UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07737
THE PURISIMA FUNDS
(Exact name of registrant as specified in charter)
13100 SKYLINE BLVD.
WOODSIDE, CALIFORNIA 94062
(Address of principal executive offices) (Zip code)
U. S. BANCORP FUND SERVICES, LLC
2020 EAST FINANCIAL WAY, SUITE 100
GLENDORA, CALIFORNIA 91741
(Name and address of agent for service)
(650) 851-3334
Registrant's telephone number, including area code
Date of fiscal year end: AUGUST 31
Date of reporting period: FEBRUARY 29, 2012
ITEM 1. REPORTS TO STOCKHOLDERS.
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The Purisima Funds
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SEMI-ANNUAL REPORT (UNAUDITED)
FEBRUARY 29, 2012
The Purisima Total Return Fund
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TABLE OF CONTENTS
A Letter to Our Shareholders 2
Sector Breakdown 5
Expense Example 5
Schedule of Investments 7
Statement of Assets and Liabilities 14
Statement of Operations 15
Statement of Changes in Net Assets 16
Financial Highlights 17
Notes to Financial Statements 18
Other Information 26
Trustees and Officer Information 30
Privacy Notice 34
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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.
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A LETTER TO OUR SHAREHOLDERS
Welcome to the annual report for the Purisima Total Return Fund for the 6-month
period ending February 29, 2012. The primary investment objective of the Fund is
achieving high total return for shareholders.
MARKET REVIEW AND OUTLOOK
An overall lackluster 2011 finished on a high note,and positive market
momentum has carried into 2012. We expect the positive stock market trend to
continue and for stocks to end this year up a lot.
As last year began, we said 2011 would likely be a "pause that refreshes" the
bull market. Typical of third bull market years, overall market returns in 2011
were about flat and marked by frustrating volatility, shaking positive sentiment
out of newly minted optimists. A steep mid-year correction tied largely to fears
of recession and a European implosion (fears that failed to materialize yet
again) hit economically sensitive categories like Emerging Markets,Materials,
Energy and Industrials particularly hard.(i)
In many ways, 2011's correction was similar to 2010's-both were predicated on
similar fears, though 2011's magnitude was a bit bigger and longer than 2010's.
A key difference was 2010's started earlier and bottomed in early July, giving
the market and portfolios nearly six full months to recover in calendar year
2010. 2011's correction was only beginning in earnest in early July last year,
and the recovery has carried into the front part of 2012. Also dissimilar,
2010's big bounce through year end helped sentiment improve-one contributing
reason to our expectation that 2011 returns would be muted.
As 2012 began, we detected no sentiment bounce. Optimists were scarce, and ample
skepticism is rampant-a bullish feature-providing a wall of worry for this bull
market to climb. Headlines fret tapped-out consumers, sovereign debt, a Chinese
hard landing, political wrangling, too much stimulus, too little stimulus, etc.
Yet underappreciated positives abound. Corporate revenues and profits are
growing at healthy clips, stock valuations are extremely attractive, the global
economy continues to reach new highs-and that vibrancy likely continues into
2012.
In Europe, the PIIGS (Portugal, Ireland, Italy, Greece and Spain) face a rough
road, but their issues aren't new or uniform. In 2012, the issue of primacy and
the dominant elephant in the room is Italy, which faces key funding hurdles
early-almost half of its 2012 debt auctions on a money value basis occur in
February, March and April. Its auctions will likely proceed fine, but results
needn't be spectacular-"just ok" will suffice to soundly beat doomsday
expectations. Note, stocks move ahead of known events-they don't wait for
clarity. Waiting
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(i) Eagle, PACE. Performance returns reflect the average of actual
representative client portfolios invested in our Private Client Group's
100% global equity strategy for the quarter ending 12/31/2011. The
performance of individual accounts may differ given the various investment
restrictions, cash requirements and other circumstances applicable to
particular clients. Performance returns are net of advisory fees and
reflect the reinvestment of dividends, interest and other forms of accrued
income. Returns are preliminary and unaudited.
2
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for clarity is almost always very costly. What's more, in 2012, PIIGS fears turn
three years old. Positive or negative, sentiment typically doesn't stay elevated
on an issue for so long. Sentiment here likely improves, helping boost stocks.
Last year, we also said Emerging Markets would do fine economically, but
investors had become overly optimistic about Emerging Markets investing. And
they underperformed, lagging developed peers even before the correction set in.
We believe Emerging Markets will reaccelerate in 2012, both from economic and
investing standpoints, with particular strength in emerging Asia. Emerging
Markets reacceleration should also benefit the global economy, especially
resource sectors.
The US economic expansion should also continue, driven by a strong private
sector. Some of the weak spots to date-namely employment and housing-will likely
show some strength, throwing cold water on naysayers' frequent refrain that the
US economy can't improve while those categories struggle. We're past "the pause
that refreshes."
An additional sweet spot is we either re-elect a Democrat or newly elect a
Republican. Historically, either outcome has generated above-average equity
returns in election years. Ideologists from both parties have difficulty
fathoming this for loathing of the opposition view-but it's true. We will either
get a new love or decide we like what we have more than we like it now-either is
bullish for 2012.
FUND POSITIONING
For the 6-month period ending February 29, 2012, the Fund underperformed the
MSCI World Index benchmark (8.2% versus 8.5%, respectively). In aggregate,
country positioning benefited returns relative to the benchmark. The Fund's
overweight to the US and underweights to Japan, Canada and Australia helped
returns, while overweights to the Brazil, Switzerland, Mexico and China
detracted.
Sector positioning also had a positive impact on relative returns. The Fund's
overweights to Information Technology and Industrials and underweights to
Utilities and Telecommunication Services contributed positively to returns,
while an overweight to Materials and underweight to Consumer Discretionary
detracted.
Stock selection in aggregate detracted from the Fund's returns. Stock selection
in the Japan boosted returns, while stock selection in the UK, US, Australia and
the Netherlands detracted. On a sector basis, stock selection in Industrials and
Energy benefitted relative returns, while stock selection in Information
Technology, Health Care, Consumer Staples, Financials, Consumer Discretionary
and Materials detracted.
CLOSING REMARKS
In our view, the greatest risk in 2012 stems from eurozone politicians
attempting to "fix" sovereign debt woes and/or the banking system with new
regulatory/accounting schemes-resulting in unintended negative consequences.
Their "slow but steady" strategy thus far has been appropriate, in our view, and
gives the private sector time to derive solutions. The eurozone likely continues
to be weak economically, but not uniformly weak. And history shows
3
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a region even as large as the eurozone can be weak, but the rest of the world
can be fine.
Nor does it mean European stocks will do poorly this year. Many European markets
are already well below their bull market highs, and recall, stocks move ahead of
eventual economic recovery. We are also mindful that Chinese officials have
every incentive in 2012 (a leadership transition year) to boost growth. However,
if they take another course, that could take the luster off Emerging Markets
growth, a category we expect to be overall vibrant.
In short, we anticipate 2012 to be as rewarding as 2011 was frustrating. Thank
you for your continued interest and support.
Sincerely,
/s/ Kenneth L. Fisher
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Chairman and Chief Investment Officer
Fisher Investments
OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO
CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY
OR SELL ANY SECURITY.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
FUND HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE AND ARE NOT
RECOMMENDATIONS TO BUY OR SELL ANY SECURITY. MUTUAL FUND INVESTING INVOLVES RISK
OF LOSS. PRINCIPAL LOSS IS POSSIBLE. THE FUND MAY USE SHORT SALES OF SECURITIES,
WHICH INVOLVE THE RISK THAT LOSSES MAY EXCEED THE ORIGINAL AMOUNT INVESTED.
FOREIGN INVESTING INVOLVES SPECIAL RISKS, INCLUDING A GREATER VOLATILITY AND
POLITICAL, ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS.
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 02/12
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SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA TOTAL RETURN FUND
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Energy 19.3%
Information Technology 17.2%
Industrials 17.1%
Materials 14.2%
Health Care 10.7%
Consumer Discretionary 7.6%
Consumer Staples 6.7%
Financials 6.1%
Telecommunication Services 1.1%
Utilities 0.0%
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Total 100.0%
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(1) Percentage of Total Investments as of February 29, 2012.
IMPORTANT INFORMATION
The following disclosure provides important information regarding the Fund's
Expense Example. Please refer to this information when reviewing the Expense
Example for the Fund.
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other fund expenses. This Example is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period indicated and held for the entire period from September 1, 2011 to
February 29, 2012, for the Total Return Fund.
ACTUAL EXPENSES
The information in the table under the heading "Actual Performance" provides
information about actual account values and actual expenses. You may use the
information in these columns together with the amount you invested, to estimate
the expenses that you paid over the period. Simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the row entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
5
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HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The information in the table under the heading "Hypothetical Performance (5%
return before expenses)" provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratios and assumed
rates of return of 5% per year before expenses, which are not the Fund's actual
returns. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads), or redemption fees. Therefore, the information under the
heading "Hypothetical Performance (5% return before expenses)" is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher.
Actual Hypothetical Performance
Purisima Total Return Fund Performance (5% return before expenses)
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Beginning Account Value (09/01/11) $1,000.00 $1,000.00
Ending Account Value (02/29/2012) $1,075.20 $1,018.15
Expenses Paid During Period(1) $ 6.97 $ 6.77
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(1) Expenses are equal to the Fund's expense ratio for the six month period of
1.35% for the Total Return Fund multiplied by the average account value
over the period, multiplied by 182/366 (to reflect the one-half year
period).
