As filed with the Securities and Exchange Commission on November 7, 2011
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENTCOMPANIES
Investment Company Act file number 811-07737
THE PURISIMA FUNDS
(Exact name of registrant as specified in charter)
13100 SKYLINE BLVD.
WOODSIDE, CALIFORNIA 94062
(Address of principal executive offices) (Zip code)
U. S. BANCORP FUND SERVICES, LLC
2020 EAST FINANCIAL WAY, SUITE 100
GLENDORA, CALIFORNIA 91741
(Name and address of agent for service)
(650) 851-3334
Registrant's telephone number, including area code
Date of fiscal year end: AUGUST 31
Date of reporting period: AUGUST 31, 2011
ITEM 1. REPORTS TO STOCKHOLDERS.
THE PURISIMA FUNDS
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ANNUAL REPORT
AUGUST 31, 2011
The Purisima Total Return Fund
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TABLE OF CONTENTS
A Letter to Our Shareholders 2
Sector Breakdown 6
Expense Example 6
Schedule of Investments 8
Statement of Assets and Liabilities 14
Statement of Operations 15
Statement of Changes in Net Assets 16
Financial Highlights 17
Notes to Financial Statements 18
Other Information 26
Report of Independent Registered Public Accounting Firm 27
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 annual report for the Purisima Total Return Fund for the 12-month
period ending August 31, 2011. The primary investment objective of the Fund is
achieving high total return for shareholders.
MARKET REVIEW AND OUTLOOK
The period began with a rally following a steep correction in 2010 ostensibly
caused by fears of eurozone debt and a global economic slowdown. The period
ended with a new correction caused by similar concerns. Still, the MSCI World
gained 15.06% for the period.
Some economic metrics slowed, but growth rate volatility is normal, and overall,
the global economic expansion remains on track in our view. Further, a material
portion of the slowdown can be tied to earthquake -related supply chain
disruptions from Japan. Those effects should be fleeting and are already showing
signs of rebounding. Our expectation is global growth and corporate earnings
should be fine in the period ahead--better than most expect--with the US among
the developed world's leaders.
QE2 (the second round of the Fed's quantitative easing following the 2008 debt
crisis) ended with very little fanfare. Camps were very divided on QE2--some
hopeful it would spur lending and investment, others fearing it would cause an
inflationary death cycle. Neither happened. In our view, QE2 was largely
unnecessary since both the economy and markets were already recovering on their
own; however, it did seemingly provide a nice sentiment boost in Q4 2010. Beyond
that, QE2 didn't do as much as the critics feared or the proponents hoped. While
we believe QE2 heightens the risk of inflation down the road, there are ample
forces keeping prices in check for now.
Headlines and pundit commentary took on tones that sounded amazingly like a year
earlier--almost as if they were ghosts returning to haunt us--the overriding
themes being debt and fears of a "double-dip" recession.
On the debt side, the old-ghost fears refocused on PIIGS (Portugal, Italy,
Ireland, Greece and Spain) and new fears focused on government debt versus the
US debt ceilings. All this contributed to a market pullback. Our view is the
other eurozone members have significant incentive to take whatever steps
necessary to maintain their monetary union--at least for the near term.
By mid-year 2011, the fear there would be a huge crisis leading to economic
implosion from US municipal bond defaults causing a new debt contagion was dead
in the water. Instead, muni prices are up and defaults are down over last year.
There will surely be more defaults this year, but nothing approaching a
catastrophe as was widely expected as 2011 began. In the same vein, state tax
receipts are up and budget gaps narrowing--as is normal in an expansion.
Despite none of these fears having real validity in our view, the fears won't go
away. Instead, we believe they likely continue morphing and contributing to
short-term volatility, the proverbial "wall of worry" bull markets legendarily
love to climb
2
FUND POSITIONING
For the 12-month period ending August 31, 2011, the Fund outperformed the MSCI
World Index benchmark (19.05% versus 15.06%, respectively). In aggregate,
country positioning benefited returns relative to the benchmark. The Fund's
overweights to Emerging Markets and the US and underweights to Italy and Japan
helped returns, while an underweight to Australia and overweight to the
Netherlands detracted.
Sector positioning also had a slight positive impact on relative returns. The
Fund's overweights to Materials and Energy and underweights to Financials,
Health Care and Utilities contributed positively to returns, while an
underweight to Consumer Staples detracted.
Stock selection in aggregate benefited the Fund's returns. Stock selection in
the US, Germany, UK, Netherlands and France boosted returns, while stock
selection in Japan, Spain and Switzerland detracted. On a sector basis, stock
selection in Industrials, Materials, Health Care, Information Technology, Energy
and Consumer Discretionary added to returns, while stock selection in Financials
detracted.
CLOSING REMARKS
We cannot identify material, negative fundamental issues not already well known
and hence digested into market pricing. The pullback that began in April 2011
knocked a lot of optimism out of folks. As 2011 began, we saw two very divided
sentiment camps--newly bullish and dug-in bearish--contributing to ongoing
back-and-forth market action. Today, many of the newly converted bulls have
become bears again, making overall sentiment far more negative than
positive--just as it was when 2009 and 2010 began, in our view. Looking forward,
we believe overly dour sentient against a backdrop of solid fundamentals bodes
well for stocks in the period ahead.
Thank you for your continued interest and support.
Sincerely,
/s/ KENNETH FISHER
-------------------------------
Kenneth L. Fisher
Chairman and Chief Investment Officer
Fisher Investments
OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO
CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY
OR SELL ANY SECURITY.
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
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. THESE RISKS ARE GREATER FOR EMERGING MARKETS.
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 24 DEVELOPED MARKET COUNTRY INDICES. ONE CANNOT INVEST DIRECTLY IN
AN INDEX.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS.
FISHER INVESTMENTS IS THE ADVISER TO THE PURISIMA FUNDS. THE PURISIMA FUNDS ARE
DISTRIBUTED BY QUASAR DISTRIBUTORS, LLC 09/11
4
PERFORMANCE SUMMARY
FOR YEAR ENDED AUGUST 31, 2011
PURISIMA TOTAL RETURN FUND
GROWTH OF $25,000
PURISIMA TOTAL RETURN FUND CUMULATIVE TOTAL RETURN VERSUS MSCI WORLD INDEX
10,000 INVESTED FROM 8/31/01 TO 8/31/11*
PURISIMA MSCI WORLD
TOTAL INDEX NET
RETURN (USD)
------ -----
8/31/2001 25,000 25,000
2/28/2002 25,189 23,788
8/31/2002 20,820 20,701
2/28/2003 18,481 18,889
8/31/2003 22,948 22,962
2/29/2004 26,483 27,267
8/31/2004 24,948 26,547
2/28/2005 28,212 30,536
8/31/2005 28,741 31,354
2/28/2006 32,125 34,581
8/31/2006 32,921 36,298
2/28/2007 35,334 40,065
8/31/2007 38,068 42,459
2/29/2008 36,433 39,853
8/31/2008 33,596 37,334
2/28/2009 18,309 21,074
8/31/2009 27,762 30,908
2/28/2010 29,952 32,518
8/31/2010 27,879 31,385
2/28/2011 36,651 39,565
8/31/2011 33,189 35,923
PURISIMA TOTAL RETURN FUND MSCI WORLD INDEX*
ONE YEAR ONE YEAR
Average Annual Total Average annual Total
Return(2)** 19.05% Return(2)** 15.06%
FIVE-YEAR FIVE-YEAR
Average Annual Total Average annual Total
Return(2)** 0.16% Return(2)** -0.21%
TEN-YEAR TEN-YEAR
Cumulative Total Return(1)** 32.76% Cumulative Total Return(1)** 43.69%
Average Annual Total Average annual Total
Return(2)** 2.87% Return(2)** 3.69%
PLEASE NOTE PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. Share price
and return will fluctuate, and investors may experience a gain or loss when they
sell their shares. To obtain a prospectus on the Purisima Funds please call
1-800-841-0199. The prospectus contains more information, including the
political, economic, currency risks and potential volatility of foreign
investing. Read the prospectus carefully before investing.
(1) Cumulative total return measures the change in value of an investment over
the periods indicated and reflects all fund fees and expenses.
(2) Average annual total return represents the average annual change in value
of an investment over the periods indicated and reflects all fund fees and
expenses. Average annual total return and cumulative total return for the
one-year period would be identical.
* The MSCI World Index is an unmanaged global stock index comprised of
various world stock markets, including the U.S. The total return of a
$25,000 investment includes all expenses.
** The total returns shown do not reflect the deduction of taxes a shareholder
would pay on fund distributions or redemption of fund shares. The total
return reflects the rate an investment would have earned (or lost) on an
investment in the Fund, assuming reinvestment of all dividends and
distributions.
