-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RalBWGT1Y0M0UrNrNBNssT6Bkqadrntw0Mk1bXgxGTtCrzH6RmYfX4ywM2RlWUSR PfDgDtYbQkgFf+l2kOfO1g== 0000909012-09-001345.txt : 20091109 0000909012-09-001345.hdr.sgml : 20091109 20091109140334 ACCESSION NUMBER: 0000909012-09-001345 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20090831 FILED AS OF DATE: 20091109 DATE AS OF CHANGE: 20091109 EFFECTIVENESS DATE: 20091109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PURISIMA FUNDS CENTRAL INDEX KEY: 0001019946 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07737 FILM NUMBER: 091167656 BUSINESS ADDRESS: STREET 1: C/O FISHER INVESTMENTS STREET 2: 13100 SKYLINE BLVD CITY: WOODSIDE STATE: CA ZIP: 94062 BUSINESS PHONE: 650-851-3334 MAIL ADDRESS: STREET 1: C/O FISHER INVESTMENTS STREET 2: 13100 SKYLINE BLVD CITY: WOODSIDE STATE: CA ZIP: 94062 0001019946 S000005935 The Purisima Total Return Fund C000016365 The Purisima Total Return Fund PURIX 0001019946 S000005936 The Purisima All-Purpose Fund C000016366 The Purisima All-Purpose Fund PURLX N-CSR 1 t305659.txt As filed with the Securities and Exchange Commission on November 9, 2009 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07737 THE PURISIMA FUNDS ------------------ (Exact name of registrant as specified in charter) 13100 SKYLINE BLVD. WOODSIDE, CALIFORNIA 94062 -------------------------- (Address of principal executive offices) (Zip code) U. S. BANCORP FUND SERVICES, LLC 2020 EAST FINANCIAL WAY, SUITE 100 GLENDORA, CALIFORNIA 91741 -------------------------- (Name and address of agent for service) (650) 851-3334 -------------- Registrant's telephone number, including area code Date of fiscal year end: AUGUST 31 --------- Date of reporting period: AUGUST 31, 2009 --------------- ITEM 1. REPORTS TO STOCKHOLDERS. THE PURISIMA FUNDS Annual Report August 31, 2009 The Purisima Total Return Fund [LOGO]-------------------------------------------------------------------------- TABLE OF CONTENTS A Letter to Our Shareholders 2 Performance Summary 5 Sector Breakdown 6 Expense Example 6 Schedule of Investments 8 Statement of Assets and Liabilities 15 Statement of Operations 16 Statement of Changes in Net Assets 17 Financial Highlights 18 Notes to Financial Statements 19 Report of Independent Registered Public Accounting Firm 27 Other Information 28 Trustees and Officer Information 30 Privacy Notice 34 - --------------------------------------------------------------------------[LOGO] INVESTMENT OBJECTIVES PURISIMA TOTAL RETURN FUND Seeks to provide investors with a high level of total return by considering both domestic and foreign securities. EACH FUND RESERVES THE RIGHT TO REJECT ANY ORDER FOR THE PURCHASE OF ITS SHARES OR TO LIMIT OR SUSPEND, WITHOUT PRIOR NOTICE, THE OFFERING OF ITS SHARES. THE REQUIRED MINIMUM INVESTMENTS MAY BE WAIVED IN THE CASE OF CERTAIN QUALIFIED RETIREMENT PLANS. THE FUNDS WILL NOT ACCEPT YOUR ACCOUNT IF YOU ARE INVESTING FOR ANOTHER PERSON AS ATTORNEY-IN-FACT. THE FUNDS ALSO WILL NOT ACCEPT ACCOUNTS WITH A "POWER OF ATTORNEY" IN THE REGISTRATION SECTION OF THE PURCHASE APPLICATION. 1 [LOGO]-------------------------------------------------------------------------- A LETTER TO OUR SHAREHOLDERS Welcome to the annual report for the Purisima Total Return Fund for the 12-month period ending August 31, 2009. The primary investment objective of the Fund is achieving high total return for shareholders. MARKET REVIEW AND OUTLOOK Global equities finished the period down, with the MSCI World Index falling - -17.21%. Although the year was disappointing, recent market activity has been much more encouraging. Looking forward, we believe remaining fully invested in equities is the proper portfolio positioning. In our view, March 9, 2009 marked the beginning of a new bull market. From the March 9th low through August, global markets climbed nearly 60%. However, market recovery won't be a smooth path upward. Minor pullbacks are quite normal parts of a larger upward trend. In many ways, the rally since March 9th has unfolded in typical new bull market fashion. The initial bounce off the bottom of a bear market is usually exceptionally strong, and the sectors and regions beaten down most in the final stages of the bear generally lead in the bull's beginning. Financials, Materials, Industrials, Information Technology, and Consumer Discretionary--the hardest hit sectors at the tail end of this bear market--have indeed performed best during the upswing. Similarly, Emerging Markets stocks have outpaced developed markets by a wide margin thus far during the recovery. Although economies show signs of improvement globally, economic data have been far from stellar. But a rising market does not require strong economic data--markets discount future conditions, not backward-looking economic releases. Thus, we expect stocks to continue moving higher in the second half of the year--albeit with volatility and pullbacks along the way--as eventual economic recovery becomes reflected in share prices, even if official data remain weak for some time. Global monetary and fiscal stimulus continues to grow and is bullish. Yet massive amounts of already approved fiscal stimulus have yet to be deployed. The US, for instance, has disbursed only a fraction of its $787 billion stimulus plan by some accounts. China's similarly huge stimulus package has been put to work more quickly and efficiently, which bodes well for China leading the world out of recession. Capital markets are demonstrating encouraging signs of normality. Global credit markets have eased considerably from last year's severe dysfunction. Many interbank lending rates have dropped to their lowest levels on record, credit spreads have narrowed, and firms with strong credit ratings are issuing debt at or below pre-crisis interest rates. Among pessimists' many concerns is massive money creation worldwide will soon lead to explosive inflation. In our view, higher inflation won't become an actionable risk for at least a couple years, and even then, a problematic inflation level is far from inevitable. Today, central bankers are rightly providing liquidity in an effort to stave off deflationary forces and bolster financial institution balance sheets. Inflation is highly unlikely until a more robust economic recovery causes money velocity to reaccelerate and manufacturing and labor capacity to be more fully utilized. Then will be the time to closely monitor central banks' monetary "exit strategy," but no sooner. 2 - --------------------------------------------------------------------------[LOGO] FUND POSITIONING Recession is retreating in many areas of the world. In particular, emerging markets look poised to resume robust growth and will likely drive global expansion going forward. As investors increasingly gain faith in the economic recovery, we expect stocks to continue to benefit. Thus, we remain fully invested in equities in an attempt to capture expected stock market gains. For the 12-month period ending August 31, 2009, the Fund slightly underperformed the MSCI World Index benchmark, returning -17.37%. In aggregate, country positioning benefited return relative to the benchmark. The Fund's underweight to the US and overweights to Switzerland and Germany helped portfolio returns, while underweights to the UK and Sweden detracted from returns. Sector positioning also had a slight positive impact on relative returns. The Fund's overweight to Telecommunication Services and Information Technology contributed positively to returns. An underweight to Utilities also helped returns. Underweights to Financials and Consumer Discretionary and an overweight to Industrials detracted from returns. Stock selection in aggregate detracted from the Fund's returns. Stock selection in Financials, Consumer Staples, and Health Care boosted returns, while stock selection in Energy, Industrials, and Materials hurt returns. CLOSING REMARKS Although we are highly encouraged by recent market activity, the recovery will not be without volatility. Nevertheless, we think remaining positioned for what we anticipate will be an overall positive market is the best course ahead. Thank you for your continued interest and support. Sincerely, /S/ KENNETH L. FISHER - --------------------- Kenneth L. Fisher Chairman and Chief Investment Officer Fisher Investments OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY OR SELL ANY SECURITY. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 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. 3 [LOGO]-------------------------------------------------------------------------- SMALL- AND MEDIUM-CAPITALIZATION COMPANIES TEND TO HAVE LIMITED LIQUIDITY AND GREATER PRICE VOLATILITY THAN LARGE CAPITALIZATION COMPANIES. GROWTH STOCKS TYPICALLY ARE MORE VOLATILE THAN VALUE STOCKS; HOWEVER, VALUE STOCKS HAVE A LOWER EXPECTED GROWTH RATE IN EARNINGS AND SALES. INVESTMENTS IN DEBT SECURITIES TYPICALLY DECREASE IN VALUE WHEN INTEREST RATES RISE. THIS RISK IS GREATER FOR LONGER-TERM DEBT SECURITIES. The MSCI World Index is a broad-based unmanaged capitalization-weighted stock index designed to measure global developed market equity performance. It consists of 23 developed market country indices. One cannot invest directly in an index. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS. FISHER INVESTMENTS IS THE ADVISER TO THE PURISIMA FUNDS. THE PURISIMA FUNDS ARE DISTRIBUTED BY QUASAR DISTRIBUTORS, LLC 09/09 4 - --------------------------------------------------------------------------[LOGO] PERFORMANCE SUMMARY FOR YEAR ENDED AUGUST 31, 2009 PURISIMA TOTAL RETURN FUND GROWTH OF $10,000 PURISIMA TOTAL RETURN FUND CUMULATIVE TOTAL RETURN VERSUS MSCI WORLD INDEX $10,000 INVESTED FROM 9/1/99 TO 8/31/09* [The following table was represented as a line chart in the printed material.] Total MSCI World Return Index ------ ----- 9/1/1999 10,000 10,000 2/29/2000 10,971 10,936 8/31/2000 11,264 11,312 2/28/2001 10,841 9,374 2/28/2002 11,198 8,031 8/31/2002 9,256 6,989 2/28/2003 8,216 6,377 8/31/2003 10,202 7,752 2/29/2004 11,774 9,206 8/31/2004 11,091 8,963 2/28/2005 12,542 10,309 8/31/2005 12,777 10,586 2/28/2006 14,282 11,675 8/31/2006 14,636 12,255 2/28/2007 15,709 13,527 8/31/2007 16,924 14,335 2/29/2008 16,197 13,455 8/31/2008 14,936 12,605 2/28/2009 8,139 7,115 8/31/2009 12,342 10,435 PURISIMA TOTAL RETURN FUND ONE-YEAR Average Annual Total Return(2)** -17.37% FIVE-YEAR Average Annual Total Return(2)** 2.16% TEN-YEAR Cumulative Total Return(1)** 23.42% Average Annual Total Return(2)** 2.13% MSCI WORLD INDEX* ONE-YEAR Average Annual Total Return(2)** -17.21% FIVE-YEAR Average Annual Total Return(2)** 3.09% TEN-YEAR Cumulative Total Return(1)** 4.35% Average Annual Total Return(2)** 0.43% PLEASE NOTE PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. SHARE PRICE AND RETURN WILL FLUCTUATE, AND INVESTORS MAY EXPERIENCE A GAIN OR LOSS WHEN THEY SELL THEIR SHARES. TO OBTAIN A PROSPECTUS ON THE PURISIMA FUNDS PLEASE CALL 1-800-841-0199. THE PROSPECTUS CONTAINS MORE INFORMATION, INCLUDING THE POLITICAL, ECONOMIC, CURRENCY RISKS AND POTENTIAL VOLATILITY OF FOREIGN INVESTING. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. (1) Cumulative total return measures the change in value of an investment over the periods indicated and reflects all fund fees and expenses. (2) Average annual total return represents the average annual change in value of an investment over the periods indicated and reflects all fund fees and expenses. Average annual total return and cumulative total return for the one-year period would be identical. * The MSCI World Index is an unmanaged global stock index comprised of various world stock markets, including the U.S. The total return of a $10,000 investment includes all expenses. ** The total returns shown do not reflect the deduction of taxes a shareholder would pay on fund distributions or redemption of fund shares. The total return reflects the rate an investment would have earned (or lost) on an investment in the Fund, assuming reinvestment of all dividends and distributions. 5 [LOGO]-------------------------------------------------------------------------- SECTOR BREAKDOWN(1) (UNAUDITED) PURISIMA TOTAL RETURN FUND - -------------------------------------------------------------------------------- Energy 15.5% Information Technology 15.4% Industrials 13.3% Financials 13.2% Materials 12.6% Consumer Discretionary 11.0% Consumer Staples 6.6% Health Care 5.8% Telecommunication Services 3.8% Utilities 1.8% Mutual Fund 1.0% - -------------------------------------------------------------------------------- Total 100.0% - ---------- (1) Percentage of Total Investments as of August 31, 2009. IMPORTANT INFORMATION The following disclosure provides important information regarding the Fund's Expense Example. Please refer to this information when reviewing the Expense Example for the Fund. EXPENSE EXAMPLE (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period indicated and held for the entire period from March 1, 2009 to August 31, 2009 for the Total Return Fund. ACTUAL EXPENSES The information in the table under the heading "Actual Performance" provides information about actual account values and actual expenses. You may use the information in these columns together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the row entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. 6 - --------------------------------------------------------------------------[LOGO] HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The information in the table under the heading "Hypothetical Performance (5% return before expenses)" provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratios and assumed rates of return of 5% per year before expenses, which are not the Fund's actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads), or redemption fees. Therefore, the information under the heading "Hypothetical Performance (5% return before expenses)" is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. ACTUAL HYPOTHETICAL PERFORMANCE PURISIMA TOTAL RETURN FUND PERFORMANCE (5% RETURN BEFORE EXPENSES) - -------------------------------------------------------------------------------- Beginning Account Value (03/01/09) $ 1,000.00 $ 1,000.00 Ending Account Value (08/31/09) $ 1,516.30 $ 1,017.64 Expenses Paid During Period(1) $ 9.51 $ 7.63 - -------------------------------------------------------------------------------- - ---------- (1) Expenses are equal to the Fund's expense ratio for the six month period of 1.50% for the Total Return Fund multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). 7 [LOGO]-------------------------------------------------------------------------- PURISIMA TOTAL RETURN FUND SCHEDULE OF INVESTMENTS AUGUST 31, 2009 SHARES OR PRINCIPAL VALUE VALUE - -------------------------------------------------------------------------------- COMMON STOCKS: 98.6% AUSTRALIA: 1.7% 101,000 BHP Billiton, Ltd. - ADR $ 6,292,300 ------------- BRAZIL: 3.7% 10,800 Banco Bradesco SA 175,068 5,527 Companhia Energetica de Minas Gerais - ADR 80,749 15,300 Companhia Siderurgica Nacional SA - ADR 399,177 11,000 Empresa Brasileira de Aeronautica SA 233,640 (Embraer) - ADR 15,500 Gafisa SA 224,601 25,800 Gerdau SA - ADR 303,150 184,700 Petroleo Brasileiro SA - ADR 7,321,508 230,900 Vale SA - ADR 4,435,589 40,200 Weg SA 332,743 ------------- 13,506,225 ------------- CANADA: 1.0% 72,500 EnCana Corporation 3,769,275 ------------- CHINA: 2.9% 450 Baidu.com - ADR (a) 148,527 138,500 China Cosco Holdings Company, Ltd. 167,799 3,400 China Life Insurance Company, Ltd. - ADR 215,424 174,200 China Mobile Hong Kong, Ltd. - ADR 8,574,124 162,000 China Oilfield Services, Ltd. 141,507 3,450 China Petroleum & Chemical Corporation - 289,627 ADR 2,600 CNOOC, Ltd. - ADR 339,690 366,000 Industrial & Commercial Bank Of China, Ltd. 249,810 46,400 Weichai Power Company, Ltd. 206,543 ------------- 10,333,051 ------------- CZECH REPUBLIC: 0.0% 1,500 Cez AS 78,350 ------------- FINLAND: 1.2% 296,400 Nokia Oyj - ADR 4,152,564 ------------- 8 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - --------------------------------------------------------------------------[LOGO] SHARES OR PRINCIPAL VALUE VALUE - -------------------------------------------------------------------------------- FRANCE: 4.0% 25,700 AXA $ 585,079 173,550 AXA - ADR 3,969,089 46,708 BNP Paribas SA 3,761,201 104,708 Total SA - ADR 5,996,627 ------------- 14,311,996 ------------- GERMANY: 6.2% 139,400 BASF AG - ADR 7,282,256 17,600 E.ON AG 744,582 129,900 E.ON AG - ADR 5,501,265 100,900 Siemens AG - ADR 8,762,156 ------------- 22,290,259 ------------- HONG KONG: 0.9% 283,800 Cheung Kong Holdings, Ltd. - ADR 3,363,030 ------------- INDIA: 0.2% 1,600 HDFC Bank, Ltd. - ADR 157,616 5,400 ICICI Bank, Ltd. - ADR 164,808 1,800 Reliance Industries, Ltd. - GDR 144A (a) 153,000 11,100 Sterlite Industries India, Ltd. - ADR (a) 148,629 ------------- 624,053 ------------- INDONESIA: 0.3% 264,500 Bank Rakyat Tbk PT 199,425 964,400 Bumi Resources Tbk PT 277,456 385,000 International Nickel Indonesia Tbk PT (a) 161,372 456,500 Medco Energi Internasional Tbk PT 132,466 5,600 Telekomunikasi Indonesia Tbk PT - ADR 182,168 ------------- 952,887 ------------- ISRAEL: 0.1% 4,900 Teva Pharmaceutical Industries, Ltd. - ADR 252,350 ------------- ITALY: 1.0% 141,532 Intesa Sanpaolo SpA - ADR (a) 3,683,314 ------------- JAPAN: 5.4% 156,700 Honda Motor Company, Ltd. - ADR 4,909,411 454,200 Mitsubishi UFJ Financial Group, Incorporated 2,879,628 - ADR 283,800 Nomura Holdings, Incorporated 2,510,128 260,900 Panasonic Corporation - ADR 4,156,137 86,200 Sony Corporation 2,329,855 57,500 Sumitomo Mitsui Financial Group, 2,477,969 Incorporated 48,400 Sumitomo Mitsui Financial Group, Incorporated - ADR (a) 206,184 ------------- 19,469,312 ------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 9 [LOGO]-------------------------------------------------------------------------- SHARES OR PRINCIPAL VALUE VALUE - -------------------------------------------------------------------------------- MALAYSIA: 0.1% 52,200 CIMB Group Holdings BHD $ 147,491 106,000 Genting BHD 201,073 226,600 MMC Corporation BHD 151,217 ------------- 499,781 ------------- MEXICO: 1.5% 99,500 America Movil SA de CV - ADR 4,492,425 221,308 Grupo Mexico SA de CV 320,670 17,700 Industrias Penoles SA de CV 274,495 6,000 Wal-Mart De Mexico SA de CV - ADR 211,500 ------------- 5,299,090 ------------- NETHERLANDS: 2.9% 197,827 ING Groep NV - ADR 2,981,253 264,400 Unilever NV - ADR 7,384,692 ------------- 10,365,945 ------------- NORWAY: 0.0% 0 Statoil ASA 5 ------------- PHILIPPINES: 0.1% 3,100 Philippine Long Distance Telephone - ADR 159,495 ------------- POLAND: 0.1% 1,900 Bank Pekao SA - GDR 97,107 900 Bre Bank SA (a) 78,722 2,800 KGHM Polska Miedz SA - GDR 167,815 ------------- 343,644 ------------- RUSSIAN FEDERATION: 0.1% 3,000 LUKOIL - ADR 147,750 11,300 OAO Gazprom - Sponsored ADR 238,272 ------------- 386,022 ------------- SOUTH AFRICA: 0.2% 3,400 Anglo Platinum, Ltd. - ADR (a) 301,716 10,300 MTN Group Ltd. 168,809 5,500 Sasol, Ltd. - ADR 207,845 ------------- 678,370 ------------- SOUTH KOREA: 0.7% 7,000 Daewoo Securities Company, Ltd. 128,633 4,700 Daewoo Shipbuilding & Marine Engineering Company, Ltd. - GDR 150,391 2,800 Hyundai Dept Store 214,333 1,400 Hyundai Heavy Industries Company, Ltd. 213,548 2,800 KB Financial Group, Incorporated - 114,156 ADR (a) 800 Lotte Shopping Company 182,240 10 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - --------------------------------------------------------------------------[LOGO] SHARES OR PRINCIPAL VALUE VALUE - -------------------------------------------------------------------------------- SOUTH KOREA: 0.7% (CONTINUED) 3,425 POSCO - ADR $ 313,250 1,250 Samsung Electronics Company, Ltd. - 384,586 GDR 144A 900 Samsung Fire & Marine Insurance Company 161,422 2,500 Samsung Securities Company, Ltd. 149,732 1,800 Shinhan Financial Group Company, Ltd. - ADR 117,576 3,600 SK Energy Company, Ltd. 289,695 2,400 Woori Finance Holdings Company, Ltd. - 80,448 ADR (a) 7,500 Woori Investment & Securities Company, Ltd. 105,092 ------------- 2,605,102 ------------- SPAIN: 2.1% 495,675 Banco Santander Central Hispano SA - ADR 7,648,265 ------------- SWITZERLAND: 9.7% 