utilities 0.0%
----------------------------------------------------
Total 100.0%
- ----------
1 Percentage of Total Investments as of August 31, 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 March 1, 2010 to August 31,
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.
6
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 (03/01/10) $1,000.00 $ 1,000.00
Ending Account Value (08/31/10) $ 930.80 $ 1,018.65
Expenses Paid During Period(1) $ 6.33 $ 6.61
1 Expenses are equal to the Fund's expense ratio for the six month period of
1.30% for the Total Return Fund multiplied by the average account value
over the period, multiplied by 184/365 (to reflect the one-half year
period).
7
PURISIMA TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 2010
SHARES/PRINCIPAL VALUE VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS: 99.1%
AUSTRALIA: 1.9%
98,500 BHP Billiton, Ltd. - ADR $ 6,553,205
------------
BRAZIL: 3.9%
26,800 Companhia Siderurgica Nacional SA - ADR 414,060
9,800 Empresa Brasileira de Aeronautica SA
(Embraer) - ADR 242,942
34,300 Gafisa SA 233,972
179,775 Petroleo Brasileiro SA - ADR 5,995,496
224,900 Vale SA - ADR 6,016,075
36,200 Weg SA 353,498
------------
13,256,043
------------
CANADA: 2.9%
125,800 Bank Nova Scotia Halifax 6,061,044
72,500 Cenovus Energy, Inc. 1,950,975
72,500 EnCana Corporation 1,993,025
------------
10,005,044
------------
CHINA: 2.9%
102,000 Baidu.com - ADR (a) 7,999,860
164,000 China Cosco Holdings Company, Ltd. 170,562
3,100 China Life Insurance Company, Ltd. - ADR 178,405
146,000 China Oilfield Services, Ltd. 186,753
3,250 China Petroleum & Chemical Corporation - ADR 257,432
2,275 CNOOC, Ltd. - ADR 386,340
365,000 Industrial & Commercial Bank of China, Ltd. 265,113
420,000 Lenovo Group, Ltd. 240,810
42,400 Weichai Power Company, Ltd. 352,663
------------
10,037,938
------------
FINLAND: 0.7%
296,400 Nokia Oyj - ADR 2,537,184
------------
FRANCE: 3.1%
18,200 AXA 282,880
180,550 AXA - ADR 2,787,692
46,708 BNP Paribas SA 2,922,247
97,708 Total SA - ADR 4,558,078
------------
10,550,897
------------
8 The accompanying notes are an integral part of these financial statements.
SHARES/PRINCIPAL VALUE VALUE
- -------------------------------------------------------------------------------
GERMANY: 4.7%
136,300 BASF AG - ADR $ 7,174,832
98,900 Siemens AG - ADR 8,953,417
------------
16,128,249
------------
HONG KONG: 1.0%
283,800 Cheung Kong Holdings, Ltd. - ADR 3,536,148
------------
INDIA: 0.2%
1,425 HDFC Bank, Ltd. - ADR 227,715
4,800 ICICI Bank, Ltd. - ADR 198,288
3,750 Reliance Industries, Ltd. GDR 144A 146,587
9,550 Sterlite Industries India, Ltd. - ADR 123,004
------------
695,594
INDONESIA: 0.3%
245,500 Bank Rakyat Tbk PT 252,701
874,400 Bumi Resources Tbk PT 160,654
293,000 International Nickel Indonesia Tbk PT 138,636
426,500 Medco Energi Internasional Tbk PT 145,156
5,050 Telekomunikasi Indonesia Tbk PT - ADR 196,950
------------
894,097
------------
JAPAN: 4.3%
156,700 Honda Motor Company, Ltd. - ADR 5,160,131
454,200 Mitsubishi UFJ Financial Group, Incorporated - ADR 2,157,450
283,800 Nomura Holdings, Incorporated 1,597,874
260,900 Panasonic Corporation - ADR 3,289,949
86,200 Sony Corporation 2,429,730
------------
14,635,134
------------
MALAYSIA:0.2%
89,400 CIMB Group Holdings BHD 222,207
97,000 Genting BHD 292,099
215,600 MMC Corporation BHD 173,819
------------
688,125
------------
MEXICO: 1.6%
99,200 America Movil SA de CV - ADR 4,625,696
164,320 Grupo Mexico SA de CV 422,147
15,850 Industrias Penoles SA de CV 331,424
10,800 Wal-Mart De Mexico SA de CV - ADR 242,244
------------
5,621,511
------------
NETHERLANDS: 2.0%
258,400 Unilever NV - ADR 6,922,536
------------
PHILIPPINES: 0.0%
2,800 Philippine Long Distance Telephone - ADR 150,976
------------
The accompanying notes are an integral part of these financial statements. 9
SHARES/PRINCIPAL VALUE VALUE
- -------------------------------------------------------------------------------