5
SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA TOTAL RETURN FUND
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Information Technology 17.4%
Industrials 17.4%
Health Care 14.4%
Materials 13.1%
Energy 12.3%
Financials 10.1%
Consumer Discretionary 7.0%
Consumer Staples 6.9%
Telecommunication Services 1.1%
Mutual Funds 0.3%
Utilities 0.0%
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Total 100.0%
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(1) Percentage of Total Investments as of August 31, 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 March 1, 2011 to August 31,
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.
6
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The information in the table under the heading "Hypothetical Performance (5%
return before expenses)" provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratios and assumed
rates of return of 5% per year before expenses, which are not the Fund's actual
returns. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads), or redemption fees. Therefore, the information under the
heading "Hypothetical Performance (5% return before expenses)" is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
ACTUAL HYPOTHETICAL PERFORMANCE
PURISIMA TOTAL RETURN FUND PERFORMANCE (5% RETURN BEFORE EXPENSES)
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Beginning Account Value (03/01/11) $1,000.00 $ 1,000.00
Ending Account Value (08/31/2011) $ 905.60 $ 1,018.80
Expenses Paid During Period(1) $ 6.10 $ 6.46
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(1) Expenses are equal to the Fund's expense ratio for the six month period of
1.27% for the Total Return Fund multiplied by the average account value
over the period, multiplied by 184 /365 (to reflect the one-half year
period).
7
PURISIMA TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 2011
SHARES/PRINCIPAL AMOUNT VALUE
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COMMON STOCKS: 98.27%
AUSTRALIA: 1.93%
88,100 BHP Billiton, Ltd. - ADR $ 7,503,477
--------------
BRAZIL: 1.49%
3,050 Embraer SA - ADR 77,745
1,230 Petroleo Brasileiro SA - ADR 35,731
4,060 Ultrapar Participacoes SA 70,570
199,200 Vale SA - ADR 5,625,408
--------------
5,809,454
--------------
CANADA: 2.98%
12,930 Agrium, Incorporated 1,111,463
118,800 Bank Nova Scotia Halifax 6,630,228
106,400 Cenovus Energy, Incorporated 3,838,912
--------------
11,580,603
--------------
CHILE: 0.03%
255 Banco Santander Chile 23,042
1,425 Sociedad Quimica y Minera De Chile SA - ADR 91,599
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114,641
--------------
CHINA: 3.48%
56,750 Baidu.com - ADR (a) 8,273,015
34,000 China Oilfield Services, Ltd. 53,363
750 China Petroleum & Chemical Corporation - ADR 73,890
24,210 CNOOC, Ltd. - ADR 4,919,230
58,000 Industrial & Commercial Bank of China, Ltd. 38,141
138,000 Lenovo Group, Ltd. 92,522
18,800 Weichai Power Company, Ltd. 93,688
--------------
13,543,849
--------------
COLOMBIA: 0.01%
1,070 Ecopetrol SA - ADR 46,780
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CZECH REPUBLIC: 0.01%
1,000 CEZ AS 47,045
--------------
FRANCE: 3.66%
180,550 AXA - ADR 2,870,745
41,108 BNP Paribas SA 2,118,171
5,330 LVMH Moet Hennessy Louis Vuitton SA 903,085
99,200 Sanofi 7,219,054
11,400 Technip SA 1,112,914
--------------
14,223,969
--------------
8 The accompanying notes are an integral part of these financial statements.
SHARES/PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
GERMANY: 4.91%
129,900 BASF AG - ADR $ 9,250,179
13,800 Daimler AG 746,755
88,100 Siemens AG - ADR 9,091,920
--------------
19,088,854
--------------
HONG KONG: 0.94%
260,800 Cheung Kong Holdings, Ltd. - ADR 3,638,160
--------------
INDIA: 0.02%
1,300 Reliance Industries, Ltd. - GDR 144A 45,019
2,450 Sterlite Industries India, Ltd. - ADR 28,396
--------------
73,415
--------------
INDONESIA: 0.08%
118,000 Bank Mandiri Tbk PT 94,727
152,500 Bank Rakyat Tbk PT 117,060
156,400 Bumi Resources Tbk PT 46,280
8,500 Gudang Garam Tbk PT 54,787
--------------
312,854
--------------
JAPAN: 2.85%
711,000 Hitachi, Ltd. 3,834,961
135,300 Honda Motor Company, Ltd. - ADR 4,393,191
38,500 Komatsu, Ltd. - ADR (a) 1,029,875
403,000 Mitsubishi UFJ Financial Group, Incorporated - ADR 1,813,500
--------------
11,071,527
--------------
MALAYSIA: 0.04%
21,200 CIMB Group Holdings BHD 50,246
29,000 Genting BHD 91,579
31,100 MMC Corporation BHD 26,273
--------------
168,098
--------------
MEXICO: 1.38%
172,000 America Movil SA de CV - ADR 4,396,320
12,600 Fomento Economico Mexicano SAB de CV 85,464
40,720 Grupo Mexico SA de CV 138,578
1,300 Industrias Penoles SA de CV 62,691
25,725 Wal-Mart De Mexico SA de CV - ADR 688,144
--------------
5,371,197
--------------
NETHERLANDS: 2.02%
230,800 Unilever NV - ADR 7,847,200
--------------
POLAND: 0.03%
450 Bank Pekao SA - GDR 23,122
375 Bre Bank SA (a) 35,828
1,075 KGHM Polska Miedz SA - GDR 65,284
--------------
124,234
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The accompanying notes are an integral part of these financial statements. 9