321,800 Abb, Ltd - ADR 6,168,906 166,800 Credit Suisse Group - ADR 8,488,452 168,050 Nestle SA 6,979,733 48,400 Roche Holding AG 7,692,624 44,306 Transocean, Ltd (a) 3,360,167 133,833 UBS AG (a) 2,451,811 ------------- 35,141,693 ------------- TAIWAN: 0.3% 35,480 Advanced Semiconductor Engineering, Incorporated - ADR 124,180 23,246 Asustek Computer Incorporated - GDR 185,041 46,519 Hon Hai Precision - GDR 316,327 20,342 Siliconware Precision Industries, Ltd - ADR 128,155 43,735 Taiwan Semiconductor Manufacturing Company, Ltd. - ADR 467,964 ------------- 1,221,667 ------------- TURKEY: 0.0% 6,800 Turkcell Iletisim Hizmet AS - ADR 109,548 ------------- UNITED KINGDOM: 2.7% 13,003 Anglo American Plc 427,810 170,000 Anglo American Plc - ADR 2,752,300 74,350 GlaxoSmithKline Plc - ADR 2,907,085 24,625 Rio Tinto Plc - ADR 3,820,815 ------------- 9,908,010 ------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 11 [LOGO]-------------------------------------------------------------------------- SHARES OR PRINCIPAL VALUE VALUE - -------------------------------------------------------------------------------- UNITED STATES: 49.5% 147,150 Anadarko Petroleum Corporation $ 7,779,820 343,000 Applied Materials, Incorporated 4,520,740 139,200 Carnival Corporation 4,071,600 120,500 Caterpillar, Incorporated 5,459,855 394,000 Cisco Systems, Incorporated (a) 8,510,400 155,500 Coach, Incorporated 4,399,095 104,700 ConocoPhillips 4,714,641 72,000 Devon Energy Corporation 4,419,360 119,500 Dover Corporation 4,133,505 221,700 Electronic Arts, Incorporated (a) 4,039,374 352,550 EMC Corporation (a) 5,605,545 133,000 Fortune Brands, Incorporated 5,294,730 125,300 Freeport-McMoRan Copper & Gold, 7,891,394 Incorporated 238,850 General Electric Company 3,320,015 151,900 Hewlett-Packard Company 6,818,791 89,900 Honeywell International, Incorporated 3,304,724 330,700 Intel Corporation 6,719,824 94,000 Johnson & Johnson 5,681,360 131,200 Merck & Co., Incorporated 4,254,816 269,600 Microsoft Corporation 6,645,640 209,200 Nordstrom, Incorporated 5,865,968 102,700 Nucor Corporation 4,574,258 131,700 Occidental Petroleum Corporation 9,627,270 336,400 Oracle Corporation 7,357,068 129,500 PACCAR, Incorporated 4,684,015 99,200 PPG Industries, Incorporated 5,495,680 69,225 Procter & Gamble Company 3,745,765 121,300 Schlumberger Ltd. 6,817,060 85,900 Target Corporation 4,037,300 24,766 Time Warner Cable, Incorporated 914,361 98,666 Time Warner, Incorporated 2,753,768 78,400 Union Pacific Corporation 4,689,104 92,900 United Technologies Corporation 5,514,544 100,900 Wal-Mart Stores, Incorporated 5,132,783 ------------- 178,794,173 ------------- TOTAL COMMON STOCKS (Cost $366,976,792) 356,239,776 ------------- 12 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - --------------------------------------------------------------------------[LOGO] SHARES OR PRINCIPAL VALUE VALUE - -------------------------------------------------------------------------------- PREFERRED STOCKS: 0.4% BRAZIL: 0.4% 3,100 Companhia de Bebidas das Americas (AmBev) - ADR $ 231,167 27,225 Itau Unibanco Holding SA - ADR 456,019 34,000 Lojas Americanas SA 202,950 27,100 Vale SA - ADR 466,391 ------------- 1,356,527 ------------- TOTAL PREFERRED STOCKS (Cost $1,396,559) 1,356,527 ------------- MUTUAL FUNDS: 0.9% 3,543,764 SEI Daily Income Trust Government Fund 3,543,764 ------------- TOTAL MUTUAL FUNDS (Cost $3,543,764) 3,543,764 ------------- TOTAL INVESTMENTS (Cost $371,917,115): 99.9% 361,140,067 Other Assets in Excess of Liabilities: 0.1% 243,161 ------------- TOTAL NET ASSETS: 100.0% $ 361,383,228 ============= - ------------- ADR - American depositary receipt. GDR - Global Depository Receipt. (a) Non Income Producing. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 13 [LOGO]-------------------------------------------------------------------------- INDUSTRY % OF NET ASSETS - -------------------------------------------------------------------------------- Oil, Gas & Consumable Fuels 12.6% Metals & Mining 9.1% Commercial Banks 6.3% Pharmaceuticals 5.8% Software 5.0% Machinery 4.2% Food Products 4.0% Capital Markets 3.8% Wireless Telecommunication Services 3.7% Chemicals 3.5% Communications Equipment 3.5% Computers & Peripherals 3.5% Industrial Conglomerates 3.4% Semiconductors & Semiconductor Equipment 3.4% Household Durables 3.3% Multiline Retail 2.9% Energy Equipment & Services 2.9% Aerospace & Defense 2.5% Electric Utilities 1.8% Electrical Equipment 1.7% Food & Staples Retailing 1.5% Insurance 1.4% Automobiles 1.4% Road & Rail 1.3% Textiles, Apparel & Luxury Goods 1.2% Hotels, Restaurants & Leisure 1.2% Household Products 1.0% Media 1.0% Real Estate Management & Development 0.9% Diversified Financial Services 0.8% Electronic Equipment & Instruments 0.2% Beverages 0.1% Diversified Telecommunication Services 0.1% Marine 0.0% Internet Software & Services 0.0% ------ TOTAL INVESTMENT IN SECURITIES 99.0% Cash Equivalent 0.9% Other Assets in Excess of Liabilities 0.1% ------ TOTAL NET ASSETS 100.0% ====== 14 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - --------------------------------------------------------------------------[LOGO] PURISIMA TOTAL RETURN FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 2009 ASSETS Investments at value (cost $371,917,115) $ 361,140,067 ============= Cash 12,968 Receivables: Interest and dividends 759,569 Fund shares sold 205,703 Prepaid expenses 15,500 ------------- Total Assets 362,133,807 ------------- LIABILITIES Payable for fund shares redeemed 63,228 Payable to the adviser (Note 3) 333,451 Accrued distribution fees (Note 4) 198,333 Accrued fund administration, fund accounting, transfer agent and custody fees 98,996 Accrued expenses 56,571 ------------- Total Liabilities 750,579 ------------- NET ASSETS $ 361,383,228 ============= Number of shares issued and outstanding (unlimited shares authorized, $0.01 par value) 22,248,130 NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 16.24 ============= COMPONENTS OF NET ASSETS Paid-in capital 396,545,618 Undistributed net investment income 3,797,914 Accumulated net realized loss on investments (28,187,965) Net unrealized depreciation on investments (10,777,048) Net unrealized appreciation on foreign currency 4,709 ------------- NET ASSETS $ 361,383,228 ============= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 15 [LOGO]-------------------------------------------------------------------------- PURISIMA TOTAL RETURN FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2009 INVESTMENT INCOME Dividend income(1) $ 8,845,612 Interest income 29,275 ------------ Total Investment Income 8,874,887 ------------ EXPENSES Investment advisory fees (Note 3) 3,094,624 Distribution fees (Note 4) 661,923 Administration fees (Note 3) 254,121 Transfer agent fees 225,545 Fund accounting fees 103,100 Miscellaneous expenses 101,893 Custody fees 94,925 Registration fees 32,858 Audit fees 31,890 Reports to shareholders 29,545 Legal fees 26,786 Trustees fees 21,569 Interest expense 251 ------------ Total expenses before waiver and reimbursement 4,679,030 Waiver and reimbursement of expenses by adviser (Note 3) (36,690) ------------ Net expenses 4,642,340 ------------ NET INVESTMENT INCOME 4,232,547 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments (27,858,277) Net realized gain on foreign currency translation 19,636 Change in net unrealized appreciation/depreciation on (59,951,134) investments Change in net unrealized appreciation/depreciation on 7,326 ------------ foreign currency Net Realized and Unrealized Loss on Investments (87,782,449) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(83,549,902) ============ - ------------ (1) Net of $775,856 in foreign withholding taxes. 16 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - --------------------------------------------------------------------------[LOGO] PURISIMA TOTAL RETURN FUND STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED AUGUST 31, 2009 AUGUST 31, 2008 --------------- --------------- OPERATIONS Net investment income $ 4,232,547 $ 2,923,870 Net realized gain (loss) on investments and foreign currency translation (27,838,641) 22,275,073 Change in net unrealized appreciation/ depreciation on investments (59,951,134) (84,190,652) Change in net unrealized appreciation/ depreciation on foreign currency 7,326 (2,617) ------------- ------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (83,549,902) (58,994,326) ------------- ------------- DISTRIBUTION TO SHAREHOLDERS From net investment income (2,541,948) (1,298,261) From net realized gain on investments (6,295,704) (34,522,389) ------------- ------------- NET DECREASE IN NET ASSETS RESULTING FROM DISTRIBUTIONS PAID (8,837,652) (35,820,650) ------------- ------------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold 45,738,924 118,169,093 Proceeds from reinvestment of distributions 8,228,346 33,170,091 Cost of shares redeemed (55,808,714) (66,635,964) ------------- ------------- NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS (1,841,444) 84,703,220 ------------- ------------- TOTAL DECREASE IN NET ASSETS (94,228,998) (10,111,756) ------------- ------------- NET ASSETS Beginning of year 455,612,226 465,723,982 ------------- ------------- End of year (includes undistributed net investment income of $3,797,914 and $2,083,758 respectively) $ 361,383,228 $ 455,612,226 ============= ============= CHANGE IN CAPITAL SHARES Shares outstanding, beginning of year 22,500,371 18,784,710 ------------- ------------- Shares sold 3,274,955 5,193,681 Shares issued on reinvestment of 620,071 1,428,514 distributions Shares repurchased (4,147,267) (2,906,534) ------------- ------------- Net increase (decrease) in capital shares (252,241) 3,715,661 ------------- ------------- Shares Outstanding, end of year 22,248,130 22,500,371 ============= ============= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 17 [LOGO]-------------------------------------------------------------------------- PURISIMA TOTAL RETURN FUND FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH YEAR. The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Annual Report.