POLAND: 0.1%
1,650 Bank Pekao SA - GDR $ 80,255
1,275 Bre Bank SA (a) 102,484
4,600 KGHM Polska Miedz SA - GDR 155,614
------------
338,353
------------
RUSSIAN FEDERATION: 0.1%
2,800 LUKOIL - ADR 147,980
10,100 OAO Gazprom - Sponsored ADR 208,720
------------
356,700
------------
SOUTH AFRICA: 0.2%
2,500 Anglo Platinum, Ltd. - ADR 207,000
10,300 MTN Group Ltd. 168,292
4,900 Sasol, Ltd. - ADR 184,730
------------
560,022
------------
SOUTH KOREA: 0.9%
6,500 Daewoo Securities Company, Ltd. 119,547
1,100 Daewoo Shipbuilding & Marine
Engineering Company, Ltd. 21,378
4,700 Daewoo Shipbuilding & Marine
Engineering Company, Ltd. - GDR 182,877
6,800 Hynix Semiconductor Incorporated (a) 119,676
2,575 Hyundai Dept Store 257,736
1,350 Hyundai Heavy Industries Company, Ltd. 297,272
2,625 KB Financial Group, Incorporated - ADR 106,943
4,300 LG Display Company,Ltd. 119,434
750 Lotte Shopping Company 243,035
3,150 POSCO - ADR 318,024
1,125 Samsung Electronics Company, Ltd. - GDR 144A 354,207
825 Samsung Fire & Marine Insurance Company 131,777
2,300 Samsung Securities Company, Ltd. 111,269
1,800 Shinhan Financial Group Company, Ltd. - ADR 137,952
3,250 SK Energy Company, Ltd. 345,629
1,900 Woori Finance Holdings Company, Ltd. - ADR 64,315
7,500 Woori Investment & Securities, Incorporated 109,788
------------
3,040,859
------------
SPAIN: 1.7%
490,121 Banco Santander Central Hispano SA - ADR 5,729,514
------------
SWITZERLAND: 8.8%
312,800 ABB, Ltd. - ADR $ 6,058,936
163,300 Credit Suisse Group - ADR 7,165,604
162,050 Nestle SA 8,395,794
46,000 Roche Holdings AG 6,252,647
44,306 Transocean, Ltd. (a) 2,255,176
------------
30,128,157
------------
10 The accompanying notes are an integral part of these financial statements.
SHARES/PRINCIPAL VALUE VALUE
- -------------------------------------------------------------------------------
TAIWAN: 0.3%
35,175 Advanced Semiconductor Engineering,
Incorporated - ADR $ 119,243
3,187 Asustek Computer, Incorporated - GDR 106,142
39,445 Hon Hai Precision - GDR 291,892
21,246 Pegatron Corporation (a) 56,046
18,542 Siliconware Precision Industries, Ltd. - ADR 82,883
39,335 Taiwan Semiconductor Manufacturing
Company, Ltd. - ADR 370,142
------------
1,026,348
------------
TURKEY: 0.0%
6,800 Turkcell Iletisim Hizmet AS - ADR 107,780
------------
UNITED KINGDOM:3.1%
170,000 Anglo American Plc - ADR 3,027,700
69,350 GlaxoSmithKline Plc - ADR 2,593,690
98,500 Rio Tinto Plc - ADR 4,967,355
------------
10,588,745
------------
UNITED STATES: 54.2%
112,700 Adobe System, Incorporated (a) 3,128,552
144,050 Anadarko Petroleum Corporation 6,624,860
622,300 Applied Materials, Incorporated 6,465,697
78,200 Boeing Company 4,780,366
139,200 Carnival Corporation 4,340,256
117,500 Caterpillar, Incorporated 7,656,300
386,000 Cisco Systems, Incorporated (a) 7,739,300
150,200 Coach, Incorporated 5,383,168
119,500 Dover Corporation 5,348,820
341,850 EMC Corporation (a) 6,235,344
70,000 Emerson Electric Company 3,265,500
125,000 Fortune Brands, Incorporated 5,598,750
123,000 Freeport-McMoRan Copper & Gold, Incorporated 8,853,540
238,850 General Electric Company 3,458,548
149,200 Hewlett Packard Company 5,741,216
89,900 Honeywell International, Incorporated 3,514,191
318,800 Intel Corporation 5,649,136
91,200 Johnson & Johnson 5,200,224
265,300 Microsoft Corporation 6,229,244
205,900 Nordstrom, Incorporated 5,954,628
102,700 Nucor Corporation 3,777,306
126,700 Occidental Petroleum Corporation 9,259,236
330,200 Oracle Corporation 7,224,776
121,500 PACCAR, Incorporated 4,980,285
94,600 PNC Financial Services Group, Incorporated 4,820,816
96,300 PPG Industries, Incorporated 6,339,429
69,225 Procter & Gamble Company 4,130,656
The accompanying notes are an integral part of these financial statements. 11
SHARES/PRINCIPAL VALUE VALUE
- -------------------------------------------------------------------------------
UNITED STATES: 54.2% (CONTINUED)
118,300 Schlumberger Ltd. $ 6,308,939
85,900 Target Corporation 4,394,644
117,666 Time Warner, Incorporated 3,527,627
75,600 Union Pacific Corporation 5,514,264
90,300 United Technologies Corporation 5,888,463
100,900 Wal Mart Stores, Incorporated 5,059,126
168,900 Wells Fargo & Company 3,977,595
------------
186,370,802
------------
TOTAL COMMON STOCKS
(Cost $346,751,264) $340,459,961
------------
PREFERRED STOCKS: 0.7%
BRAZIL: 0.7%
12,584 Banco Bradesco SA $ 221,856
2,225 Companhia de Bebidas das Americas
(AmBev) - ADR 246,285
5,529 Companhia Energetica de Minas Gerais - ADR 91,339
22,500 Gerdau S.A. - ADR 301,950
23,375 Itau Unibanco Holdings SA - ADR 504,199
30,000 Lojas Americanas SA 252,128
24,500 Vale SA - ADR 578,690
------------
2,196,447
------------
TOTAL PREFERRED STOCKS
(Cost $1,762,054) $ 2,196,447
------------
MUTUAL FUNDS: 0.1%
360,592 SEI Daily Income Trust Government Fund 360,592
TOTAL MUTUAL FUNDS
(Cost $360,592) $ 360,592
------------
TOTAL INVESTMENTS
(Cost $348,873,910): 99.9% 343,017,000
------------
Other Assets in Excess of Liabilities: 0.1% 226,507
------------
TOTAL NET ASSETS: 100.0% $343,243,507
============
- ----------
ADR - American Depositary Receipt.
GDR - Global Depository Receipt.
(a) Non Income Producing.
12 The accompanying notes are an integral part of these financial statements.
INDUSTRY % OF NET ASSETS
- ---------------------------------------------------------------------
Metals & Mining 10.5%
Oil, Gas & Consumable Fuels 9.4%
Commercial Banks 8.2%
Machinery 5.6%
Software 4.8%
Food Products 4.5%
Aerospace & Defense 4.2%
Pharmaceuticals 4.1%
Chemicals 3.9%
Semiconductors & Semiconductor Equipment 3.8%
Industrial Conglomerates 3.7%
Computers & Peripherals 3.6%
Household Durables 3.4%
Multiline Retail 3.2%
Communications Equipment 3.0%
Electrical Equipment 2.7%
Capital Markets 2.7%
Energy Equipment & Services 2.5%
Internet Software & Services 2.3%
Road & Rail 1.6%
Textiles, Apparel & Luxury Goods 1.6%
Food & Staples Retailing 1.5%
Automobiles 1.5%
Wireless Telecommunication Services 1.5%
Hotels Restaurants & Leisure 1.4%
Household Products 1.2%
Real Estate Management & Development 1.0%
Media 1.0%
Insurance 1.0%
Electronic Equipment & Instruments 0.1%
Beverages 0.1%
Diversified Telecommunication Services 0.1%
Marine 0.1%
Electric Utilities 0.0%
-----
TOTAL INVESTMENT IN SECURITIES 99.8%
Cash Equivalent 0.1%
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
AUGUST 31, 2010
ASSETS:
Investments in securities, at fair value:
Investments at value (cost $348,873,910) $ 343,017,000
Cash 38
Receivables:
Interest and dividends receivable 1,096,320
Receivable for Fund shares sold 42,899
Prepaid expenses 19,116
-------------
Total Assets 344,175,373
-------------
LIABILITIES:
Payable for fund shares redeemed 314,363
Payable to the adviser (Note 3) 306,901
Accrued distribution fees (Note 4) 114,257
Accrued fund administration, fund accounting, transfer agent and custody fees 128,011
Accrued expenses 68,334
-------------
Total Liabilities 931,866
-------------
NET ASSETS $ 343,243,507
=============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 21,261,151
=============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 16.14
=============
COMPONENTS OF NET ASSETS
Paid-in capital $ 379,412,957
Undistributed net investment income 2,861,570
Accumulated net realized loss on investments (33,190,699)
Net unrealized depreciation on investments (5,856,910)