SHARES/PRINCIPAL AMOUNT VALUE
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RUSSIAN FEDERATION: 0.03%
2,050 Magnit OJSC $ 48,790
4,900 OAO Gazprom - Sponsored ADR (a) 60,165
--------------
108,955
--------------
SOUTH AFRICA: 0.05%
3,575 Anglo Amern Platinum, Ltd. - ADR 48,942
2,500 MTN Group, Ltd. 51,562
1,550 Sasol, Ltd. - ADR 74,586
--------------
175,090
--------------
SOUTH KOREA: 0.27%
90 Amorepacific Corporation 98,027
--------------
2,200 Daewoo Shipbuilding & Marine Engineering
Company, Ltd. 59,802
725 Daewoo Shipbuilding & Marine Engineering
Company, Ltd. - GDR 144A 39,441
1,800 Doosan Infracore Company, Ltd. (a) 36,697
130 Honam Petrochemical Corporation 43,502
1,700 Hynix Semiconductor, Incorporated 30,436
680 Hyundai Department Store Company, Ltd. 114,730
350 Hyundai Heavy Industries Company, Ltd. 113,676
235 Hyundai Mobis 74,232
200 Lotte Shopping Company 81,830
800 POSCO - ADR 76,112
275 Samsung Electronics Company, Ltd. - GDR 144A (a) 95,890
225 Samsung Fire & Marine Insurance Company (a) 48,507
600 Samsung Securities Company, Ltd. 35,656
615 SK Energy Company, Ltd. 97,422
1,700 Woori Investment & Securities, Incorporated 23,823
--------------
1,069,783
--------------
SPAIN: 1.18%
492,904 Banco Santander Central Hispano SA - ADR 4,574,149
--------------
SWITZERLAND: 7.37%
342,000 ABB, Ltd. - ADR 7,274,340
144,000 Credit Suisse Group - ADR 4,132,800
146,650 Nestle SA 9,082,710
46,650 Roche Holdings AG 8,168,164
--------------
28,658,014
--------------
TAIWAN: 0.06%
10,112 Advanced Semiconductor Engineering,
Incorporated - ADR 45,403
1,235 Asustek Computer, Incorporated - GDR 52,125
6,342 Siliconware Precision Industries, Ltd. - ADR 29,110
10,135 Taiwan Semiconductor Manufacturing
Company, Ltd. - ADR 121,316
--------------
247,954
--------------
10 The accompanying notes are an integral part of these financial statements.
SHARES/PRINCIPAL AMOUNT VALUE
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UNITED KINGDOM - 4.30%
153,900 Anglo American Plc - ADR $ 3,193,425
163,850 GlaxoSmithKline Plc - ADR 7,017,695
106,000 Rio Tinto Plc - ADR 6,482,960
--------------
16,694,080
--------------
UNITED STATES: 59.15%
134,850 Abbott Laboratories 7,080,973
60,600 Allergan, Incorporated 4,957,686
37,480 Amazon.com, Incorporated (a) 8,069,069
61,050 Anadarko Petroleum Corporation 4,502,437
559,900 Applied Materials, Incorporated 6,338,068
70,900 Boeing Company 4,740,374
25,300 Brinker International, Incorporated 571,274
58,100 Caterpillar, Incorporated 5,287,100
12,700 Cliffs Natural Resources, Incorporated 1,052,195
141,300 Coach, Incorporated 7,943,886
66,900 Deere & Co. 5,406,858
104,500 Dover Corporation 6,010,840
368,850 EMC Corporation (a) 8,332,322
70,000 Emerson Electric Company 3,258,500
104,900 Exxon Mobil Corporation 7,766,796
21,520 FMC Technologies, Incorporated (a) 956,779
116,500 Freeport-McMoRan Copper & Gold, Incorporated 5,491,810
461,650 General Electric Company 7,529,512
9,600 Google, Incorporated (a) 5,193,216
81,600 Halliburton Company 3,620,592
82,000 Honeywell International, Incorporated 3,920,420
299,800 Intel Corporation 6,034,974
35,200 International Business Machines Corporation 6,051,232
150,800 Johnson & Johnson 9,922,640
16,850 Kansas City Southern (a) 912,596
144,600 Medtronic, Incorporated 5,071,122
233,300 Microsoft Corporation 6,205,780
49,500 Mosaic Company 3,520,935
92,100 National Oilwell Varco, Incorporated 6,089,652
86,400 NetApp, Incorporated (a) 3,250,368
66,950 Occidental Petroleum Corporation 5,807,243
293,700 Oracle Corporation 8,244,159
337,900 Pfizer, Incorporated 6,413,342
87,800 PNC Financial Services Groups, Incorporated 4,402,292
86,500 PPG Industries, Incorporated 6,625,035
63,225 Procter & Gamble Company 4,026,168
98,500 Qualcomm, Incorporated 5,068,810
106,100 Schlumberger, Ltd. 8,288,532
133,466 Time Warner, Incorporated 4,225,534
14,000 T Rowe Price Group, Incorporated 748,720
The accompanying notes are an integral part of these financial statements. 11
SHARES/PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
United States (continued)
69,300 Union Pacific Corporation $ 6,387,381
80,300 United Technologies Corporation 5,962,275
87,000 Wal-Mart Stores, Incorporated 4,629,270
153,000 Wells Fargo & Company 3,993,300
--------------
229,912,067
--------------
TOTAL COMMON STOCKS
(Cost $340,844,184) $ 382,005,449
--------------
PREFERRED STOCKS: 1.08%
Brazil: 1.08%
212,134 Banco Bradesco SA 3,786,592
2,700 Companhia de Bebidas das Americas (AmBev) - ADR 96,228
2,629 Companhia Energetica de Minas Gerais - ADR 49,740
5,825 Itau Unibanco Holdings SA - ADR 105,782
6,100 Vale SA - ADR 157,563
--------------
4,195,905
--------------
TOTAL PREFERRED STOCKS
(Cost $4,886,336) $ 4,195,905
--------------
MUTUAL FUNDS: 0.31%
1,185,458 SEI Daily Income Trust Government Fund 1,185,458
--------------
TOTAL MUTUAL FUNDS
(Cost $1,185,458) $ 1,185,458
--------------
TOTAL INVESTMENTS
(Cost $346,915,978): 99.66% 387,386,812
Other Assets in Excess of Liabilities: 0.34% 1,328,109
--------------
TOTAL NET ASSETS: 100.0% $ 388,714,921
==============
--------------
ADR - American Depositary Receipt.
GDR - Global Depository Receipt.
(a) Non Income Producing.
12 The accompanying notes are an integral part of these financial statements.
INDUSTRY % OF NET ASSETS
--------------------------------------------------------------------------------
Pharmaceuticals 13.06%
Metals & Mining 7.70%
Commercial Banks 7.15%
Oil, Gas & Consumable Fuels 7.04%
Chemicals 5.31%
Energy Equipment & Services 5.18%
Machinery 4.65%
Food Products 4.36%
Industrial Conglomerates 4.28%
Aerospace & Defense 3.78%
Software 3.72%
Internet Software & Services 3.46%
Semiconductors & Semiconductor Equipment 3.27%
Computers & Peripherals 3.02%
Electrical Equipment 2.71%
Textiles, Apparel & Luxury Goods 2.28%
Internet & Catalog Retail 2.08%
Road & Rail 1.88%
IT Services 1.56%
Food & Staples Retailing 1.38%
Automobiles 1.32%
Health Care Equipment & Supplies 1.30%
Communications Equipment 1.30%
Capital Markets 1.27%
Wireless Telecommunication Services 1.14%
Media 1.09%
Household Products 1.04%
Electronic Equipment & Instruments 0.99%
Real Estate Management & Development 0.94%
Insurance 0.75%
Hotels Restaurants & Leisure 0.17%
Multiline Retail 0.05%
Beverages 0.05%
Personal Products 0.02%
Electric Utilities 0.02%
Auto Components 0.02%
Tobacco 0.01%
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TOTAL INVESTMENT IN SECURITIES 99.35%
Cash Equivalent 0.31%
Other Assets in Excess of Liabilities 0.34%
-------
TOTAL NET ASSETS 100.0%
=======
The accompanying notes are an integral part of these financial statements. 13
PURISIMA TOTAL RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2011
ASSETS:
Investments at value (cost $346,915,978) $387,386,812
Foreign currency at value (cost $1,200) 1,199
Cash 24,693
Receivables:
Interest and dividends receivable 1,578,188
Receivable for Fund shares sold 296,298
Prepaid expenses 21,475
------------
Total Assets 389,308,665
------------
LIABILITIES:
Payable for fund shares redeemed 600
Payable to the adviser (Note 3) 321,460
Accrued distribution fees (Note 4) 113,528
Accrued fund administration, fund accounting,
transfer agent and custody fees 105,550
Accrued expenses 52,606
------------
Total Liabilities 593,744
------------
NET ASSETS $388,714,921
============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 20,373,549
============
NET ASSET VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $ 19.08
============
COMPONENTS OF NET ASSETS
Paid-in capital $361,845,842
Undistributed net investment income 3,796,105
Accumulated net realized loss on investments (17,486,916)
Net unrealized appreciation on investments 40,470,834
Net unrealized appreciation on foreign currency 89,056
------------
NET ASSETS $388,714,921
============
14 The accompanying notes are an integral part of these financial statements.
PURISIMA TOTAL RETURN FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2011
INVESTMENT INCOME
Dividend income(1) $ 9,334,764
Interest income 2,398
------------
Total Investment Income 9,337,162
------------
EXPENSES
Investment advisory fees (Note 3) 4,120,961
Distribution fees (Note 4) 370,293
Administration fees (Note 3) 300,239
Transfer agent fees 237,770
Fund accounting fees 124,998
Custody fees 115,459
Miscellaneous expenses 98,147
Legal fees 50,443
Audit fees 35,518
Reports to shareholders 29,037
Registration fees 28,360
Trustees fees 21,591
Interest expense (Note 2) 84
------------
Total expenses 5,532,900
------------
NET INVESTMENT INCOME 3,804,262
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 15,701,200
Net realized gain on foreign currency translation 2,731
Change in net unrealized appreciation (depreciation)
on investments 46,327,744 Change in net unrealized
appreciation (depreciation) on foreign currency 72,467
------------
Net Realized and Unrealized Gain on Investments 62,104,142
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 65,908,404
============
-------
(1) Net of $576,963 in foreign withholding taxes.
The accompanying notes are an integral part of these financial statements. 15
PURISIMA TOTAL RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
2011 2010
------------ ------------
OPERATIONS
Net investment income $ 3,804,262 $ 2,872,375
Net realized gain (loss) on investments and
foreign currency translation 15,703,931 (4,837,360)
Change in net unrealized appreciation
(depreciation) on investments 46,327,744 4,920,138
Change in net unrealized appreciation
(depreciation) on foreign currency 72,467 11,880
------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 65,908,404 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 50,178,081 43,364,621
Proceeds from reinvestment of distributions 2,743,371 3,841,013
Cost of shares redeemed (70,488,567) (64,338,295)
------------ ------------
NET DECREASE FROM CAPITAL SHARE TRANSACTIONS (17,567,115) (17,132,661)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 45,471,414 (18,139,721)
------------ ------------
NET ASSETS
Beginning of year 343,243,507 361,383,228
------------ ------------
End of year (includes undistributed net
investment income of $3,796,105 and
$2,861,570 respectively) $388,714,921 $343,243,507
============ ============
CHANGE IN CAPITAL SHARES
Shares outstanding, beginning of year 21,261,151 22,248,130
------------ ------------
Shares sold 2,506,283 2,464,458
Shares issued on reinvestment of distributions 138,484 221,129
Shares repurchased (3,532,369) (3,672,566)
------------ ------------
Net decrease in capital shares (887,602) (986,979)
------------ ------------
Shares Outstanding, end of year 20,373,549 21,261,151
============ ============
16 The accompanying notes are an integral part of these financial statements.
PURISIMA TOTAL RETURN FUND
FINANCIAL HIGHLIGHTS
for a capital share outstanding throughout each year.