6
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PURISIMA TOTAL RETURN FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2012 (UNAUDITED)
Shares Value
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COMMON STOCKS: 96.08%
Australia: 1.59%
83,500 BHP Billiton, Ltd.-ADR $ 6,414,470
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Brazil: 1.98%
3,050 Embraer SA-ADR 91,683
1,255 Petroleo Brasileiro SA-ADR 37,449
4,535 Ultrapar Participacoes SA 102,122
307,200 Vale SA-ADR 7,723,008
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7,954,262
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Canada: 2.02%
209,800 Cenovus Energy, Incorporated 8,140,240
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Chile: 0.03%
255 Banco Santander Chile-ADR 20,658
1,425 Sociedad Quimica y Minera De Chile SA-ADR 84,331
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104,989
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China: 4.22%
52,000 AAC Technologies Holdings, Inc. 133,684
214,750 Agricultural Bank of China, Ltd. 106,874
226,000 Anhui Conch Cement Company, Ltd. 786,725
57,825 Baidu.com-ADR (a) 7,904,677
249,025 Bank Of China, Ltd. 108,520
129,400 China Construction Bank Corporation 108,776
130,000 China Oilfield Services, Ltd. 228,617
13,200 China Pacific Insurance Group Company, Ltd. 47,567
2,000 China Petroleum & Chemical Corporation-ADR 226,580
18,500 China Shenhua Energy Company, Ltd. 85,509
23,185 CNOOC, Ltd.-ADR 5,250,939
55,000 Golden Eagle Retail Group, Ltd. 135,865
239,000 Industrial & Commercial Bank of China 175,332
320,000 Lenovo Group, Ltd. 283,438
27,000 Ping An Insurance Group Company 236,192
52,000 Sany Heavy Equipment International
Holdings Company, Ltd. 45,857
254,000 Shanghai Electric Company, Ltd. 137,214
143,800 Weichai Power Company, Ltd. 793,512
70,000 Zhuzhou CSR Times Electric Company, Ltd. 193,136
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16,989,014
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The accompanying notes are an integral part of these financial statements. 7
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Shares Value
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Colombia:0.02%
1,625 Ecopetrol SA-ADR $ 94,559
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France: 2.26%
5,330 LVMH Moet Hennessy Louis Vuitton SA 896,878
94,200 Sanofi 6,966,668
11,400 Technip SA 1,244,374
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9,107,920
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Germany: 2.97%
70,500 BASF SE-ADR 6,195,892
13,800 Daimler AG 834,623
49,500 Siemens AG-ADR 4,935,645
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11,966,160
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Hong Kong: 1.15%
29,850 AIA Group, Ltd. 113,147
28,550 Bank Of East Asia, Ltd. 115,029
114,000 Brilliance China Automotive Holdings, Ltd. (a) 132,722
11,000 Cheung Kong Holdings, Ltd. 160,826
231,300 Cheung Kong Holdings, Ltd.-ADR 3,358,476
6,000 China Mobile, Ltd. 64,091
41,625 China Resources Enterprise, Ltd. 155,902
46,000 Chow Sang Sang Holdings International, Ltd. 125,732
6,800 Hong Kong Exchanges and Clearing, Ltd. 126,773
548,000 Singamas Container Holdings, Ltd. 168,861
46,000 Wynn Macau, Ltd. 121,284
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4,642,843
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India: 0.17%
4,260 HDFC Bank, Ltd.-ADR 146,331
5,330 Larsen & Toubro, Ltd.-GDR 143,377
3,275 Reliance Industries, Ltd.-GDR 144A 107,747
14,250 Sterlite Industries India, Ltd.-ADR 141,360
5,670 Tata Motors, Ltd.-ADR 154,791
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693,606
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Indonesia: 0.27%
260,500 Bank Mandiri Tbk PT 186,278
294,000 Bank Rakyat Tbk PT 224,900
431,400 Bumi Resources Tbk PT 117,176
18,500 Gudang Garam Tbk PT 116,394
53,500 Indocement Tunggal Tbk PT 103,501
83,000 Semen Gresik Tbk PT 103,520
70,500 United Tractors Tbk PT 226,663
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1,078,432
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8 The accompanying notes are an integral part of these financial statements.
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Shares Value
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Japan: 2.50%
646,000 Hitachi, Ltd. $ 3,758,864
135,300 Honda Motor Company, Ltd.-ADR 5,157,636
38,500 Komatsu, Ltd.-ADR 1,148,455
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10,064,955
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Malaysia:0.12%
41,000 CIMB Group Holdings BHD 98,000
40,500 Genting BHD 143,315
163,700 MMC Corporation BHD 149,737
51,500 SapuraCrest Petroleum BHD 85,446
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476,498
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Mexico: 1.28%
171,050 America Movil SA de CV-ADR 4,094,937
5,600 Fomento Economico Mexicano SAB de CV 41,180
40,824 Grupo Mexico SA de CV 128,599
1,300 Industrias Penoles SA de CV 64,083
25,725 Wal-Mart De Mexico SA de CV-ADR 802,877
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5,131,676
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Netherlands: 1.82%
219,800 Unilever NV-ADR 7,321,538
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Poland: 0.02%
1,675 KGHM Polska Miedz SA 79,637
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Russian Federation: 0.03%
2,800 Magnit OJSC-GDR 82,516
2,900 OAO Gazprom-Sponsored ADR 38,285
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120,801
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Singapore: 0.05%
13,000 DBS Group Holdings, Ltd. 147,603
24,000 Singapore Telecommunications, Ltd. 60,832
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208,435
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South Africa: 0.03%
3,575 Anglo American Platinum, Ltd.-ADR 46,225
1,550 Sasol, Ltd.-ADR 82,724
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128,949
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South Korea: 0.72%
140 Amorepacific Corporation 128,396
5,020 Daewoo Shipbuilding & Marine Engineering
Company, Ltd. 161,317
655 Daewoo Shipbuilding & Marine Engineering
Company, Ltd.-GDR 144A 42,075
10,210 Doosan Infracore Company, Ltd. 206,714
665 Honam Petrochemical Corporation 210,427
7,640 Hynix Semiconductor Incorporated (a) 206,242
The accompanying notes are an integral part of these financial statements. 9
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Shares Value
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South Korea (continued)
850 Hyundai Department Store Company, Ltd. $ 126,883
850 Hyundai Heavy Industries Company, Ltd. 257,950
4,350 Hyundai Hysco Company, Ltd. 148,341
655 Hyundai Mobis 166,864
2,820 LG Fashion Corporation 105,871
2,195 POSCO-ADR 203,037
85 Samsung Electronics Company, Ltd. 91,631
85 Samsung Electronics Company, Ltd.-GDR 144A 45,816
700 Samsung Engineering Company, Ltd. 147,981
2,075 Samsung Securities Company, Ltd. 112,957
3,350 Seah Besteel Corporation 145,232
1,590 SK Innovation Company, Ltd. 263,644
800 S-Oil Corporation 89,745
1,700 Woori Investment & Securities Corporation, Ltd. 21,350
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2,882,473
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Spain: 0.91%
440,404 Banco Santander Central Hispano SA-ADR 3,655,353
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Switzerland: 3.69%
306,000 ABB, Ltd.-ADR 6,269,940
140,350 Nestle SA 8,578,927
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14,848,867
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Taiwan: 0.29%
37,987 Advanced Semiconductor Engineering,
Incorporated-ADR 185,377
17,000 Asustek Computer, Incorporated 159,613
85,000 Fubon Financial Holdings Company, Ltd. 100,048
27,217 Siliconware Precision Industries, Ltd.-ADR 157,042
11,300 Synnex Technology International Corporation-GDR 114,469
104,000 Taiwan Semiconductor Manufacturing Corporation, Ltd. 286,923
98,000 TXC Corporation 152,021
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1,155,493
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United Kingdom: 7.25%
137,800 Angelo American Plc-ADR 2,914,470
155,550 GlaxoSmithKline Plc-ADR 6,892,421
167,750 Rio Tinto Plc-ADR 9,550,007
268,600 Royal Dutch Shell PLC 9,803,481
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29,160,379
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United States: 60.69%
12,600 Abbott Laboratories 713,286
60,600 Allergan, Incorporated 5,429,154
37,430 Amazon.com, Incorporated (a) 6,725,797
122,550 Anadarko Petroleum Corporation 10,308,906
10 The accompanying notes are an integral part of these financial statements.
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Shares Value
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United States (continued)
70,900 Boeing Company $ 5,313,955
54,900 Caterpillar, Incorporated 6,270,129
14,700 Cliffs Natural Resources, Incorporated 933,156
131,700 Coach, Incorporated 9,856,428
66,900 Deere & Company 5,548,017
98,400 Dover Corporation 6,299,568
337,450 EMC Corporation (a) 9,343,991
62,800 Emerson Electric Company 3,159,468
37,700 EOG Resources, Incorporated 4,292,522
100,400 Exxon Mobil Corp. 8,684,600
21,520 FMC Technologies, Incorporated (a) 1,085,254
212,850 Freeport-McMoRan Copper & Gold, Incorporated 9,058,896
442,650 General Electric Company 8,432,483
9,000 Google, Incorporated-Class A (a) 5,564,250
81,600 Halliburton Company 2,985,744
76,000 Honeywell International, Incorporated 4,527,320
279,800 Intel Corporation 7,521,024
35,200 International Business Machsines Corporation 6,924,896
141,800 Johnson & Johnson 9,228,344
9,875 Joy Global, Incorporated 858,730
14,250 Kansas City Southern (a) 991,515
141,400 Medtronic, Incorporated 5,390,168
232,000 Microsoft Corporation 7,363,680
49,500 Mosaic Company 2,858,625
87,500 National Oilwell Varco, Incorporated 7,221,375
76,400 NetApp, Incorporated (a) 3,285,200
66,950 Occidental Petroleum Corporation 6,987,571
280,700 Oracle Corporation 8,216,089
335,700 Pfizer, Incorporated 7,083,270
82,000 PNC Financial Services Groups, Incorporated 4,880,640
82,500 PPG Industrzes, Incorporated 7,528,125
58,125 Procter & Gamble Company 3,924,600
90,800 Qualcomm, Incorporated 5,645,944
101,100 Schlumberger Ltd. 7,846,371
18,300 T Rowe Price Group, Incorporated 1,127,097
133,466 Time Warner, Incorporated 4,966,270
34,300 Union Pacific Corporation 3,781,575
79,300 United Technologies Corporation 6,650,891
87,000 Wal-Mart Stores, Incorporated 5,139,960
138,500 Wells Fargo & Company 4,333,665
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244,288,549
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TOTAL COMMON STOCKS
(Cost $324,016,613) $ 386,710,098
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The accompanying notes are an integral part of these financial statements. 11
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Shares Value
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PREFERRED STOCKS: 1.07%
Brazil: 1.07%
212,134 Banco Bradesco SA $ 3,848,111
2,700 Companhia de Bebidas das Americas
(AmBev) - ADR 108,027
1,554 Companhia Energetica de Minas Gerais-ADR 35,478
4,830 Gerdau S.A.-ADR 50,232
5,825 Itau Unibanco Holding SA-ADR 122,616
6,100 Vale SA-ADR 149,938
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4,314,402
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TOTAL PREFERRED STOCKS
(Cost $4,921,177) $ 4,314,402
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EXCHANGE TRADED FUNDS: 2.03%
203,300 iShares FTSE China 25 Index Fund 8,186,891
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TOTAL EXCHANGE TRADED FUNDS
(Cost $203,300) $ 8,186,891
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MUTUAL FUNDS: 0.47%
1,907,732 SEI Daily Income Trust Government Fund 1,907,732
-------------
TOTAL MUTUAL FUNDS
(Cost $1,907,732) $ 1,907,732
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TOTAL INVESTMENTS
(Cost $337,991,349): 99.65% 401,119,123
Other Assets in Excess of Liabilities: 0.35% 1,391,555
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TOTAL NET ASSETS: 100.0% $ 402,510,678
=============
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ADR - American Depositary Receipt.