Net unrealized appreciation on foreign currency 16,589
-------------
NET ASSETS $ 343,243,507
=============
14 The accompanying notes are an integral part of these financial statements.
PURISIMA TOTAL RETURN FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2010
INVESTMENT INCOME
Dividend income(1) $ 8,054,617
Interest income 606
-----------
Total Investment Income 8,055,223
-----------
EXPENSES
Investment advisory fees (Note 3) 3,814,794
Distribution fees (Note 4) 342,930
Administration fees (Note 3) 291,131
Transfer agent fees 219,885
Fund accounting fees 123,761
Miscellaneous expenses 107,328
Custody fees 107,195
Registration fees 26,270
Audit fees 33,316
Reports to shareholders 31,625
Legal fees 25,435
Trustees fees 21,950
Interest expense 538
-----------
Total expenses before waiver and reimbursement 5,146,158
Recoupment of expenses by adviser (Note 3) 36,690
-----------
Net expenses 5,182,848
-----------
NET INVESTMENT INCOME 2,872,375
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (4,828,626)
Net realized loss on foreign currency translation (8,734)
Change in net unrealized appreciation (depreciation) on investments 4,920,138
Change in net unrealized appreciation (depreciation) on foreign currency 11,880
-----------
Net Realized and Unrealized Gain on Investments 94,658
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,967,033
===========
- ----------
(1) Net of $745,925 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
YEAR ENDED YEAR ENDED
AUGUST 31, 2010 AUGUST 31, 2009
OPERATIONS
Net investment income $ 2,872,375 $ 4,232,547
Net realized (loss) on investments and
foreign currency translation (4,837,360) (27,838,641)
Change in net unrealized appreciation
(depreciation) on investments 4,920,138 (59,951,134)
Change in net unrealized appreciation
(depreciation) on foreign currency 11,880 7,326
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,967,033 (83,549,902)
------------- -------------
DISTRIBUTION TO SHAREHOLDERS
From net investment income (3,798,545) (2,541,948)
From net realized gain on investments (175,548) (6,295,704)
------------- -------------
NET DECREASE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS PAID (3,974,093) (8,837,652)
------------- -------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 43,364,621 45,738,924
Proceeds from reinvestment of distributions 3,841,013 8,228,346
Cost of shares redeemed (64,338,295) (55,808,714)
------------- -------------
NET DECREASE FROM CAPITAL SHARE TRANSACTIONS (17,132,661) (1,841,444)
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (18,139,721) (94,228,998)
------------- -------------
NET ASSETS
Beginning of year 361,383,228 455,612,226
------------- -------------
End of year (includes undistributed net investment
income of $2,861,570 and $3,797,914 respectively) $ 343,243,507 $ 361,383,228
============= =============
CHANGE IN CAPITAL SHARES
Shares outstanding, beginning of year 22,248,130 22,500,371
------------- -------------
Shares sold 2,464,458 3,274,955
Shares issued on reinvestment of distributions 221,129 620,071
Shares repurchased (3,672,566) (4,147,267)
------------- -------------
Net decrease in capital shares (986,979) (252,241)
------------- -------------
Shares Outstanding, end of year 21,261,151 22,248,130
============= =============
16 The accompanying notes are an integral part of these financial statements.
PURISIMA TOTAL RETURN FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH YEAR.
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Annual Report.
YEAR ENDED AUGUST 31,
------------------------------------------------------------
2010 2009 2008 2007 2006
-------- -------- -------- -------- --------
Net asset value, beginning of year $ 16.24 $ 20.25 $ 24.79 $ 21.51 $ 19.03
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.14 0.19 0.15 0.09 0.04
Net realized and unrealized
gain (loss) on investments (0.06) (3.79) (2.82) 3.27 2.72
-------- -------- -------- -------- --------
Total from investment operations 0.08 (3.60) (2.67) 3.36 2.76
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
From net investment income (0.17) (0.12) (0.07) (0.08) (0.28)
From net realized gain (0.01) (0.29) (1.80) -- --
-------- -------- -------- -------- --------
Total distributions (0.18) (0.41) (1.87) (0.08) (0.28)
-------- -------- -------- -------- --------
Net asset value, end of year $ 16.14 $ 16.24 $ 20.25 $ 24.79 $ 21.51
======== ======== ======== ======== ========
Total return 0.42% (17.37%) (11.75%) 15.63% 14.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions) $ 343.2 $ 361.4 $ 455.6 $ 465.7 $ 387.3
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed or recouped 1.35% 1.51% 1.41% 1.39% 1.49%
After fees waived and expenses
absorbed or recouped 1.36% 1.50% 1.41% 1.39% 1.49%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS # 0.75% 1.37% 0.61% 0.37% 0.21%
Portfolio turnover rate 10.82% 22.04% 62.96% 16.38% 43.47%
# Net of fees waived or recouped.
The accompanying notes are an integral part of these financial statements. 17
PURISIMA TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2010
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
18
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.
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 (2007 -
2009), or expected to be taken in the Fund's 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.
The accompanying notes are an integral part of these financial statements. 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, 2010, the Total Return Fund
decreased accumulated undistributed net investment income by
$10,174, and decreased accumulated net realized loss on investments
by $10,174.
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 year ended
August 31, 2010, was as follows:
MAXIMUM AMOUNT AVERAGE AVERAGE
AMOUNT INTEREST OUTSTANDING AT AMOUNT INTEREST
OUTSTANDING EXPENSE AUGUST 31, 2010 OUTSTANDING RATE
- ----------- ------- --------------- ----------- ----
$ 1,326,000 $ 538 $ 0 $19,205 2.750%
NOTE 3 - COMMITMENTS, OTHER RELATED PARTY TRANSACTIONS AND OTHER SERVICE
PROVIDERS
The Fund has an Investment Management Agreement with the Adviser to provide
investment advisory services to the Fund. The Adviser furnishes all investment
advice, office space, facilities, and most of the personnel needed by the Fund.
As compensation for its services, the Adviser is entitled to a monthly fee at
the annual rate of 1.00% of the Fund's average daily net assets.
The Fund is responsible for its own operating expenses. The Adviser has
contractually agreed to limit the Fund's total expenses (exclusive of brokerage,
interest, taxes, dividends on securities sold short and extraordinary expenses)
to not more than 1.50% of the average daily net assets.
Any fee withheld or voluntarily reduced and/or any Fund expense absorbed by the
Adviser pursuant to an agreed upon expense cap shall be reimbursed by the Fund
to the Adviser, if so requested by the Adviser, anytime before the end of the
third fiscal year following the year to which the fee reduction, waiver, or
expense absorption relates, provided the aggregate amount of the Fund's current
operating expenses for such fiscal year does not exceed the applicable
limitation on Fund expenses. Any such reimbursement is also contingent upon
Board of Trustees review and approval prior to the time the reimbursement is
initiated. The Fund must pay its current ordinary operating expenses before the
Adviser is entitled to any reimbursement of fees and/or expenses. For the year
ended August 31, 2010 the Advisor recouped $36,690 from the Fund. As of August
31, 2010 all fees previously waived and expenses absorbed by the advisor have
been recouped.
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. For the year
ended August 31, 2010, Purisima Total Return Fund paid USBFS $291,131 for
services rendered in its capacity as the Trust's Administrator.
21
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as
principal underwriter of the Fund and acts as the Fund's distributor in a
continuous public offering of the Fund's shares.
