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: FEBRUARY 28, 2011
ITEM 1. REPORTS TO STOCKHOLDERS.
The Purisima Funds
--------------------------------------------------------------------------------
SEMI-ANNUAL REPORT (UNAUDITED)
FEBRUARY 28, 2011
The Purisima Total Return Fund
TABLE OF CONTENTS
A Letter to Our Shareholders 2
Sector Breakdown 5
Expense Example 6
Schedule of Investments 7
Statement of Assets and Liabilities 13
Statement of Operations 14
Statement of Changes in Net Assets 15
Financial Highlights 16
Notes to Financial Statements 17
Other Information 24
Trustees and Officer Information 28
Privacy Notice 32
INVESTMENT OBJECTIVES
PURISIMA TOTAL RETURN FUND
The Purisima Total Return Fund ("the Fund") seeks a high total return. (Total
return includes capital appreciation, dividend and interest income, and
distributions).
EACH FUND RESERVES THE RIGHT TO REJECT ANY ORDER FOR THE PURCHASE OF ITS SHARES
OR TO LIMIT OR SUSPEND, WITHOUT PRIOR NOTICE, THE OFFERING OF ITS SHARES. THE
REQUIRED MINIMUM INVESTMENTS MAY BE WAIVED IN THE CASE OF CERTAIN QUALIFIED
RETIREMENT PLANS. THE FUNDS WILL NOT ACCEPT YOUR ACCOUNT IF YOU ARE INVESTING
FOR ANOTHER PERSON AS ATTORNEY-IN-FACT. THE FUNDS ALSO WILL NOT ACCEPT ACCOUNTS
WITH A "POWER OF ATTORNEY" IN THE REGISTRATION SECTION OF THE PURCHASE
APPLICATION.
1
A LETTER TO OUR SHAREHOLDERS
Welcome to the semi-annual report for the Purisima Total Return Fund for the
six-month period ended February 28, 2011. The primary investment objective of
the Fund is achieving high total return for shareholders.
MARKET REVIEW AND OUTLOOK
Stocks ended 2010 on a high note. However, we expect a more subdued 2011 with
more modest returns and a much wider dispersion of returns by category and stock
around the averages. Historically, third years of bull markets have often been
modestly positive or mildly negative, occasionally very strong, but not
terrible. And in those years, dispersion increased, and by year end, market
leadership changed. We believe 2011 may be typical of that, reminiscent of 1960,
1977, 1994, and 2005 - pauses that refresh before the next potential big up-leg.
We call it the Year of the Alpha Bet.
In each of the last four years, correctly assessing overall stock market
direction overwhelmingly determined investment success or disappointment-much
more than the type of stock bought. Because return dispersion among categories
was relatively modest and their directionality near uniform (big positives in
2007, 2009, and 2010; huge negative in 2008), betting on broad market and
economic trends (what finance calls systemic or "Beta Bets") was paramount.
By stark contrast, beating 2011's market should require correct "Alpha Bets"
(e.g., picking the right countries, sectors, industries, individual securities,
etc.). In an alpha-driven market, macro bulls and bears are frustrated because
beta is scarce, but making accurate micro decisions can generate quite
satisfactory returns.
FUND POSITIONING
Two years ago, we said the initial, sentiment-driven bounce off the bear market
bottom would eventually subside and fundamental drivers would regain primacy.
That transition appears to have begun and should mature this year. While our
current portfolio positioning is appropriate for now, we anticipate various
adjustments as 2011 fundamentals evolve.
The widely feared double-dip recession didn't materialize in 2010. The five
PIIGS (Portugal, Italy, Ireland, Greece, and Spain) countries' debt problems
didn't destroy the recovery. Optimism increased. There are too many optimists
now. There are also too many pessimists, but little in between-a bar-belled,
bifurcated sentiment display, which is rare but not unprecedented. Global
economic and corporate earnings growth should continue, although at increasingly
inconsistent rates among categories. Monetary policy remains highly
accommodative; fiscal policy risks have mostly abated; equity valuations remain
at big discounts to fixed income; third years of US presidential cycles have
been almost always positive for stocks, if sometimes only slightly; and most
major, identifiable risks seem unlikely to become crises in 2011.
2
These bullish factors argue against a sharp downturn in 2011. The period we
earlier described as the "Pessimism of Disbelief," however, has ended. Investor
sentiment has improved too much, too fast to make high stock returns likely.
Continual pessimists and those newly afraid of heights balance the virtual
sentiment barbell, suggesting the market delivers a widely frustrating middle
ground painful for beta bettors, with a fair degree of volatility along the way.
For the six-month period ending February 28, 2011, the Fund's country and sector
allocation decisions overall benefited the portfolio relative to the MSCI World
Index benchmark. The Fund's overweight to the United States and underweights to
Singapore, Japan, and the United Kingdom added to returns, while an underweight
to Canada and an overweight to Switzerland hurt returns. From a sector
standpoint, underweights to Utilities, Health Care, and Consumer Staples and
overweights to Materials, Industrials, and Energy benefited returns.
The Fund's stock selection overall benefited from portfolio returns relative to
the benchmark. Stock selection in the United States, United Kingdom, Germany,
and Australia helped returns, while stock selection in Switzerland, the
Netherlands, and Spain hurt returns. From a sector standpoint, stock selection
in Materials, Industrials, Energy, and Information Technology helped returns,
while stock selection in Financials, Health Care, and Consumer Staples
detracted.
CLOSING REMARKS
The Fund outperformed the MSCI World Index benchmark over the six-month period
ending February 28, 2011. The categories that led during the initial bounce
should still lead into early 2011. However, as the bull market matures and new
fundamental trends emerge, a change in leadership among categories is likely,
requiring some material portfolio realignment, though this rotation is doubtful
in the first quarter - more likely later in the year. Done right, 2011 can be a
perfectly fine year.
Thank you for your continued interest and support.
Sincerely,
/s/ KENNETH L. FISHER
----------------------
Kenneth L. Fisher
Chairman and Chief Investment
Officer Fisher Investments
OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO
CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED INVESTMENT ADVICE.
3
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
FUND HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE AND ARE NOT
RECOMMENDATIONS TO BUY OR SELL ANY SECURITY.
MUTUAL FUND INVESTING INVOLVES RISK OF LOSS. PRINCIPAL LOSS IS POSSIBLE. THE
FUND MAY USE SHORT SALES OF SECURITIES, WHICH INVOLVE THE RISK THAT LOSSES MAY
EXCEED THE ORIGINAL AMOUNT INVESTED. FOREIGN INVESTING INVOLVES SPECIAL RISKS,
INCLUDING A GREATER VOLATILITY AND POLITICAL, ECONOMIC AND CURRENCY RISKS AND
DIFFERENCES IN ACCOUNTING METHODS. SMALL- AND MEDIUM-CAPITALIZATION COMPANIES
TEND TO HAVE LIMITED LIQUIDITY AND GREATER PRICE VOLATILITY THAN LARGE
CAPITALIZATION COMPANIES. GROWTH STOCKS TYPICALLY ARE MORE VOLATILE THAN VALUE
STOCKS; HOWEVER, VALUE STOCKS HAVE A LOWER EXPECTED GROWTH RATE IN EARNINGS AND
SALES. INVESTMENTS IN DEBT SECURITIES TYPICALLY DECREASE IN VALUE WHEN INTEREST
RATES RISE. THIS RISK IS GREATER FOR LONGER-TERM DEBT SECURITIES.
The MSCI World Index is a broad-based unmanaged capitalization-weighted stock
index designed to measure global developed market equity performance. It
consists of 23 developed market country indices. One cannot invest directly in
an index.
Alpha is an annualized return measure of how much better or worse a fund's
performance is relative to an index of funds in the same category, after
allowing for differences in risk. Beta measures the volatility of the fund, as
compared to that of the overall market. The Market's beta is set at 1.00; a beta
higher than 1.00 is considered to be more volatile than the market, while a beta
lower than 1.00 is considered to be less volatile.
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
SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA TOTAL RETURN FUND
----------------------------------------------------
Industrials 18.1%
Energy 16.2%
Materials 14.7%
Information Technology 13.8%
Financials 13.2%
Consumer Discretionary 9.0%
Consumer Staples 5.8%
Mutual Funds 4.5%
Healthcare 3.5%
Telecommunication Services 1.2%
Utilities 0.0%
----------------------------------------------------
Total 100.0%
--------
(1) Percentage of Total Investments as of February 28, 2011.
IMPORTANT INFORMATION
The following disclosure provides important information regarding the Fund's
Expense Example. Please refer to this information when reviewing the Expense
Example for the Fund.
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other fund expenses. This Example is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period indicated and held for the entire period from September 1, 2010 to
February 28, 2011, for the Total Return Fund.