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Annual Report.
YEAR ENDED AUGUST 31,
-----------------------------------------------
2011 2010 2009 2008 2007
------ ------ ------ ------ ------
Net asset value, beginning of year $16.14 $16.24 $20.25 $24.79 $21.51
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.20 0.14 0.19 0.15 0.09
Net realized and unrealized gain
(loss) on investments 2.88 (0.06) (3.79) (2.82) 3.27
------ ------ ------ ------ ------
Total from investment operations 3.08 0.08 (3.60) (2.67) 3.36
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income (0.14) (0.17) (0.12) (0.07) (0.08)
From net realized gain -- (0.01) (0.29) (1.80) --
------ ------ ------ ------ ------
Total distributions (0.14) (0.18) (0.41) (1.87) (0.08)
------ ------ ------ ------ ------
Net asset value, end of year $19.08 $16.14 $16.24 $20.25 $24.79
====== ====== ====== ====== ======
Total return 19.05% 0.42% (17.37%) (11.75%) 15.63%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions) $388.7 $343.2 $361.4 $455.6 $465.7
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed or recouped 1.34% 1.35% 1.51% 1.41% 1.39%
After fees waived and expenses
absorbed or recouped 1.34% 1.36% 1.50% 1.41% 1.39%
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS # 0.92% 0.75% 1.37% 0.61% 0.37%
Portfolio turnover rate 35.06% 10.82% 22.04% 62.96% 16.38%
------
# Net of fees waived.
The accompanying notes are an integral part of these financial statements. 17
PURISIMA TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2011
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)
18
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 (2008 - 2010), or expected to be taken
in the Fund's 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.
19
E. USE OF ESTIMATES. The presentation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates and assumptions.
F. CONCENTRATION OF RISK. Investments in securities of non-U.S. issues in
certain countries involve special investment risks. These risks may
include but are not limited to, investment restrictions, adverse
political, social and economic developments, government involvement in
the private sector, limited and less reliable investor information, lack
of liquidity, certain local tax law considerations, and limited
regulation of the securities markets.
G. SECURITIES SOLD SHORT. To the extent the Fund engages in selling
securities short, it is obligated to replace a security borrowed by
purchasing the same security at the current market value. The Fund would
incur a loss if the price of the security increases between the date of
the short sale and the date on which the Fund replaces the borrowed
security. The Fund would realize a gain if the price of the security
declines between those dates.
The Fund is required to establish a margin account with the broker
lending the security sold short. While the short sale is outstanding,
the broker retains the proceeds of the short sale and the Fund must also
maintain a deposit with the broker consisting of cash having a value
equal to a specified percentage of the value of the securities sold
short.
H. RECLASSIFICATION OF CAPITAL ACCOUNTS. Accounting principles generally
accepted in the United States of America require that certain components
of net assets relating to permanent difference be reclassified between
financial and tax reporting. These reclassifications are primarily
related to gains or losses on foreign currency and foreign tax gains and
have no effect on net assets or net asset value per share. For the year
ended August 31, 2011, the Total Return Fund increased accumulated
undistributed net investment income by $148, and increased accumulated
net realized loss on investments by $148.
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.
20
Borrowing activity under the Loan Agreement for the year ended August
31, 2011, was as follows:
MAXIMUM AMOUNT AVERAGE AVERAGE
AMOUNT INTEREST OUTSTANDING AT AMOUNT INTEREST
OUTSTANDING EXPENSE AUGUST 31, 2011 OUTSTANDING RATE
----------- -------- --------------- ----------- --------
$ 213,000 $ 84 $ 0 $ 2,586 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 year ended August 31, 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 year
ended August 31, 2011, Purisima Total Return Fund paid USBFS $300,239 for
services rendered in its capacity as the Trust's Administrator.
21
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as
principal underwriter of the Fund and acts as the Fund's distributor in a
continuous public offering of the Fund's shares.
NOTE 4 - SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Total Return Fund is
authorized to pay expenses incurred for the purpose of financing activities,
including the employment of other dealers, intended to result in the sale of
shares of the Fund. The fee accrues at an annual rate not to exceed 0.25% of the
Fund's average daily net assets. For the year ended August 31, 2011, the Fund
incurred $370,293 in distribution fees. Quasar Distributors, LLC, an affiliate
of the Administrator, serves as distributor of the Fund pursuant to a
Distribution Agreement with the Trust.
NOTE 5 - INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of securities, excluding U.S.
Government securities and short-term investments, for the year ended August 31,
2011 were as follows:
FUND PURCHASES SALES
---- --------- -----
Total Return Fund $142,704,354 $160,989,747
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.
22
The availability of observable inputs can vary from security to security and is
affected by a wide variety of factors, including, for example, the type of
security, whether the security is new and not yet established in the
marketplace, the liquidity of markets, and other characteristics particular to
the security. To the extent that valuation is based on models or inputs that are
less observable or unobservable in the market, the determination of fair value
requires more judgment. Accordingly, the degree of judgment exercised in
determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair
value hierarchy. In such cases, for disclosure purpose, the level in the fair
value hierarchy within which the fair value measurement falls in its entirety,
is determined based on the lowest level input that is significant to the fair
value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. The
following tables summarize the inputs used as of August 31, 2011 for the Fund's
assets and liabilities measured at fair value:
DESCRIPTION LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
--------------------------------------------------------------------------------
EQUITY
Common Stock $381,432,931 $572,518(1) $ -- $382,005,449
Preferred Stock $ 4,195,905 $ -- $ -- $ 4,195,905
--------------------------------------------------------------------------------
TOTAL EQUITY $385,628,836 $572,518 $ -- $386,201,354
--------------------------------------------------------------------------------
SHORT-TERM
INVESTMENTS $ 1,185,458 $ -- $ -- $ 1,185,458
--------------------------------------------------------------------------------
TOTAL
INVESTMENTS
IN SECURITIES* $386,814,294 $572,518 $ -- $387,386,812
================================================================================
* 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:
Indonesia $ 312,854
Malaysia $ 168,098
South Korea $ 39,441
Taiwan $ 52,125
---------
$ 572,518
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 year ended August 31, 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.
23
As of August 31, 2011, the components of distributable earnings on a tax basis
were as follows:
TOTAL RETURN
Cost of investments for tax purposes $347,289,224
============
Gross tax unrealized appreciation $ 67,573,720
Gross tax unrealized depreciation (27,476,132)
Net unrealized currency appreciation 89,056
------------
Net tax unrealized appreciation 40,186,644
------------
Undistributed ordinary income 3,796,105
Undistributed Long Term Capital Gains --
------------
Total distributable earnings 3,796,105
------------
Other accumulated loss (17,113,670)
------------
Total accumulated gain $ 26,869,079
============
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, 2011, the Fund has $17,113,670 of capital loss carryover which
expires August 31, 2018.
The tax character of distributions paid during the fiscal years ended August 31,
2011 and 2010 were as follows:
ORDINARY LONG TERM
INCOME CAPITAL GAINS
----------- -------------
Total Return Fund
8/31/2011 $ 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.
24
NOTE 9 - ACCOUNTING PRONOUNCEMENTS
On May 12, 2011, the Financial Accounting Standards Board ("FASB") issued an
Accounting Standard Update ("ASU") modifying Topic 820, Fair Value Measurements
and Disclosures. At the same time, the International Accounting Standards Board
("IASB") issued International Financial Reporting Standard ("IFRS") 13, Fair
Value Measurement. The objective by the FASB and IASB is convergence of their
guidance on fair value measurements and disclosures. Specifically, the ASU
requires reporting entities to disclose i) the amounts of any transfers between
Level 1 and Level 2, and the reasons for the transfers, ii) for Level 3 fair
value measurements, a) quantitative information about significant unobservable
inputs used, b) a description of the valuation processes used by the reporting
entity and c) a narrative description of the sensitivity of the fair value
measurement to changes in unobservable inputs if a change in those inputs might
result in a significantly higher or lower fair value measurement. The effective
date of the ASU is for interim and annual periods beginning after December 15,
2011. At this time, management is evaluating the implications of this guidance
and the impact it will have on the financial statement amounts and footnote
disclosures, if any.
25
PURISIMA TOTAL RETURN FUND
OTHER INFORMATION
PROXY VOTING PROCEDURES (UNAUDITED)
The Adviser votes proxies relating to portfolio securities in accordance with
procedures that have been approved by the Trust's Board of Trustees. You may
obtain a description of these procedures, free of charge, by calling toll-free
1-800-841-0199. This information is also available through the Securities and
Exchange Commission's website at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to the portfolio
securities during the most recent 12-month period ended June 30 is available
without charge, upon request, by calling toll-free 1-800-841-0199. This
information is also available through the Securities and Exchange Commission's
website at http://www.sec.gov.