NOTE 4 - SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Total Return Fund is
authorized to pay expenses incurred for the purpose of financing activities,
including the employment of other dealers, intended to result in the sale of
shares of the Fund. The fee accrues at an annual rate not to exceed 0.25% of the
Fund's average daily net assets. For the year ended August 31, 2010, the Fund
incurred $342,930 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,
2010 were as follows:
FUND PURCHASES SALES
---- --------- -----
Total Return Fund $40,322,196 $55,220,099
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Fund utilizes various methods to measure the fair value of most of its
investments on a recurring basis. GAAP establishes a hierarchy that prioritizes
inputs to valuation methods. The three levels of input are:
Level 1 - Unadjusted quoted prices in active markets for identical assets
and liabilities that the Fund has the ability to access.
Level 2 - Observable inputs other than quoted prices included in level 1
that are observable for the asset or liability, either
directly or indirectly. These inputs may include quoted prices
for the identical instrument on an inactive market, prices for
similar instruments, interest rates, prepayment speeds, credit
risk, yield curves, default rates and similar data.
Level 3 - Unobservable inputs for the asset or liability, to the extent
relevant observable inputs are not available, representing the
Fund's own assumptions about the assumptions a market
participate would is in valuing the asset or liability, and
would be based on the best information available.
The availability of observable inputs can vary from security to security and is
affected by a wide variety of factors, including, for example, the type of
security, whether the security is new and not yet established in the
marketplace, the liquidity of markets, and other characteristics particular to
the security. To the extent that valuation is based on models or inputs that are
less observable or unobservable in the market, the determination of fair value
requires more judgment. Accordingly, the degree of judgment exercised in
determining fair value is greatest for instruments categorized in Level 3.
22
The inputs used to measure fair value may fall into different levels of the fair
value hierarchy. In such cases, for disclosure purpose, the level in the fair
value hierarchy within which the fair value measurement falls in its entirety,
is determined based on the lowest level input that is significant to the fair
value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. The
following tables summarize the inputs used as of August 31, 2010 for the Fund's
assets and liabilities measured at fair value:
DESCRIPTION LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- --------------------------------------------------------------------------------
EQUITY
Common Stock $339,426,772 $ 1,033,189 $ -- $340,459,961
Preferred Stock $ 2,196,447 $ -- $ -- $ 2,196,447
- --------------------------------------------------------------------------------
TOTAL EQUITY $341,623,219 $ 1,033,189 $ -- $342,656,408
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS $ 360,592 $ -- $ -- $ 360,592
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS
IN SECURITIES* $341,983,811 $ 1,033,189 $ -- $343,017,000
- --------------------------------------------------------------------------------
* Please refer to the Schedule of Investments for country breakdown.
There were no significant transfers between Level 1 and Level 2 during the
period. The Fund did not hold any Level 3 securities during the year ended
August 31, 2010.
NOTE 7 - FEDERAL INCOME TAX MATTERS
The difference between the book and tax basis components of the distributable
earnings relate principally to the timing of recognition of income and gains for
federal income tax purposes. These differences are primarily attributable to the
tax deferral of losses on wash sales, the realization for tax purposes of
unrealized gains on passive foreign investment companies and return of capital
distributions and income adjustments recognized for tax purposes on real estate
investment trusts. Short-term gains distributions reported in the Statements of
Changes of Net Assets, if any, are reported as ordinary income for federal tax
purposes.
As of August 31, 2010, the components of distributable earnings on a tax basis
were as follows:
TOTAL RETURN
-------------
Cost of investments for tax purposes $ 349,196,062
=============
Gross tax unrealized appreciation $ 57,236,136
Gross tax unrealized depreciation (63,415,198)
-------------
Net tax unrealized depreciation (6,179,062)
-------------
Undistributed ordinary income 2,869,810
Undistributed Long Term Capital Gains --
-------------
Total distributable earnings 2,869,810
-------------
Other accumulated loss (32,860,198)
-------------
Total accumulated loss $ (36,169,450)
=============
23
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, 2010, the Fund deferred, on a tax basis, $4,832,066 of Post-October
losses.
The tax character of distributions paid during the fiscal years ended August 31,
2010 and 2009 were as follows:
ORDINARY LONG TERM
INCOME CAPITAL GAINS
------ -------------
Total Return Fund
8/31/2010 $ 3,798,545 $ 175,548
8/31/2009 $ 2,541,948 $ 6,295,704
NOTE 8 - NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") "Improving Disclosures about Fair Value
Measurements." The ASU requires enhanced disclosures about a) transfers into and
out of Levels 1 and 2, and b) purchases, sales, issuances, and settlements on a
gross basis relating to Level 3 measurements. The first disclosure is effective
for the first reporting period beginning after December 15, 2009, and for
interim periods within those fiscal years. There were no significant transfers
in to and out of Levels 1 and 2 during the current period presented. The second
disclosure will become effective for fiscal years beginning after December 15,
2010, and for interim periods within those fiscal years. Management is currently
evaluating the impact this disclosure may have on the Fund's financial
statements.
NOTE 9 - SUBSEQUENT EVENTS
The Fund is required to recognize in the financial statements the effect of all
subsequent events that provide additional evidence about conditions that exited
at the date of the Statement of Assets and Liabilities. For non-recognized
subsequent events that must be disclosed to keep the financial statements from
being misleading, the Fund is required to disclosed the nature of the event as
well as an estimate of its financial effect, or a statement that such an
estimate cannot be made. Management has evaluated subsequent events through the
issuance of these financial statements and has noted no such events.
24
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
THE PURISIMA FUNDS
WOODSIDE, CALIFORNIA
We have audited the accompanying statement of assets and liabilities of the
Purisima Total Return Fund (the "Fund"), a series of The Purisima Funds,
including the schedule of investments as of August 31, 2010, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of August 31, 2010, by correspondence with the custodian. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Purisima Total Return Fund as of August 31, 2010, the results of its operations,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
October 22, 2010
25
This page is intentionally left blank.
PURISIMA TOTAL RETURN FUND
OTHER INFORMATION
PROXY VOTING PROCEDURES (UNAUDITED)
The Adviser votes proxies relating to portfolio securities in accordance with
procedures that have been approved by the Trust's Board of Trustees. You may
obtain a description of these procedures, free of charge, by calling toll-free
1-800-841-0199. This information is also available through the Securities and
Exchange Commission's website at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to the portfolio
securities during the most recent 12-month period ended June 30 is available
without charge, upon request, by calling toll-free 1-800-841-0199. This
information is also available through the Securities and Exchange Commission's
website at http://www.sec.gov.
FORM N-Q DISCLOSURE (UNAUDITED)
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third fiscal quarters on Form N-Q. The Fund's Form N-Q is available
without charge, upon request, by calling 1-800-841-0199. Furthermore, you can
obtain the Form N-Q on the SEC's website at www.sec.gov.
TAX NOTICE (UNAUDITED)
For the fiscal year ended August 31, 2010, certain dividends paid by the Fund
may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth
Tax Relief Reconciliation Act of 2003. The Fund designates 100% of dividends
declared from ordinary income as qualified dividend income.
The percentage of dividend income distributed for the year ended August 31, 2010
designated as qualified dividends received deduction available to corporate
shareholders is 71.56% for the Total Return Fund.
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 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.
32
This page is intentionally left blank.
ITEM 1. REPORTS TO STOCKHOLDERS.