ACTUAL EXPENSES
The information in the table under the heading "Actual Performance" provides
information about actual account values and actual expenses. You may use the
information in these columns together with the amount you invested, to estimate
the expenses that you paid over the period. Simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the row entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
5
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The information in the table under the heading "Hypothetical Performance (5%
return before expenses)" provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratios and assumed
rates of return of 5% per year before expenses, which are not the Fund's actual
returns. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads), or redemption fees. Therefore, the information under the
heading "Hypothetical Performance (5% return before expenses)" is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
ACTUAL HYPOTHETICAL PERFORMANCE
PURISIMA TOTAL RETURN FUND PERFORMANCE (5% RETURN BEFORE EXPENSES)
--------------------------------------------------------------------------------
Beginning Account Value $ 1,000.00 $ 1,000.00
(09/01/10)
Ending Account Value (02/28/2011) $ 1,314.60 $ 1,017.75
Expenses Paid During Period (1) $ 8.15 $ 7.10
--------------------------------------------------------------------------------
--------
(1) Expenses are equal to the Fund's expense ratio for the six month period of
1.42% for the Total Return Fund multiplied by the average account value
over the period, multiplied by 181/365 (to reflect the one-half year
period).
6
PURISIMA TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2011 (UNAUDITED)
SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS: 94.31%
AUSTRALIA: 2.06%
94,000 BHP Billiton, Ltd. - ADR $ 8,892,400
-----------
BRAZIL: 3.24%
1,700 BM&FBovespa SA 11,474
6,600 Companhia Siderurgica Nacional SA - ADR 107,382
2,400 Embraer SA 81,744
13,900 Gafisa SA 85,298
159,830 Petroleo Brasileiro SA - ADR 6,366,029
212,700 Vale SA - ADR 7,280,721
8,900 Weg SA 109,712
-----------
14,042,360
-----------
CANADA: 2.45%
125,800 Bank Nova Scotia Halifax 7,780,730
72,500 Cenovus Energy, Incorporated 2,820,975
-----------
10,601,705
-----------
CHINA: 2.92%
51,550 Baidu.com - ADR (a) 6,245,798
800 China Life Insurance Company, Ltd. - ADR 45,792
34,000 China Oilfield Services, Ltd. 67,756
750 China Petroleum & Chemical Corporation - 76,950
ADR
26,110 CNOOC, Ltd. - ADR 5,961,957
58,000 Industrial & Commercial Bank of China, 44,535
Ltd.
100,000 Lenovo Group, Ltd. 60,478
20,800 Weichai Power Company, Ltd. 138,346
-----------
12,641,612
-----------
FRANCE: 1.80%
18,200 AXA 382,254
180,550 AXA - ADR 3,780,717
46,708 BNP Paribas SA 3,646,867
-----------
7,809,838
-----------
GERMANY: 5.41%
130,700 BASF AG - ADR 10,863,784
93,600 Siemens AG - ADR 12,583,584
-----------
23,447,368
-----------
The accompanying notes are an integral part of these financial statements. 7
SHARES VALUE
--------------------------------------------------------------------------------
HONG KONG: 0.94%
260,800 Cheung Kong Holdings, Ltd. - ADR $ 4,058,048
-----------
INDIA: 0.02%
1,300 Reliance Industries, Ltd. - GDR 144A 55,367
2,450 Sterlite Industries India, Ltd. - ADR 36,113
-----------
91,480
-----------
INDONESIA: 0.05%
119,000 Bank Rakyat Tbk PT 63,402
156,400 Bumi Resources Tbk PT 53,188
75,000 International Nickel Indonesia Tbk PT 42,935
98,500 Medco Energi Internasional Tbk PT 32,660
-----------
192,185
-----------
JAPAN: 2.79%
146,800 Honda Motor Company, Ltd. - ADR 6,413,692
454,200 Mitsubishi UFJ Financial Group, 2,511,726
Incorporated - ADR
86,200 Sony Corporation 3,153,800
-----------
12,079,218
-----------
MALAYSIA: 0.04%
21,200 CIMB Group Holdings BHD 56,014
23,600 Genting BHD 77,287
53,100 MMC Corporation BHD 47,173
-----------
180,474
-----------
MEXICO: 1.28%
89,900 America Movil SA de CV - ADR 5,162,058
40,720 Grupo Mexico SA de CV 155,175
3,950 Industrias Penoles SA de CV 137,406
2,625 Wal-Mart De Mexico SA de CV - ADR 74,970
-----------
5,529,609
-----------
NETHERLANDS: 1.71%
245,400 Unilever NV - ADR 7,420,896
-----------
POLAND: 0.03%
450 Bank Pekao SA - GDR 25,793
375 Bre Bank SA (a) 40,635
1,075 KGHM Polska Miedz SA - GDR 65,776
-----------
132,204
-----------
RUSSIAN FEDERATION: 0.00%
2,450 OAO Gazprom - Sponsored - ADR (a) 71,939
-----------
SOUTH AFRICA: 0.04%
3,900 Anglo Platinum, Ltd. - ADR 62,829
2,500 MTN Group Ltd. 44,129
1,200 Sasol, Ltd. - ADR 65,844
-----------
172,802
-----------
8 The accompanying notes are an integral part of these financial statements.
SHARES VALUE
--------------------------------------------------------------------------------
SOUTH KOREA: 0.21%
1,100 Daewoo Shipbuilding & Marine
Engineering Company, Ltd. $ 33,624
725 Daewoo Shipbuilding & Marine
Engineering Company, Ltd. - GDR 144A 44,467
1,700 Hynix Semiconductor Incorporated (a) 42,701
680 Hyundai Dept Store 73,202
360 Hyundai Heavy Industries Company, Ltd. 138,750
1,550 LG Display Company, Ltd. 49,165
200 Lotte Shopping Company 69,464
800 POSCO - ADR 82,464
275 Samsung Electronics Company, Ltd. - GDR 112,446
144A (a)
225 Samsung Fire & Marine Insurance Company 44,555
600 Samsung Securities Company, Ltd. 40,243
375 Shinhan Financial Group Company, Ltd. - 31,429
ADR
755 SK Energy Company, Ltd. 117,065
1,700 Woori Investment & Securities, Incorporated 30,727
-----------
910,302
-----------
SPAIN: 1.30%
458,404 Banco Santander Central Hispano SA - ADR 5,638,369
-----------
SWITZERLAND: 7.81%
295,800 ABB, Ltd. - ADR 7,250,058
153,400 Credit Suisse Group - ADR 7,091,682
155,050 Nestle SA 8,777,990
46,000 Roche Holdings AG 6,936,390
44,306 Transocean, Ltd. (a) 3,749,617
-----------
33,805,737
-----------
TAIWAN: 0.08%
9,070 Advanced Semiconductor Engineering,
Incorporated - ADR 51,881
787 Asustek Computer, Incorporated - GDR 35,559
(a)