GDR - Global Depository Receipt.
(a) Non Income Producing.
12 The accompanying notes are an integral part of these financial statements.
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Industry % of Net Assets
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Oil, Gas & Consumable Fuels 13.59%
Metals & Mining 9.38%
Pharmaceuticals 9.02%
Machinery 5.47%
Energy Equipment & Services 5.14%
Commercial Banks 4.54%
Chemicals 4.19%
Aerospace & Defense 4.12%
Food Products 3.95%
Software 3.87%
Industrial Conglomerates 3.36%
Internet Software & Services 3.35%
Computers & Peripherals 3.25%
Textiles, Apparel & Luxury Goo 2.70%
Electrical Equipment 2.42%
Semiconductors & Semiconductor Equipment 2.11%
IT Services 1.72%
Internet & Catalog Retail 1.67%
Automobiles 1.56%
Food & Staples Retailing 1.54%
Communications Equipment 1.44%
Health Care Equipment & Supplies 1.34%
Media 1.23%
Road & Rail 1.19%
Wireless Telecommunication Services 1.03%
Electronic Equipment, Instruments 1.00%
Household Products 0.97%
Real Estate Management & Development 0.87%
Capital Markets 0.31%
Construction Materials 0.25%
Insurance 0.10%
Construction & Engineering 0.07%
Hotels Restaurants & Leisure 0.07%
Multiline Retail 0.07%
Diversified Financial Services 0.06%
Auto Components 0.04%
Beverages 0.04%
Personal Products 0.03%
Specialty Retail 0.03%
Tobacco 0.03%
Diversified Telecommunication 0.02%
Electric Utilities 0.01%
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TOTAL INVESTMENT IN SECURITIES 97.15%
Cash Equivalent 2.50%
Other Assets in Excess of Liabilities 0.35%
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TOTAL NET ASSETS 100.0%
=======
The accompanying notes are an integral part of these financial statements. 13
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PURISIMA TOTAL RETURN FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2012 (UNAUDITED)
ASSETS:
Investments at value (cost $337,991,349) $401,119,123
Receivables:
Interest and dividends receivable 1,795,080
Receivable for Fund shares sold 172,655
Receivable for foreign currency 29,335
Receivable for investments sold 19,484
Prepaid expenses 65,884
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Total Assets 403,201,561
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LIABILITIES:
Payable for investments purchased 29,333
Payable for fund shares redeemed 60,975
Payable for foreign currency 29,502
Payable to the Adviser (Note 3) 318,988
Accrued distribution fees (Note 4) 108,361
Accrued fund administration, fund accounting,
transfer agent and custody fees 116,388
Accrued expenses 27,336
------------
Total Liabilities 690,883
------------
NET ASSETS $402,510,678
============
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 19,827,980
============
Net asset value, redemption price and offering price per share $ 20.30
============
COMPONENTS OF NET ASSETS
Paid-in capital $351,312,715
Undistributed net investment income 1,663,009
Accumulated net realized loss on investments (13,636,484)
Net unrealized appreciation/depreciation on:
Investments 63,127,774
Foreign currency 43,664
------------
Net assets $402,510,678
============
14 The accompanying notes are an integral part of these financial statements.
--------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2012 (UNAUDITED)
INVESTMENT INCOME
Dividend income(1) $ 4,206,747
Interest income 344
-----------
Total Investment Income 4,207,091
-----------
EXPENSES
Investment advisory fees (Note 3) 1,885,371
Distribution fees (Note 4) 169,683
Administration fees (Note 3) 143,995
Transfer agent fees 96,007
Fund accounting fees 54,876
Custody fees 52,019
Miscellaneous expenses 49,250
Legal fees 31,562
Audit fees 22,927
Registration fees 14,197
Reports to shareholders 13,026
Trustees fees 11,134
-----------
Total expenses 2,544,047
-----------
Net investment income 1,663,044
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on:
Investments 3,865,344
Foreign currency translation (14,912)
Change in net unrealized appreciation/depreciation on:
Investments 22,656,940
Foreign currency (45,392)
-----------
Net realized and unrealized gain on investments
and foreign currency 26,461,980
-----------
Net increase in net assets resulting from operations $28,125,024
===========
-------
(1) Net of $162,385 in foreign withholding taxes.
The accompanying notes are an integral part of these financial statements. 15
--------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, AUGUST 31,
2012 2011
---------------- -----------
(UNAUDITED)
OPERATIONS
Net investment income $ 1,663,044 $ 3,804,262
Net realized gain (loss) on:
Investments 3,865,344 15,701,200
Foreign currency translation (14,912) 2,731
Change in net unrealized appreciation/depreciation on:
Investments 22,656,940 46,327,744
Foreign currency (45,392) 72,467
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 28,125,024 65,908,404
------------ ------------
DISTRIBUTION TO SHAREHOLDERS
From net investment income (3,796,140) (2,869,875)
------------ ------------
NET DECREASE IN NET ASSETS RESULTING
FROM DISTRIBUTIONS PAID (3,796,140) (2,869,875)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 16,763,037 50,178,081
Proceeds from reinvestment of distributions 3,570,973 2,743,371
Cost of shares redeemed (30,867,137) (70,488,567)
------------ ------------
NET DECREASE FROM CAPITAL SHARE TRANSACTIONS (10,533,127) (17,567,115)
------------ ------------
TOTAL INCREASE IN NET ASSETS 13,795,757 45,471,414
------------ ------------
NET ASSETS
Beginning of period 388,714,921 343,243,507
------------ ------------
End of period (includes undistributed net investment
income of $1,663,009 and $3,796,105 respectively) $402,510,678 $388,714,921
============ ============
CHANGE IN CAPITAL SHARES
Shares outstanding, beginning of period 20,373,549 21,261,151
------------ ------------
Shares sold 894,759 2,506,283
Shares issued on reinvestment of distributions 199,051 138,484
Shares redeemed (1,639,379) (3,532,369)
------------ ------------
Net decrease in capital shares (545,569) (887,602)
------------ ------------
Shares Outstanding, end of period 19,827,980 20,373,549
============ ============
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 PERIOD.
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Semi-Annual Report.
YEAR ENDED AUGUST 31,
SIX MONTHS ENDED ----------------------------------------------
FEB. 29, 2012++ 2011 2010 2009 2008 2007
---------------------------------------------------------------
Net asset value, beginning of period $19.08 $16.14 $16.24 $20.25 $24.79 $21.51
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.09 0.20 0.14 0.19 0.15 0.09
Net realized and unrealized gain (loss) on investments 1.32 2.88 (0.06) (3.79) (2.82) 3.27
------ ------ ------ ------ ------ ------
Total from investment operations 1.14 3.08 0.08 (3.60) (2.67) 3.36
------ ------ ------ ------ ------ ------
Less distributions:
From net investment income (0.19) (0.14) (0.17) (0.12) (0.07) (0.08)
From net realized gain -- 0.00 (0.01) (0.29) (1.80) --
------ ------ ------ ------ ------ ------
Total distributions (0.19) (0.14) (0.18) (0.41) (1.87) (0.08)
------ ------ ------ ------ ------ ------
Net asset value, end of period $20.30 $19.08 $16.14 $16.24 $20.25 $24.79
====== ====== ====== ====== ====== ======
Total return 7.52%** 19.05% 0.42% (17.37%) (11.75%) 15.63%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $402.5 $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 1.35%* 1.34% 1.35% 1.51% 1.41% 1.39%
After fees waived and expenses absorbed or recouped 1.35%* 1.34% 1.36% 1.50% 1.41% 1.39%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS# 0.88%* 0.92% 0.75% 1.37% 0.61% 0.37%
Portfolio turnover rate 16.17%** 35.06% 10.82% 22.04% 62.96% 16.38%
-------
* Annualized.
** Not annualized.
++ Unaudited.
# Net of fees waived.
The accompanying notes are an integral part of these financial statements. 17
--------------------------------------------------------------------------------
PURISIMA TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012 (UNAUDITED)
NOTE 1-ORGANIZATION
The Purisima Funds (the "Trust") was organized as a Delaware statutory trust on
June 27, 1996 and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act") as an open-end management investment company issuing
its shares in series. Each series represents a distinct portfolio with its own
investment objectives and policies. The accompanying financial statements
include the Total Return Fund (the "Fund"), which commenced operations on
October 28, 1996, one of the two portfolios comprising the Trust. Fisher Asset
Management, LLC (doing business as Fisher Investments) (the "Adviser") serves as
the investment adviser to the Funds.