YEAR ENDED AUGUST 31, ------------------------------------------------------------------- 2009 2008 2007 2006 2005 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of year $ 20.25 $ 24.79 $ 21.51 $ 19.03 $ 16.58 ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.19 0.15 0.09 0.04 0.10 Net realized and unrealized gain (loss) on investments (3.79) (2.82) 3.27 2.72 2.42 ---------- ---------- ---------- ---------- ---------- Total from investment operations (3.60) (2.67) 3.36 2.76 2.52 ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS: From net investment income (0.12) (0.07) (0.08) (0.28) (0.07) From net realized gain (0.29) (1.80) -- -- -- ---------- ---------- ---------- ---------- ---------- Total distributions (0.41) (1.87) (0.08) (0.28) (0.07) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 16.24 $ 20.25 $ 24.79 $ 21.51 $ 19.03 ========== ========== ========== ========== ========== Total return (17.37%) (11.75%) 15.63% 14.54% 15.20% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (millions) $ 361.4 $ 455.6 $ 465.7 $ 387.3 $ 325.4 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived and expenses absorbed or recouped 1.51% 1.41% 1.39% 1.49% 1.46% After fees waived and expenses absorbed or recouped 1.50% 1.41% 1.39% 1.49% 1.49% RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS # 1.37% 0.61% 0.37% 0.21% 0.52% Portfolio turnover rate 22.04% 62.96% 16.38% 43.47% 16.68%
- ---------- # Net of fees waived. 18 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. - --------------------------------------------------------------------------[LOGO] PURISIMA TOTAL RETURN FUND NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2009 NOTE 1 - ORGANIZATION The Purisima Funds (the "Trust") was organized as a Delaware statutory trust on June 27, 1996 and is registered under the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end management investment company issuing its shares in series. Each series represents a distinct portfolio with its own investment objectives and policies. The accompanying financial statements include the Total Return Fund (the "Fund"), which commenced operations on October 28, 1996, one of the two portfolios comprising the Trust. Fisher Asset Management, LLC (doing business as Fisher Investments) (the "Adviser") serves as the investment adviser to the Funds. The investment objective of the Total Return Fund is as follows: The Fund seeks a high total return. The Fund seeks to achieve its objective by investing in a portfolio allocated between domestic and foreign common stocks, fixed-income securities, money market instruments and other equity-type securities. The Fund's investments in different types of securities may vary significantly. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America. A. SECURITY VALUATION. Investments in securities traded on a national securities exchange are valued at the last sales price on the business day as of which such value is being determined. If on a particular day, an exchange-listed security does not trade, then the mean between the bid and asked prices will be used. Foreign exchange traded equity securities are valued based upon the price on the exchange or market on which they trade as of the close of business of such market or exchange immediately preceding the time the Fund's net asset value is determined. Investments in securities traded on the NASDAQ Global Market, the NASDAQ Global Select Market and the NASDAQ Capital Market will be valued at the NASDAQ Official Closing Price ("NOCP"), which may not necessarily represent the last sale price. Securities traded on an exchange or NASDAQ for which there have been no sales and other over-the-counter securities are valued at the closing price. Securities for which quotations are not readily available are valued 19 [LOGO]-------------------------------------------------------------------------- at their respective fair values as determined in good faith by the Board of Trustees or their designee, taking into consideration: (I) fundamental analytical data relating to the investment; (II) the nature and duration of restrictions on disposition of the securities; and (III) an evaluation of the forces which influence the market in which these securities are purchased and sold. Debt securities with remaining maturities of 60 days or less are valued at amortized cost which, when combined with accrued interest, approximates market value. The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("SFAS 157"), effective with the beginning of the Portfolio's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. See Note 6 - Fair Value of Financial Instruments for further disclosure. 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. 20 - --------------------------------------------------------------------------[LOGO] The Fund recognizes the tax benefits of uncertain tax positions only where the position is "more likely then not" to be sustained assuming examination by tax authorities. Management has analyzed the Fund's tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2006 - 2008), or expected to be taken in the Fund's 2009 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. 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. In preparing these financial statements, the Trust has evaluated events and transactions for potential recognition or disclosure through October 30, 2009, the date the financial statements were available to be issued. 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. 21 [LOGO]-------------------------------------------------------------------------- H. RECLASSIFICATION OF CAPITAL ACCOUNTS. Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent difference be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the year ended August 31, 2009, the Total Return Fund increased accumulated undistributed net investment income by $23,557, and increased accumulated net realized loss on investments by $23,557. I. INDEMNIFICATION OBLIGATIONS. Under the Fund's organizational documents, its current and former officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred or that would be covered by other parties. J. LINE OF CREDIT. The Fund has a Loan Agreement with U.S. Bank N.A. Under the terms of the Loan Agreement, the Fund's borrowings cannot exceed the lesser of $8,000,000 or 33 1/3% of the net assets of the Fund. The interest rate paid on the Loan equals the prime rate per annum, payable monthly. Borrowing activity under the Loan Agreement for the year ended August 31, 2009, was as follows: MAXIMUM AMOUNT AVERAGE AVERAGE AMOUNT INTEREST OUTSTANDING AT AMOUNT INTEREST OUTSTANDING EXPENSE AUGUST 31, 2009 OUTSTANDING RATE - ----------- ------- --------------- ----------- ---- $ 748,000 $ 251 $ 0 $ 8,918 2.750% K. ACCOUNTING FOR DERIVATIVES. In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161") was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity's results of operation and financial position. Because the Fund holds no derivative positions, the adoption of SFAS 161 had no impact on the Fund's financial statement. 22 - --------------------------------------------------------------------------[LOGO] NOTE 3 - COMMITMENTS, OTHER RELATED PARTY TRANSACTIONS AND OTHER SERVICE PROVIDERS The Fund has an Investment Management Agreement with the Adviser to provide investment advisory services to the Fund. The Adviser furnishes all investment advice, office space, facilities, and most of the personnel needed by the Fund. As compensation for its services, the Adviser is entitled to a monthly fee at the annual rate of 1.00% of the Fund's average daily net assets. The Fund is responsible for its own operating expenses. The Adviser has contractually agreed to limit the Fund's total expenses (exclusive of brokerage, interest, taxes, dividends on securities sold short and extraordinary expenses) to not more than 1.50% of the average daily net assets. Any fee withheld or voluntarily reduced and/or any Fund expense absorbed by the Adviser pursuant to an agreed upon expense cap shall be reimbursed by the Fund to the Adviser, if so requested by the Adviser, anytime before the end of the third fiscal year following the year to which the fee reduction, waiver, or expense absorption relates, provided the aggregate amount of the Fund's current operating expenses for such fiscal year does not exceed the applicable limitation on Fund expenses. Any such reimbursement is also contingent upon Board of Trustees review and approval prior to the time the reimbursement is initiated. The Fund must pay its current ordinary operating expenses before the Adviser is entitled to any reimbursement of fees and/or expenses. For the year ended August 31, 2009, the Adviser waived fees of $36,690. U.S. Bank, N.A. serves as the Fund's Custodian. U.S. Bancorp Fund Services, LLC ("USBFS"), an affiliate of U.S. Bank, N.A., serves as the Administrator, Fund Accountant and Transfer Agent. Certain officers of the Trust, including the Trust's Treasurer, are employees of the Administrator. In its capacity as the Fund's Administrator, USBFS provides general fund management including corporate secretarial services, coordinates the preparation of materials for the Board of Trustees, assists with the annual audit of the Fund's financial statements, monitors the Fund's compliance with federal and state regulations as well as investment restrictions, coordinates the payment of Fund expenses and monitors expense accruals, prepares financial statements and non-investment related statistical data and makes required tax reporting calculations. During the year ended August 31, 2009, Purisima Total Return Fund paid USBFS $254,121 for services rendered in its capacity as the Trust's Administrator. Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as principal underwriter of the Fund and acts as the Fund's distributor in a continuous public offering of the Fund's shares. NOTE 4 - SERVICE AND DISTRIBUTION PLAN The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Total Return Fund is authorized to pay expenses incurred for the purpose of financing activities, including the employment of other dealers, intended to result in the sale of shares of the Fund. The fee accrues at an annual rate not to exceed 0.25% of the Fund's average daily net assets. For the year ended August 31, 2009, the Fund 23 [LOGO]------------------------------------------------------------------------- incurred $661,923 in distribution fees. Quasar Distributors, LLC, an affiliate of the Administrator, serves as distributor of the Fund pursuant to a Distribution Agreement with the Trust. NOTE 5 - INVESTMENT TRANSACTIONS The cost of purchases and the proceeds from sales of securities, excluding U.S. Government securities and short-term investments, for the year ended August 31, 2009 were as follows: FUND PURCHASES SALES ---- --------- ----- Total Return Fund $69,810,605 $74,876,824 NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS The Trust has adopted authoritative fair valuation accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion in changes in valuation techniques and related inputs during the period. These inputs are summarized in the three board levels listed below. The Trust has performed an analysis of all existing investments to determine the significance and character of all inputs to their fair value determination. Level 1 - Quoted unadjusted prices for identical instruments in active markets to which the Trust has access at the date of measurement. Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers. Level 3 - Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Trust's own assumptions that market participants would use to price the asset or liability based on the best available information. The following table provides the fair value measurements of applicable Fund assets by level within the fair value hierarchy for each Fund as of August 31, 2009. These assets are measured on a recurring basis. 24 - -------------------------------------------------------------------------[LOGO]
LEVEL 1 -- LEVEL 2 -- LEVEL 3 -- QUOTED PRICES SIGNIFICANT SIGNIFICANT IN ACTIVE MARKETS OTHER OBSERVABLE UNOBSERVABLE DESCRIPTIION TOTAL FOR IDENTICAL ASSETS INPUTS INPUTS - ------------------------------------------------------------------------------------------------------- EQUITY Capital Good $ 42,850,134 $ 42,699,743 $ 150,391 $ -- Consumer Discretionary 39,710,904 39,543,089 167,815 -- Consumer Staples 23,685,640 23,685,640 -- -- Energy 55,987,618 55,987,618 -- -- Financials 47,925,668 47,828,561 97,107 -- Health Care 20,788,235 20,788,235 -- -- Information Technology 56,124,726 55,939,685 185,041 -- Materials 45,574,959 45,574,959 -- -- Telecommunication Services 13,686,569 13,686,569 -- -- Transportation 4,856,903 4,856,903 -- -- Utilities 6,404,947 6,404,947 -- -- - ------------------------------------------------------------------------------------------------------- TOTAL EQUITY $357,596,303 $356,995,949 $ 600,354 $ -- SHORT-TERM INVESTMENTS $ 3,543,764 $ 3,543,764 $ -- $ -- - ------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN $361,140,067 $360,539,713 $ 600,354 $ -- SECURITIES - ------------------------------------------------------------------------------------------------------- OTHER FINANCIAL INSTRUMENTS* $ -- $ -- $ -- $ -- - -------------------------------------------------------------------------------------------------------
* Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards, swaps contracts, and written options. Futures, forwards, and swap contracts are valued at the unrealized appreciation (depreciation) on the instrument while written options are valued at market value. NOTE 7 - FEDERAL INCOME TAX MATTERS The difference between the book and tax basis components of the distributable earnings relate principally to the timing of recognition of income and gains for federal income tax purposes. These differences are primarily attributable to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains on passive foreign investment companies and return of capital distributions and income adjustments recognized for tax purposes on real estate investment trusts. Short-term gains distributions reported in the Statements of Changes of Net Assets, if any, are reported as ordinary income for federal tax purposes. As of August 31, 2009, the components of distributable earnings on a tax basis were as follows: TOTAL RETURN ---------------- Cost of investments for tax purposes $ 372,208,861 ================ Gross tax unrealized appreciation $ 52,536,526 Gross tax unrealized depreciation (63,605,320) ---------------- Net tax unrealized depreciation (11,068,794) ---------------- Undistributed ordinary income 3,797,914 Undistributed Long Term Capital Gains 175,283 ---------------- Total distributable earnings 3,973,197 ---------------- Other accumulated loss (28,066,793) ---------------- Total accumulated loss $ (35,162,390) ================ 25 [LOGO]-------------------------------------------------------------------------- Under current tax law, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. At August 31, 2009, the Fund deferred, on a tax basis, $28,071,502 of Post-October losses. The tax composition of dividends are as follows: ORDINARY LONG TERM INCOME CAPITAL GAINS ------ ------------- Total Return Fund 8/31/2009 $2,541,948 $ 6,295,704 8/31/2008 $1,298,261 $34,522,389 The Fund designated $6,295,704 as long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(3). 26 The accompanying notes are an integral part of these financial statements. - ------------------------------------------------------------------------- [LOGO] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE SHAREHOLDERS AND BOARD OF TRUSTEES THE PURISIMA FUNDS WOODSIDE, CALIFORNIA We have audited the accompanying statement of assets and liabilities of the Purisima Total Return Fund, a series of The Purisima Funds (the "Trust"), including the schedule of investments as of August 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2009, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly in all material respects, the financial position of the Purisima Total Return Fund as of August 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. TAIT, WELLER & BAKER LLP Philadelphia, Pennsylvania October 30, 2009 27 [LOGO]-------------------------------------------------------------------------- PURISIMA TOTAL RETURN FUND OTHER INFORMATION PROXY VOTING PROCEDURES (UNAUDITED) The Adviser votes proxies relating to portfolio securities in accordance with procedures that have been approved by the Trust's Board of Trustees. You may obtain a description of these procedures, free of charge, by calling toll-free 1-800-841-0199. This information is also available through the Securities and Exchange Commission's website at http://www.sec.gov. Information regarding how the Fund voted proxies relating to the portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling toll-free 1-800-841-0199. This information is also available through the Securities and Exchange Commission's website at http://www.sec.gov. FORM N-Q DISCLOSURE (UNAUDITED) The Fund files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters on Form N-Q. The Fund's Form N-Q is available without charge, upon request, by calling 1-800-841-0199. Furthermore, you can obtain the Form N-Q on the SEC's website at www.sec.gov. TAX NOTICE (UNAUDITED) For the fiscal year ended August 31, 2009, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 100% of dividends declared from ordinary income as qualified dividend income. 28 - --------------------------------------------------------------------------[LOGO] (UNAUDITED) The percentage of dividend income distributed for the year ended August 31, 2009 designated as qualified dividends received deduction available to corporate shareholders is 85.65% for the Total Return Fund. For the year ended August 31, 2009, the Total Return Fund earned foreign source income and paid foreign taxes, which they intend to pass through to their shareholders pursuant to Section 853 of the Internal Revenue Code as follows: GROSS DIVIDENDS TAXES WITHHELD --------------- -------------- Australia 188,272.00 -- 0% Brazil 482,560.00 54,688.36 11% Canada 137,739.31 20,660.90 15% China 27,577.63 3,021.74 11% Cayman Islands (13.00) -- Czech 7,579.30 1,136.89 15% France 491,447.92 107,710.72 22% Finland 161,789.05 25,305.74 16% Germany 884,681.62 230,313.01 26% Hong Kong 413,517.44 25,668.43 6% India 3,412.40 21.02 1% Indonesia 26,895.43 4,093.95 15% Italy 4,050.75 607.61 15% Israel 3,255.57 626.92 19% Japan 376,167.85 31,625.32 8% Luxembourg 2,712.51 94.87 3% Malaysia 7,769.19 1,399.59 18% Mexico 55,982.45 -- 0% Netherlands 264,742.89 40,015.55 15% Netherlands Antellies 107,436.00 -- 0% Norway 4,500.00 -- 0% Philippines 24,175.37 3,769.78 16% Poland 20,651.40 3,209.64 16% Republic of Korea 32,376.33 5,250.98 16% South Africa 9,024.80 51.00 1% Spain 756,473.13 127,610.38 17% Russia 10,147.16 1,988.88 20% Switzerland 595,230.43 71,607.21 12% Taiwan 34,872.93 9,944.62 29% Turkey 5,198.22 138.71 3% 29 [LOGO]-------------------------------------------------------------------------- PURISIMA TOTAL RETURN FUND TRUSTEES AND OFFICER INFORMATION (UNAUDITED) The Board of Trustees is responsible for the overall management of the Trust's business. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to it, including all agreements with the Adviser, Administrator, Custodian and Transfer Agent. The Board of Trustees delegates the day-to-day operations of the Trust to its Officers, subject to the Fund's investment objective and policies and to general supervision by the Board of Trustees. The Statement of Additional Information includes additional information about the Trust's Trustees and is available, without charge, by calling 1-800-841-0199. The Trustees and Officers of the Trust, their business addresses and principal occupations during the past five years are: Name, Address, Position(s) Held Date of Birth with Trust Year Elected(1) - -------------------------------------------------------------------------------- Kenneth L. Fisher* (born 1950) President and Trustee 1996 13100 Skyline Blvd. Woodside, CA 94062 - -------------------------------------------------------------------------------- Pierson E. Clair III (born 1948) Trustee 1996 13100 Skyline Blvd. Woodside, CA 94062 - -------------------------------------------------------------------------------- Scott LeFevre (born 1957) Trustee 2001 13100 Skyline Blvd. Woodside, CA 94062 - -------------------------------------------------------------------------------- Alfred D. McKelvy, Jr. (born 1948) Trustee 2003 13100 Skyline Blvd. Woodside, CA 94062: - -------------------------------------------------------------------------------- Bryan F. Morse (born 1952) Trustee 1996 13100 Skyline Blvd. Woodside, CA 94062 - -------------------------------------------------------------------------------- Grover T. Wickersham (born 1949) Trustee 1996 13100 Skyline Blvd. Woodside, CA 94062 30 - --------------------------------------------------------------------------[LOGO] Number of Portfolios in Fund Complex Other Principal Occupation(s) Overseen by Directorships During Past Five Years Director Held - -------------------------------------------------------------------------------- Chief Executive Officer and majority 2 None shareholder of Fisher Investment, Inc., the sole shareholder of the Adviser, and has served in such capacities since the incorporation of the Adviser in 1986. Prior thereto, he was the founder of Fisher Investments, a sole proprietorship which commenced operations in 1979. - -------------------------------------------------------------------------------- President and Chief Executive Officer of 2 Signature Brown & Haley since 1998 (fine confectioners); Foods, Inc. Vice President of Blummer Chocolate Company from 1980 to 1997, where he had been employed since 1970. - -------------------------------------------------------------------------------- Sole proprietor of LeFevre Capital 2 None Management, a registered investment adviser. - -------------------------------------------------------------------------------- Executive Director of the law firm of 2 Bay BOMA; Berding & Weil, LLP since 1990. BOMA California; Heritage Bank (Advisory Board). - -------------------------------------------------------------------------------- Sole proprietor of Bryan F. Morse, RIA, 2 None a registered investment adviser since 1990. - -------------------------------------------------------------------------------- Attorney in private practice in Palo 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 [LOGO]-------------------------------------------------------------------------- Name, Address, Position(s) Held Date of Birth with Trust Year Elected(1) - -------------------------------------------------------------------------------- Tom Fishel (born 1960) Chief 2005 13100 Skyline Blvd. Compliance Woodside, CA 94062 Officer - -------------------------------------------------------------------------------- Keith Shintani (born 1963) Secretary and 2006 2020 East Financial Way Assistant Glendora, CA 91741 Treasurer - -------------------------------------------------------------------------------- Michael Ricks (born 1977) Treasurer 2006 2020 East Financial Way Glendora, CA 91741 - -------------------------------------------------------------------------------- - ----------- (1) Trustees and officers of the Funds serve until their resignation, removal or retirement. * "Interested person" of the Trust, as defined in the 1940 Act. 32 - --------------------------------------------------------------------------[LOGO] Number of Portfolios in Fund Complex Other Principal Occupation(s) Overseen by Directorships During Past Five Years Director Held - -------------------------------------------------------------------------------- Vice President and Chief Compliance Officer of N/A None the Adviser. Vice President of Charles Schwab & Co., Inc. from 1995 to 2004, where he had been employed since 1983. - -------------------------------------------------------------------------------- Vice President of U.S. Bancorp Fund N/A None Services, LLC and its predecessor, Investment Company Administration, LLC since 1998. - -------------------------------------------------------------------------------- Vice President of U.S. Bancorp Fund N/A None Services, LLC since 2001. - -------------------------------------------------------------------------------- 33 [LOGO]-------------------------------------------------------------------------- PRIVACY NOTICE FISHER ASSET MANAGEMENT, LLC (doing business as Fisher Investments) and THE PURISIMA FUNDS collect non-public information about you from the following sources: o Information we receive about you on applications or other forms; o Information you give us orally; and o Information about your transactions with us or others. We are committed to protecting your privacy and your non-public personal information. We do not sell or market your non-public personal information to unaffiliated organizations. We maintain physical, electronic and procedural safeguards to guard your non-public personal information. We hold our employees to strict standards of conduct regarding confidentiality, and employees who violate our Privacy Policy are subject to disciplinary process. We restrict access to your information to those employees who need to know that information to carry out their duties. We do not disclose any non-public personal information about our clients or former clients without the client's authorization, except as permitted by law. We may disclose the non-public information we collect to employees and affiliates, and unaffiliated third parties as permitted by law. Third parties may include law enforcement agencies, government and regulatory authorities, and professionals such as our legal counsel and auditors, and we may disclose information for reasons such as audit purposes, prevention of fraud or money laundering, protection of confidentiality, compliance with laws, and to provide agreed upon products and services to you. Third parties may also include service providers performing financial services for us (such as brokers and custodians) and service providers performing non-financial services for us (such as third parties performing computer related or data maintenance, marketing or other services for us or to assist us in offering our products and services to you). It is our policy to require all third party service providers that will receive information to sign strict confidentiality agreements agreeing to safeguard such information and use it only for the purpose it was provided. 