FORM N-Q DISCLOSURE (UNAUDITED)
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third fiscal quarters on Form N-Q. The Fund's Form N-Q is available
without charge, upon request, by calling 1-800-841-0199. Furthermore, you can
obtain the Form N-Q on the SEC's website at www.sec.gov.
TAX NOTICE (UNAUDITED)
For the fiscal year ended August 31, 2011, certain dividends paid by the Fund
may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth
Tax Relief Reconciliation Act of 2003. The Fund designates 100% of dividends
declared from ordinary income as qualified dividend income.
The percentage of dividend income distributed for the year ended August 31, 2011
designated as qualified dividends received deduction available to corporate
shareholders is 100.00% for the Total Return Fund.
26
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
THE PURISIMA FUNDS
WOODSIDE, CALIFORNIA
We have audited the accompanying statement of assets and liabilities of the
Purisima Total Return Fund (the "Fund"), a series of The Purisima Funds,
including the schedule of investments as of August 31, 2011, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of August 31, 2011, by correspondence with the custodian. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Purisima Total Return Fund as of August 31, 2011, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
October 25, 2011
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 shareholder of N/A None
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 confectioners); Foods, Inc.
Vice President of Blummer Chocolate Company
from 1980 to 1997, where he had been employed
since 1970.
--------------------------------------------------------------------------------
Sole proprietor of LeFevre Capital Management. 2 None
--------------------------------------------------------------------------------
Executive Director of the law firm of 2 Diablo Valley
Berding & Weil, LLP since Bank; East
1990. Bay BOMA.
--------------------------------------------------------------------------------
Retired. Prior to retirement, sole proprietor of 2 None
Bryan F. Morse, RIA, a registered investment
adviser from 1990 to 2010.
--------------------------------------------------------------------------------
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) Chief 2005
13100 Skyline Blvd. Compliance
Woodside, CA 94062 Officer
--------------------------------------------------------------------------------
Katherine Taylor (born 1966) Treasurer 2011
13100 Skyline Blvd.
Woodside, CA 94062
--------------------------------------------------------------------------------
Nicole Gerrard Lightner (born 1970) Secretary 2011
13100 Skyline Blvd.
Woodside, CA 94062
--------------------------------------------------------------------------------
----------
(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
--------------------------------------------------------------------------------
Chief Compliance Officer of the Adviser.
Vice President of Charles Schwab & Co.,
Inc. from 1995 to 2004, where he had been
employed since 1983.
--------------------------------------------------------------------------------
Group Vice President of Finance and Treasurer
of the Advisor where she has been
employed since 2003.
--------------------------------------------------------------------------------
In-house legal counsel for the Adviser since
2006 and Secretary of the Adviser
since 2008. Prior to joining the Adviser,
she was an attorney at Paul Hastings
LLP from 2000-2006 and at a Canadian
law firm from 1998-2000.
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
--------------------------------------------
ANNUAL REPORT
AUGUST 31, 2011
The Purisima All-Purpose Fund
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
A LETTER TO OUR SHAREHOLDERS
Welcome to the annual report for the Purisima All-Purpose Fund for the 12-month
period ending August 31, 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 and cash.
Thank you for your continued interest and support.
Sincerely,
/S/ KENNETH FISHER
-------------------
Kenneth L. Fisher
Chairman and Chief Investment Officer
Fisher Investments
OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO
CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY
OR SELL ANY SECURITY.
FUND HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE AND ARE NOT
RECOMMENDATIONS TO BUY OR SELL ANY SECURITY.
MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE. THE FUND MAY
USE SHORT SALES OF SECURITIES, WHICH INVOLVE THE RISK THAT LOSSES MAY EXCEED THE
ORIGINAL AMOUNT INVESTED. THE FUND MAY ALSO USE OPTIONS AND FUTURES CONTRACTS,
WHICH HAVE THE RISKS OF UNLIMITED LOSSES OF THE UNDERLYING HOLDINGS DUE TO
UNANTICIPATED MARKET MOVEMENTS AND FAILURE TO CORRECTLY PREDICT THE DIRECTION OF
SECURITIES PRICES, INTEREST RATES AND CURRENCY EXCHANGE RATES. THE FUND MAY
INVEST IN FOREIGN SECURITIES WHICH INVOLVE GREATER VOLATILITY AND POLITICAL,
ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS. THE FUND MAY
INVEST IN DEBT SECURITIES WHICH TYPICALLY DECREASE IN VALUE WHEN INTEREST RATES
RISE. THIS RISK IS GREATER FOR LONGER-TERM DEBT SECURITIES.
THE FUND IS NON-DIVERSIFIED, MEANING IT MAY CONCENTRATE ITS ASSETS IN FEWER
INDIVIDUAL HOLDINGS THAN A DIVERSIFIED FUND. THEREFORE, THE FUND IS MORE EXPOSED
TO INDIVIDUAL STOCK VOLATILITY THAN A DIVERSIFIED FUND. AN INVESTMENT IN THE
FUND IS NOT SUITABLE FOR ALL INVESTORS.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS.
FISHER INVESTMENTS IS THE ADVISER TO THE PURISIMA FUNDS. THE PURISIMA FUNDS ARE
DISTRIBUTED BY QUASAR DISTRIBUTORS, LLC. 09/11
1
PERFORMANCE SUMMARY (UNAUDITED)
FOR YEAR ENDED AUGUST 31, 2011
PURISIMA ALL-PURPOSE FUND
GROWTH OF $25,000
PURISIMA ALL-PURPOSE FUND CUMULATIVE TOTAL RETURN VERSES MERRILL LYNCH U.S.
TREASURY BILLS 0-3 MONTHS INDEX $25,000 INVESTED FROM FUND INCEPTION ON 11/01/05
TO 8/31/11*
MERRILL LYNCH U.S. TREASURY BILLS
MONTH PURISIMA ALL-PURPOSE FUND 0-3 MONTHS INDEX
----- ------------------------- ----------------
11/1/2005 25,000 25,000
2/28/2006 25,400 25,321
5/31/2006 25,878 25,614
8/31/2006 26,406 25,935
11/30/2006 26,858 26,265
2/28/2007 27,270 26,590
5/31/2007 27,757 26,946
8/31/2007 28,325 27,308
11/30/2007 28,703 27,623
2/29/2008 29,229 27,881
5/31/2008 29,373 27,983
8/31/2008 29,545 28,125
11/30/2008 29,890 28,270
2/28/2009 29,841 28,275
5/31/2009 30,437 28,296
8/31/2009 30,347 28,311
11/30/2009 30,317 28,327
2/28/2010 30,237 28,332
5/31/2010 30,116 28,340
8/31/2010 30,056 28,352
11/30/2010 29,965 28,360
2/28/2011 29,875 28,372
5/31/2010 29,754 28,387
8/31/2010 29,663 28,394
PURISIMA ALL-PURPOSE FUND MERRILL LYNCH U.S. TREASURY BILLS
0-3 MONTHS INDEX
ONE YEAR ONE YEAR
Annual Total Return** -1.31% Annual Total Return** 0.15%
SINCE INCEPTION (11/01/2005) SINCE INCEPTION (11/01/2005)
Cumulative Total Return(1)** 18.65% Cumulative Total Return(1)** 12.80%
Average Annual Total Average Annual Total
Return(2)** 2.98% Return(2)** 2.09%
PLEASE NOTE PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. SHARE PRICE
AND RETURN WILL FLUCTUATE, AND INVESTORS MAY EXPERIENCE A GAIN OR LOSS WHEN THEY
SELL THEIR SHARES. TO OBTAIN A PROSPECTUS ON THE PURISIMA FUNDS PLEASE CALL
1-800-841-0199. THE PROSPECTUS CONTAINS MORE INFORMATION, INCLUDING THE
POLITICAL, ECONOMIC, CURRENCY RISKS AND POTENTIAL VOLATILITY OF FOREIGN
INVESTING. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
1. Cumulative total return measures the change in value of an investment over
the periods indicated and reflects all fund fees and expenses.
2. Average annual total return represents the average annual change in value
of an investment over the periods indicated and reflects all fund fees and
expenses. Average annual total return and cumulative total return for the
one-year period would be identical.
* The Merrill Lynch US Treasury Bills 0-3 Months Index is an unmanaged index
of Treasury securities that assumes reinvestment of all income.