The investment objective of the Total Return Fund is as follows:
The Total Return Fund is a diversified fund and seeks a high total return. The
Fund seeks to achieve its objective by investing in a portfolio allocated
between domestic and foreign common stocks, fixed-income securities, money
market instruments and other equity-type securities. The Fund's investments in
different types of securities may vary significantly.
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with accounting principles generally accepted in the
United States of America.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last sales price on the business
day as of which such value is being determined. If on a particular
day, an exchange-listed security does not trade, then the mean between
the bid and asked prices will be used. Foreign exchange traded equity
securities are valued based upon the price on the exchange or market
on which they trade as of the close of business of such market or
exchange immediately preceding the time the Fund's net asset value is
determined. Investments in securities traded on the NASDAQ Global
Market, the NASDAQ Global Select Market and the NASDAQ Capital Market
will be valued at the NASDAQ Official Closing Price ("NOCP"), which
may not necessarily represent the last sale price. Securities traded
on an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the closing price.
Securities for which quotations are not readily available are valued
at their respective fair values as determined in good faith by the
Board of Trustees or their designee, taking into consideration: (I)
fundamental analytical data relating to the investment; (II) the
nature and duration of restrictions on disposition of the securities;
and (III)
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 or33 1/3% of the net assets of the
Fund. The interest rate paid on the Loan equals the prime rate per
annum, payable monthly. There were no borrowings for the six months
ended Fegruary 29, 2012.
20
--------------------------------------------------------------------------------
NOTE 3-COMMITMENTS, OTHER RELATED PARTY TRANSACTIONS AND OTHER SERVICE
PROVIDERS
The Fund has an Investment Management Agreement with the Adviser to provide
investment advisory services to the Fund. The Adviser furnishes all investment
advice, office space, facilities, and most of the personnel needed by the Fund.
As compensation for its services, the Adviser is entitled to a monthly fee at
the annual rate of 1.00% of the Fund's average daily net assets.
The Fund is responsible for its own operating expenses. The Adviser has
contractually agreed to limit the Fund's total expenses (exclusive of brokerage,
interest, taxes, dividends on securities sold short, acquired fund fees, and
extraordinary expenses) to not more than 1.50% of the average daily net assets.
Any fee withheld and/or any Fund expense absorbed by the Adviser pursuant to an
agreed upon expense cap shall be reimbursed by the Fund to the Adviser, if so
requested by the Adviser, anytime before the end of the third fiscal year
following the year to which the fee reduction, waiver, or expense absorption
relates, provided the aggregate amount of the Fund's current operating expenses
for such fiscal year does not exceed the applicable limitation on Fund expenses
in place at the time the expenses were waived. Any such reimbursement is also
contingent upon Board of Trustees review and approval prior to the time the
reimbursement is initiated. The Fund must pay its current ordinary operating
expenses before the Adviser is entitled to any reimbursement of fees and/or
expenses. For the six months ended February 29, 2012, 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. In its capacity as the Fund's Administrator,
USBFS provides general fund management including corporate secretarial services,
coordinates the preparation of materials for the Board of Trustees, assists with
the annual audit of the Fund's financial statements, monitors the Fund's
compliance with federal and state regulations as well as investment
restrictions, coordinates the payment of Fund expenses and monitors expense
accruals, prepares financial statements and non-investment related statistical
data and makes required tax reporting calculations. For the six months ended
February 29, 2012, Purisima Total Return Fund paid USBFS $143,995 for services
rendered in its capacity as the Trust's Administrator.
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A. and USBFS, serves
as principal underwriter of the Fund and acts as the Fund's distributor in a
continuous public offering of the Fund's shares.
NOTE 4-SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Total Return Fund is
authorized to pay expenses incurred for the purpose of financing activities,
including the employment of other dealers,
21
--------------------------------------------------------------------------------
intended to result in the sale of shares of the Fund. The fee accrues at an
annual rate not to exceed 0.25% of the Fund's average daily net assets. For the
six months ended February 29, 2012, the Fund incurred $169,683 in distribution
fees. Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A. and USBFS,
serves as distributor of the Fund pursuant to a Distribution Agreement with the
Trust.
NOTE 5-INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of securities, excluding U.S.
Government securities and short-term investments, for the six months ended
February 29, 2012 were as follows:
Fund Purchases Sales
------ --------- -----
Total Return Fund $61,338,705 $74,662,216
NOTE 6-FAIR VALUE OF FINANCIAL INSTRUMENTS
On January 21, 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2010-06, Improving Disclosures about
Fair Value Measurements. ASU No. 2010-06 amends FASB Accounting Standards
Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures,
(formerly FASB Statement No. 157), to require additional disclosures regarding
fair value measurements. Specifically, the amendment requires reporting entities
to disclose: i) the input and valuation techniques used to measure fair value
for both recurring and nonrecurring fair value measurements, for Level 2 or
Level 3 positions; ii) transfers between all levels (including Level 1 and Level
2) will be required to be disclosed on a gross basis (i.e. transfers out must be
disclosed separately from transfers in) as well as the reason(s) for the
transfers; and iii) purchases, sales, issuances and settlements must be shown on
a gross basis in the Level 3 rollforward rather than as one net number.
The effective date of this guidance is for interim and annual periods beginning
after December 15, 2009; however, the requirement to provide the Level 3
activity for purchases, sales, issuances and settlements on a gross basis will
be effective for interim and annual periods beginning after December 15, 2010.
The Funds have disclosed the applicable requirements of this accounting standard
in their financial statements.
The Funds follow a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Funds' own market
assumptions (unobservable inputs). These inputs are used in determining the
value of each Fund's investments and are summarized in the following fair value
hierarchy:
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.
22
--------------------------------------------------------------------------------
Level 3 - Unobservable inputs for the asset or liability, to the extent
relevant observable inputs are not available, representing the
Fund's own assumptions, based on the best information available,
about the assumptions a market participant would use in valuing
the asset or liability.
The availability of observable inputs can vary from security to security and is
affected by a wide variety of factors, including, for example, the type of
security, whether the security is new and not yet established in the
marketplace, the liquidity of markets, and other characteristics particular to
the security. To the extent that valuation is based on models or inputs that are
less observable or unobservable in the market, the determination of fair value
requires more judgment. Accordingly, the degree of judgment exercised in
determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair
value hierarchy. In such cases, for disclosure purpose, the level in the fair
value hierarchy within which the fair value measurement falls in its entirety,
is determined based on the lowest level input that is significant to the fair
value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. The
following tables summarize the inputs used as of February 29, 2012 for the
Fund's assets and liabilities measured at fair value:
DESCRIPTION LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
--------------------------------------------------------------------------------
EQUITY
Common Stocks $386,508,410 $201,688 $ -- $386,710,098
--------------------------------------------------------------------------------
Preferred Stocks 4,314,402 -- -- 4,314,402
--------------------------------------------------------------------------------
Exchange Traded Funds 8,186,891 -- -- 8,186,891
--------------------------------------------------------------------------------
TOTAL EQUITY 399,009,703 201,688 -- 399,211,391
--------------------------------------------------------------------------------
SHORT-TERM 1,907,732 -- -- 1,907,732
INVESTMENTS
--------------------------------------------------------------------------------
TOTAL $400,917,435 $201,688 $ -- $401,119,123
INVESTMENTS IN
SECURITIES*
================================================================================
* Please refer to the Schedule of Investments for country breakdown.
(1) The Common Stocks Level 2 balance consists of the market value of the
associated Level 2 investments in the following countries:
South Korea $ 42,075
Taiwan $ 159,613
----------
$ 201,688
There were no significant transfers between Level 1 and Level 2 during the
period as compared to their classification in the previous annual report. The
Fund did not hold any Level 3 securities during the six months ended February
29, 2012.
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
23
--------------------------------------------------------------------------------
realization for tax purposes of unrealized gains on passive foreign investment
companies and return of capital distributions and income adjustments recognized
for tax purposes on real estate investment trusts. Short-term gains
distributions reported in the Statements of Changes of Net Assets, if any, are
reported as ordinary income for federal tax purposes.
As of August 31, 2011, the Fund's most recent fiscal year end, 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 six months ended February 29,
2012 and the fiscal year ended August 31, 2011 were as follows:
ORDINARY LONG TERM
INCOME CAPITAL GAINS
------------- ---------------
Total Return Fund
2/29/2012 $ 3,796,105 $ --
8/31/2011 $ 2,869,875 $ --
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-NEW ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB issued ASU No. 2011-04 "Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements" in GAAP and the International
Financial Reporting Standards ("IFRSs"). ASU No. 2011-04 amends FASB ASC Topic
820, Fair Value Measurements and Disclosures, to establish common requirements
for measuring fair value and for disclosing information about fair value
measurements in accordance with GAAP and IFRSs. ASU No. 2011-04 is effective for
fiscal years beginning after December 15, 2011 and for interim periods within
those fiscal years. Management is currently evaluating the impact of these
amendments and does not believe they will have a material impact on the
Company's financial statements.
25
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PURISIMA TOTAL RETURN FUND
OTHER INFORMATION
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AGREEMENT
(UNAUDITED)
On October 20, 2011, the Board of Trustees performed its annual review and
renewal of the Investment Management Agreement for the Total Return Fund for the
one-year period commencing November 1, 2011. The Board of Trustees, including
the Independent Trustees, took into consideration information provided at the
meeting, as well as a wide variety of materials relating to the services
provided by the Adviser. Extensive information was provided to the Board in
response to a detailed request for information sent to the Adviser by legal
counsel to the Fund. That information included reports on the financial
condition of the Adviser, the services, operations and personnel of the Adviser,
compliance procedures, investment performance, brokerage and portfolio
transactions, distribution and marketing plans and other information relating to
the nature, extent and quality of services provided by the Adviser to the Fund.
In addition, the Board discussed and reviewed information regarding the Fund's
investment results, as well as advisory fee and expense comparisons. The Board's
Independent Trustees met separately to discuss the various factors summarized
below.
In deciding to renew the Agreement, the Board of Trustees did not identify any
single factor or particular information that, in isolation, was the controlling
factor. This summary describes the most important, but not all, of the factors
considered by the Board.