10,745 Hon Hai Precision - GDR 79,942
2,177 Pegatron Corporation (a) 12,808
6,342 Siliconware Precision Industries, Ltd. 43,062
- ADR
10,135 Taiwan Semiconductor Manufacturing
Company, Ltd. - ADR 124,559
-----------
347,811
-----------
UNITED KINGDOM: 3.14%
153,900 Anglo American Plc - ADR 4,159,917
69,350 GlaxoSmithKline Plc - ADR 2,677,603
94,900 Rio Tinto Plc - ADR 6,745,492
-----------
13,583,012
-----------
The accompanying notes are an integral part of these financial statements. 9
SHARES VALUE
--------------------------------------------------------------------------------
UNITED STATES: 56.99%
135,000 ABB Ltd. $ 6,493,500
112,700 Adobe System, Incorporated (a) 3,888,150
35,100 Amazon.com, Incorporated (a) 6,082,479
137,550 Anadarko Petroleum Corporation 11,255,717
592,300 Applied Materials, Incorporated 9,731,489
78,200 Boeing Company 5,631,182
121,200 Carnival Corporation 5,171,604
112,500 Caterpillar, Incorporated 11,579,625
369,400 Cisco Systems, Incorporated (a) 6,856,064
142,200 Coach, Incorporated 7,809,624
112,500 Dover Corporation 7,228,125
324,850 EMC Corporation (a) 8,839,169
70,000 Emerson Electric Company 4,176,200
100,100 Exxon Mobil Corporation 8,561,553
233,000 Freeport-McMoRan Copper & Gold, 12,337,350
Incorporated
217,050 General Electric Company 4,540,686
82,000 Honeywell International, Incorporated 4,748,620
299,800 Intel Corporation 6,436,706
91,200 Johnson & Johnson 5,603,328
251,300 Microsoft Corporation 6,679,554
49,500 Mosaic Company 4,249,575
99,300 National Oilwell Varco, Incorporated 7,901,301
122,300 Occidental Petroleum Corporation 12,470,931
316,200 Oracle Corporation 10,402,980
121,500 PACCAR, Incorporated 6,090,795
87,800 PNC Financial Services Groups, 5,417,260
Incorporated
91,500 PPG Industries, Incorporated 8,086,770
63,225 Procter & Gamble Company 3,986,336
113,000 Schlumberger Ltd. 10,556,460
82,900 Target Corporation 4,356,395
141,466 Time Warner, Incorporated 5,404,001
71,100 Union Pacific Corporation 6,783,651
85,300 United Technologies Corporation 7,125,962
94,400 Wal Mart Stores, Incorporated 4,906,912
168,900 Wells Fargo & Company 5,448,714
-------------
246,838,768
-------------
TOTAL COMMON STOCKS
(Cost $308,716,332) $ 408,488,137
-------------
10 The accompanying notes are an integral part of these financial statements.
SHARES VALUE
--------------------------------------------------------------------------------
PREFERRED STOCKS: 1.17%
BRAZIL: 1.17%
233,634 Banco Bradesco SA $ 4,574,554
2,700 Companhia de Bebidas das Americas (AmBev) 72,927
- ADR
2,629 Companhia Energetica de Minas Gerais - 44,325
ADR
5,825 Itau Unibanco Holdings SA - ADR 129,431
7,200 Lojas Americanas SA 57,858
880 Ultrapar Participacoes SA 13,889
6,100 Vale SA - ADR 182,817
-------------
5,075,801
-------------
TOTAL PREFERRED STOCKS
(Cost $5,372,700) $ 5,075,801
-------------
MUTUAL FUNDS: 4.49%
19,440,494 SEI Daily Income Trust Government Fund 19,440,494
-------------
TOTAL MUTUAL FUNDS
(Cost $19,440,494) $ 19,440,494
-------------
TOTAL INVESTMENTS
(Cost $333,529,526): 99.97% 433,004,432
Other Assets in Excess of Liabilities: 0.03% 147,276
-------------
TOTAL NET ASSETS: 100.0% $ 433,151,708
=============
ADR - American Depositary Receipt.
GDR - Global Depository Receipt.
(a) Non Income Producing.
The accompanying notes are an integral part of these financial statements. 11
INDUSTRY % OF NET ASSETS
--------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels 11.07%
Metals & Mining 9.30%
Commercial Banks 8.18%
Machinery 5.86%
Chemicals 5.36%
Energy Equipment & Services 5.14%
Pharmaceuticals 5.01%
Software 4.84%
Aerospace & Defense 4.06%
Industrial Conglomerates 3.97%
Semiconductors & Semiconductor Equipment 3.82%
Food Products 3.74%
Electrical Equipment 2.64%
Computers & Peripherals 2.07%
Textiles, Apparel & Luxury Goods 1.81%
Capital Markets 1.65%
Communications Equipment 1.58%
Road & Rail 1.57%
Automobiles 1.48%
Internet & Catalog Retail 1.44%
Internet Software & Services 1.41%
Media 1.25%
Hotels Restaurants & Leisure 1.21%
Wireless Telecommunication Services 1.20%
Food & Staples Retailing 1.15%
Multiline Retail 1.05%
Insurance 0.98%
Household Products 0.94%
Real Estate Management & Development 0.92%
Household Durables 0.75%
Beverages 0.03%
Diversified Financial Services 0.02%
Electric Utilities 0.01%
Electronic Equipment & Instruments 0.00%
-------
TOTAL INVESTMENT IN SECURITIES 95.51%
Cash Equivalent 4.49%
Other Assets in Excess of Liabilities 0.00%
-------
TOTAL NET ASSETS 100.0%
=======
12 The accompanying notes are an integral part of these financial statements.
PURISIMA TOTAL RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 2011 (UNAUDITED)
ASSETS:
Investments at value (cost $333,529,526) $ 433,004,432
Cash 4,868
Receivables:
Interest and dividends receivable 1,140,616
Receivable for Fund shares sold 403,406
Receivable for investments sold 5,964,526
Prepaid expenses 82,196
-------------
Total Assets 440,600,044
-------------
LIABILITIES:
Payable for investments purchased 6,411,825
Payable for fund shares redeemed 231,936
Payable to the adviser (Note 3) 330,774
Accrued distribution fees (Note 4) 294,378
Accrued fund administration, fund accounting,
transfer agent and custody fees 140,354
Accrued expenses 39,069
-------------
Total Liabilities 7,448,336
-------------
NET ASSETS $ 433,151,708
=============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 20,553,980
=============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE $ 21.07
=============
COMPONENTS OF NET ASSETS
Paid-in capital 365,970,976
Undistributed net investment income 615,086
Accumulated net realized loss on investments (32,946,742)
Net unrealized appreciation on investments 99,474,906
Net unrealized appreciation on foreign currency 37,482
-------------
NET ASSETS $ 433,151,708
=============
The accompanying notes are an integral part of these financial statements. 13
PURISIMA TOTAL RETURN FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2011 (UNAUDITED)
INVESTMENT INCOME
Dividend income(1) $ 3,468,620
Interest income 833
-------------
Total Investment Income 3,469,453
-------------
EXPENSES
Investment advisory fees (Note 3) 2,004,476
Distribution fees (Note 4) 340,761
Administration fees (Note 3) 149,759
Transfer agent fees 110,225
Fund accounting fees 62,445
Miscellaneous expenses 52,450
Custody fees 56,110
Registration fees 14,795
Audit fees 17,605
Reports to shareholders 15,385
Legal fees 11,107
Trustees fees 10,860
Interest expense (Note 2) 84
-------------
Total expenses 2,846,062
-------------
NET INVESTMENT INCOME 623,391
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 236,868
Net realized gain on foreign currency translation 7,089
Change in net unrealized appreciation/(depreciation) on
investments 105,331,816
Change in net unrealized appreciation/(depreciation) on
foreign currency 20,893
-------------
Net Realized and Unrealized Gain on Investments 105,596,666
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 106,220,057
=============
--------
(1) Net of $185,302 in foreign withholding taxes.
14 The accompanying notes are an integral part of these financial statements.
PURISIMA TOTAL RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2011 AUGUST 31, 2010
----------------- ---------------
(Unaudited)
OPERATIONS
Net investment income $ 623,391 $ 2,872,375
Net realized gain (loss) on investments and
foreign currency translation 243,957 (4,837,360)
Change in net unrealized appreciation/
(depreciation) on investments 105,331,816 4,920,138
Change in net unrealized appreciation/
(depreciation) on foreign currency 20,893 11,880
------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 106,220,057 2,967,033
------------ ------------
DISTRIBUTION TO SHAREHOLDERS
From net investment income (2,869,875) (3,798,545)
From net realized loss on investments -- (175,548)
------------ ------------
NET DECREASE IN NET ASSETS RESULTING
FROM DISTRIBUTIONS PAID (2,869,875) (3,974,093)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 21,828,119 43,364,621
Proceeds from reinvestment of distributions 2,743,371 3,841,013
Cost of shares redeemed (38,013,471) (64,338,295)
------------ ------------
NET DECREASE FROM CAPITAL SHARE TRANSACTIONS (13,441,981) (17,132,661)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 89,908,201 (18,139,721)
------------ ------------
NET ASSETS
Beginning of year 343,243,507 361,383,228
------------ ------------
End of year (includes undistributed net
investment income of $615,086 and $2,861,570
respectively) $433,151,708 $343,243,507
============ ============
CHANGE IN CAPITAL SHARES
Shares outstanding, beginning of year 21,261,151 22,248,130
------------ ------------
Shares sold 1,110,113 2,464,458
Shares issued on reinvestment of
distributions 138,484 221,129
Shares repurchased (1,955,768) (3,672,566)
------------ ------------
Net decrease in capital shares (707,171) (986,979)
------------ ------------
Shares Outstanding, end of year 20,553,980 21,261,151
============ ============
The accompanying notes are an integral part of these financial statements. 15
PURISIMA TOTAL RETURN FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Semi-Annual Report.