** The total returns shown do not reflect the deduction of taxes a shareholder
would pay on fund distributions or redemption of fund shares. The total
return reflects the rate an investment would have earned (or lost) on an
investment in the Fund, assuming reinvestment of all dividends and
distributions.
2
SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA ALL-PURPOSE FUND
---------------------------------------------
Mutual Funds 79.5%
U.S. Treasury Obligations 20.5%
---------------------------------------------
Total 100.0%
(1) Percentage of Total Investments as of August 31, 20011
3
IMPORTANT INFORMATION
The following disclosure provides important information regarding the Fund's
Expense Example. Please refer to this information when reviewing the Expense
Example for the Fund.
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs; and (2) ongoing costs, including management fees; and other fund
expenses. This Example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period indicated and held for the entire period from March 1, 2011 to August 31,
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.
4
EXPENSE EXAMPLE (UNAUDITED)
PURISIMA ALL-PURPOSE FUND ACTUAL HYPOTHETICAL PERFORMANCE
(Inception date: 11/01/2005) PERFORMANCE (5% RETURN BEFORE EXPENSES)
--------------------------------------------------------------------------------
Beginning Account Value (03/01/11) $1,000.00 $1,000.00
Ending Account Value (08/31/11) $ 992.90 $1,017.64
Expenses Paid During Period(1) $ 7.53 $ 7.63
--------------------------------------------------------------------------------
(1) Expenses are equal to the Fund's expense ratio for the six month period of
1.50% for the Purisima All-Purpose Fund multiplied by the average account value
over the period, multiplied by 184/365 (to reflect the one-half year period).
5
PURISIMA ALL-PURPOSE FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 2011
PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
U.S. TREASURY NOTES - 20.3%
10,000 1.000%, 12/31/2011 $ 10,033
--------
TOTAL U.S. TREASURY NOTES (COST $10,017) 10,033
--------
SHARES VALUE
--------------------------------------------------------------------------------
MUTUAL FUNDS - 78.4%
38,809 SEI Daily Income Trust Government Fund 38,809
--------
TOTAL MUTUAL FUNDS (COST $38,809) $ 38,809
--------
TOTAL INVESTMENTS (COST $48,826) - 98.7% $ 48,842
Other Assets in Excess of Liabilities - 1.3% 661
--------
TOTAL NET ASSETS - 100.0% $ 49,503
--------
The accompanying notes are an integral part of these financial statements.
6
PURISIMA ALL-PURPOSE FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2011
--------------------------------------------------------------------------------
ALL-PURPOSE FUND
----------------
ASSETS
Investments in securities, at cost $ 48,826
========
Investments in securities, at value $ 48,842
Receivables:
Dividends and interest 19
Due from Adviser (Note 3) 12,146
Prepaid expenses 13,624
--------
Total Assets 74,631
--------
LIABILITIES
Accrued administration fees (Note 3) 3,560
Accrued transfer agent fees 2,507
Accrued audit fees 12,000
Accrued fund accounting fees 5,039
Accrued reports to shareholders 1,496
Other accrued expenses 526
--------
Total Liabilities 25,128
--------
NET ASSETS $ 49,503
========
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 .82
========
COMPONENTS OF NET ASSETS
Paid-in capital $ 49,487
Net unrealized appreciation on investments 16
--------
Net assets $ 49,503
========
The accompanying notes are an integral part of these financial statements.
7
PURISIMA ALL-PURPOSE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2011
--------------------------------------------------------------------------------
ALL-PURPOSE FUND
----------------
INVESTMENT INCOME
Income
Interest $ 221
---------
Total income 221
---------
Expenses
Administration fees 40,694
Fund accounting fees 31,045
Trustee fees 22,203
Registration fees 21,313
Transfer agent fees 15,124
Audit fees 12,151
Reports to shareholders 5,146
Custody fees 3,072
Miscellaneous 526
Advisory fees 498
Legal fees 7
---------
Total expenses 151,779
Less: Expenses waived and reimbursed by Adviser (Note 3) (151,032)
---------
Net expenses 747
---------
NET INVESTMENT LOSS (526)
---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Change in net unrealized appreciation
(depreciation) on investments (129)
---------
Net loss on investments (129)
---------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (655)
=========
The accompanying notes are an integral part of these financial statements.
8
PURISIMA ALL-PURPOSE FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
AUGUST 31, 2011 AUGUST 31, 2010
--------------- ---------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment income (loss) $ (526) $ (485)
Net realized gain on investments -- 1
Change in net unrealized appreciation
(depreciation) on investments (129) (23)
------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS (655) (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 INCREASE (DECREASE) IN NET ASSETS (655) (507)
------- -------
NET ASSETS
Beginning of year 50,158 50,665
------- -------
END OF YEAR $49,503 $50,158
======= =======
Undistributed net investment income (loss) $ -- $ --
======= =======
(a) A summary of capital share transactions is as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2011 AUGUST 31, 2010
--------------- ---------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
Shares sold -- $ -- -- $ --
Shares issued on reinvestment
of distributions -- -- 71 712
Shares redeemed -- -- -- --
------ ----- ------ -----
Net increase -- $ -- 71 $ 7
====== ===== ====== =====
The accompanying notes are an integral part of these financial statements.
9
PURISIMA ALL-PURPOSE FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH YEAR.
--------------------------------------------------------------------------------
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS ANNUAL REPORT.
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
2011 2010 2009 2008 2007
----------------------------------------------------------------
Net asset value, beginning of year $ 9.95 $10.19 $10.27 $10.47 $10.50
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (0.10) (0.10) 0.19 0.46 0.69
Net realized and unrealized gain
(loss) on investments (0.03) -- 0.08 (0.03) 0.04
------ ------ ------ ------ ------
Total from investment operations (0.13) (0.10) 0.27 0.43 0.73
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income 0.00 (0.14) (0.35) (0.63) (0.76)
From net realized gain -- -- -- * -- --
------ ------ ------ ------ ------
Total distributions -- (0.14) (0.35) (0.63) (0.76)
------ ------ ------ ------ ------
Net asset value, end of year $ 9.82 $ 9.95 $10.19 $10.27 $10.47
====== ====== ====== ====== ======
Total return (1.31%) (0.96%) 2.71% 4.31% 7.27%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (thousands) $ 49.5 $ 50.2 $ 50.7 $ 29.5 $ 28.3
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived 304.53% 294.12% 357.92% 500.20% 545.57%
After fees waived 1.50% 1.50% 1.50% 1.50% 1.50%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS # (1.06%) (0.96%) 2.28% 4.44% 6.66%
Portfolio turnover rate 0.00% 0.00% 0.00% 0.00% 0.00%
------------
# Net of fees waived.
* Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
10
PURISIMA ALL-PURPOSE FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2011
NOTE 1 - ORGANIZATION
The Purisima Funds (the "Trust") was organized as a Delaware statutory trust on
June 27, 1996 and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company issuing
its shares in a series. Each series represents a distinct portfolio with its own
investment objectives and policies. The accompanying financial statements
include the Purisima All-Purpose Fund (the "Fund"), a non-diversified fund which
commenced operations on November 1, 2005. The Fund is one of the two portfolios
comprising the Trust. Fisher Asset Management, LLC (doing business as Fisher
Investments) (the "Adviser") serves as the investment adviser to the Fund.
The investment objective of the Purisima All-Purpose Fund is as follows:
The Fund seeks to provide protection against declines in the value of the U.S.
and foreign equity markets. It invests in derivative securities, money market
instruments and other securities, including U.S. and foreign common stocks, and
fixed income securities. From its inception through August 31, 2011, the Fund
has invested exclusively in money-market instruments.
For the year ended August 31, 2011, the All Purpose Fund invested 78.4% of its
assets in the SEI Daily Income Trust Government Fund. The SEI Daily Income Trust
Government invests in U.S. Government securities. The Financial Statements of
the SEI Daily Income Trust Government Fund, including disclosure of the risks,
performance, expenses or other information is available through the SEC website
at http://www.sec.gov.
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
11
PURISIMA ALL-PURPOSE FUND
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.
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.
12
PURISIMA ALL-PURPOSE FUND
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 (2008 - 2010), or expected to be taken in the Fund's 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 the trade date. Dividend income and
distributions to shareholders are recorded on the ex-dividend date and
interest income is recognized on the accrual basis. Realized gains and
losses are evaluated on the bases of identified costs.
E. USE OF ESTIMATES. The presentation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from those estimates and assumptions.
F. CONCENTRATION OF RISK. Investments in securities of non-U.S. issues in
certain countries involve special investment risks. These risks may
include, but are not limited to, investment restrictions, adverse
political, social and economic developments, government involvement in
the private sector, limited and less reliable investor information,
lack of liquidity, certain local tax law considerations, and limited
regulation of the securities markets.