1. NATURE, EXTENT AND QUALITY OF SERVICES
The Adviser, its personnel and its resources. The Board considered the
depth and quality of the Adviser's investment management process,
including its sophisticated methodology; the experience, capability
and integrity of its senior management and other personnel, especially
the Adviser's Investment Policy Committee and personnel who directly
support the Fund; the low turnover rates of its key personnel; and the
overall financial strength and stability of its organization. The
Board discussed the quality of the services provided by the Adviser
and noted that the quarterly report from the Adviser was extremely
sophisticated and thorough. The Board commented on the high quality of
the independent capital markets research conducted by the Adviser and
reported to the Board on a regular basis. The Board's consensus was
that the Adviser was open about its thinking on the management of the
Fund and very available to address any questions or concerns the Board
may have from time to time. The Board also considered that the Adviser
made available to its investment professionals a variety of resources
and systems relating to investment management, compliance, trading,
performance and portfolio accounting. The Board further considered the
Adviser's continuing need to attract and retain qualified personnel
and to maintain and enhance its resources and systems. The Board also
observed that the Adviser had maintained the quality of services
provided to the Fund despite the continued relatively small share of
the Adviser's assets under management represented by the Fund,
typically around one percent.
26
--------------------------------------------------------------------------------
OTHER SERVICES. The Board considered the Adviser's policies,
procedures and systems to ensure compliance with applicable laws and
regulations and its commitment to these programs; its efforts to keep
the Trustees informed; and its attention to matters that may involve
conflicts of interest with the Fund.
The Board concluded that the nature, extent and quality of the
services provided by the Adviser has benefited and should continue to
benefit the Fund and its shareholders.
2. INVESTMENT PERFORMANCE
The Board considered the Fund's pursuit of its investment objective
and the investment results of the Fund in light of its objective. The
Trustees compared the Fund's total returns with various independent
securities price indexes (the Standard & Poor's 500 Stock Price Index,
the Morgan Stanley Capital Institutional World Index and the Morgan
Stanley Capital International EAFE Index) and mutual fund peer groups
objectively compiled using data from Morningstar, Inc., and noted the
performance of the Fund during various periods compared to those
indexes and peer groups. The Board noted the wide range of funds and
strategies against which the Fund was being compared. The Board found
that for three, five and ten year periods, the Fund's performance was
below the median, but equal to the median for the one-year period. The
Board will continue to monitor performance in light of improved
relative performance over the most recent period, but also understands
the challenges of market conditions experienced in 2008 and 2009,
which have continued to significantly impact the Fund's relative
performance for periods that include those years.
The Board concluded that the Adviser's services to the Fund have
provided some value compared to the lowest performing funds in the
peer group for certain periods, and have generated a positive return
for the period since inception. The Board also continues to see value
in the Adviser's services and the potential for improvement of
relative performance for future periods.
3. ADVISORY FEES AND TOTAL EXPENSES
The Board reviewed the advisory fees and total expenses of the Fund
and compared such amounts with the average fee and expense levels of
other funds in an applicable group of peer funds compiled using data
from Morningstar, Inc. The Board observed that the Fund's advisory
fees were 0.15% above the median fees and total expenses were slightly
below the median expense levels of the comparable funds in the peer
group. The Board noted that the Fund has operated below its expense
limit in some recent fiscal periods. The Board concluded that the
reasonable level of the fees charged by the Adviser benefits the Fund
and its shareholders. The Board then considered the fees charged to
the Fund compared to the Adviser's private clients. The Board
considered as part of a detailed comparison the extra burden of
administration, public reporting, compliance, deadlines, risk and
regulations associated with the Fund that do not apply to the private
accounts. The Board determined that the respective mutual fund peer
groups provided a better comparison and it found the Fund's fees
reasonable.
27
--------------------------------------------------------------------------------
4. ADVISER, COSTS, LEVEL OF PROFITS AND ECONOMIES OF SCALE
The Board discussed the Adviser's costs of providing services to the
Fund, as well as the resulting level of profits to the Adviser. The
Board considered the Adviser's need to invest in technology,
infrastructure and staff to reinforce and offer new services and to
accommodate changing regulatory requirements. The Trustees noted that
at its present asset size, breakpoints in the Fund's advisory fee
structure were not practicable, but that economies of scale in the
cost of operations, to the extent they exist, effectively were being
shared given the Adviser's past waiver of fees in respect of the Fund,
and the Fund's ability to benefit from the much larger scale of the
Adviser's business for other clients. The Board received an oral
presentation from the Adviser on its overall level of profitability
and specifically with respect to the Fund, and acknowledged the
limited usefulness of the information given the Fund's relatively
small size compared to the rest of the Adviser's assets under
management and the reasonability of the Fund's fees and expenses. The
Board concluded that the Fund's cost structure is reasonable.
5. ANCILLARY BENEFITS
The Board considered a variety of other benefits received by the
Adviser, including possible ancillary benefits to itself or its
institutional management business. The Board noted that the Adviser
ceased the use of third-party soft dollar products from trades by the
Fund, and noted that the small relative size of the Fund compared to
the Adviser's other business would suggest minimal possible fallout
benefits.
6. CONCLUSIONS
Based on its review, including consideration of each of the factors
referred to above, the Board concluded that the Agreement is fair and
reasonable to the Fund and its shareholders, that the Fund's
shareholders received, and should receive, reasonable value in return
for the advisory fees paid to the Adviser by the Fund, and that the
renewal of the Agreement was in the best interests of the Fund and its
shareholders.
28
--------------------------------------------------------------------------------
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.
29
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
30
--------------------------------------------------------------------------------
Number of
Portfolios in
Fund Complex Other
Principal Occupation(s) Overseen by Directorships
During Past Five Years Director Held
--------------------------------------------------------------------------------
Chief Executive Officer and majority N/A None
shareholder of Fisher Investments, Inc.,
the sole shareholder of the Adviser,
and has served in such capacities
since the incorporation of the Adviser
in 1986. Prior thereto, he was the founder
of Fisher Investments, a sole
proprietorship which commenced operations in
1979.
--------------------------------------------------------------------------------
President and Chief Executive Officer of 2 Signature
Brown & Haley since 1998 (fine Foods, Inc.
confectioners); Vice President of Blummer
Chocolate Company from 1980 to 1997, where
he had been employed since 1970.
--------------------------------------------------------------------------------
Sole proprietor of LeFevre Capital 2 None
Management, a registered investment adviser.
--------------------------------------------------------------------------------
Executive Director of the law firm of 2 Diablo Valley
Berding & Weil, LLP since 1990. Bank; East
Bay BOMA.
--------------------------------------------------------------------------------
Retired. Prior to retirement, sole 2 None
proprietor of Bryan F. Morse, RIA, a
registered investment adviser from 1990 to 2011.
--------------------------------------------------------------------------------
Attorney in private practice in Palo Alto, 2 None
California. Prior to entering private
practice in June of 1981, served as a
Branch Chief of the Los Angeles Regional
Office of the U.S. Securities
and Exchange Commission.
--------------------------------------------------------------------------------
31
--------------------------------------------------------------------------------
Position(s) Held
Name, Address, Age with Trust Year Elected(1)
--------------------------------------------------------------------------------
Tom Fishel (born 1960) Vice President 2005
13100 Skyline Blvd. and Chief
Woodside, CA 94062 Compliance
Officer
--------------------------------------------------------------------------------
Katherine Taylor (born 1966) Treasurer 2011
13100 Skyline Blvd.
Woodside, CA 94062
--------------------------------------------------------------------------------
Nicole Gerrard Lightner Secretary 2011
(born 1970)
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.
32
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
33
PRIVACY NOTICE
--------------------------------------------------------------------------------
FACTS WHAT DOES THE PURISIMA FUNDS DO
WITH YOUR PERSONAL INFORMATION?
--------------------------------------------------------------------------------
WHY? Financial companies choose how
they share your personal
information. Federal law gives
consumers the right to limit some
but not all sharing. Federal law
also requires us to tell you how
we collect, share, and protect
your personal information. Please
read this notice carefully to
understand what we do.
--------------------------------------------------------------------------------
WHAT? The types of personal information
we collect and share depend on
the product or service you have
with us. This information can
include:
o Social Security number and
payment history
o Account balances and account
transactions
o Assets and transaction history
When you are no longer our
customer, we continue to share
your information as described in
this notice.
--------------------------------------------------------------------------------
HOW? All financial companies need to
share customers' personal
information to run their everyday
business. In the section below,
we list the reasons financial
companies can share their
customers' personal information;
the reasons The Purisima Funds
chooses to share; and whether you
can limit this sharing.
--------------------------------------------------------------------------------
DOES THE PURISIMA CAN YOU LIMIT THIS
REASONS WE CAN SHARE FUNDS SHARE? SHARING?
YOUR PERSONAL
INFORMATION
--------------------------------------------------------------------------------
FOR OUR EVERYDAY Yes No
BUSINESS PURPOSES -such
as to process your
transactions, maintain
your account(s), respond
to court orders and
legal investigations, or
report to credit bureaus
--------------------------------------------------------------------------------
FOR OUR MARKETING Yes No
PURPOSES - to offer our
products and services to
you
--------------------------------------------------------------------------------
FOR JOINT MARKETING WITH No No
OTHER FINANCIAL
COMPANIES
--------------------------------------------------------------------------------
FOR OUR AFFILIATES' Yes No
EVERYDAY BUSINESS
PURPOSES -information
about your transactions
and experiences
--------------------------------------------------------------------------------
FOR OUR AFFILIATES' No No
EVERYDAY BUSINESS
PURPOSES -information
about your
creditworthiness
--------------------------------------------------------------------------------
FOR NONAFFILIATES TO No No
MARKET TO YOU
--------------------------------------------------------------------------------
QUESTIONS? Call 1-800-550-1071
--------------------------------------------------------------------------------
WHO WE ARE
Who is providing this notice? The Purisima Funds
--------------------------------------------------------------------------------
34
--------------------------------------------------------------------------------
WHAT WE DO
--------------------------------------------------------------------------------
How does The Purisima Funds To protect your personal information from
protect my personal information? unauthorized access and use, we use
security measures that comply with federal
law. These measures include computer
safeguards and secured files and
buildings. The Purisima Funds has adopted
internal policies to protect your
non-public personal information.