YEAR ENDED AUGUST 31,
SIX MONTHS ENDED ---------------------------------------------
FEB. 28, 2011++ 2010 2009 2008 2007 2006
---------------- ------ ------ ------ ------ ------
Net asset value,
beginning of period $16.14 $16.24 $20.25 $24.79 $21.51 $19.03
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.03 0.14 0.19 0.15 0.09 0.04
Net realized and
unrealized
gain (loss) on 5.04 (0.06) (3.79) (2.82) 3.27 2.72
------ ------ ------ ------ ------ ------
investments
Total from investment
operations 5.07 0.08 (3.60) (2.67) 3.36 2.76
------ ------ ------ ------ ------ ------
Less distributions:
From net investment (0.14) (0.17) (0.12) (0.07) (0.08) (0.28)
income
From net realized gain -- (0.01) (0.29) (1.80) -- --
------ ------ ------ ------ ------ ------
Total distributions (0.14) (0.18) (0.41) (1.87) (0.08) (0.28)
------ ------ ------ ------ ------ ------
Net asset value, end $21.07 $16.14 $16.24 $20.25 $24.79 $21.51
====== ====== ====== ====== ====== ======
of period
Total return 31.46%** 0.42% (17.37%) (11.75%) 15.63% 14.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (millions) $433.2 $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 1.42%* 1.35% 1.51% 1.41% 1.39% 1.49%
After fees waived and
expenses absorbed
or recouped 1.42%* 1.36% 1.50% 1.41% 1.39% 1.49%
RATIO OF NET INVESTMENT
INCOME TO AVERAGE
NET ASSETS # 0.31%* 0.75% 1.37% 0.61% 0.37% 0.21%
Portfolio turnover 10.60%** 10.82% 22.04% 62.96% 16.38% 43.47%
rate
--------
* Annualized.
** Not annualized.
++ Unaudited.
# Net of fees waived.
16 The accompanying notes are an integral part of these financial statements.
PURISIMA TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2011 (UNAUDITED)
NOTE 1 - ORGANIZATION
The Purisima Funds (the "Trust") was organized as a Delaware statutory trust on
June 27, 1996 and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act") as an open-end management investment company issuing
its shares in series. Each series represents a distinct portfolio with its own
investment objectives and policies. The accompanying financial statements
include the Total Return Fund (the "Fund"), which commenced operations on
October 28, 1996, one of the two portfolios comprising the Trust. Fisher Asset
Management, LLC (doing business as Fisher Investments) (the "Adviser") serves as
the investment adviser to the Funds.
The investment objective of the Total Return Fund is as follows:
The Total Return Fund is a diversified fund and 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)
17
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.
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 or 2011
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.
18
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 are primarily related
to gains or losses on foreign currency and have no effect on net assets or
net asset value per share.
I. INDEMNIFICATION OBLIGATIONS. Under the Fund's organizational documents, its
current and former officers and trustees are indemnified against certain
liabilities arising out of the performance of their duties to the Fund. In
addition, in the normal course of business, the Fund enters into contracts
that contain a variety of representations and warranties that provide
general indemnifications. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be
made against the Fund that have not yet occurred or that would be covered
by other parties.
J. LINE OF CREDIT. The Fund has a Loan Agreement with U.S. Bank N.A. Under the
terms of the Loan Agreement, the Fund's borrowings cannot exceed the lesser
of $8,000,000 or 33 1/3% of the net assets of the Fund. The interest rate
paid on the Loan equals the prime rate per annum, payable monthly.
19
Borrowing activity under the Loan Agreement for the six months ended
February 28, 2011, was as follows:
MAXIMUM AMOUNT AVERAGE AVERAGE
AMOUNT INTEREST OUTSTANDING AT AMOUNT INTEREST
OUTSTANDING EXPENSE FEBRUARY 28, 2011 OUTSTANDING RATE
----------- -------- ----------------- ----------- --------
$ 213,000 $ 84 $ 0 $ 5,215 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, acquired fund fees, and
extraordinary expenses) to not more than 1.50% of the average daily net assets.
Any fee withheld 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
in place at the time the expenses were waived. Any such reimbursement is also
contingent upon Board of Trustees review and approval prior to the time the
reimbursement is initiated. The Fund must pay its current ordinary operating
expenses before the Adviser is entitled to any reimbursement of fees and/or
expenses. For the six months ended February 28, 2011, the Advisor had previously
recouped all fees previously waived and expenses absorbed from the Total Return
Fund.
U.S. Bank, N.A. serves as the Fund's Custodian. U.S. Bancorp Fund Services, LLC
("USBFS"), an affiliate of U.S. Bank, N.A., serves as the Administrator, Fund
Accountant and Transfer Agent. Certain officers of the Trust, including the
Trust's Treasurer, are employees of the 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 six
months ended February 28, 2011, Purisima Total Return Fund paid USBFS $149,759
for services rendered in its capacity as the Trust's Administrator.
20
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as
principal underwriter of the Fund and acts as the Fund's distributor in a
continuous public offering of the Fund's shares.
NOTE 4 - SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Total Return Fund is
authorized to pay expenses incurred for the purpose of financing activities,
including the employment of other dealers, intended to result in the sale of
shares of the Fund. The fee accrues at an annual rate not to exceed 0.25% of the
Fund's average daily net assets. For the six months ended February 28, 2011, the
Fund incurred $340,761 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 six months ended
February 28, 2011 were as follows:
FUND PURCHASES SALES
---- --------- ------
Total Return Fund $41,742,501 $76,230,287
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
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. The second disclosure will become
effective for fiscal years beginning after December 15, 2010, and for interim
periods within those fiscal years.
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 use in valuing the asset or liability, and would be based
on the best information available.
21
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 February 28, 2011 for the
Fund's assets and liabilities measured at fair value:
DESCRIPTION LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
--------------------------------------------------------------------------------
EQUITY
Common Stock $408,408,111 $80,026(1) $-- $408,488,137
Preferred Stock $ 5,075,801 $ -- $-- $ 5,075,801
--------------------------------------------------------------------------------
TOTAL EQUITY $413,483,912 $80,026 $-- $413,563,938
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS $ 19,440,494 $ -- $-- $ 19,440,494
--------------------------------------------------------------------------------
TOTAL INVESTMENTS
IN SECURITIES* $432,924,406 $80,026 $-- $433,004,432
================================================================================
* Please refer to the Schedule of Investments for country breakdown.
(1) The Common Stocks Level 2 balance consists of the market value of
the associated Level 2 investments in the following countries:
South Korea $44,467
Taiwan $35,559
-------
$80,026
There were no significant transfers between Level 1 and Level 2 during the
period as compared to their classification in the previous annual report. The
Fund did not hold any Level 3 securities during the six months ended February
28, 2011.
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.
22
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)
=============
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, and 28,044,721 of capital loss carryover which expires August 31, 2018.
The tax character of distributions paid during the six months ended February 28,
2011 and the fiscal year ended August 31, 2010 were as follows:
ORDINARY LONG TERM
INCOME CAPITAL GAINS
-------------- -------------
Total Return Fund
2/28/2011 $ 2,869,875 $ --
8/31/2010 $ 3,798,545 $ 175,548
NOTE 8 - 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 existed
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 disclose 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.
23
PURISIMA TOTAL RETURN FUND
OTHER INFORMATION
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT
ADVISORY AGREEMENT (UNAUDITED)
On October 21, 2010, the Board of Trustees performed its annual review and
renewal of the Investment Management Agreement for the Total Return Fund for the
one-year period commencing November 1, 2010. The Board of Trustees, including
the Independent Trustees, took into consideration information provided at the
meeting, as well as a wide variety of materials relating to the services
provided by the Adviser. Extensive information was provided to the Board in
response to a detailed request for information sent to the Adviser by legal
counsel to the Fund. That information included reports on the financial
condition of the Adviser, the services, operations and personnel of the Adviser,
compliance procedures, investment performance, brokerage and portfolio
transactions, distribution and marketing plans and other information relating to
the nature, extent and quality of services provided by the Adviser to the Fund.
In addition, the Board discussed and reviewed information regarding the Fund's
investment results, as well as advisory fee and expense comparisons. The Board's
Independent Trustees met separately to discuss the various factors summarized
below, both without and then with legal counsel to the Fund, who is not
independent legal counsel.
In deciding to renew the Agreement, the Board of Trustees did not identify any
single factor or particular information that, in isolation, was the controlling
factor. This summary describes the most important, but not all, of the factors
considered by the Board.
1. Nature, Extent and Quality of Services
THE ADVISER, ITS PERSONNEL AND ITS RESOURCES. The Board considered the
depth and quality of the Adviser's investment management process,
including its sophisticated methodology; the experience, capability
and integrity of its senior management and other personnel; the low
turnover rates of its key personnel; and the overall financial
strength and stability of its organization. The Board discussed the
quality of the services provided by the Adviser and noted that the
quarterly report from the Adviser was extremely sophisticated and
thorough. The Board commented on the high quality of the independent
capital markets research conducted by the Adviser and reported to the
Board on a regular basis. The Board's consensus was that the Adviser
was open about its thinking on the management of the Fund and very
available to address any questions or concerns the Board may have from
time to time. The Board also considered that the Adviser made
available to its investment professionals a variety of resources and
systems relating to investment management, compliance, trading,
performance and portfolio accounting. The Board further considered the
Adviser's continuing need to attract and retain qualified personnel
and to maintain and enhance its resources and systems. The Board also
observed that the Adviser had maintained the quality of services
provided to the Fund despite the continued relatively small share of
the Adviser's assets under management represented by the Fund,
typically around one percent.