THE PURISIMA FUNDS
ANNUAL REPORT
AUGUST 31, 2010
The Purisima All-Purpose Fund
A LETTER TO OUR SHAREHOLDERS
Welcome to the annual report for the Purisima All-Purpose Fund for the 12-month
period ending August 31, 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,
Kenneth L. Fisher
Chairman and Chief Investment Officer
Fisher Investments
OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO
CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY
OR SELL ANY SECURITY.
FUND HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE AND ARE NOT
RECOMMENDATIONS TO BUY OR SELL ANY SECURITY.
MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE. THE FUND MAY
USE SHORT SALES OF SECURITIES, WHICH INVOLVE THE RISK THAT LOSSES MAY EXCEED THE
ORIGINAL AMOUNT INVESTED. THE FUND MAY ALSO USE OPTIONS AND FUTURES CONTRACTS,
WHICH HAVE THE RISKS OF UNLIMITED LOSSES OF THE UNDERLYING HOLDINGS DUE TO
UNANTICIPATED MARKET MOVEMENTS AND FAILURE TO CORRECTLY PREDICT THE DIRECTION OF
SECURITIES PRICES, INTEREST RATES AND CURRENCY EXCHANGE RATES. THE FUND MAY
INVEST IN FOREIGN SECURITIES WHICH INVOLVE GREATER VOLATILITY AND POLITICAL,
ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS. THE FUND MAY
INVEST IN DEBT SECURITIES WHICH TYPICALLY DECREASE IN VALUE WHEN INTEREST RATES
RISE. THIS RISK IS GREATER FOR LONGER-TERM DEBT SECURITIES.
THE FUND IS NON-DIVERSIFIED, MEANING IT MAY CONCENTRATE ITS ASSETS IN FEWER
INDIVIDUAL HOLDINGS THAN A DIVERSIFIED FUND. THEREFORE, THE FUND IS MORE EXPOSED
TO INDIVIDUAL STOCK VOLATILITY THAN A DIVERSIFIED FUND. AN INVESTMENT IN THE
FUND IS NOT SUITABLE FOR ALL INVESTORS.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS.
FISHER INVESTMENTS IS THE ADVISER TO THE PURISIMA FUNDS. THE PURISIMA FUNDS ARE
DISTRIBUTED BY QUASAR DISTRIBUTORS, LLC.
PERFORMANCE SUMMARY (UNAUDITED)
FOR YEAR ENDED AUGUST 31, 2010
PURISIMA ALL-PURPOSE FUND
GROWTH OF $10,000
PURISIMA ALL-PURPOSE FUND CUMULATIVE TOTAL RETURN VERSES MERRILL LYNCH U.S.
TREASURY BILLS 0-3 MONTHS INDEX $10,000 INVESTED FROM FUND INCEPTION ON 11/01/05
TO 8/31/10*
[The following table was represented as a line chart in the printed material.]
MERRILL LYNCH U.S. TREASURY BILLS
MONTH PURISIMA ALL-PURPOSE FUND 0-3 MONTHS INDEX
----- ------------------------- ----------------
11/1/2005 10,000 10,000
2/28/2006 10,160 10,128
5/31/2006 10,351 10,246
8/31/2006 10,562 10,374
11/30/2006 10,743 10,506
2/28/2007 10,908 10,636
5/31/2007 11,103 10,779
8/31/2007 11,330 10,923
11/30/2007 11,481 11,049
2/29/2008 11,692 11,153
5/31/2008 11,749 11,193
8/31/2008 11,818 11,250
11/30/2008 11,956 11,308
2/28/2009 11,936 11,310
5/31/2009 12,175 11,318
8/31/2009 12,139 11,325
11/30/2009 12,127 11,331
2/28/2010 12,095 11,333
5/31/2010 12,047 11,336
8/31/2010 12,022 11,341
PURISIMA ALL-PURPOSE FUND
ONE-YEAR
Annual Total Return** -0.96%
SINCE INCEPTION (11/01/2005)
Cumulative Total Return(1)** 20.22%
Average Annual Total Return(2)** 3.89%
MERRILL LYNCH U.S. TREASURY BILLS 0-3 MONTHS INDEX
ONE-YEAR
Annual Total Return** 0.14%
SINCE FUND INCEPTION (11/01/2005)
Cumulative Total Return(1)** 12.67%
Average Annual Total Return(2)** 2.50%
PLEASE NOTE PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. SHARE PRICE
AND RETURN WILL FLUCTUATE, AND INVESTORS MAY EXPERIENCE A GAIN OR LOSS WHEN THEY
SELL THEIR SHARES. TO OBTAIN A PROSPECTUS ON THE PURISIMA FUNDS PLEASE CALL
1-800-841-0199. THE PROSPECTUS CONTAINS MORE INFORMATION, INCLUDING THE
POLITICAL, ECONOMIC, CURRENCY RISKS AND POTENTIAL VOLATILITY OF FOREIGN
INVESTING. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
1. Cumulative total return measures the change in value of an investment over
the periods indicated and reflects all fund fees and expenses.
2. Average annual total return represents the average annual change in value
of an investment over the periods indicated and reflects all fund fees and
expenses. Average annual total return and cumulative total return for the
one-year period would be identical.
* The Merrill Lynch US Treasury Bills 0-3 Months Index is an unmanaged index
of Treasury securities that assumes reinvestment of all income.
** The total returns shown do not reflect the deduction of taxes a
shareholder would pay on fund distributions or redemption of fund shares.
The total return reflects the rate an investment would have earned (or
lost) on an investment in the Fund, assuming reinvestment of all dividends
and distributions.
SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA ALL-PURPOSE FUND
- ----------------------------------------------------------------------
U.S. Treasury Obligations 68.3%
Mutual Funds 31.7%
- ----------------------------------------------------------------------
Total 100.0%
(1) Percentage of Total Investments as of August 31, 20010
IMPORTANT INFORMATION
The following disclosure provides important information regarding the Fund's
Expense Example. Please refer to this information when reviewing the Expense
Example for the Fund.
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs; and (2) ongoing costs, including management fees; and other fund
expenses. This Example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period indicated and held for the entire period from March 1, 2010 to August 31,
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 (03/01/10) $1,000.00 $1,000.00
Ending Account Value (08/31/10) $994.00 $1,017.64
Expenses Paid During Period(1) $7.54 $7.63
- --------------------------------------------------------------------------------
(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 184/365 (to reflect the one-half year period).
PURISIMA ALL-PURPOSE FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 2010
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------
U.S. TREASURY BILLS - 29.9%
15,000 0.000%, 12/16/2010 $ 14,994
--------
TOTAL U.S. TREASURY BILLS (COST $14,988) 14,994
--------
U.S. TREASURY NOTES - 40.8%
10,000 5.125%, 06/30/2011 $ 10,404
10,000 1.000%, 12/31/2011 10,084
--------
TOTAL U.S. GOVERNMENT NOTES (COST $20,349) $ 20,488
--------
SHARES VALUE
- --------------------------------------------------------------------------------
MUTUAL FUNDS - 32.8%
16,454 SEI Daily Income Trust Government Fund 16,454
--------
TOTAL MUTUAL FUNDS (COST $16,454) $ 16,454
--------
TOTAL INVESTMENTS (COST $51,791) - 103.5% $ 51,936
Liabilities in Excess of Other Assets - (3.5)% (1,778)
--------
TOTAL NET ASSETS - 100.0% $ 50,158
========
The accompanying notes are an integral part of these financial statements.