34 This page is intentionally left blank. This page is intentionally left blank. This page is intentionally left blank. THE PURISIMA FUNDS Annual Report August 31, 2009 The Purisima All-Purpose Fund A LETTER TO OUR SHAREHOLDERS Welcome to the annual report for the Purisima All-Purpose Fund for the 12-month period ending August 31, 2009. The Fund seeks to provide protection against declines in the value of the U.S. and foreign equity markets. During the period, the Fund was primarily invested in US government securities. Thank you for your continued interest and support. Sincerely, /s/ KENNETH L. FISHER - --------------------- Kenneth L. Fisher Chairman and Chief Investment Officer Fisher Investments OPINIONS EXPRESSED ABOVE ARE THOSE OF KENNETH L. FISHER AND ARE SUBJECT TO CHANGE, ARE NOT GUARANTEED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY OR SELL ANY SECURITY. FUND HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE AND ARE NOT RECOMMENDATIONS TO BUY OR SELL ANY SECURITY. MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE. THE FUND MAY USE SHORT SALES OF SECURITIES, WHICH INVOLVE THE RISK THAT LOSSES MAY EXCEED THE ORIGINAL AMOUNT INVESTED. THE FUND MAY ALSO USE OPTIONS AND FUTURES CONTRACTS, WHICH HAVE THE RISKS OF UNLIMITED LOSSES OF THE UNDERLYING HOLDINGS DUE TO UNANTICIPATED MARKET MOVEMENTS AND FAILURE TO CORRECTLY PREDICT THE DIRECTION OF SECURITIES PRICES, INTEREST RATES AND CURRENCY EXCHANGE RATES. THE FUND MAY INVEST IN FOREIGN SECURITIES WHICH INVOLVE GREATER VOLATILITY AND POLITICAL, ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN ACCOUNTING METHODS. THE FUND MAY INVEST IN DEBT SECURITIES WHICH TYPICALLY DECREASE IN VALUE WHEN INTEREST RATES RISE. THIS RISK IS GREATER FOR LONGER-TERM DEBT SECURITIES. THE FUND IS NON-DIVERSIFIED, MEANING IT MAY CONCENTRATE ITS ASSETS IN FEWER INDIVIDUAL HOLDINGS THAN A DIVERSIFIED FUND. THEREFORE, THE FUND IS MORE EXPOSED TO INDIVIDUAL STOCK VOLATILITY THAN A DIVERSIFIED FUND. AN INVESTMENT IN THE FUND IS NOT SUITABLE FOR ALL INVESTORS. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS. FISHER INVESTMENTS IS THE ADVISER TO THE PURISIMA FUNDS. THE PURISIMA FUNDS ARE DISTRIBUTED BY QUASAR DISTRIBUTORS, LLC. 09/09 PERFORMANCE SUMMARY FOR YEAR ENDED AUGUST 31, 2009 PURISIMA ALL-PURPOSE FUND GROWTH OF $10,000 PURISIMA ALL-PURPOSE FUND CUMULATIVE TOTAL RETURN VERSES MERRILL LYNCH U.S. TREASURY BILLS 0-3 MONTHS INDEX $10,000 INVESTED FROM FUND INCEPTION ON 11/01/05 TO 8/31/09* [The following table was represented as a line chart in the printed material.] MERRILL LYNCH U.S. TREASURY BILLS PURISIMA ALL-PURPOSE FUND 0-3 MONTHS INDEX ------------------------- ---------------- 11/1/2005 10,000 10,000 11/30/2005 10,020 10,032 12/31/2005 10,049 10,064 1/31/2006 10,100 10,095 2/28/2006 10,160 10,128 3/31/2006 10,220 10,167 4/30/2006 10,281 10,205 5/31/2006 10,351 10,246 6/30/2006 10,421 10,285 7/31/2006 10,492 10,329 8/31/2006 10,562 10,374 9/30/2006 10,623 10,421 10/31/2006 10,683 10,461 11/30/2006 10,743 10,506 12/31/2006 10,800 10,553 1/31/2007 10,865 10,596 2/28/2007 10,908 10,636 3/31/2007 10,973 10,684 4/30/2007 11,027 10,731 5/31/2007 11,103 10,779 6/30/2007 11,168 10,821 7/31/2007 11,232 10,863 8/31/2007 11,330 10,923 9/30/2007 11,352 10,965 10/31/2007 11,416 10,998 11/30/2007 11,481 11,049 12/31/2007 11,530 11,081 1/31/2008 11,657 11,136 2/29/2008 11,692 11,153 3/31/2008 11,726 11,178 4/30/2008 11,738 11,190 5/31/2008 11,749 11,193 6/30/2008 11,772 11,213 7/31/2008 11,807 11,233 8/31/2008 11,818 11,250 9/30/2008 11,841 11,283 10/31/2008 11,864 11,296 11/30/2008 11,956 11,308 12/31/2008 11,996 11,308 1/31/2009 11,948 11,307 2/28/2009 11,936 11,310 3/31/2009 11,948 11,314 4/30/2009 11,936 11,317 5/31/2009 12,175 11,318 6/30/2009 12,151 11,320 7/31/2009 12,139 11,322 8/31/2009 12,139 11,325 PURISIMA ALL-PURPOSE FUND ONE-YEAR Average Annual Total Return(2**) 2.71% SINCE INCEPTION (11/01/2005) Cumulative Total Return(1**) 21.39% Average Annual Total Return(2**) 5.19% MERRILL LYNCH U.S. TREASURY BILLS 0-3 MONTHS INDEX ONE-YEAR Average Annual Total Return(2**) 0.66% SINCE FUND INCEPTION (11/01/2005) Cumulative Total Return(1**) 13.25% Average Annual Total Return(2**) 3.30% PLEASE NOTE PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. SHARE PRICE AND RETURN WILL FLUCTUATE, AND INVESTORS MAY EXPERIENCE A GAIN OR LOSS WHEN THEY SELL THEIR SHARES. TO OBTAIN A PROSPECTUS ON THE PURISIMA FUNDS PLEASE CALL 1-800-841-0199. THE PROSPECTUS CONTAINS MORE INFORMATION, INCLUDING THE POLITICAL, ECONOMIC, CURRENCY RISKS AND POTENTIAL VOLATILITY OF FOREIGN INVESTING. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. 1. Cumulative total return measures the change in value of an investment over the periods indicated and reflects all fund fees and expenses. 2. Average annual total return represents the average annual change in value of an investment over the periods indicated and reflects all fund fees and expenses. Average annual total return and cumulative total return for the one-year period would be identical. * The Merrill Lynch US Treasury Bills 0-3 Months Index is an unmanaged index of Treasury securities that assumes reinvestment of all income. ** The total returns shown do not reflect the deduction of taxes a shareholder would pay on fund distributions or redemption of fund shares. The total return reflects the rate an investment would have earned (or lost) on an investment in the Fund, assuming reinvestment of all dividends and distributions. SECTOR BREAKDOWN(1) (UNAUDITED) PURISIMA ALL-PURPOSE FUND - -------------------------------------------------------------------------------- U.S. Treasury Obligations 67.3% Mutual Funds 32.7% - -------------------------------------------------------------------------------- Total 100.0% (1) Percentage of Total Investments as of August 31, 2009. IMPORTANT INFORMATION The following disclosure provides important information regarding the Fund's Expense Example. Please refer to this information when reviewing the Expense Example for the Fund. EXPENSE EXAMPLE (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees; and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period indicated and held for the entire period from March 1, 2009 to August 31, 2009 for the Purisima All-Purpose Fund. ACTUAL EXPENSES The information in the table under the heading "Actual Performance" provides information about actual account values and actual expenses. You may use the information in these columns together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the row entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The information in the table under the heading "Hypothetical Performance (5% return before expenses)" provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratios and assumed rates of return of 5% per year before expenses, which are not the Fund's actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads), or redemption fees. Therefore, the information under the heading "Hypothetical Performance (5% return before expenses)" is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EXPENSE EXAMPLE (UNAUDITED) PURISIMA ALL-PURPOSE FUND ACUTAL HYPOTHETICAL PERFORMANCE (Inception date: 11/01/2005) PERFORMANCE (5% RETURN BEFORE EXPENSES) - -------------------------------------------------------------------------------- Beginning Account Value (03/01/09) $1,000.00 $1,000.00 Ending Account Value (08/31/09) $1,017.00 $1,017.64 Expenses Paid During Period(1) $7.63 $7.63 - -------------------------------------------------------------------------------- (1) Expenses are equal to the Fund's expense ratio for the four month period of 1.50% for the Purisima All-Purpose Fund multiplied by the average account value over the period, multiplied by 184/365 (to reflect the four month period). PURISIMA ALL-PURPOSE FUND SCHEDULE OF INVESTMENTS AUGUST 31, 2009 PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------- U.S. TREASURY NOTE - 61.1% 10,000 3.500%, 02/15/2010 $ 10,149 10,000 5.125%, 06/30/2011 10,774 10,000 4.000%, 09/30/2009 10,033 --------- TOTAL U.S. TREASURY NOTES (COST $30,788) $ 30,956 --------- SHARES VALUE - -------------------------------------------------------------------------------- MUTUAL FUNDS - 29.7% 15,069 SEI Daily Income Trust Government Fund 15,069 --------- TOTAL MUTUAL FUNDS (COST $15,069) $ 15,069 --------- TOTAL INVESTMENTS (COST $45,857) - 90.8% $ 46,025 Other Assets in Excess of Liabilities - 9.2% 4,640 --------- TOTAL NET ASSETS - 100.0% $ 50,665 ========= PURISIMA ALL-PURPOSE FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 2009 ALL-PURPOSE FUND ------------ ASSETS Investments in securities, at cost $ 45,857 ============ Investments in securities, at value $ 46,025 Receivables: Dividends and interest 275 Due from Adviser (Note 3) 13,446 Prepaid expenses 15,135 ------------ Total Assets 74,881 ------------ LIABILITIES Accrued administration fees (Note 3) 3,066 Accrued transfer agent fees 2,553 Accrued audit fees 12,010 Accrued fund accounting fees 5,098 Accrued reports to shareholders 946 Other accrued expenses 543 ------------ Total Liabilities 24,216 ------------ NET ASSETS $ 50,665 ============ Number of shares issued and outstanding (unlimited shares authorized, $0.01 par value) 4,970 ============ NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 10.19 ============ COMPONENTS OF NET ASSETS Paid-in capital $ 49,785 Accumulated net investment income 712 Net unrealized appreciation on investments 168 ------------ Net assets $ 50,665 ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. PURISIMA ALL-PURPOSE FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2009 ALL-PURPOSE FUND ------------ INVESTMENT INCOME Income Interest $ 1,578 ------------ Total income 1,578 ------------ Expenses Advisory fees 417 Administration fees 40,058 Transfer agent fees 15,064 Fund accounting fees 30,374 Custody fees 3,182 Reports to shareholders 3,435 Registration fees 22,276 Audit fees 12,070 Legal fees 5 Trustee fees 22,057 Miscellaneous 495 ------------ Total expenses 149,433 Less: Expenses waived by Adviser (Note 3) (148,806) ------------ Net expenses 627 ------------ NET INVESTMENT INCOME 951 ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments 7 Change in net unrealized appreciation on investments 168 ------------ Net gain on investments 175 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,126 ============ PURISIMA ALL-PURPOSE FUND STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED INCREASE IN NET ASSETS FROM: AUGUST 31, 2009 AUGUST 31, 2008 --------------- --------------- OPERATIONS Net investment income $ 951 $ 1,289 Net realized gain on investments 7 9 Change in net unrealized appreciation (depreciation) on investments 168 (96) -------- -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,126 1,202 -------- -------- DISTRIBUTION TO SHAREHOLDERS From net investment income (1,006) (1,717) From net realized gains from investments (15) -- -------- -------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (1,021) (1,717) -------- -------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares (a) 21,021 1,717 -------- -------- TOTAL INCREASE IN NET ASSETS 21,126 1,202 -------- -------- NET ASSETS Beginning of period 29,539 28,337 -------- -------- END OF PERIOD $ 50,665 $ 29,539 ======== ======== Undistributed net investment income $ 712 $ 767 ======== ======== (a) A summary of capital share transactions is as follows: YEAR ENDED YEAR ENDED AUGUST 31, 2009 AUGUST 31, 2008 SHARES VALUE SHARES VALUE ------ ------ ------ ----- Shares sold 1,992 $20,000 -- $ -- Shares issued on reinvestment of distributions 101 1,021 172 1,717 Shares redeemed -- -- -- -- Net increase 2,093 $21,021 172 $1,717
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD. THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS ANNUAL REPORT.