24
OTHER SERVICES. The Board considered the Adviser's policies,
procedures and systems to ensure compliance with applicable laws and
regulations and its commitment to these programs; its efforts to keep
the Trustees informed; and its attention to matters that may involve
conflicts of interest with the Fund.
The Board concluded that the nature, extent and quality of the
services provided by the Adviser has benefited and should continue to
benefit the Fund and its shareholders.
2. INVESTMENT PERFORMANCE
The Board considered the Fund's pursuit of its investment objective
and the investment results of the Fund in light of its objective. The
Trustees compared the Fund's total returns with various independent
securities price indexes (the Standard & Poor's 500 Stock Price Index,
the Morgan Stanley Capital Institutional World Index and the Morgan
Stanley Capital International EAFE Index) and mutual fund peer groups
objectively compiled using data from Morningstar, Inc., and noted the
satisfactory performance of the Fund during various periods compared
to those indexes over various periods. The Board noted the wide range
of funds and strategies against which the Fund was being compared, and
emphasized performance over longer periods. The Board found that for
more recent periods of up to five years, the Fund's performance was
below the median but still in the middle portion of its peer group.
The Board will continue to monitor performance in light of improved
relative performance over the most recent period, but also understands
the challenges of market conditions experienced in 2008 and 2009.
The Board concluded that the Adviser's performance record in managing
the Fund indicates that its continued management has benefited and
should continue to benefit the Fund and its shareholders.
3. ADVISORY FEES AND TOTAL EXPENSES
The Board reviewed the advisory fees and total expenses of the Fund
and compared such amounts with the average fee and expense levels of
other funds in an applicable group of peer funds compiled using data
from Morningstar, Inc. The Board observed that the Fund's advisory
fees were slightly above the median fees and total expenses were
slightly below the median expense levels of the comparable funds in
the peer group. The Board noted that, in the past, the Adviser had
waived significant fees in respect of the Fund to maintain an overall
expense limitation, which the Adviser would not be able to recoup,
thus indicating a substantial prior investment by the Adviser in that
Fund. The Board noted that the Fund is operating slightly below its
expense limit in some recent fiscal periods. The Board concluded that
the reasonable level of the fees charged by the Adviser benefits the
Fund and its shareholders. The Board then considered the fees charged
to the Fund versus the Adviser's private clients. The Board considered
as part of a detailed comparison the extra burden of administration,
compliance, deadlines, risk and regulations associated with the Fund
that do not apply to the private accounts. The Board determined that
the respective mutual fund peer groups provided a better comparison
and it found the Fund's fees reasonable.
25
4. ADVISER, COSTS, LEVEL OF PROFITS AND ECONOMIES OF SCALE
The Board discussed the Adviser's costs of providing services to the
Fund, as well as the resulting level of profits to the Adviser. The
Board considered the Adviser's need to invest in technology,
infrastructure and staff to reinforce and offer new services and to
accommodate changing regulatory requirements. The Trustees noted that
at its present asset size, breakpoints in the Fund's advisory fee
structure were not practicable, but that economies of scale in the
cost of operations, to the extent they exist, effectively were being
shared given the Adviser's past waiver of fees in respect of the Fund.
The Board received an oral presentation from the Adviser on its
overall level of profitability and specifically with respect to the
Fund, and acknowledged the limited usefulness of the information given
the Fund's relatively small size compared to the rest of the Adviser's
assets under management and the reasonability of the Fund's fees and
expenses compared to peer funds. The Board concluded that the Fund's
cost structure is reasonable.
5. ANCILLARY BENEFITS
The Board considered a variety of other benefits received by the
Adviser, including possible ancillary benefits to itself or its
institutional management business. The Board noted that the Adviser
ceased the use of third-party soft dollar products from trades by the
Fund, and noted that the small relative size of the Fund compared to
the Adviser's other business would suggest minimal possible fallout
benefits.
6. CONCLUSIONS
Based on its review, including consideration of each of the factors
referred to above, the Board concluded that the Agreement is fair and
reasonable to the Fund and its shareholders, that the Fund's
shareholders received, and should receive, reasonable value in return
for the advisory fees paid to the Adviser by the Fund, and that the
renewal of the Agreement was in the best interests of the Fund and its
shareholders.
26
PROXY VOTING PROCEDURES (UNAUDITED)
The Adviser votes proxies relating to portfolio securities in accordance with
procedures that have been approved by the Trust's Board of Trustees. You may
obtain a description of these procedures, free of charge, by calling toll-free
1-800-841-0199. This information is also available through the Securities and
Exchange Commission's website at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to the portfolio
securities during the most recent 12-month period ended June 30 is available
without charge, upon request, by calling toll-free 1-800-841-0199. This
information is also available through the Securities and Exchange Commission's
website at http://www.sec.gov.
FORM N-Q DISCLOSURE (UNAUDITED)
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third fiscal quarters on Form N-Q. The Fund's Form N-Q is available
without charge, upon request, by calling 1-800-841-0199. Furthermore, you can
obtain the Form N-Q on the SEC's website at www.sec.gov.
27
PURISIMA TOTAL RETURN FUND
TRUSTEES AND OFFICER INFORMATION (UNAUDITED)
The Board of Trustees is responsible for the overall management of the Trust's
business. The Board of Trustees approves all significant agreements between the
Trust and persons or companies furnishing services to it, including all
agreements with the Adviser, Administrator, Custodian and Transfer Agent. The
Board of Trustees delegates the day-to-day operations of the Trust to its
Officers, subject to the Fund's investment objective and policies and to general
supervision by the Board of Trustees. The Statement of Additional Information
includes additional information about the Trust's Trustees and is available,
without charge, by calling 1-800-841-0199.
The Trustees and Officers of the Trust, their business addresses and principal
occupations during the past five years are:
Name, Address, Position(s) Held
Date of Birth with Trust Year Elected(1)
--------------------------------------------------------------------------------
Kenneth L. Fisher* (born 1950) President 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 N/A None
shareholder of Fisher Investments, 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 Diablo Valley
Berding & Weil, LLP since 1990. Bank; East
Bay BOMA.
--------------------------------------------------------------------------------
Retired. Prior to retirement, sole 2 None
proprietor of Bryan F. Morse, RIA, a
registered investment adviser from 1990 to 2011.
--------------------------------------------------------------------------------
Attorney in private practice in Palo Alto, 2 None
California. Prior to entering private
practice in June of 1981, served as a
Branch Chief of the Los Angeles Regional
Office of the U.S. Securities
and Exchange Commission.
--------------------------------------------------------------------------------
29
Position(s) Held
Name, Address, Age with Trust Year Elected(1)
--------------------------------------------------------------------------------
Tom Fishel (born 1960) Vice President 2005
13100 Skyline Blvd. and Chief
Woodside, CA 94062 Compliance
Officer
--------------------------------------------------------------------------------
Keith Shintani (born 1963) Secretary and 2006
2020 East Financial Way Assistant
Glendora, CA 91741 Treasurer
--------------------------------------------------------------------------------
Shannon Fenton (born 1974) Treasurer 2011
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
Principal Occupation(s)
During Past Five Years
--------------------------------------------------------------------------------
Vice President and Chief Compliance Officer of the
Adviser. Vice President of Charles
Schwab & Co., Inc. from 1995 to 2004,
where he had been employed since 1983.
--------------------------------------------------------------------------------
Vice President of U.S. Bancorp
Fund Services, LLC and its
predecessor, Investment Company
Administration, LLC since 1998.
--------------------------------------------------------------------------------
Assistant Vice President of U.S.
Bancorp Fund Services, LLC since
2007.
--------------------------------------------------------------------------------
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.
The Purisima Funds
--------------------------------------------------------------------------------
Semi-Annual Report (Unaudited)
February 28, 2011
The Purisima All-Purpose Fund
A LETTER TO OUR SHAREHOLDERS
Welcome to the semi-annual report for the Purisima All-Purpose Fund for the
six-month period ended February 28, 2011. The Fund seeks to provide protection
against declines in the value of the US and foreign equity markets. During the
period, the Fund was primarily invested in US government securities.
Thank you for your continued interest and support.
Sincerely,
/S/ KENNETH L. FISHER
---------------------
Kenneth L. Fisher
Chairman and Chief Investment Officer
Fisher Investments
OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO
CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED INVESTMENT ADVICE.
FUND HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE AND ARE NOT
RECOMMENDATIONS TO BUY OR SELL ANY SECURITY.
MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE. THE FUND MAY
USE SHORT SALES OF SECURITIES, WHICH INVOLVE THE RISK THAT LOSSES MAY EXCEED THE
ORIGINAL AMOUNT INVESTED. THE FUND MAY ALSO USE OPTIONS AND FUTURES CONTRACTS,
WHICH HAVE THE RISKS OF UNLIMITED LOSSES OF THE UNDERLYING HOLDINGS DUE TO
UNANTICIPATED MARKET MOVEMENTS AND FAILURE TO CORRECTLY PREDICT THE DIRECTION OF
SECURITIES PRICES, INTEREST RATES AND CURRENCY EXCHANGE RATES. THE FUND MAY
INVEST IN FOREIGN SECURITIES WHICH INVOLVE GREATER VOLATILITY AND POLITICAL,
ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS. THE FUND MAY
INVEST IN DEBT SECURITIES WHICH TYPICALLY DECREASE IN VALUE WHEN INTEREST RATES
RISE. THIS RISK IS GREATER FOR LONGER-TERM DEBT SECURITIES.
THE FUND IS NON-DIVERSIFIED, MEANING IT MAY CONCENTRATE ITS ASSETS IN FEWER
INDIVIDUAL HOLDINGS THAN A DIVERSIFIED FUND. THEREFORE, THE FUND IS MORE EXPOSED
TO INDIVIDUAL STOCK VOLATILITY THAN A DIVERSIFIED FUND. AN INVESTMENT IN THE
FUND IS NOT SUITABLE FOR ALL INVESTORS.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS.
FISHER INVESTMENTS IS THE ADVISER TO THE PURISIMA FUNDS. THE PURISIMA FUNDS ARE
DISTRIBUTED BY QUASAR DISTRIBUTORS, LLC.
1
SECTOR BREAKDOWN (1) (UNAUDITED)
PURISIMA ALL-PURPOSE FUND
----------------------------------------------
U.S. Treasury Obligations 45.8%
Mutual Fund 54.2%
----------------------------------------------
Total 100.0%
(1) Percentage of Total Investments as of February 28, 2011.
2
IMPORTANT INFORMATION
The following disclosure provides important information regarding the Fund's
Expense Example. Please refer to this information when reviewing the Expense
Example for the Fund.
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs; and (2) ongoing costs, including management fees; and other fund
expenses. This Example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period indicated and held for the entire period from September 1, 2010 to
February 28, 2011 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.
3
EXPENSE EXAMPLE (UNAUDITED)
PURISIMA ALL-PURPOSE FUND ACUTAL HYPOTHETICAL PERFORMANCE
PERFORMANCE (5% RETURN BEFORE EXPENSES)
--------------------------------------------------------------------------------
Beginning Account Value (9/01/10) $1,000.00 $1,000.00
Ending Account Value (02/28/11) $ 994.00 $1,017.36
Expenses Paid During Period(1) $ 7.42 $ 7.50
--------------------------------------------------------------------------------
(1) Expenses are equal to the Fund's expense ratio for the six month period of
1.50% for the Purisima All-Purpose Fund multiplied by the average account value
over the period, multiplied by 181/365 (to reflect the one-half year period).
4
PURISIMA ALL-PURPOSE FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2011 (UNAUDITED)
PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
U.S. TREASURY NOTES - 40.6%
10,000 5.125%, 06/30/2011 $ 10,167
10,000 1.000%, 12/31/2011 10,062
--------
TOTAL U.S. TREASURY NOTES (COST $20,155) $ 20,229
--------
SHARES VALUE
--------------------------------------------------------------------------------
MUTUAL FUND - 48.1%
23,979 SEI Daily Income Trust Government Fund 23,979
--------
TOTAL MUTUAL FUND (COST $23,979) $ 23,979
--------
TOTAL INVESTMENTS (COST $44,134) - 88.7% $ 44,208
Other Assets in Excess of Liabilities - 11.3% 5,636
--------
TOTAL NET ASSETS - 100.0% $ 49,844
--------
5
PURISIMA ALL-PURPOSE FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 2011 (UNAUDITED)
--------------------------------------------------------------------------------
ALL-PURPOSE FUND
ASSETS
Investments in securities, at cost $ 44,134
========
Investments in securities, at value $ 44,208
Receivables:
Dividends and interest 103
Due from Adviser (Note 3) 11,564
Prepaid expenses 16,190
--------
Total Assets 72,065
--------
LIABILITIES
Accrued administration fees (Note 3) 2,788
Accrued transfer agent fees 3,664
Accrued audit fees 5,728
Accrued fund accounting fees 7,657
Accrued reports to shareholders 681
Other accrued expenses 1,703
--------
Total Liabilities 22,221
--------
NET ASSETS $ 49,844
========
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 5,041
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE $ 9.89
========
COMPONENTS OF NET ASSETS
Paid-in capital $ 49,769
Accumulated net realized gain on investments 1
Net unrealized appreciation on investments 74
--------
Net assets $ 49,844
========
The accompanying notes are an integral part of these financial statements.
6
PURISIMA ALL-PURPOSE FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2011 (UNAUDITED)
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Interest $ 129
-------
Total income 129
-------
Expenses
Advisory fees (Note 3) 248
Administration fees (Note 3) 20,036
Transfer agent fees 7,421
Fund accounting fees 15,023
Custody fees 1,629
Reports to shareholders 1,810
Registration fees 9,455
Audit fees 5,973
Legal fees 2
Trustee fees 11,041
Miscellaneous 246
-------
Total expenses 72,884
Less: Expenses waived by Adviser (Note 3) (72,512)
-------
Net expenses 372
-------
NET INVESTMENT LOSS (243)
-------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS
Change in net unrealized appreciation/(depreciation)
on investments (71)
-------
Net loss on investments (71)
-------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (314)
=======
The accompanying notes are an integral part of these financial statements.
7
PURISIMA ALL-PURPOSE FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
SIX MONTH ENDED YEAR ENDED
INCREASE IN NET ASSETS FROM: FEBRUARY 28, 2011 AUGUST 31, 2010
----------------- ---------------
(Unaudited)
OPERATIONS
Net investment income (loss) $ ( 243) $ ( 485)
Net realized gain on investments -- 1
Change in net unrealized appreciation/
(depreciation) on investments ( 71) ( 23)
------- -------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ( 314) ( 507)
------- -------
DISTRIBUTION TO SHAREHOLDERS
From net investment income -- ( 712)
From net realized gains from investments -- --
------- -------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS -- ( 712)
------- -------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from
net change in outstanding shares (a) -- 712
------- -------
TOTAL DECREASE IN NET ASSETS ( 314) ( 507)
------- -------
NET ASSETS
Beginning of year 50,158 50,665
-------- -------
END OF YEAR $ 49,844 $ 50,158
======== ========
(a) A summary of capital share transactions is as follows:
SIX MONTH ENDED YEAR ENDED
FEBRUARY 28, 2011* AUGUST 31, 2010
--------------------- -----------------
SHARES VALUE SHARES VALUE
--------------------------------------------------------------------------------
Shares sold -- $ -- -- $ --
Shares issued on reinvestment
of distributions -- -- 71 712
Shares redeemed -- -- -- --
---------- --------- --------- --------
Net increase -- $ -- 71 $ 712
========== ========= ========= ========
* Unaudited
The accompanying notes are an integral part of these financial statements.
8
PURISIMA ALL-PURPOSE FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
--------------------------------------------------------------------------------
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS SEMI-ANNUAL REPORT.
FOR THE
SIX MONTHS FOR THE FOR THE FOR THE FOR THE NOVEMBER 1,
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 2005^ THRU
FEBRUARY 28, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
2011++ 2010 2009 2008 2007 2006
---------------------------------------------------------------------------
Net asset value, beginning of period $ 9.95 $10.19 $10.27 $10.47 $10.50 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.05) (0.10) 0.19 0.46 0.69 0.56
Net realized and unrealized gain
(loss) on investments (0.01) -- 0.08 (0.03) 0.04 --
------ ------ ------ ------ ------ ------
Total from investment operations (0.06) (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 $ 9.89 $ 9.95 $10.19 $10.27 $10.47 $10.50
====== ====== ====== ====== ====== ======
Total return (0.60%) (0.96%) 2.71% 4.31% 7.27% 5.62%**
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 49.8 $ 50.2 $ 50.7 $ 29.5 $ 28.3 $ 26.4
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived 293.93% 294.12% 357.92% 500.20% 545.57% 620.25%*
After fees waived 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%*
RATIO OF NET INVESTMENT INCOME LOSS
TO AVERAGE NET ASSETS # (0.98%) (0.96%) 2.28% 4.44% 6.66% 6.71%*
Portfolio turnover rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%**
--------
# Net of fees waived.
* Annualized.
** Not annualized.
*** Amount represents less than $0.01 per share.
^ Commencement of operations.
++ Unaudited
The accompanying notes are an integral part of these financial statements.