PURISIMA ALL-PURPOSE FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2010
ALL-PURPOSE FUND
----------------
ASSETS
Investments in securities, at cost $ 51,791
================
Investments in securities, at value $ 51,936
Receivables:
Dividends and interest 106
Due from Adviser 11,661
Prepaid expenses 16,558
----------------
Total Assets 80,261
----------------
LIABILITIES
Accrued administration fees 2,916
Accrued transfer agent fees 3,751
Accrued audit fees 11,755
Accrued fund accounting fees 7,836
Accrued reports to shareholders 1,217
Other accrued expenses 2,628
----------------
Total Liabilities 30,103
----------------
NET ASSETS $ 50,158
================
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 5,041
================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE $ 9.95
================
COMPONENTS OF NET ASSETS
Paid-in capital $ 50,012
Accumulated net realized gain on investments 1
Net unrealized appreciation on investments 145
----------------
Net assets $ 50,158
================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2010
ALL-PURPOSE FUND
----------------
INVESTMENT INCOME
Income
Interest $ 271
----------------
Total income 271
----------------
Expenses
Advisory fees (Note 3) 505
Administration fees (Note 3) 41,850
Transfer agent fees 15,865
Fund accounting fees 31,095
Custody fees 3,785
Reports to shareholders 3,983
Registration fees 14,983
Audit fees 12,495
Legal fees 103
Trustee fees 23,065
Miscellaneous 556
----------------
Total expenses 148,285
Less: Expenses waived by Adviser (Note 3) (147,529)
----------------
Net expenses 756
----------------
NET INVESTMENT LOSS (485)
----------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS
Net realized gain on investments 1
Change in net unrealized depreciation on investments (23)
----------------
Net loss on investments (22)
----------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (507)
================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
INCREASE IN NET ASSETS FROM: AUGUST 31, 2010 AUGUST 31, 2009
--------------- ---------------
OPERATIONS
Net investment income (loss) $ (485) $ 951
Net realized gain on investments 1 7
Change in net unrealized appreciation (depreciation) on investments (23) 168
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (507) 1,126
--------------- ---------------
DISTRIBUTION TO SHAREHOLDERS
From net investment income (712) (1,006)
From net realized gains from investments -- (15)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (712) (1,021)
--------------- ---------------
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 (507) 21,126
--------------- ---------------
NET ASSETS
Beginning of year 50,665 29,539
--------------- ---------------
END OF YEAR $ 50,158 $ 50,665
=============== ===============
Undistributed net investment income $ -- $ 712
=============== ===============
(a) A summary of capital share transactions is as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 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
========== ========== ========== ==========
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 ANNUAL REPORT.
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR NOVEMBER 1,
ENDED ENDED ENDED ENDED 2005^ THRU
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
2010 2009 2008 2007 2006
------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period $ 10.19 $ 10.27 $ 10.47 $ 10.50 $ 10.00
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (0.10) 0.19 0.46 0.69 0.56
Net realized and unrealized gain
(loss) on investments -- 0.08 (0.03) 0.04 --
------------ ------------ ------------ ------------ ------------
Total from investment operations (0.10) 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 $ 9.95 $ 10.19 $ 10.27 $ 10.47 $ 10.50
============ ============ ============ ============ ============
Total return (0.96%) 2.71% 4.31% 7.27% 5.62%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 50.2 $ 50.7 $ 29.5 $ 28.3 $ 26.4
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived 294.12% 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 # (0.96%) 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.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PURISIMA ALL-PURPOSE FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2010
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, 2010, 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 (2007 -
2009), or expected to be taken in the Fund's 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
August 31, 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.
NOTE 3 - COMMITMENTS, OTHER RELATED PARTY TRANSACTIONS AND OTHER SERVICE
PROVIDERS
The Fund has an Investment Management Agreement with the Adviser to provide
investment advisory services to the Fund. The Adviser furnishes all investment
advice, office space, facilities, and most of the personnel needed by the Fund.
As compensation for its services, the Adviser is entitled to a monthly fee at
the annual rate of 1.00% of the Fund's average daily net assets.
The Fund is responsible for its own operating expenses. The Adviser has
contractually agreed to limit the Fund's total expenses (exclusive of brokerage,
interest, taxes, dividends on securities sold short and extraordinary expenses)
to not more than 1.50% of the average daily net assets.
Any fee withheld or voluntarily reduced and/or any Fund expense absorbed by the
Adviser pursuant to an agreed upon expense cap shall be reimbursed by the Fund
to the Adviser, if so requested by the Adviser, anytime before the end of the
third fiscal year following the year to which the fee reduction, waiver, or
expense absorption relates, provided the aggregate amount of the Fund's current
operating expenses for such fiscal year does not exceed the applicable
limitation on Fund expenses. Any such reimbursement is also contingent upon
Board of Trustees review and approval prior to the time the reimbursement is
initiated. The Fund must pay its current ordinary operating expenses before the
Adviser is entitled to any reimbursement of fees and/or expenses. For the year
ended August 31 2010, the Fund paid the Adviser $505.
As of August 31, 2010, the Adviser has reimbursed the Fund $147,529 to limit its
total expenses to not more than 1.50% of the average daily net assets.
At August 31, 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, 2011 AUGUST 31, 2012 AUGUST 31, 2013
- ---- --------------- --------------- ---------------
Purisima All-Purpose Fund $ 144,904 $ 148,806 $ 147,529
U.S. Bank, N.A. serves as the Fund's Custodian. U.S. Bancorp Fund Services, LLC
("USBFS"), an
PURISIMA ALL-PURPOSE FUND
affiliate of U.S. Bank, N.A., serves as the Administrator, Fund Accountant and
Transfer Agent. Certain officers of the Trust, including the Trust's Treasurer,
are employees of the Administrator. In its capacity as the Fund's Administrator,
USBFS provides general fund management including corporate secretarial services,
coordinates the preparation of materials for the Board of Trustees, assists with
the annual audit of the Fund's financial statements, monitors the Fund's
compliance with federal and state regulations as well as investment
restrictions, coordinates the payment of Fund expenses and monitors expense
accruals, prepares financial statements and non-investment related statistical
data and makes required tax reporting calculations. During the year ended August
31, 2010, Purisima All-Purpose Fund paid USBFS $41,850 for services rendered in
its capacity as the Fund's Administrator.
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as
principal underwriter of the Fund and acts as the Fund's distributor, pursuant
to a Distribution Agreement with the Trust, in a continuous public offering of
the Fund's shares.
NOTE 4 - SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Fund is authorized to pay
expenses incurred for the purpose of distribution activities, including the
engagement of other dealers, intended to result in the sale of shares of the
Fund. The fee accrues at an annual rate not to exceed 0.25% of the Fund's
average daily net assets. For the year ended August 31, 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 year ended August 31, 2010, were as follows:
FUND PURCHASES SALES
---- --------- -----
Purisima All-Purpose Fund $ 0 $ 0
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Fund utilizes various methods to measure the fair value of most of its
investments on a recurring basis. GAAP establishes a hierarchy that prioritizes
inputs to valuation methods. The three levels of input are:
Level 1 - Unadjusted quoted prices in active markets for identical assets
and liabilities that the Fund has the ability to access.