G. OPTIONS. Exchange traded options are valued at the last reported sale
price at the close of the exchange on which the security is primarily
traded. Certain markets are not closed at the time that a Fund prices
portfolio securities. In these situations, snapshot prices are
provided by the individual pricing services or other alternate sources
at the close of the NYSE as appropriate. If no sales are reported, the
mean between the last reported bid and asked prices will be used.
Non-exchange traded options will also be valued at the mean between
bid and asked prices. "Fair value" of other private options are valued
after consulting with the Adviser using a mathematical model.
Options purchased are recorded as investments; options written (sold)
are accounted for as liabilities. When an option expires, the premium
(original option value) is realized as a gain if the option was
written or as a loss if the option was purchased. When the exercise of
an option result in a cash settlement, the difference between the
premium and the settlement proceeds is realized as a gain or loss.
When securities are acquired or delivered upon exercise of an option,
the acquisition cost or sale proceeds are adjusted by the amount of
the premium. When an option is closed, the difference between the
premium and the cost to close the position is realized as a gain or
loss. The Fund may purchase options which are included in the Fund's
Schedules of Investments and subsequently marked to market to reflect
the current value of the option. At August 31, 2011, the Fund had no
options outstanding.
13
PURISIMA ALL-PURPOSE FUND
H. SECURITIES SOLD SHORT. To the extent the Fund engages in selling
securities short, they are obligated to replace a security borrowed by
purchasing the same security at the current market value. The Fund
would incur a loss if the price of the security increases between the
date of the short sale and the date on which the Fund replaces the
borrowed security. The Fund would realize a gain if the price of the
security declines between those dates. The Fund is required to
establish a margin account with the broker lending the security sold
short. While the short sale is outstanding, the broker retains the
proceeds of the short sale and the Fund must also maintain a deposit
with the broker consisting of cash having a value equal to a specified
percentage of the value of the securities sold short. I .
Indemnification Obligations. Under the Fund's organizational
documents, its current and former officers and trustees are
indemnified against certain liabilities arising out of the performance
of their duties to the Fund. In addition, in the normal course of
business, the Fund enters into contracts that contain a variety of
representations and warranties that provide general indemnifications.
The Fund's maximum exposure under these arrangements is unknown as
this would involve future claims that may be made against the Fund
that have not yet occurred or that would be covered by other parties.
NOTE 3 - COMMITMENTS, OTHER RELATED PARTY TRANSACTIONS AND OTHER
SERVICE PROVIDERS
The Fund has an Investment Management Agreement with the Adviser to provide
investment advisory services to the Fund. The Adviser furnishes all investment
advice, office space, facilities, and most of the personnel needed by the Fund.
As compensation for its services, the Adviser is entitled to a monthly fee at
the annual rate of 1.00% of the Fund's average daily net assets.
The Fund is responsible for its own operating expenses. The Adviser has
contractually agreed to limit the Fund's total expenses (exclusive of brokerage,
interest, taxes, dividends on securities sold short and extraordinary expenses)
to not more than 1.50% of the average daily net assets.
Any fee withheld or voluntarily reduced and/or any Fund expense absorbed by the
Adviser pursuant to an agreed upon expense cap shall be reimbursed by the Fund
to the Adviser, if so requested by the Adviser, anytime before the end of the
third fiscal year following the year to which the fee reduction, waiver, or
expense absorption relates, provided the aggregate amount of the Fund's current
operating expenses for such fiscal year does not exceed the applicable
limitation on Fund expenses. Any such reimbursement is also contingent upon
Board of Trustees review and approval prior to the time the reimbursement is
initiated. The Fund must pay its current ordinary operating expenses before the
Adviser is entitled to any reimbursement of fees and/or expenses. For the year
ended August 31 2011, the Fund paid the Adviser $498.
As of August 31, 2011, the Adviser has reimbursed the Fund $151,032 to limit its
total expenses to not more than 1.50% of the average daily net assets.
14
PURISIMA ALL-PURPOSE FUND
At August 31, 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, 2012 AUGUST 31, 2013 AUGUST 31, 2014
----- --------------- --------------- ---------------
Purisima
All-Purpose Fund $ 148,806 $ 147,529 $ 151,032
U.S. Bank, N.A. serves as the Fund's Custodian. U.S. Bancorp Fund Services, LLC
("USBFS"), an affiliate of U.S. Bank, N.A., serves as the Administrator, Fund
Accountant and Transfer Agent. Certain officers of the Trust, including the
Trust's Treasurer, are employees of the Administrator. In its capacity as the
Fund's Administrator, USBFS provides general fund management including corporate
secretarial services, coordinates the preparation of materials for the Board of
Trustees, assists with the annual audit of the Fund's financial statements,
monitors the Fund's compliance with federal and state regulations as well as
investment restrictions, coordinates the payment of Fund expenses and monitors
expense accruals, prepares financial statements and non-investment related
statistical data and makes required tax reporting calculations. During the year
ended August 31, 2011, Purisima All-Purpose Fund paid USBFS $40,694 for services
rendered in its capacity as the Fund's Administrator.
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as
principal underwriter of the Fund and acts as the Fund's distributor, pursuant
to a Distribution Agreement with the Trust, in a continuous public offering of
the Fund's shares.
NOTE 4 - SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Fund is authorized to pay
expenses incurred for the purpose of distribution activities, including the
engagement of other dealers, intended to result in the sale of shares of the
Fund. The fee accrues at an annual rate not to exceed 0.25% of the Fund's
average daily net assets. For the year ended August 31, 2011, the Fund did not
utilize the Plan.
NOTE 5 - INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of securities, excluding
short-term investments, for the year ended August 31, 2011, were as follows:
FUND PURCHASES SALES
---- --------- -----
Purisima All-Purpose Fund $ 0 $ 0
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 Level 1 and 2, and b) purchases, sales, issuance, 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,
15
PURISIMA ALL-PURPOSE FUND
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 is in valuing
the asset or liability, and would be based on the best information
available.
The availability of observable inputs can vary from security to security and is
affected by a wide variety of factors, including, for example, the type of
security, whether the security is new and not yet established in the
marketplace, the liquidity of markets, and other characteristics particular to
the security. To the extent that valuation is based on models or inputs that are
less observable or unobservable in the market, the determination of fair value
requires more judgment. Accordingly, the degree of judgment exercised in
determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair
value hierarchy. In such cases, for disclosure purpose, the level in the fair
value hierarchy within which the fair value measurement falls in its entirety,
is determined based on the lowest level input that is significant to the fair
value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. The
following tables summarize the inputs used as of August 31, 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 $ -- $10,033 $- $10,033
--------------------------------------------------------------------------------
TOTAL FIXED INCOME $ -- $10,033 $- $10,033
SHORT-TERM INVESTMENTS $38,809 $ -- $- $38,809
--------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES $38,809 $10,033 $- $48,842
--------------------------------------------------------------------------------
16
PURISIMA ALL-PURPOSE FUND
There were no significant transfers between level 1 & 2 during current period
presented. The Fund did not hold any level 3 securities during the period.
NOTE 7 - FEDERAL INCOME TAX MATTERS
The difference between the book and tax basis components of the distributable
earnings relates principally to the timing of recognition of income and gains
for federal income tax purposes. These differences, if any, are primarily
attributable to the tax deferral of losses on wash sales, the realization for
tax purposes of unrealized gains on passive foreign investment companies and
return of capital distributions and income adjustments recognized for tax
purposes on real estate investment trusts. Short-term gains distributions
reported in the Statements of Changes of Net Assets, if any, are reported as
ordinary income for federal tax purposes. For the year ended August 31, 2011,
the All Purpose Fund decreased accumulated net investment loss by $526, and
decreased accumulated net realized gain on investments and paid-in capital by $1
and $525, respectively.
As of August 31, 2011, the components of distributable earnings on a tax basis
were as follows:
All-Purpose
-----------
Cost of investments for tax purposes $ 48,826
===========
Gross tax unrealized appreciation $ 16
Gross tax unrealized depreciation $ --
-----------
Net tax unrealized appreciation $ 16
-----------
Undistributed long term gain $ --
===========
Total accumulated earnings $ 16
===========
The tax character of distributions paid during the fiscal years ended August 31,
2011 and 2010 were as follows:
Ordinary Income Long Term Capital Gains
----------------------------------------
Purisima All-Purpose Fund
8/31/2011 -- --
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 exited
at the date of the Statement of Assets and Liabilities. For non-recognized
subsequent events that must be disclosed to keep the financial statements from
being misleading, the Fund is required to disclosed the nature of the event as
well as an estimate of its financial effect, or a statement that such an
estimate cannot be made. Management has evaluated subsequent events through the
issuance of these financial statements and has noted no such events.