9
PURISIMA ALL-PURPOSE FUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2011 (UNAUDITED)
NOTE 1 - ORGANIZATION
The Purisima Funds (the "Trust") was organized as a Delaware statutory trust on
June 27, 1996 and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company issuing
its shares in a series. Each series represents a distinct portfolio with its own
investment objectives and policies. The accompanying financial statements
include the Purisima All-Purpose Fund (the "Fund"), a non-diversified fund which
commenced operations on November 1, 2005. The Fund is one of the two portfolios
comprising the Trust. Fisher Asset Management, LLC (doing business as Fisher
Investments) (the "Adviser") serves as the investment adviser to the Fund.
The investment objective of the Purisima All-Purpose Fund is as follows:
The Fund seeks to provide protection against declines in the value of the U.S.
and foreign equity markets. It invests in derivative securities, money market
instruments and other securities, including U.S. and foreign common stocks, and
fixed income securities. From its inception through February 28, 2011, 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.
10
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 or 2011 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.
11
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 basis of identified costs.
E. USE OF ESTIMATES. The presentation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from those estimates and assumptions.
F. CONCENTRATION OF RISK. Investments in securities of non-U.S. issues in
certain countries involve special investment risks. These risks may
include, but are not limited to, investment restrictions, adverse
political, social and economic developments, government involvement in
the private sector, limited and less reliable investor information,
lack of liquidity, certain local tax law considerations, and limited
regulation of the securities markets.
G. OPTIONS. Exchange traded options are valued at the last reported sale
price at the close of the exchange on which the security is primarily
traded. Certain markets are not closed at the time that a Fund prices
portfolio securities. In these situations, snapshot prices are
provided by the individual pricing services or other alternate sources
at the close of the NYSE as appropriate. If no sales are reported, the
mean between the last reported bid and asked prices will be used.
Non-exchange traded options will also be valued at the mean between
bid and asked prices. "Fair value" of other private options are valued
after consulting with the Adviser using a mathematical model.
Options purchased are recorded as investments; options written (sold)
are accounted for as liabilities. When an option expires, the premium
(original option value) is realized as a gain if the option was
written or as a loss if the option was purchased. When the exercise of
an option result in a cash settlement, the difference between the
premium and the settlement proceeds is realized as a gain or loss.
When securities are acquired or delivered upon exercise of an option,
the acquisition cost or sale proceeds are adjusted by the amount of
the premium. When an option is closed, the difference between the
premium and the cost to close the position is realized as a gain or
loss. The Fund may purchase options which are included in the Fund's
Schedules of Investments and subsequently marked to market to reflect
the current value of the option. At February 28, 2011, 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.
12
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 and/or any Fund expense absorbed by the Adviser pursuant to an
agreed upon expense cap shall be reimbursed by the Fund to the Adviser, if so
requested by the Adviser, anytime before the end of the third fiscal year
following the year to which the fee reduction, waiver, or expense absorption
relates, provided the aggregate amount of the Fund's current operating expenses
for such fiscal year does not exceed the applicable limitation on Fund expenses.
Any such reimbursement is also contingent upon Board of Trustees review and
approval prior to the time the reimbursement is initiated. The Fund must pay its
current ordinary operating expenses before the Adviser is entitled to any
reimbursement of fees and/or expenses. For the six months ended February 28,
2011, the Fund accrued $248 in Advisor fees.
For the six months ended February 28, 2011, the Adviser reimbursed the Fund
$72,512 to limit its total expenses to not more than 1.50% of the average daily
net assets.
At February 28, 2011 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
13
PURISIMA ALL-PURPOSE FUND
U.S. Bank, N.A. serves as the Fund's Custodian. U.S. Bancorp Fund Services, LLC
("USBFS"), an affiliate of U.S. Bank, N.A., serves as the Administrator, Fund
Accountant and Transfer Agent. Certain officers of the Trust, including the
Trust's Treasurer, are employees of the Administrator. In its capacity as the
Fund's Administrator, USBFS provides general fund management including corporate
secretarial services, coordinates the preparation of materials for the Board of
Trustees, assists with the annual audit of the Fund's financial statements,
monitors the Fund's compliance with federal and state regulations as well as
investment restrictions, coordinates the payment of Fund expenses and monitors
expense accruals, prepares financial statements and non-investment related
statistical data and makes required tax reporting calculations. During the six
months ended February 28, 2011, Purisima All-Purpose Fund paid USBFS $20,036 for
services rendered in its capacity as the Fund's Administrator.
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as
principal underwriter of the Fund and acts as the Fund's distributor, pursuant
to a Distribution Agreement with the Trust, in a continuous public offering of
the Fund's shares.
NOTE 4 - SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Fund is authorized to pay
expenses incurred for the purpose of distribution activities, including the
engagement of other dealers, intended to result in the sale of shares of the
Fund. The fee accrues at an annual rate not to exceed 0.25% of the Fund's
average daily net assets. For the six months ended February 28, 2011, the Fund
did not utilize the Plan.
NOTE 5 - INVESTMENT TRANSACTIONS
The Fund had no purchases or sales of long-term investment securities for the
six months ended February 28, 2011.
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
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.
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.
14
PURISIMA ALL-PURPOSE FUND
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 use 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
February 28, 2011 for the Fund's assets and liabilities measured at fair
value:
Description Level 1 Level 2 Level 3 Total
--------------------------------------------------------------------------------
FIXED INCOME
Federal Agency Obligations $ -- $ 20,229 $ -- $ 20,229
--------------------------------------------------------------------------------
TOTAL FIXED INCOME $ -- $ 20,229 $ -- $ 20,229
SHORT-TERM INVESTMENTS $ 23,979 $ -- $ -- $ 23,979
--------------------------------------------------------------------------------
TOTAL INVESTMENTS
IN SECURITIES $ 23,979 $ 20,229 $ -- $ 44,208
--------------------------------------------------------------------------------
There were no significant transfers between Level 1 and Level 2 during the
period as compared to their classification in the previous annual report. The
Fund did not hold any Level 3 securities during the period.
15
PURISIMA ALL-PURPOSE FUND
NOTE 7 - FEDERAL INCOME TAX MATTERS
The difference between the book and tax basis components of the distributable
earnings relates principally to the timing of recognition of income and gains
for federal income tax purposes. These differences, if any, are primarily
attributable to the tax deferral of losses on wash sales, the realization for
tax purposes of unrealized gains on passive foreign investment companies and
return of capital distributions and income adjustments recognized for tax
purposes on real estate investment trusts. Short-term gains distributions
reported in the Statements of Changes of Net Assets, if any, are reported as
ordinary income for federal tax purposes.
As of August 31, 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 six months ended February 28,
2011 and the fiscal year ended August 31, 2010 were as follows:
Ordinary Income Long Term Capital Gains
-----------------------------------------------
Purisima All-Purpose Fund
2/28/2011 -- --
8/31/2010 $ 712 --
NOTE 8 - 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 existed
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 disclose 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.
16
OTHER INFORMATION - PURISIMA ALL PURPOSE FUND
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AGREEMENT
(UNAUDITED)
On October 21, 2010, the Board of Trustees performed its annual review and
renewal of the Investment Management Agreement for the All Purpose Fund for the
one-year period commencing November 1, 2010. The Board of Trustees, including
the Independent Trustees, took into consideration information provided at the
meeting, as well as a wide variety of materials relating to the services
provided by the Adviser. Extensive information was provided to the Board in
response to a detailed request for information sent to the Adviser by legal
counsel to the Fund. That information included reports on the financial
condition of the Adviser, the services, operations and personnel of the Adviser,
compliance procedures, investment performance, brokerage and portfolio
transactions, distribution and marketing plans and other information relating to
the nature, extent and quality of services provided by the Adviser to the Fund.
In addition, the Board discussed and reviewed information regarding the Fund's
investment results, as well as advisory fee and expense comparisons. The Board's
Independent Trustees met separately to discuss the various factors summarized
below, both without and then with legal counsel to the Fund, who is not
independent legal counsel.
In deciding to renew the Agreement, the Board of Trustees did not identify any
single factor or particular information that, in isolation, was the controlling
factor. This summary describes the most important, but not all, of the factors
considered by the Board.
The Board recognized that the Fund has engaged in only minimal investment
activities since its inception because its primary use has been reserved as an
investment when the Adviser takes a defensive posture with respect to the
securities markets. To date, the Fund has remained invested in U.S. Treasury
securities and cash, with only an executive officer of the Adviser as its
shareholder.
1. Nature, Extent and Quality of Services
THE ADVISER, ITS PERSONNEL AND ITS RESOURCES. The Board considered the depth and
quality of the Adviser's investment management process, including its
sophisticated methodology; the experience, capability and integrity of its
senior management and other personnel; the low turnover rates of its key
personnel; and the overall financial strength and stability of its organization.