PURISIMA ALL-PURPOSE FUND FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED NOVEMBER 1, 2005^ THRU AUGUST 31, 2009 AUGUST 31, 2008 AUGUST 31, 2007 AUGUST 31, 2006 Net asset value, beginning of period $ 10.27 $ 10.47 $ 10.50 $ 10.00 -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.19 0.46 0.69 0.56 Net realized and unrealized gain (loss) on investments 0.08 (0.03) 0.04 -- -------- -------- -------- -------- Total from investment operations 0.27 0.43 0.73 0.56 -------- -------- -------- -------- LESS DISTRIBUTIONS: From net investment income (0.35) (0.63) (0.76) (0.06) From net realized gain --*** -- -- -- -------- -------- -------- -------- Total distributions (0.35) (0.63) (0.76) (0.06) -------- -------- -------- -------- Net asset value, end of period $ 10.19 $ 10.27 $ 10.47 $ 10.50 ======== ======== ======== ======== Total return 2.71% 4.31% 7.27% 5.62%** RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $ 50.7 $ 29.5 $ 28.3 $ 26.4 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived 357.92% 500.20% 545.57% 620.25%* After fees waived 1.50% 1.50% 1.50% 1.50%* RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS # 2.28% 4.44% 6.66% 6.71%* Portfolio turnover rate 0.00% 0.00% 0.00% 0.00%**
- ---------- # Net of fees waived. * Annualized. ** Not annualized. *** Amount represents less than $0.01 per share. ^ Commencement of operations. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. PURISIMA ALL-PURPOSE FUND NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2009 NOTE 1 - ORGANIZATION The Purisima Funds (the "Trust") was organized as a Delaware statutory trust on June 27, 1996 and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company issuing its shares in a series. Each series represents a distinct portfolio with its own investment objectives and policies. The accompanying financial statements include the Purisima All-Purpose Fund (the "Fund"), a non-diversified fund which commenced operations on November 1, 2005. The Fund is one of the two portfolios comprising the Trust. Fisher Asset Management, LLC (doing business as Fisher Investments) (the "Adviser") serves as the investment adviser to the Fund. The investment objective of the Purisima All-Purpose Fund is as follows: The Fund seeks to provide protection against declines in the value of the U.S. and foreign equity markets. It invests in derivative securities, money market instruments and other securities, including U.S. and foreign common stocks, and fixed income securities. From its inception through August 31, 2009, the Fund has invested exclusively in money-market instruments. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of the financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America. A. SECURITY VALUATION. Investments in securities traded on a national securities exchange are valued at the last sales price on the business day as of which such value is being determined. If on a particular day, an exchange-listed security does not trade, then the mean between the bid and asked prices will be used. Foreign exchange traded equity securities are valued based upon the price on the exchange or market on which they trade as of the close of business of such market or exchange immediately preceding the time the Fund's net asset value is determined. Investments in securities traded on the NASDAQ Global Market, the NASDAQ Global Select Market and the NASDAQ Capital Market will be valued at the NASDAQ Official Closing Price ("NOCP"), which may not necessarily represent the last sale price. Securities traded on an exchange or NASDAQ for which there have been no sales and other over-the-counter securities are valued at the closing price. Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Board of Trustees or their designee, taking into consideration: (I) fundamental analytical data relating to the investment; (II) the nature and duration of restrictions on disposition of the securities; and (III) an evaluation of the forces which influence the market in which these securities are purchased and sold. Debt securities with remaining maturities of 60 days or less are valued at amortized cost which, when combined with accrued interest, approximates market value. PURISIMA ALL-PURPOSE FUND The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("SFAS 157"), effective with the beginning of the Portfolios' fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. See Note 6 - Fair Value of Financial Instruments for further disclosure. B. FOREIGN CURRENCY TRANSLATION. The Fund's records are maintained in U.S. dollars. The value of securities, currencies and other assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the reporting period. Purchases and sales of investment securities, income and expenses are translated on the respective dates of such transactions. The Fund does not isolate that portion of their net realized and unrealized gains and losses on investments resulting from changes in foreign exchange rates from the impact arising from changes in market prices. Such fluctuations are included with net realized and unrealized gain or loss from investments and foreign currency. Net realized foreign currency transaction gains and losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the differences between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency translation gains and losses arise from changes in the value of assets and liabilities, other than investments in securities, resulting from changes in the exchange rates. C. FEDERAL INCOME AND EXCISE TAXES. The Fund has elected to be taxed as a "regulated investment company" and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income or excise tax provision is required. In order to avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years. The Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable based upon its current interpretations of the tax rules and regulation that exist in the markets in which it invests. The Fund recognizes the tax benefits of uncertain tax positions only where the position is PURISIMA ALL-PURPOSE FUND "more likely then not" to be sustained assuming examination by tax authorities. Management has analyzed the Fund's tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2006 - 2008), or expected to be taken in the Fund's 2009 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. In preparing these financial statements, the Trust has evaluated events and transactions for potential recognition or disclosure through October 30, 2009, the date the financial statements were available to be issued. 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 PURISIMA ALL-PURPOSE FUND close the position is realized as a gain or loss. The Fund may purchase options which are included in the Fund's Schedules of Investments and subsequently marked to market to reflect the current value of the option. At August 31, 2009, the Fund had no options outstanding. H. SECURITIES SOLD SHORT. To the extent the Fund engages in selling securities short, they are obligated to replace a security borrowed by purchasing the same security at the current market value. The Fund would incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund would realize a gain if the price of the security declines between those dates. The Fund is required to establish a margin account with the broker lending the security sold short. While the short sale is outstanding, the broker retains the proceeds of the short sale and the Fund must also maintain a deposit with the broker consisting of cash having a value equal to a specified percentage of the value of the securities sold short. I . INDEMNIFICATION OBLIGATIONS. Under the Fund's organizational documents, its current and former officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred or that would be covered by other parties. J . ACCOUNTING FOR DERIVATIVES. In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedge Activities" ("SFAS 161") was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity's results of operation and financial position. Because the Fund holds no derivative positions, the adoption of SFAS 161 had no impact on the Fund's financial statement. 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. PURISIMA ALL-PURPOSE FUND Any fee withheld or voluntarily reduced and/or any Fund expense absorbed by the Adviser pursuant to an agreed upon expense cap shall be reimbursed by the Fund to the Adviser, if so requested by the Adviser, anytime before the end of the third fiscal year following the year to which the fee reduction, waiver, or expense absorption relates, provided the aggregate amount of the Fund's current operating expenses for such fiscal year does not exceed the applicable limitation on Fund expenses. Any such reimbursement is also contingent upon Board of Trustees review and approval prior to the time the reimbursement is initiated. The Fund must pay its current ordinary operating expenses before the Adviser is entitled to any reimbursement of fees and/or expenses. For the year ended August 31, 2009, the Fund paid the Adviser $417. As of August 31, 2009, the Adviser has reimbursed the Fund $148,806 to limit its total expenses to not more than 1.50% of the average daily net assets. At August 31, 2009 the Adviser may recapture a portion of the following amounts that have been paid and/or waived on behalf of the Fund no later than the date as stated below: FUND AUGUST 31, 2010 AUGUST 31, 2011 AUGUST 31, 2012 - ---- --------------- --------------- --------------- Purisima All-Purpose Fund $148,574 $144,904 $148,806 U.S. Bank, N.A. serves as the Fund's Custodian. U.S. Bancorp Fund Services, LLC ("USBFS"), an affiliate of U.S. Bank, N.A., serves as the Administrator, Fund Accountant and Transfer Agent. Certain officers of the Trust, including the Trust's Treasurer, are employees of the Administrator. In its capacity as the Fund's Administrator, USBFS provides general fund management including corporate secretarial services, coordinates the preparation of materials for the Board of Trustees, assists with the annual audit of the Fund's financial statements, monitors the Fund's compliance with federal and state regulations as well as investment restrictions, coordinates the payment of Fund expenses and monitors expense accruals, prepares financial statements and non-investment related statistical data and makes required tax reporting calculations. During the year ended August 31, 2009, Purisima All-Purpose Fund paid USBFS $40,058 for services rendered in its capacity as the Fund's Administrator. Quasar Distributors, LLC, an affiliate of U.S. Bank, N.A., and USBFS serves as principal underwriter of the Fund and acts as the Fund's distributor, pursuant to a Distribution Agreement with the Trust, in a continuous public offering of the Fund's shares. NOTE 4 - SERVICE AND DISTRIBUTION PLAN The Trust has adopted a Service and Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund is authorized to pay expenses incurred for the purpose of distribution activities, including the engagement of other dealers, intended to result in the sale of shares of the Fund. The fee accrues at an annual rate not to exceed 0.25% of the Fund's average daily net assets. For the year ended August 31, 2009, the Fund did not utilize the Plan. PURISIMA ALL-PURPOSE FUND NOTE 5 - INVESTMENT TRANSACTIONS The cost of purchases and the proceeds from sales of securities, excluding short-term investments, for the year ended August 31, 2009, were as follows: FUND PURCHASES SALES Purisima All-Purpose Fund $ 0 $ 0 NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS The Trust has adopted authoritative fair valuation accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion in changes in valuation techniques and related inputs during the period. These inputs are summarized in the three board levels listed below. The Trust has performed an analysis of all existing investments to determine the significance and character of all inputs to their fair value determination. Level 1 - Quoted unadjusted prices for identical instruments in active markets to which the Trust has access at the date of measurement. Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers. Level 3 - Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Trust's own assumptions that market participants would use to price the asset or liability based on the best available information. The following table provides the fair value measurements of applicable Fund assets by level within the fair value hierarchy for the Fund as of August 31, 2009. These assets are measured on a recurring basis.