--------------------------------------------------------------------------------
How does The Purisima Funds collect We collect your personal information, for
my personal information? example, when you
o Open an account or provide account
information
o Make deposits or withdrawals from
your account or make a wire
transfer
o Give us your contact information
We also collect your personal information
from others, such as credit bureaus,
affiliates, or other companies.
--------------------------------------------------------------------------------
Why can't I limit all sharing? Federal law gives you the right to limit
only
o sharing for affiliates' everyday
business purposes-information
about your creditworthiness
o affiliates from using your
information to market to you
o sharing for nonaffiliates to
market to you
State laws and individual companies may
give you additional rights to limit
sharing.
--------------------------------------------------------------------------------
DEFINITIONS
--------------------------------------------------------------------------------
AFFILIATES Companies related by common ownership or
control. They can be financial and
nonfinancial companies.
o Our affiliate is Fisher
Investments.
--------------------------------------------------------------------------------
NONAFFILIATES Companies not related by common ownership
or control. They can be financial and
nonfinancial companies.
o The Purisima Funds does not share
with nonaffiliates so they can
market to you.
--------------------------------------------------------------------------------
JOINT MARKETING A formal agreement between nonaffiliated
financial companies that together market
financial products or services to you.
o The Purisima Funds does not
jointly market.
--------------------------------------------------------------------------------
OTHER IMPORTANT INFORMATION
--------------------------------------------------------------------------------
This privacy notice applies to individual consumers who are customers or former
customers. This privacy notice replaces all previous notices of our consumer
privacy policy, and may be amended at any time. We will keep you informed of
changes or amendments as required by law.
--------------------------------------------------------------------------------
35
--------------------------------------------------------------------------------
The Purisima Funds
--------------------------------------------------------------------------------
SEMI-ANNUAL REPORT (UNAUDITED)
FEBRUARY 29, 2012
The Purisima All-Purpose Fund
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
A Letter to Our Shareholders 1
Expense Example 2
Schedule of Investments 4
Sector Breakdown 5
Statement of Assets and Liabilities 6
Statement of Operations 7
Statement of Changes in Net Assets 8
Financial Highlights 9
Notes to Financial Statements 10
Other Information 18
Trustees and Officer Information 22
Privacy Notice 24
A LETTER TO OUR SHAREHOLDERS
Welcome to the annual report for the Purisima All-Purpose Fund for the 6-month
period ending February 29, 2012. 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,
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. 02/12
1
IMPORTANT INFORMATION
The following disclosure provides important information regarding the Fund's
Expense Example. Please refer to this information when reviewing the Expense
Example for the Fund.
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs; and (2) ongoing costs, including management fees; and other fund
expenses. This Example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period indicated and held for the entire period from September 1, 2011 to
February 29, 2012 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.
2
EXPENSE EXAMPLE (UNAUDITED)
PURISIMA ALL-PURPOSE FUND ACTUAL HYPOTHETICAL PERFORMANCE
(Inception date: 11/01/2005) PERFORMANCE (5% RETURN BEFORE EXPENSES)
--------------------------------------------------------------------------------
Beginning Account Value (09/01/11) $1,000.00 $1,000.00
Ending Account Value (02/29/12) $992.90 $1,017.40
Expenses Paid During Period (1) $7.43 $7.52
--------------------------------------------------------------------------------
(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 182/365 (to reflect the one-half year period).
3
PURISIMA ALL-PURPOSE FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 2012 (UNAUDITED)
PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
U.S. NOTES - 61.5%
30,000 Treasury Notes 1.125%, 12/15/2012 $ 30,226
---------
TOTAL U.S. TREASURY NOTES
(Cost $30,239) 30,226
---------
SHARES VALUE
--------------------------------------------------------------------------------
MUTUAL FUNDS - 29.7%
14,575 SEI Daily Income Trust Government Fund 14,575
---------
TOTAL MUTUAL FUNDS
(Cost $14,575) 14,575
---------
TOTAL INVESTMENTS
(Cost $44,814) - 91.2% 44,801
Other Assets in Excess of Liabilities - 8.8% 4,334
---------
TOTAL NET ASSETS - 100% $ 49,135
=========
4
SECTOR BREAKDOWN(1) (UNAUDITED)
PURISIMA ALL-PURPOSE FUND
--------------------------------------------------------------------------------
U.S. Treasury Obligations 67.5%
Mutual Funds 32.5%
--------------------------------------------------------------------------------
Total 100.0%
(1) Percentage of Total Investments as of February 29, 2012
5
PURISIMA ALL-PURPOSE FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2012 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at cost $44,814
=======
Investments in securities, at value $44,801
Dividends and interest receivable 71
Due from Adviser (Note 3) 12,014
Prepaid expenses 10,969
-------
Total Assets 67,855
-------
LIABILITIES
Accrued administration fees (Note 3) 6,576
Accrued audit fees 5,949
Accrued transfer agent fees 2,486
Other accrued expenses 3,709
-------
Total Liabilities 18,720
-------
NET ASSETS $49,135
=======
Number of shares issued and outstanding
(unlimited shares authorized, $0.01 par value) 5,041
=======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE $ 9.75
=======
COMPONENTS OF NET ASSETS
Paid-in capital $50,497
Accumulated net investment loss (1,350)
Accumulated net realized gain on investments 1
Net unrealized appreciation/depreciation on investments (13)
-------
Net assets $49,135
=======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
6
PURISIMA ALL-PURPOSE FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2012 (UNAUDITED)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income $ 29
--------
Total investment income 29
--------
EXPENSES:
Administration fees 19,746
Fund accounting fees 19,173
Trustees' fees 11,157
Registration fees 12,154
Transfer agent fees 7,491
Audit fees 5,949
Reports to shareholders 1,861
Custody fees 1,496
Miscellaneous 299
Advisory fees 245
Legal fees 4
--------
Total expenses 79,575
Less: Expenses waived and reimbursed by Adviser (Note 3) (79,207)
--------
Net expenses 368
--------
NET INVESTMENT LOSS (339)
--------
UNREALIZED LOSS ON INVESTMENTS
Change in net unrealized appreciation/depreciation on investments (29)
--------
Net unrealized loss on investments (29)
--------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (368)
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
PURISIMA ALL-PURPOSE FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 29, AUGUST 31,
2012 2011
------------ ----------
(UNAUDITED)
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment loss $ (339) $ (526)
Change in net unrealized appreciation/depreciation
on investments (29) (129)
-------- --------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (368) (655)
-------- --------
DISTRIBUTION TO SHAREHOLDERS
From net investment income -- --
From net realized gains from investments -- --
-------- --------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS -- --
-------- --------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from
net change in outstanding shares (a) -- --
-------- --------
TOTAL DECREASE IN NET ASSETS (368) (655)
-------- --------
NET ASSETS
Beginning of period 49,503 50,158
-------- --------
END OF PERIOD $ 49,135 $ 49,503
======== ========
Undistributed net investment income (loss) $ (1,350) $ (1,011)
======== ========
(a) A summary of capital share transactions is as follows:
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2012 AUGUST 31, 2011
----------------- ---------------
SHARES VALUE SHARES VALUE
------- ------- ------- -------
Shares sold 7 $ 70 -- $ --
Shares issued on reinvestment
of distributions -- -- 0 0
Shares redeemed (7) (70) -- --
------- ------- ------- -------
Net increase -- $ -- 0 $ --
======= ======= ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8
PURISIMA ALL-PURPOSE FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS SEMI-ANNUAL REPORT.
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
FEBRUARY 29, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
2012++ 2011 2010 2009 2008 2007
---------------------------------------------------------------------
Net asset value,
beginning of period $ 9.82 $ 9.95 $10.19 $10.27 $10.47 $10.50
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.07) (0.10) (0.10) 0.19 0.46 0.69
Net realized and unrealized gain
(loss) on investments (0.01) (0.03) -- 0.08 (0.03) 0.04
------ ------ ------ ------ ------ ------
Total income (loss)
from investment operations (0.08) (0.13) (0.10) 0.27 0.43 0.73
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income 0.00 0.00 (0.14) (0.35) (0.63) (0.76)
From net realized gain
on investments -- -- -- -*** -- --
------ ------ ------ ------ ------ ------
Total distributions -- -- (0.14) (0.35) (0.63) (0.76)
------ ------ ------ ------ ------ ------
Net asset value, end of period $ 9.74 $ 9.82 $ 9.95 $10.19 $10.27 $10.47
====== ====== ====== ====== ====== ======
Total return (0.71%)** (1.31%) (0.96%) 2.71% 4.31% 7.27%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 49.1 $ 49.5 $ 50.2 $ 50.7 $ 29.5 $ 28.3
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived 323.48%* 304.53% 294.12% 357.92% 500.20% 545.57%
After fees waived 1.50%* 1.50% 1.50% 1.50% 1.50% 1.50%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS # (1.38%)* (1.06%) (0.96%) 2.28% 4.44% 6.66%
Portfolio turnover rate 0.00%** 0.00% 0.00% 0.00% 0.00% 0.00%
-------
# Net of fees waived.
* Annualized.
** Not annualized.
*** Amount represents less than $0.01 per share.
++ Unaudited
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
PURISIMA ALL-PURPOSE FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 2012
NOTE 1 - ORGANIZATION
The Purisima Funds (the "Trust") was organized as a Delaware statutory trust on
June 27, 1996 and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company issuing
its shares in a series. Each series represents a distinct portfolio with its own
investment objectives and policies. The accompanying financial statements
include the Purisima All-Purpose Fund (the "Fund"), a non-diversified fund which
commenced operations on November 1, 2005. The Fund is one of the two portfolios
comprising the Trust. Fisher Asset Management, LLC (doing business as Fisher
Investments) (the "Adviser") serves as the investment adviser to the Fund.