Level 2 - Observable inputs other than quoted prices included in level 1
that are observable for the asset or liability, either directly or
indirectly. These inputs may include quoted prices for the identical
instrument on an inactive market, prices for similar instruments, interest
rates, prepayment speeds, credit risk, yield curves, default rates and
similar data.
Level 3 - Unobservable inputs for the asset or liability, to the extent
relevant observable inputs
PURISIMA ALL-PURPOSE FUND
are not available, representing the Fund's own assumptions about the
assumptions a market participate would is in valuing the asset or
liability, and would be based on the best information available.
The availability of observable inputs can vary from security to security
and is affected by a wide variety of factors, including, for example, the
type of security, whether the security is new and not yet established in
the marketplace, the liquidity of markets, and other characteristics
particular to the security. To the extent that valuation is based on
models or inputs that are less observable or unobservable in the market,
the determination of fair value requires more judgment. Accordingly, the
degree of judgment exercised in determining fair value is greatest for
instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of
the fair value hierarchy. In such cases, for disclosure purpose, the level
in the fair value hierarchy within which the fair value measurement falls
in its entirety, is determined based on the lowest level input that is
significant to the fair value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities.
The following tables summarize the inputs used as of August 31, 2010 for
the Fund's assets and liabilities measured at fair value:
Description Level 1 Level 2 Level 3 Total
- --------------------------------------------------------------------------------
FIXED INCOME
Federal Agency Obligations $ -- $ 35,482 $ -- $ 35,482
- --------------------------------------------------------------------------------
TOTAL FIXED INCOME $ -- $ 35,482 $ -- $ 35,482
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS $ 16,454 $ -- $ -- $ 16,454
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES $ 16,454 $ 35,482 $ -- $ 51,936
- --------------------------------------------------------------------------------
There were no significant transfers between level 1 & 2 during current period
presented. The Fund did not hold any level 3 securities during the period.
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.
PURISIMA ALL-PURPOSE FUND
As of August 31, 2010, the components of distributable earnings on a tax basis
were as follows:
All-Purpose
-----------
Cost of investments for tax purposes $ 51,791
===========
Gross tax unrealized appreciation $ -
Gross tax unrealized depreciation $ -
-----------
Net tax unrealized appreciation $ 145
-----------
Undistributed long term gain $ 1
-----------
Total accumulated earnings $ 146
===========
The tax character of distributions paid during the fiscal years ended August 31,
2010 and 2009 were as follows:
Ordinary Income Long Term Capital Gains
--------------- -----------------------
Purisima All-Purpose Fund
8/31/2010 $712 --
8/31/2009 $1,021 --
NOTE 8 - NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") "Improving Disclosures about Fair Value
Measurements." The ASU requires enhanced disclosures about a) transfers into and
out of Levels 1 and 2, and b) purchases, sales, issuances, and settlements on a
gross basis relating to Level 3 measurements. The first disclosure is effective
for the first reporting period beginning after December 15, 2009, and for
interim periods within those fiscal years. There were no significant transfers
in to and out of Levels 1 and 2 during the current period presented. The second
disclosure will become effective for fiscal years beginning after December 15,
2010, and for interim periods within those fiscal years. Management is currently
evaluating the impact this disclosure may have on the Fund's financial
statements.
NOTE 9 - SUBSEQUENT EVENTS
The Fund is required to recognize in the financial statements the effect of all
subsequent events that provide additional evidence about conditions that exited
at the date of the Statement of Assets and Liabilities. For non-recognized
subsequent events that must be disclosed to keep the financial statements from
being misleading, the Fund is required to disclosed the nature of the event as
well as an estimate of its financial effect, or a statement that such an
estimate cannot be made. Management has evaluated subsequent events through the
issuance of these financial statements and has noted no such events.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
THE PURISIMA FUNDS
WOODSIDE, CALIFORNIA
We have audited the accompanying statement of assets and liabilities of the
Purisima All-Purpose Fund (the "Fund"), a series of The Purisima Funds,
including the schedule of investments as of August 31, 2010, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the four years in the period then ended and for the
period November 1, 2005 (commencement of operations) to August 31, 2006. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of August 31, 2010, by correspondence with the custodian. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Purisima All-Purpose Fund as of August 31, 2010, the results of its operations,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the four years in the period
then ended and for the period November 1, 2005 to August 31, 2006, in conformity
with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER LLP
PHILADELPHIA, PENNSYLVANIA
OCTOBER 22, 2010
OTHER INFORMATION
PROXY VOTING PROCEDURES (UNAUDITED)
The Adviser votes proxies relating to portfolio securities in accordance with
procedures that have been approved by the Trust's Board of Trustees. You may
obtain a description of these procedures, free of charge, by calling toll-free
1-800-841-0199. This information is also available through the Securities and
Exchange Commission's website at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to the portfolio
securities during the most recent 12-month period ended June 30 is available
without charge, upon request, by calling toll-free 1-800-841-0199. This
information is also available through the Securities and Exchange Commission's
website at http://www.sec.gov.
FORM N-Q DISCLOSURE (UNAUDITED)
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third fiscal quarters on Form N-Q. The Fund's Form N-Q is available
without charge, upon request, by calling 1-800-841-0199. Furthermore, you can
obtain the Form N-Q on the SEC's website at www.sec.gov.
TAX NOTICE (UNAUDITED)
Additional Information applicable to foreign shareholders only: The percentage
of taxable ordinary income distributions that are designated as short-term
capital gain distributions under Internal Revenue Code Section 871(k)(2)(C) for
the year ended August 31, 2010 is 0.00%.
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
POSITION(S) COMPLEX OTHER
NAME, ADDRESS, HELD YEAR PRINCIPAL OVERSEEN BY DIRECTOR-SHIPS
DATE OF BIRTH WITH TRUST ELECTED(1) OCCUPATION(S) DURING PAST FIVE YEARS DIRECTOR HELD
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth L. Fisher President 1996 Chief Executive Officer and majority 2 None
(born 1950) and Trustee shareholder of Fisher Investments, 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,
13100 Skyline Blvd. a registered investment adviser.
Woodside, CA 94062
Alfred D. McKelvy, Jr. Trustee 2003 President and Chief Executive Officer of 2 East Bay BOMA; BOMA
(born 1948) Omnimetric Services, LLC. since 2009, 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 Trustee 1996 Attorney in private practice in Palo Alto, 2 None
(born 1949) California. Prior to entering private
13100 Skyline Blvd. practice in June of 1981, served as a
Woodside, CA 94062 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 Officer N/A None
(born 1960) Compliance of the Adviser. Vice President of Charles
13100 Skyline Blvd. Officer Schwab & Co., Inc. from 1995 to 2004, where
Woodside, CA 94062 he had been employed since 1983.