Level 1 - Quoted prices in active Level 2 - markets for identical Significant other Level 3 - Significant Description Total assets observable inputs unobservable inputs - --------------------------------------------------------------------------------------------------------------- FIXED INCOME Federal Agency Obligations $30,956 $ -- $30,956 $ -- - --------------------------------------------------------------------------------------------------------------- TOTAL FIXED INCOME $30,956 $ -- $30,956 $ -- - --------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS $15,069 $15,069 $ -- $ -- - --------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES $46,025 $15,069 $30,956 $ -- - --------------------------------------------------------------------------------------------------------------- OTHER FINANCIAL INSTRUMENTS* $ -- $ -- $ -- $ -- - ---------------------------------------------------------------------------------------------------------------
PURISIMA ALL-PURPOSE FUND *Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards, swap contracts, and written options. Futures, forwards, and swap contracts are valued at the unrealized appreciation (depreciation) on the instrument while written options are valued at market value. NOTE 7 - FEDERAL INCOME TAX MATTERS The difference between the book and tax basis components of the distributable earnings relates principally to the timing of recognition of income and gains for federal income tax purposes. These differences, if any, are primarily attributable to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains on passive foreign investment companies and return of capital distributions and income adjustments recognized for tax purposes on real estate investment trusts. Short-term gains distributions reported in the Statements of Changes of Net Assets, if any, are reported as ordinary income for federal tax purposes. As of August 31, 2009, the components of distributable earnings on a tax basis were as follows: All-Purpose ----------- Cost of investments for tax purposes $45,857 ======= Gross tax unrealized appreciation $ 169 Gross tax unrealized depreciation $ (1) ------- Net tax unrealized appreciation $ 168 Undistributed ordinary income $ 712 ------- Total accumulated earnings $ 880 ======= The tax compositions of dividends are as follows: Ordinary Long Term Income Capital Gains ------ ------------- Purisima All-Purpose Fund 8/31/2009 $1,021 -- 8/31/2008 $1,717 -- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE SHAREHOLDERS AND BOARD OF TRUSTEES THE PURISIMA FUNDS WOODSIDE, CALIFORNIA We have audited the accompanying statement of assets and liabilities of the Purisima All-Purpose Fund, a series of The Purisima Funds (the "Trust"), including the schedule of investments as of August 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended and for the period November 1, 2005 (commencement of operations) to August 31, 2006. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2009, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Purisima All-Purpose Fund as of August 31, 2009, the results of its operations, the changes in its net assets, and the financial highlights for the periods indicated above, in conformity with accounting principles generally accepted in the United States of America. TAIT, WELLER & BAKERLLP PHILADELPHIA, PENNSYLVANIA OCTOBER 30, 2009 OTHER INFORMATION PROXY VOTING PROCEDURES (UNAUDITED) The Adviser votes proxies relating to portfolio securities in accordance with procedures that have been approved by the Trust's Board of Trustees. You may obtain a description of these procedures, free of charge, by calling toll-free 1-800-841-0199. This information is also available through the Securities and Exchange Commission's website at http://www.sec.gov. Information regarding how the Fund voted proxies relating to the portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling toll-free 1-800-841-0199. This information is also available through the Securities and Exchange Commission's website at HTTP://WWW.SEC.GOV. FORM N-Q DISCLOSURE (UNAUDITED) The Fund files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters on Form N-Q. The Fund's Form N-Q is available without charge, upon request, by calling 1-800-841-0199. Furthermore, you can obtain the Form N-Q on the SEC's website at www.sec.gov. TAX NOTICE (UNAUDITED) Additional Information applicable to foreign shareholders only: The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(C) for the year ended August 31, 2009 is 11.86%. TRUSTEES AND OFFICER INFORMATION (Unaudited) The Board of Trustees is responsible for the overall management of the Trust's business. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to it, including all agreements with the Adviser, Administrator, Custodian and Transfer Agent. The Board of Trustees delegates the day-to-day operations of the Trust to its Officers, subject to the Fund's investment objective and policies and to general supervision by the Board of Trustees. The Statement of Additional Information includes additional information about the Trust's Trustees and is available, without charge, by calling 1-800-841-0199. The Trustees and Officers of the Trust, their business addresses and principal occupations during the past five years are:
NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER NAME, ADDRESS, POSITION(S) HELD YEAR PRINCIPAL OVERSEEN BY DIRECTORSHIPS DATE OF BIRTH WITH TRUST ELECTED(1) OCCUPATION(S) DURING PAST FIVE YEARS DIRECTOR HELD - ------------------------------------------------------------------------------------------------------------------------------------ Kenneth L. Fisher President 1996 Chief Executive Officer and majority 2 None (born 1950) and Trustee shareholder of Fisher Investments, 13100 Skyline Blvd. Inc., the sole shareholder of the Woodside, CA 94062 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. Pierson E. Clair III Trustee 1996 President and Chief Executive 2 Signature Foods, (born 1948) Officer of Brown & Haley since 1998 Inc. 13100 Skyline Blvd. (fine confectioners); Vice President Woodside, CA 94062 of Blummer Chocolate Company from 1980 to 1997, where he had been employed since 1970. Scott LeFevre Trustee 2001 Sole proprietor of LeFevre Capital 2 None (born 1957) Management, a registered investment 13100 Skyline Blvd. adviser. Woodside, CA 94062 Alfred D. McKelvy, Jr. Trustee 2003 President and Chief Executive 2 East Bay BOMA; (born 1948) Officer of Omnimetric Services, LLC. BOMA California; 13100 Skyline Blvd. since 2009, Executive Director of Heritage Bank Woodside, CA 94062: the law firm of Berding & Weil, LLP (Advisory Board). since 1990. Bryan F. Morse Trustee 1996 Sole proprietor of Bryan F. Morse, 2 None (born 1952) RIA, a registered investment adviser 13100 Skyline Blvd. since 1990. Woodside, CA 94062 Grover T. Wickersham Trustee 1996 Attorney in private practice in Palo 2 None (born 1949) Alto, California. Prior to entering 13100 Skyline Blvd. private practice in June of 1981, Woodside, CA 94062 served as a Branch Chief of the Los Angeles Regional Office of the U.S. Securities and Exchange Commission. Tom Fishel Chief 2005 Vice President and Chief Compliance N/A None (born 1960) Compliance Officer of the Adviser. Vice 13100 Skyline Blvd. Officer President of Charles Schwab & Co., Woodside, CA 94062 Inc. from 1995 to 2004, where he had been employed since 1983. Keith Shintani (born Secretary and 2006 Vice President of U.S. Bancorp Fund N/A None 1963) Assistant Services, LLC and its predecessor, 2020 East Financial Way Treasurer Investment Company Administration, Glendora, CA 91741 LLC since 1998.
- ---------- (1) Trustees and officers of the Funds serve until their resignation, removal or retirement. * "Interested person" of the Trust, as defined in the 1940 Act.
NUMBER OF PORTFOLIOS IN FUND COMPLEX OTHER NAME, ADDRESS, POSITION(S) HELD YEAR PRINCIPAL OVERSEEN BY DIRECTORSHIPS DATE OF BIRTH WITH TRUST ELECTED(2) OCCUPATION(S) DURING PAST FIVE YEARS DIRECTOR HELD - ------------------------------------------------------------------------------------------------------------------------------------ Michael Ricks (born Treasurer 2006 Vice President of U.S. Bancorp N/A None 1977) Fund Services, LLC since 2001. 2020 East Financial Way Glendora, CA 91741
(2) Trustees and officers of the Funds serve until their resignation, removal or retirement. PRIVACY NOTICE Fisher Asset Management, LLC (doing business as Fisher Investments) and the Purisima Funds collect non-public information about you from the following sources: o Information we receive about you on applications or other forms; o Information you give us orally; and o Information about your transactions with us or others. We are committed to protecting your privacy and your non-public personal information. We do not sell or market your non-public personal information to unaffiliated organizations. We maintain physical, electronic and procedural safeguards to guard your non-public personal information. We hold our employees to strict standards of conduct regarding confidentiality, and employees who violate our Privacy Policy are subject to disciplinary process. We restrict access to your information to those employees who need to know that information to carry out their duties. We do not disclose any non-public personal information about our clients or former clients without the client's authorization, except as permitted by law. We may disclose the non-public information we collect to employees and affiliates, and unaffiliated third parties as permitted by law. Third parties may include law enforcement agencies, government and regulatory authorities, and professionals such as our legal counsel and auditors, and we may disclose information for reasons such as audit purposes, prevention of fraud or money laundering, protection of confidentiality, compliance with laws, and to provide agreed upon products and services to you. Third parties may also include service providers performing financial services for us (such as brokers and custodians) and service providers performing non-financial services for us (such as third parties performing computer related or data maintenance, marketing or other services for us or to assist us in offering our products and services to you). It is our policy to require all third party service providers that will receive information to sign strict confidentiality agreements agreeing to safeguard such information and use it only for the purpose it was provided. ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer and principal financial officer. The registrant has not made any amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report. THE REGISTRANT UNDERTAKES TO PROVIDE TO ANY PERSON WITHOUT CHARGE, UPON REQUEST, A COPY OF ITS CODE OF ETHICS BY MAIL WHEN THEY CALL THE REGISTRANT AT 1-800-851-8845. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. THE REGISTRANT'S BOARD OF TRUSTEES HAS DETERMINED THAT IT DOES NOT HAVE AN AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT COMMITTEE. AT THIS TIME, THE REGISTRANT BELIEVES THAT THE EXPERIENCE PROVIDED BY EACH MEMBER OF THE AUDIT COMMITTEE TOGETHER OFFERS THE REGISTRANT ADEQUATE OVERSIGHT FOR THE REGISTRANT'S LEVEL OF FINANCIAL COMPLEXITY.] ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. "Audit services" refer to performing an audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. "Audit-related services" refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. "Tax services" refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. There were no "Other services" provided by the principal accountant. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant. -------------------------------------------------------------------- FYE 08/31/2009 FYE 08/31/2008 -------------------------------------------------------------------- Audit Fees 38,000 36,000 Audit-Related Fees -- -- Tax Fees 6,000 6,000 All Other Fees -- -- -------------------------------------------------------------------- The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the registrant, including services provided to any entity affiliated with the registrant. The percentage of fees billed by TAIT, WELLER AND BAKER LLP applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows: -------------------------------------------------------------------- FYE 08/31/2009 FYE 08/31/2008 -------------------------------------------------------------------- Audit-Related Fees 0% 0% Tax Fees 0% 0% All Other Fees 0% 0% -------------------------------------------------------------------- All of the principal accountant's hours spent on auditing the registrant's financial statements were attributed to work performed by full-time permanent employees of the principal accountant. The following table indicates the non-audit fees billed or expected to be billed by the registrant's accountant for services to the registrant and to the registrant's investment adviser (and any other controlling entity, etc.--not sub-adviser) for the last two years. The audit committee of the board of trustees/directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser is compatible with maintaining the principal accountant's independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant's independence. -------------------------------------------------------------------- Non-Audit Related Fees FYE 08/31/2009 FYE 08/31/2008 -------------------------------------------------------------------- Registrant -- -- Registrant's Investment Adviser -- -- -------------------------------------------------------------------- ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934). ITEM 6. INVESTMENTS. (a) Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form. (b) Not Applicable ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to open-end investment companies. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to open-end investment companies. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to open-end investment companies. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant's board of trustees. ITEM 11. CONTROLS AND PROCEDURES. (a) The Registrant's President and Treasurer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant's service provider. (b) There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) ANY CODE OF ETHICS OR AMENDMENT THERETO, THAT IS THE SUBJECT OF THE DISCLOSURE REQUIRED BY ITEM 2, TO THE EXTENT THAT THE REGISTRANT INTENDS TO SATISFY ITEM 2 REQUIREMENTS THROUGH FILING AN EXHIBIT. 1) Incorporated by reference to the Registrant's Form N-CSR filed November 10, 2003. (2) A SEPARATE CERTIFICATION FOR EACH PRINCIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. Filed herewith. (3) ANY WRITTEN SOLICITATION TO PURCHASE SECURITIES UNDER RULE 23C-1 UNDER THE ACT SENT OR GIVEN DURING THE PERIOD COVERED BY THE REPORT BY OR ON BEHALF OF THE REGISTRANT TO 10 OR MORE PERSONS. Not applicable to open-end investment companies. (b) CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. Furnished herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The Purisima Funds By /S/ KENNETH L. FISHER ------------------------------------- Kenneth L. Fisher, President Date 11/6/09 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /S/ KENNETH L. FISHER ------------------------------------- Kenneth L. Fisher, President Date 11/6/09 By /S/ MICHAEL RICKS ------------------------------------- Michael Ricks, Treasurer Date 11/6/09 EX-99.CERT 2 ex99cert.txt EX.99.CERT CERTIFICATIONS I, Kenneth L. Fisher, certify that: 1. I have reviewed this report on Form N-CSR of The Purisima Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 11/6/09 /S/ KENNETH L. FISHER ---------------------------------- Kenneth L. Fisher President CERTIFICATIONS I, Michael Ricks, certify that: 1. I have reviewed this report on Form N-CSR of The Purisima Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 11/6/09 /S/ MICHAEL RICKS ---------------------------------- Michael Ricks Treasurer EX-99.906CERT 3 ex99-906cert.txt EX.99.906CERT CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of the Purisima Funds, does hereby certify, to such officer's knowledge, that the report on Form N-CSR of the Purisima Funds for the year ended August 31, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Purisima Funds for the stated period. /S/ KENNETH L. FISHER /S/ MICHAEL RICKS - ----------------------------- ----------------------------- Kenneth L. Fisher Michael Ricks President, The Purisima Funds Treasurer, The Purisima Funds Dated: 11/6/09 This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by The Purisima Funds for purposes of Section 18 of the Securities Exchange Act of 1934. -----END PRIVACY-ENHANCED MESSAGE-----