The Board discussed the quality of the services provided by the Adviser and
noted that the quarterly report from the Adviser was extremely sophisticated and
thorough. The Board commented on the high quality of the independent capital
markets research conducted by the Adviser and reported to the Board on a regular
basis. The Board's consensus was that the Adviser was open about its thinking on
the management of the Fund and very available to address any questions or
concerns the Board may have from time to time. The Board also considered that
the Adviser made available to its investment professionals a variety of
resources and systems relating to investment management, compliance, trading,
performance and portfolio accounting. The Board further considered the Adviser's
continuing need to attract and retain qualified personnel and to maintain and
enhance its resources and systems. The Board also observed that there had been
no decline in the quality of services provided to the Fund despite the growth of
the Adviser's other client business and the continued DE MINIMIS size of the
Fund.
17
OTHER SERVICES. The Board considered the Adviser's policies, procedures and
systems to ensure compliance with applicable laws and regulations and its
commitment to these programs; its efforts to keep the Trustees informed; and its
attention to matters that may involve conflicts of interest with the Fund.
The Board concluded that the nature, extent and quality of the services provided
by the Adviser has benefited and should continue to benefit the Fund and its
shareholders, especially upon its broader use under the circumstances
contemplated by the Adviser.
2. Investment Performance
The Board considered the Fund's pursuit of its investment objective and the
investment results of the Fund in light of its objective. The Trustees compared
the Fund's total returns with a peer group of mutual funds objectively compiled
using data from Morningstar, Inc., and noted the favorable performance of the
Fund during various periods compared to those peer averages.
The Board recognized that the Fund's proposed defensive posture has not yet been
implemented and the peer group funds, referred to as specialty equity funds,
would serve as a better comparison at that time.
The Board concluded that the Adviser's performance record in managing the Fund
indicates that its continued management has benefited and should continue to
benefit the Fund and its shareholders.
3. Advisory Fees and Total Expenses
The Board reviewed the advisory fees and total expenses of the Fund and compared
such amounts with the average fee and expense levels of other funds in an
applicable group of peer funds compiled using data from Morningstar, Inc. The
Board observed that the Fund's advisory fees and total expenses were reasonable
compared to the median fee and expense levels of the comparable funds in the
indices (meaning at or below the median). The Board noted that the Adviser had
waived (and its continuing to waive) significant expenses in respect of the Fund
to maintain an overall expense limitation, thus indicating a substantial
investment by the Adviser in that Fund. The Board concluded that the reasonable
level of the fees charged by the Adviser benefits the Fund and its shareholders.
The Board then considered the fees charged to the Fund versus the Adviser's
private clients, but agreed it was not an applicable comparison given the unique
nature of the Fund and the extra burden of administration, compliance,
deadlines, risk and regulations associated with the Fund that do not apply to
the private accounts. The Board determined that the respective peer groups
provided a better comparison and it found the Fund's fees reasonable.
18
4. Adviser, Costs, Level of Profits and Economies of Scale
The Board discussed the Adviser's costs of providing services to the Fund, as
well as the resulting level of profits to the Adviser. The Board considered the
Adviser's need to invest in technology, infrastructure and staff to reinforce
and offer new services and to accommodate changing regulatory requirements. The
Trustees noted that at its present asset size, breakpoints in the Fund's
advisory fee structure were not practicable, and that no economies of scale
applied. The Board concluded that the Fund's cost structure is reasonable.
5. Ancillary Benefits
The Board considered a variety of other benefits received by the Adviser,
including possible ancillary benefits to itself or its institutional management
business. The Board noted that the Adviser ceased the use of third-party soft
dollar products from trades by the Fund, and noted that the small relative size
of the Fund compared to the Adviser's other business would suggest minimal
possible fallout benefits.
6. Conclusions
Based on its review, including consideration of each of the factors referred to
above, the Board concluded that the Agreement is fair and reasonable to the Fund
and its shareholders, that the Fund's shareholders received, and should receive,
reasonable value in return for the advisory fees paid to the Adviser by the
Fund, and that the renewal of the Agreement was in the best interests of the
Fund and its shareholders.
19
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.
20
TRUSTEES AND OFFICER INFORMATION (Unaudited)
The Board of Trustees is responsible for the overall management of the
Trust's business. The Board of Trustees approves all significant agreements
between the Trust and persons or companies furnishing services to it, including
all agreements with the Adviser, Administrator, Custodian and Transfer Agent.
The Board of Trustees delegates the day-to-day operations of the Trust to its
Officers, subject to the Fund's investment objective and policies and to general
supervision by the Board of Trustees. The Statement of Additional Information
includes additional information about the Trust's Trustees and is available,
without charge, by calling 1- 800-841-0199.
The Trustees and Officers of the Trust, their business addresses and
principal occupations during the past five years are:
NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX OTHER
OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS, POSITION(S) HELD YEAR PRINCIPAL DIRECTOR HELD
WITH TRUST ELECTED (1) OCCUPATION(S) DURING PAST FIVE YEARS
-------------------------------------------------------------------------------------------------------------------------------
Kenneth L. Fisher* President 1996 Chief Executive Officer and majority N/A None
(born 1950) shareholder of Fisher Investments, Inc., the sole
13100 Skyline Blvd. shareholder of the Adviser, and has served in
Woodside, CA 94062 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
(born 1948) Brown & Haley since 1998 (fine confectioners); Foods, Inc.
13100 Skyline Blvd. Vice President of Blummer Chocolate Company from
Woodside, CA 94062 1980 to 1997, where he had been employed
since 1970.
Scott LeFevre Trustee 2001 Sole proprietor of LeFevre Capital Management, 2 None
(born 1957) a registered investment adviser.
13100 Skyline Blvd.
Woodside, CA 94062
Alfred D. McKelvy, Jr. Trustee 2003 President and Chief Executive Officer of 2 Diablo Valley
(born 1948) Omnimetric Services, LLC. since 2009, Bank; East Bay
13100 Skyline Blvd. Executive Director of the law firm of Berding & BOMA.
Woodside, CA 94062: Weil, LLP since 1990.
Bryan F. Morse Trustee 1996 Retired. Prior to retirement, sole proprietor
(born 1952) of Bryan F. Morse, RIA, a registered investment
13100 Skyline Blvd. adviser from 1990 to 2011. 2 None
Woodside, CA 94062
Grover T. Wickersham Trustee 1996 Attorney in private practice in Palo Alto, 2 None
(born 1949) California. Prior to entering private practice in
13100 Skyline Blvd. June of 1981, served as a Branch Chief of the
Woodside, CA 94062 Los Angeles Regional Office of the U.S.
Securities and Exchange Commission.
Tom Fishel Chief 2005 Vice President and Chief Compliance Officer of N/A None
(born 1960) Compliance the Adviser. Vice President of Charles Schwab
13100 Skyline Blvd. Officer & Co., Inc. from 1995 to 2004, where he had
Woodside, CA 94062 been employed since 1983.
Keith Shintani Secretary and 2006 Vice President of U.S. Bancorp Fund Services, N/A None
(born 1963) Assistant LLC and its predecessor, Investment Company
2020 East Financial Way Treasurer Administration, LLC since 1998.
Glendora, CA 91741
--------
(1) Trustees and officers of the Funds serve until their resignation, removal or
retirement.
* "Interested person" of the Trust, as defined in the 1940 Act.
21
NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX OTHER
OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS, POSITION(S) HELD YEAR PRINCIPAL DIRECTOR HELD
WITH TRUST ELECTED (2) OCCUPATION(S) DURING PAST FIVE YEARS
-------------------------------------------------------------------------------------------------------------------------------
Shannon Fenton Treasurer 2011 Assistant Vice President of U.S. Bancorp N/A None
(born 1974) Fund Services, LLC since 2007.
2020 East Financial Way
Glendora, CA 91741
(2) Trustees and officers of the Funds serve until their resignation, removal or
retirement.
22
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.
23
ITEM 2. CODE OF ETHICS.
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to registrants who are not listed issuers (as defined in Rule
10A-3 under the Securities Exchange Act of 1934).
ITEM 6. INVESTMENTS.
(a) Schedule of Investments is included as part of the report to shareholders
filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's President and Treasurer have reviewed the Registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as of a date within 90 days of
the filing of this report, as required by Rule 30a-3(b) under the Act and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934.
Based on their review, such officers have concluded that the disclosure
controls and procedures are effective in ensuring that information required
to be disclosed in this report is appropriately recorded, processed,
summarized and reported and made known to them by others within the
Registrant and by the Registrant's service provider.
(b) There were no changes in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Any code of ethics or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy Item 2 requirements through filing an exhibit. 1) Incorporated by
reference to the Registrant's Form N-CSR filed November 10, 2003.
(2) A separate certification for each principal executive and principal
financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the registrant to 10 or more persons. Not applicable to open-end
investment companies.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
The Purisima Funds
By /s/ Kenneth L. Fisher
----------------------------
Kenneth L. Fisher, President
Date 5/4/2011
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 5/4/2011
By /s/ Shannon Fenton
----------------------------
Shannon Fenton, Treasurer
Date 5/4/2011