The investment objective of the Purisima All-Purpose Fund is as follows:
The Fund seeks to provide protection against declines in the value of the U.S.
and foreign equity markets. It invests in derivative securities, money market
instruments and other securities, including U.S. and foreign common stocks, and
fixed income securities. From its inception through February 29, 2012, the Fund
has invested exclusively in money-market instruments.
For the six months ended February 29, 2012, the All Purpose Fund invested 32.5%
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 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
10
PURISIMA ALL-PURPOSE FUND
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's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency translation gains and losses arise from changes in
the value of assets and liabilities, other than investments in
securities, resulting from changes in the exchange rates.
C. FEDERAL INCOME AND EXCISE TAXES. The Fund has elected to be taxed as a
"regulated investment company" and intends to distribute substantially
all taxable income to its shareholders and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. Therefore, no federal income or excise tax
provision is required.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, the Fund intends to declare each year as
dividends in each calendar year at least 98% of its net investment
income (earned during the calendar year) and 98% of its net realized
capital gains (earned during the twelve months ended October 31) plus
undistributed amounts, if any, from prior years.
The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be
recoverable. The Fund will accrue such taxes and recoveries as
applicable based upon its current interpretations of the tax rules and
regulation that exist in the markets in which it invests.
The Fund recognizes the tax benefits of uncertain tax positions only
where the position is "more likely then not" to be sustained assuming
examination by tax authorities. Management has analyzed the Fund's tax
positions, and has concluded that no liability for unrecognized tax
benefits should be recorded related to uncertain tax positions taken
on
11
PURISIMA ALL-PURPOSE FUND
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 February 29, 2012, the Fund had no
options outstanding.
H. SECURITIES SOLD SHORT. To the extent the Fund engages in selling
securities short, they are
12
PURISIMA ALL-PURPOSE FUND
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 six
months ended February 29, 2012, the Fund paid the Adviser $245.
As of February 29, 2012, the Adviser has reimbursed the Fund $79,207 to limit
its total expenses to not more than 1.50% of the average daily net assets.
At February 29, 2012 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:
13
PURISIMA ALL-PURPOSE FUND
Fund August 31, August 31, August 31, August 31,
2012 2013 2014 2015
--------------------------------------------------------------------------------
All-Purpose Fund $ 148,806 $ 147,529 $ 151,032 $ 79,207
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. In its capacity as the Fund's Administrator,
USBFS provides general fund management including corporate secretarial services,
coordinates the preparation of materials for the Board of Trustees, assists with
the annual audit of the Fund's financial statements, monitors the Fund's
compliance with federal and state regulations as well as investment
restrictions, coordinates the payment of Fund expenses and monitors expense
accruals, prepares financial statements and non-investment related statistical
data and makes required tax reporting calculations. During the six month ended
February 29, 2012, the Fund paid USBFS $19,746 for services rendered in its
capacity as the Fund's Administrator.
Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A. and USBFS, serves as
principal underwriter of the Fund and acts as the Fund's distributor, pursuant
to a Distribution Agreement with the Trust, in a continuous public offering of
the Fund's shares.
NOTE 4 - SERVICE AND DISTRIBUTION PLAN
The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, the Fund is authorized to pay
expenses incurred for the purpose of distribution activities, including the
engagement of other dealers, intended to result in the sale of shares of the
Fund. The fee accrues at an annual rate not to exceed 0.25% of the Fund's
average daily net assets. For the six months ended February 29, 2012, the Fund
did not utilize the Plan.
NOTE 5 - INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of securities, excluding
short-term investments, for the six months ended February 29, 2012, were as
follows:
FUND PURCHASES SALES
----------------------------------------------------------------------
Purisima All-Purpose Fund $0 $0
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
On January 21, 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2010-06, Improving Disclosures about
Fair Value Measurements. ASU No. 201006 amends FASB Accounting Standards
Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures,
(formerly FASB Statement No. 157), to require additional disclosures regarding
fair value measurements. Specifically, the amendment requires reporting entities
to disclose: i) the input and valuation techniques used to measure fair value
for both recurring and nonrecurring fair value measurements, for Level 2 or
Level 3 positions; ii) transfers between all levels (including Level 1 and Level
2) will be required to be disclosed on a gross basis (i.e. transfers out must be
disclosed separately from transfers in) as well as the reason(s) for the
transfers; and iii) purchases, sales, issuances and
14
PURISIMA ALL-PURPOSE FUND
from transfers in) as well as the reason(s) for the transfers; and iii)
purchases, sales, issuances and settlements must be shown on a gross basis in
the Level 3 rollforward rather than as one net number.
The effective date of this guidance is for interim and annual periods beginning
after December 15, 2009; however, the requirement to provide the Level 3
activity for purchases, sales, issuances and settlements on a gross basis will
be effective for interim and annual periods beginning after December 15, 2010.
The Funds have disclosed the applicable requirements of this accounting standard
in their financial statements.
The Funds follow a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Funds' own market
assumptions (unobservable inputs). These inputs are used in determining the
value of each
Fund's investments and are summarized in the following fair value hierarchy:
Level 1 - Quoted prices in active markets for identical securities
Level 2 - Evaluated prices based on other significant observable inputs
(including quoted prices for similar securities, foreign security
indices, foreign exchange rates, fair value estimates for foreign
securities and changes in benchmark securities indices).
Level 3 - Significant unobservable inputs (including the Fund's own
assumptions in determining fair value of investments)
The availability of observable inputs can vary from security to security and is
affected by a wide variety of factors, including, for example, the type of
security, whether the security is new and not yet established in the
marketplace, the liquidity of markets, and other characteristics particular to
the security. To the extent that valuation is based on models or inputs that are
less observable or unobservable in the market, the determination of fair value
requires more judgment. Accordingly, the degree of judgment exercised in
determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair
value hierarchy. In such cases, for disclosure purpose, the level in the fair
value hierarchy within which the fair value measurement falls in its entirety,
is determined based on the lowest level input that is significant to the fair
value measurement in its entirety.
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. The
following tables summarize the inputs used as of February 29, 2012 for the
Fund's assets and liabilities measured at fair value:
15
PURISIMA ALL-PURPOSE FUND
Description Level 1 Level 2 Level 3 Total
--------------------------------------------------------------------------------
Fixed Income
U.S. Treasury Notes $ -- $ 30,266 $ -- $ 30,266
--------------------------------------------------------------------------------
Total Fixed Income -- 30,266 -- 30,266
Short-Term
Investments 14,575 -- -- 14,575
--------------------------------------------------------------------------------
Total Investments
in Securities $ 14,575 $ 30,266 $ -- $ 44,801
--------------------------------------------------------------------------------
There were no significant transfers between level 1 & 2 during the period as
compared to their classification in the previous annual report. The Fund did not
hold any level 3 securities during the six months ended February 29, 2012.
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 Fund's most recent fiscal year end, 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 gains $ --
--------
Total accumulated earnings $ 16
========
The tax character of distributions paid during the six months ended February 29,
2012 and the fiscal year ended August 31, 2011 were as follows:
Ordinary Income Long Term Capital Gains
Purisima All-Purpose Fund
2/29/2012 -- --
8/31/2011 -- --
16
PURISIMA ALL-PURPOSE FUND
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 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.
NOTE 9 - NEW ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB issued ASU No. 2011-04 "Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements" in GAAP and the International
Financial Reporting Standards ("IFRSs"). ASU No. 2011-04 amends FASB ASC Topic
820, Fair Value Measurements and Disclosures, to establish common requirements
for measuring fair value and for disclosing information about fair value
measurements in accordance with GAAP and IFRSs. ASU No. 2011-04 is effective for
fiscal years beginning after December 15, 2011 and for interim periods within
those fiscal years. Management is currently evaluating the impact of these
amendments and does not believe they will have a material impact on the
Company's financial statements.
17
OTHER INFORMATION - ALL PURPOSE FUND
BOARD CONSIDERATION OF AND CONTINUATION OF INVESTMENT ADVISORY AGREEMENT
(UNAUDITED)
On October 20, 2011, the Board of Trustees performed its annual review and
renewal of the Investment Management Agreement for the All Purpose Fund for the
one-year period commencing November 1, 2011. The Board of Trustees, including
the Independent Trustees, took into consideration information provided at the
meeting, as well as a wide variety of materials relating to the services
provided by the Adviser. Extensive information was provided to the Board in
response to a detailed request for information sent to the Adviser by legal
counsel to the Fund. That information included reports on the financial
condition of the Adviser, the services, operations and personnel of the Adviser,
compliance procedures, investment performance, brokerage and portfolio
transactions, distribution and marketing plans and other information relating to
the nature, extent and quality of services provided by the Adviser to the Fund.
In addition, the Board discussed and reviewed information regarding the Fund's
investment results, as well as advisory fee and expense comparisons. The Board's
Independent Trustees met separately to discuss the various factors summarized
below.
In deciding to renew the Agreement, the Board of Trustees did not identify any
single factor or particular information that, in isolation, was the controlling
factor. This summary describes the most important, but not all, of the factors
considered by the Board.
The Board recognized that the Fund has engaged in only minimal investment
activities since its inception because its primary use has been reserved as an
investment when the Adviser takes a defensive posture with respect to the
securities markets. To date, the Fund has remained invested in U.S. Treasury
securities and cash, with only an executive officer of the Adviser as its
shareholder.
1. NATURE, EXTENT AND QUALITY OF SERVICES
THE ADVISER, ITS PERSONNEL AND ITS RESOURCES. The Board considered the depth and
quality of the Adviser's investment management process, including its
sophisticated methodology; the experience, capability and integrity of its
senior management and other personnel, especially the Adviser's Investment
Policy Committee and personnel who directly support the Fund; the low turnover
rates of its key personnel; and the overall financial strength and stability of
its organization. The Board discussed the quality of the services provided by
the Adviser and noted that the quarterly report from the Adviser was extremely
sophisticated and thorough. The Board commented on the high quality of the
independent capital markets research conducted by the Adviser and reported to
the Board on a regular basis. The Board's consensus was that the Adviser was
open about its thinking on the management of the Fund and very available to
address any questions or concerns the Board may have from time to time. The
Board also considered that the Adviser made available to its investment
professionals a variety of resources and systems relating to investment
management, compliance, trading, performance and portfolio accounting. The Board
further considered the Adviser's continuing need to attract and retain qualified
personnel and to maintain and enhance its resources and systems. The Board also
18
observed that there had been no decline in the quality of services provided to
the Fund despite the growth of the Adviser's other client business and the
continued DE MINIMIS size of the Fund.