Keith Shintani (born Secretary and 2006 Vice President of U.S. Bancorp Fund N/A None
1963) Assistant Services, LLC and its predecessor,
2020 East Financial Way Treasurer Investment Company Administration, LLC
Glendora, CA 91741 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
POSITION(S) COMPLEX OTHER
NAME, ADDRESS, HELD YEAR PRINCIPAL OVERSEEN BY DIRECTOR-SHIPS
DATE OF BIRTH WITH TRUST ELECTED(2) OCCUPATION(S) DURING PAST FIVE YEARS DIRECTOR HELD
- ------------------------------------------------------------------------------------------------------------------------------------
Michael Ricks (born Treasurer 2006 Vice President of U.S. Bancorp Fund N/A None
1977) Services, LLC since 2001.
2020 East Financial Way
Glendora, CA 91741
- ----------
2 Trustees and officers of the Funds serve until their resignation, removal
or retirement.
PRIVACY NOTICE
Fisher Asset Management, LLC (doing business as Fisher Investments) and the
Purisima Funds collect non-public information about you from the following
sources:
o Information we receive about you on applications or other forms;
o Information you give us orally; and
o Information about your transactions with us or others.
We are committed to protecting your privacy and your non-public personal
information. We do not sell or market your non-public personal information to
unaffiliated organizations. We maintain physical, electronic and procedural
safeguards to guard your non-public personal information. We hold our employees
to strict standards of conduct regarding confidentiality, and employees who
violate our Privacy Policy are subject to disciplinary process. We restrict
access to your information to those employees who need to know that information
to carry out their duties.
We do not disclose any non-public personal information about our clients or
former clients without the client's authorization, except as permitted by law.
We may disclose the non-public information we collect to employees and
affiliates, and unaffiliated third parties as permitted by law. Third parties
may include law enforcement agencies, government and regulatory authorities, and
professionals such as our legal counsel and auditors, and we may disclose
information for reasons such as audit purposes, prevention of fraud or money
laundering, protection of confidentiality, compliance with laws, and to provide
agreed upon products and services to you. Third parties may also include service
providers performing financial services for us (such as brokers and custodians)
and service providers performing non-financial services for us (such as third
parties performing computer related or data maintenance, marketing or other
services for us or to assist us in offering our products and services to you).
It is our policy to require all third party service providers that will receive
information to sign strict confidentiality agreements agreeing to safeguard such
information and use it only for the purpose it was provided.
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer and principal financial officer. The registrant has
not made any amendments to its code of ethics during the period covered by this
report. The registrant has not granted any waivers from any provisions of the
code of ethics during the period covered by this report.
THE REGISTRANT UNDERTAKES TO PROVIDE TO ANY PERSON WITHOUT CHARGE, UPON REQUEST,
A COPY OF ITS CODE OF ETHICS BY MAIL WHEN THEY CALL THE REGISTRANT AT
1-800-851-8845.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
THE REGISTRANT'S BOARD OF TRUSTEES HAS DETERMINED THAT IT DOES NOT HAVE AN AUDIT
COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT COMMITTEE. AT THIS TIME, THE
REGISTRANT BELIEVES THAT THE EXPERIENCE PROVIDED BY EACH MEMBER OF THE AUDIT
COMMITTEE TOGETHER OFFERS THE REGISTRANT ADEQUATE OVERSIGHT FOR THE REGISTRANT'S
LEVEL OF FINANCIAL COMPLEXITY.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The registrant has engaged its principal accountant to perform audit services,
audit-related services, tax services and other services during the past two
fiscal years. "Audit services" refer to performing an audit of the registrant's
annual financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years. "Audit-related services" refer to the assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit. "Tax services" refer to professional services rendered
by the principal accountant for tax compliance, tax advice, and tax planning.
There were no "Other services" provided by the principal accountant. The
following table details the aggregate fees billed or expected to be billed for
each of the last two fiscal years for audit fees, audit-related fees, tax fees
and other fees by the principal accountant.
--------------------------------------------------------------------
FYE 08/31/2010 FYE 08/31/2009
--------------------------------------------------------------------
Audit Fees 39,900 38,000
Audit-Related Fees -- --
Tax Fees 6,300 6,000
All Other Fees -- --
--------------------------------------------------------------------
The audit committee has adopted pre-approval policies and procedures that
require the audit committee to pre-approve all audit and non-audit services of
the registrant, including services provided to any entity affiliated with the
registrant.
The percentage of fees billed by TAIT, WELLER AND BAKER LLP applicable to
non-audit services pursuant to waiver of pre-approval requirement were as
follows:
-----------------------------------------------------------------
FYE 08/31/2010 FYE 08/31/2009
-----------------------------------------------------------------
Audit-Related Fees 0% 0%
Tax Fees 0% 0%
All Other Fees 0% 0%
-----------------------------------------------------------------
All of the principal accountant's hours spent on auditing the registrant's
financial statements were attributed to work performed by full-time permanent
employees of the principal accountant.
The following table indicates the non-audit fees billed or expected to be billed
by the registrant's accountant for services to the registrant and to the
registrant's investment adviser (and any other controlling entity, etc.--not
sub-adviser) for the last two years. The audit committee of the board of
trustees/directors has considered whether the provision of non-audit services
that were rendered to the registrant's investment adviser is compatible with
maintaining the principal accountant's independence and has concluded that the
provision of such non-audit services by the accountant has not compromised the
accountant's independence.
----------------------------------------------------------------------
Non-Audit Related Fees FYE 08/31/2010 FYE 08/31/2009
----------------------------------------------------------------------
Registrant -- --
Registrant's Investment Adviser -- --
----------------------------------------------------------------------
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to registrants who are not listed issuers (as defined in Rule
10A-3 under the Securities Exchange Act of 1934).
ITEM 6. INVESTMENTS.
(a) Schedule of Investments is included as part of the report to shareholders
filed under Item 1 of this Form.
(b) Not Applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's President and Treasurer have reviewed the Registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as of a date within 90 days of
the filing of this report, as required by Rule 30a-3(b) under the Act and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934.
Based on their review, such officers have concluded that the disclosure
controls and procedures are effective in ensuring that information
required to be disclosed in this report is appropriately recorded,
processed, summarized and reported and made known to them by others within
the Registrant and by the Registrant's service provider.
(b) There were no changes in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) ANY CODE OF ETHICS OR AMENDMENT THERETO, THAT IS THE SUBJECT OF THE
DISCLOSURE REQUIRED BY ITEM 2, TO THE EXTENT THAT THE REGISTRANT INTENDS
TO SATISFY ITEM 2 REQUIREMENTS THROUGH FILING AN EXHIBIT. 1) Incorporated
by reference to the Registrant's Form N-CSR filed November 10, 2003.
(2) A SEPARATE CERTIFICATION FOR EACH PRINCIPAL EXECUTIVE AND PRINCIPAL
FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF
2002. Filed herewith.
(3) ANY WRITTEN SOLICITATION TO PURCHASE SECURITIES UNDER RULE 23C-1 UNDER
THE ACT SENT OR GIVEN DURING THE PERIOD COVERED BY THE REPORT BY OR ON
BEHALF OF THE REGISTRANT TO 10 OR MORE PERSONS. Not applicable to open-end
investment companies.
(B) CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
The Purisima Funds
By /s/ Kenneth L. Fisher
-------------------------------
Kenneth L. Fisher, President
Date 11/03/2010
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 11/03/2010
By /s/ Michael Ricks
------------------------
Michael Ricks, Treasurer
Date 11/02/2010