17
PURISIMA ALL-PURPOSE FUND
NOTE 9 - NEW ACCOUNTING PRONOUNCEMENTS
On May 12, 2011, the Financial Accounting Standards Board ("FASB") issued an
Accounting Standard Update ("ASU") modifying Topic 820, Fair Value Measurements
and Disclosures. At the same time, the International Accounting Standards Board
("IASB") issued International Financial Reporting Standard ("IFRS") 13, Fair
Value Measurement. The objective by the FASB and IASB is convergence of their
guidance on fair value measurements and disclosures. Specifically, the ASU
requires reporting entities to disclose i) the amounts of any transfers between
Level 1 and Level 2, and the reasons for the transfers, ii) for Level 3 fair
value measurements, a) quantitative information about significant unobservable
inputs used, b) a description of the valuation processes used by the reporting
entity and c) a narrative description of the sensitivity of the fair value
measurement to changes in unobservable inputs if a change in those inputs might
result in a significantly higher or lower fair value measurement. The effective
date of the ASU is for interim and annual periods beginning after December 15,
2011. At this time, management is evaluating the implications of this guidance
and the impact it will have on the financial statement amounts and footnote
disclosures, if any.
18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
THE PURISIMA FUNDS
WOODSIDE, CALIFORNIA
We have audited the accompanying statement of assets and liabilities of the
Purisima All- Purpose Fund (the "Fund"), a series of The Purisima Funds,
including the schedule of investments as of August 31, 2011, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of August 31, 2011, by correspondence with the custodian. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Purisima All-Purpose Fund as of August 31, 2011, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
TAIT, WELLER & BAKER LLP
PHILADELPHIA, PENNSYLVANIA
OCTOBER 25, 2011
19
OTHER INFORMATION
PROXY VOTING PROCEDURES (UNAUDITED)
The Adviser votes proxies relating to portfolio securities in accordance with
procedures that have been approved by the Trust's Board of Trustees. You may
obtain a description of these procedures, free of charge, by calling toll-free
1-800-841-0199. This information is also available through the Securities and
Exchange Commission's website at http://www.sec.gov. Information regarding how
the Fund voted proxies relating to the portfolio securities during the most
recent 12-month period ended June 30 is available without charge, upon request,
by calling toll-free 1-800-841-0199. This information is also available through
the Securities and Exchange Commission's website at http://www.sec.gov.
FORM N-Q DISCLOSURE (UNAUDITED)
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third fiscal quarters on Form N-Q. The Fund's Form N-Q is available
without charge, upon request, by calling 1-800-841-0199. Furthermore, you can
obtain the Form N-Q on the SEC's website at www.sec.gov.
TAX NOTICE (UNAUDITED)
Additional Information applicable to foreign shareholders only: The percentage
of taxable ordinary income distributions that are designated as short-term
capital gain distributions under Internal Revenue Code Section 871(k)(2)(C) for
the year ended August 31, 2011 is 0.00%.
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)
13100 Skyline Blvd.
Woodside, CA 94062
Alfred D. McKelvy, Jr. Trustee 2003 Executive Director of the law firm of Berding & 2 Diablo Valley
(born 1948) Weil, LLP since 1990. Bank; East Bay
13100 Skyline Blvd. BOMA.
Woodside, CA 94062:
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
(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.
Katherine Taylor Treasurer 2011 Group Vice President of Finance and Treasurer
(born 1966) of the Advisor where she has been employed
13100 Skyline Blvd. since 2003.
Woodside, CA 94062
--------
(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
-------------------------------------------------------------------------------------------------------------------------------
Nicole Gerrard Lightner Secretary 2011 In-house legal counsel for the Adviser
(born 1970) since 2006 and Secretary of the Adviser
13100 Skyline Blvd. since 2008. Prior to joining the Adviser,
Woodside, CA 94062 she was an attorney at Paul Hastings
LLP from 2000-2006 and at a Canadian
law firm from 1998-2000.
--------
(1) Trustees and officers of the Funds serve until their resignation, removal or
retirement.
* "Interested person" of the Trust, as defined in the 1940 Act.
22
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.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer and principal financial officer. The registrant has
not made any amendments to its code of ethics during the period covered by this
report. The registrant has not granted any waivers from any provisions of the
code of ethics during the period covered by this report.
THE REGISTRANT UNDERTAKES TO PROVIDE TO ANY PERSON WITHOUT CHARGE, UPON REQUEST,
A COPY OF ITS CODE OF ETHICS BY MAIL WHEN THEY CALL THE REGISTRANT AT
1-800-851-8845.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
THE REGISTRANT'S BOARD OF TRUSTEES HAS DETERMINED THAT IT DOES NOT HAVE AN AUDIT
COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT COMMITTEE. AT THIS TIME, THE
REGISTRANT BELIEVES THAT THE EXPERIENCE PROVIDED BY EACH MEMBER OF THE AUDIT
COMMITTEE TOGETHER OFFERS THE REGISTRANT ADEQUATE OVERSIGHT FOR THE REGISTRANT'S
LEVEL OF FINANCIAL COMPLEXITY.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The registrant has engaged its principal accountant to perform audit services,
audit-related services, tax services and other services during the past two
fiscal years. "Audit services" refer to performing an audit of the registrant's
annual financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years. "Audit-related services" refer to the assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit. "Tax services" refer to professional services rendered
by the principal accountant for tax compliance, tax advice, and tax planning
including the review of the registrant's federal and state tax returns. There
were no "Other services" provided by the principal accountant. The following
table details the aggregate fees billed or expected to be billed for each of the
last two fiscal years for audit fees, audit-related fees, tax fees and other
fees by the principal accountant.
---------------------------- ---------------------- ----------------------
FYE 08/31/2011 FYE 08/31/2010
---------------------------- ---------------------- ----------------------
Audit Fees 41,100 39,900
Audit-Related Fees -- --
Tax Fees 6,400 6,300
All Other Fees -- --
---------------------------- ---------------------- ----------------------
The audit committee has adopted pre-approval policies and procedures that
require the audit committee to pre-approve all audit and non-audit services of
the registrant, including services provided to any entity affiliated with the
registrant.
The percentage of fees billed by TAIT, WELLER AND BAKER LLP applicable to
non-audit services pursuant to waiver of pre-approval requirement were as
follows:
---------------------------- ---------------------- ----------------------
FYE 08/31/2011 FYE 08/31/2010
---------------------------- ---------------------- ----------------------
Audit-Related Fees 0% 0%
Tax Fees 0% 0%
All Other Fees 0% 0%
---------------------------- ---------------------- ----------------------
All of the principal accountant's hours spent on auditing the registrant's
financial statements were attributed to work performed by full-time permanent
employees of the principal accountant.
The following table indicates the non-audit fees billed or expected to be billed
by the registrant's accountant for services to the registrant and to the
registrant's investment adviser (and any other controlling entity, etc.--not
sub-adviser) for the last two years. The audit committee of the board of
trustees/directors has considered whether the provision of non-audit services
that were rendered to the registrant's investment adviser is compatible with
maintaining the principal accountant's independence and has concluded that the
provision of such non-audit services by the accountant has not compromised the
accountant's independence.
--------------------------------- ---------------------- -----------------------
Non-Audit Related Fees FYE 08/31/2011 FYE 08/31/2010
--------------------------------- ---------------------- -----------------------
Registrant -- --
Registrant's Investment Adviser -- --
--------------------------------- ---------------------- -----------------------
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to registrants who are not listed issuers (as defined in Rule
10A-3 under the Securities Exchange Act of 1934).
ITEM 6. INVESTMENTS.
(a) Schedule of Investments is included as part of the report to shareholders
filed under Item 1 of this Form.
(b) Not Applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's President and Treasurer have reviewed the Registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as of a date within 90 days of
the filing of this report, as required by Rule 30a-3(b) under the Act and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934.
Based on their review, such officers have concluded that the disclosure
controls and procedures are effective in ensuring that information required
to be disclosed in this report is appropriately recorded, processed,
summarized and reported and made known to them by others within the
Registrant and by the Registrant's service provider.
(b) There were no changes in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Any code of ethics or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy Item 2 requirements through filing an exhibit. 1) Incorporated by
reference to the Registrant's Form N-CSR filed November 10, 2003.
(2) A separate certification for each principal executive and principal
financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the registrant to 10 or more persons. Not applicable to open-end
investment companies.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
The Purisima Funds
By 11/2/11
----------------------------------
Kenneth L. Fisher, President
Date 11/2/11
----------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ KENNETH L. FISHER
----------------------------------
Kenneth L. Fisher, President
Date 11/2/11
----------------------------------
By /S/ KATHERINE TAYLOR
----------------------------------
Katherine Taylor, Treasurer
Date 11/2/11
----------------------------------