OTHER SERVICES. The Board considered the Adviser's policies, procedures and
systems to ensure compliance with applicable laws and regulations and its
commitment to these programs; its efforts to keep the Trustees informed; and its
attention to matters that may involve conflicts of interest with the Fund.
The Board concluded that the nature, extent and quality of the services provided
by the Adviser has benefited and should continue to benefit the Fund and its
shareholders, especially upon its broader use under the circumstances
contemplated by the Adviser.
2. INVESTMENT PERFORMANCE
The Board considered the Fund's pursuit of its investment objective and the
investment results of the Fund in light of its objective. The Trustees compared
the Fund's total returns with a peer group of mutual funds objectively compiled
using data from Morningstar, Inc., and noted the favorable performance of the
Fund during various periods compared to those peer averages.
The Board recognized that the Fund's proposed defensive posture has not yet been
implemented and the peer group funds, referred to as specialty equity funds,
would serve as a better comparison at that time.
The Board concluded that the Adviser's performance record in managing the Fund
indicates that its continued management has benefited and should continue to
benefit the Fund and its shareholders.
3. ADVISORY FEES AND TOTAL EXPENSES
The Board reviewed the advisory fees and total expenses of the Fund and compared
such amounts with the average fee and expense levels of other funds in an
applicable group of peer funds compiled using data from Morningstar, Inc. The
Board observed that the Fund's advisory fees and total expenses were reasonable
compared to the median fee and expense levels of the comparable funds in the
indices (meaning at or below the median). The Board noted that the Adviser had
waived (and its continuing to waive) significant fees in respect of the Fund to
maintain an overall expense limitation, thus indicating a substantial investment
by the Adviser in that Fund. The Board concluded that the reasonable level of
the fees charged by the Adviser benefits the Fund and its shareholders. The
Board then considered the fees charged to the Fund compared to the Adviser's
private clients, but agreed it was not an applicable comparison given the unique
nature of the fund and the extra burden of administration, public reporting,
compliance, deadlines, risk and regulations associated with the Fund that do not
apply to the private accounts. The Board determined that the respective peer
groups provided a better comparison and it found the Fund's fees reasonable.
4. ADVISER, COSTS, LEVEL OF PROFITS AND ECONOMIES OF SCALE
The Board discussed the Adviser's costs of providing services to the Fund, as
well as the resulting level of profits to the Adviser. The Board noted the
substantial subsidy by the Adviser
19
to maintain the Fund's contractual expense level. The Board considered the
Adviser's need to invest in technology, infrastructure and staff to reinforce
and offer new services and to accommodate changing regulatory requirements. The
Trustees noted that at its present asset size, breakpoints in the Fund's
advisory fee structure were not practicable, and that no economies of scale
applied. The Board concluded that the Fund's cost structure is reasonable.
5. ANCILLARY BENEFITS
The Board considered a variety of other benefits received by the Adviser,
including possible ancillary benefits to itself or its institutional management
business. The Board noted that the Adviser does not use third-party soft dollar
products from trades by the Fund, and noted that the small relative size of the
Fund compared to the Adviser's other business would suggest minimal possible
fallout benefits.
6. CONCLUSIONS
Based on its review, including consideration of each of the factors referred to
above, the Board concluded that the Agreement is fair and reasonable to the Fund
and its shareholders, that the Fund's shareholders received, and should receive,
reasonable value in return for the advisory fees paid to the Adviser by the
Fund, and that the renewal of the Agreement was in the best interests of the
Fund and its shareholders.
20
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.
21
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 2010. 2 None
Woodside, CA 94062
Grover T. Wickersham Trustee 1996 Attorney in private practice in Palo Alto, 2 None
(born 1949) California. Prior to entering private practice in
13100 Skyline Blvd. June of 1981, served as a Branch Chief of the
Woodside, CA 94062 Los Angeles Regional Office of the U.S.
Securities and Exchange Commission.
Tom Fishel Chief 2005 Vice President and Chief Compliance Officer of N/A None
(born 1960) Compliance the Adviser. Vice President of Charles Schwab
13100 Skyline Blvd. Officer & Co., Inc. from 1995 to 2004, where he had
Woodside, CA 94062 been employed since 1983.
Katherine Taylor Treasurer 2006 Group Vice President of Finance and Treasurer N/A None
(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.
22
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 leagal 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
frim 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.
23
--------------------------------------------------------------------------------
FACTS WHAT DOES THE PURISIMA FUNDS DO
WITH YOUR PERSONAL INFORMATION?
--------------------------------------------------------------------------------
WHY? Financial companies choose how
they share your personal
information. Federal law gives
consumers the right to limit some
but not all sharing. Federal law
also requires us to tell you how
we collect, share, and protect
your personal information. Please
read this notice carefully to
understand what we do.
--------------------------------------------------------------------------------
WHAT? The types of personal information
we collect and share depend on
the product or service you have
with us. This information can
include:
o Social Security number and
payment history
o Account balances and account
transactions
o Assets and transaction history
When you are no longer our
customer, we continue to share
your information as described in
this notice.
--------------------------------------------------------------------------------
HOW? All financial companies need to
share customers' personal
information to run their everyday
business. In the section below,
we list the reasons financial
companies can share their
customers' personal information;
the reasons The Purisima Funds
chooses to share; and whether you
can limit this sharing.
--------------------------------------------------------------------------------
DOES THE PURISIMA CAN YOU LIMIT THIS
REASONS WE CAN SHARE FUNDS SHARE? SHARING?
YOUR PERSONAL
INFORMATION
--------------------------------------------------------------------------------
FOR OUR EVERYDAY Yes No
BUSINESS PURPOSES -such
as to process your
transactions, maintain
your account(s), respond
to court orders and
legal investigations, or
report to credit bureaus
--------------------------------------------------------------------------------
FOR OUR MARKETING Yes No
PURPOSES - to offer our
products and services to
you
--------------------------------------------------------------------------------
FOR JOINT MARKETING WITH No No
OTHER FINANCIAL
COMPANIES
--------------------------------------------------------------------------------
FOR OUR AFFILIATES' Yes No
EVERYDAY BUSINESS
PURPOSES -information
about your transactions
and experiences
--------------------------------------------------------------------------------
FOR OUR AFFILIATES' No No
EVERYDAY BUSINESS
PURPOSES -information
about your
creditworthiness
--------------------------------------------------------------------------------
FOR NONAFFILIATES TO No No
MARKET TO YOU
--------------------------------------------------------------------------------
QUESTIONS? Call 1-800-550-1071
24
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WHO WE ARE
Who is providing this notice? The Purisima Funds
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WHAT WE DO
--------------------------------------------------------------------------------
How does The Purisima Funds To protect your personal information from
protect my personal information? unauthorized access and use, we use
security measures that comply with federal
law. These measures include computer
safeguards and secured files and
buildings.
--------------------------------------------------------------------------------
How does The Purisima Funds collect We collect your personal information, for
my personal information? example, when you
o Open an account
o Provide account information
o Make deposits or withdrawals from
your account
o Use your credit or debit card
o Make a wire transfer
We also collect your personal information
from others, such as credit bureaus,
affiliates, or other companies.
--------------------------------------------------------------------------------
Why can't I limit all sharing? Federal law gives you the right to limit
only
Sharing for affiliates' everyday
business purposes-information
about your creditworthiness
Affiliates from using your
information to market to you
Sharing for nonaffiliates to market to you
State laws and individual companies may
give you additional rights to limit
sharing.
--------------------------------------------------------------------------------
DEFINITIONS
--------------------------------------------------------------------------------
AFFILIATES Companies related by common ownership or
control. They can be financial and
nonfinancial companies.
--------------------------------------------------------------------------------
NONAFFILIATES Companies not related by common ownership
or control. They can be financial and
nonfinancial companies.
o THE PURISIMA FUNDS does not share
with nonaffiliates so they can
market to you.
--------------------------------------------------------------------------------
JOINT MARKETING A formal agreement between nonaffiliated
financial companies that together market
financial products or services to you.
o THE PURISIMA FUNDS does not
jointly market.
--------------------------------------------------------------------------------
OTHER IMPORTANT INFORMATION
--------------------------------------------------------------------------------
This privacy notice applies to individual consumers who are customers or former
customers. This privacy notice replaces all previous notices of our consumer
privacy policy, and may be amended at any time. We will keep you informed of
changes or amendments as required by law.
--------------------------------------------------------------------------------
25
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ITEM 2. CODE OF ETHICS.
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to registrants who are not listed issuers (as defined in Rule
10A-3 under the Securities Exchange Act of 1934).
ITEM 6. INVESTMENTS.
(a) Schedule of Investments is included as part of the report to shareholders
filed under Item 1 of this Form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's President and Treasurer have reviewed the Registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as of a date within 90 days of
the filing of this report, as required by Rule 30a-3(b) under the Act and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934.
Based on their review, such officers have concluded that the disclosure
controls and procedures are effective in ensuring that information required
to be disclosed in this report is appropriately recorded, processed,
summarized and reported and made known to them by others within the
Registrant and by the Registrant's service provider.
(b) There were no changes in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Any code of ethics or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy Item 2 requirements through filing an exhibit. 1) Incorporated by
reference to the Registrant's Form N-CSR filed November 10, 2003.
(2) A separate certification for each principal executive and principal
financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the registrant to 10 or more persons. Not applicable to open-end
investment companies.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
The Purisima Funds
By /s/ KENNETH L. FISHER
----------------------------
Kenneth L. Fisher, President
Date 4/25/12
-------
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 4/25/12
--------
By /S/ KATHERINE TAYLOR
---------------------------
Katherine Taylor, Treasurer
Date 4/25/12
-------