N-CSR 1 ncsr-1003.txt PURISIMA FUNDS - ANNUAL REPORT 2003 As filed with the Securities and Exchange Commission on November 7, 2003 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) (Name and address of agent for service) 1-800-851-8845 Registrant's telephone number, including area code Date of fiscal year end: August 31, 2003 --------------- Date of reporting period: August 31, 2003 --------------- Item 1. Reports to Stockholders. ---------------------------------- Annual Report August 31, 2003. -------------------------------------------------------------------------------- PURISIMA FUNDS -------------------------------------------------------------------------------- ANNUAL REPORT AUGUST 31, 2003 The Purisima Total Return Fund The Purisima Pure American Fund The Purisima Pure Foreign Fund -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- TABLE OF CONTENTS Shareholder Letter 1-4 Performance Summaries 5-6 Financial Information 7-23 Notes to Financial Statements 24-25 Other Information 29-31 Report of Independent Accountants 32 -------------------------------------------------------------------------------- INVESTMENT OBJECTIVES PURISIMA TOTAL RETURN FUND Seeks to provide investors with a high level of total return by considering both domestic and foreign securities. PURISIMA PURE AMERICAN FUND Seeks to provide investors with a high level of total return, while concentrating its holdings in U.S. securities. PURISIMA PURE FOREIGN FUND Seeks to provide investors with a high level of total return, while concentrating its holdings in securities outside the U.S. -------------------------------------------------------------------------------- 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. A LETTER TO OUR SHAREHOLDERS Welcome to the annual report for the Purisima Funds for the year ended August 31, 2003. After moving from a defensive posture in mid-2002, the Funds remained fully invested in equities throughout the period. Following an up and down first half to the period, global equities staged a sharp rally almost immediately following the commencement of Operation Iraqi Freedom. The core drivers that we think are underpinning the rebound continue to play out largely in line with our expectations, leading us to remain optimistic about further upside in the medium term. For the period covered by the report, the Funds performed generally in-line with their respective benchmarks. The Foreign and Total Return Funds posted an absolute gain of over 10%, while the Domestic Fund yielded a high single-digit total return. The sharp sell-offs in July and September 2002 seemingly created a double bottom in the already lengthy bear market. Although economic recovery began in the first half of 2002, expectations of a double-dip recession permeated financial media and investor sentiment throughout the end of 2002 and the start of 2003. Stocks mounted a sharp rally beginning in early October that reflected renewed optimism and saw the most battered groups of the bear market perform the best. The rally culminated in December 2002 as the solidarity of the UN Security Council came into question regarding a military solution to Saddam Hussein's Iraqi regime. The economy showed marked signs of improvement in the fourth quarter of 2002, countering the dour views of pundits and economists alike. However, the degree to which world opinion soured leading up to the war was unexpected. In concert with the threat of war, investors were barraged by financial media claims that the bear market remained intact and any rally should be treated as a selling opportunity. We strongly disagreed then and maintain our positive outlook today. After a negative first quarter of 2003, global stock market indexes began moving higher in the spring and had reached 52-week highs by the summer months, climbing a proverbial "wall of worry." Although economic recovery began in the first half of 2002, fears of continued joblessness, SARS, deflation, a weakened dollar, and a quagmire in Iraq permeated financial media and investor sentiment. Major world equity indexes saw past these tribulations and rallied through the second half of the period. Stocks even advanced through the summer months, which are traditionally perceived to be negative for stocks. The most significant surprise to investors in our view has been the dramatic fiscal policy package initiated by President Bush--both in timing and scope. The capital gains tax reduction was a particularly pleasant surprise and should prove to have meaningful positive long-term effects. The acceleration of marginal income tax rate cuts and the slashing of dividend tax rates are beneficial additions to the capital gains measure and should provide substantial supply side stimulus in coming years. Various European countries including Germany, France, and Italy are seemingly following suit with significant structural reforms of their own. The asset and sub-asset allocation decisions within the Funds remained consistent throughout the period. Consumer Discretionary and Materials sectors remain significantly overweight in the Funds relative to their benchmarks as early cycle stocks historically enjoy leadership first. We've also overweighted the portfolios to technology stocks, which were among the best performers during the period. We've chosen what we regard as higher quality technology businesses featuring healthy financials and dominant market positions. These companies should best capitalize on emerging opportunities and leverage market share growth to improve margins as the technology economy rebounds from depressed levels. In each of the Funds, the weighted average market capitalization of the holdings is slightly smaller than that of the respective benchmarks, consistent with our belief that small caps tend to lead in new bull markets as a liquidity surge provides disproportional benefits across the size spectrum. However, smaller cap stocks' dramatic outperformance over the course of the bear market leads us to place only a modest style bet there. Outside of the technology overweight, we maintain a modest value slant in the portfolios, hoping to capitalize on steep global yield curves that beget favorable lending conditions across the globe. Growth stocks outperformed stocks believed to be representative of a value strategy in the latter half of the period, mainly as a result of technology's performance, but we expect this trend to be short-lived. In an effort to control risk relative to benchmark, all three of the Funds maintain active counter-strategies in case we are wrong on our core economic and market assumptions. The Funds hold underweight positions in large cap and growth-oriented companies as well as positions in more defensive sectors like Health Care, Consumer Staples, and Utilities. The Total Return Fund is modestly overweight US stocks, consistent with our belief that the US economy has the most favorable prospects to lead the global recovery. With promising fundamentals, we expect that foreign indexes are also likely to rise materially on an absolute basis, and we've positioned the portfolio to capture relative strength in continental Europe. We've taken an underweight position to the United Kingdom, whose comparatively less accommodative monetary policy and tighter fiscal policy pose additional risk. Our holdings in Japan are focused on large, financially stable global exporters. In the late months of summer, our Japanese equities posted significant relative gains compared to other countries. We're cautiously optimistic about Japan, but are more enthusiastic on the potential of other regions and, therefore, have taken a slight underweight position. Pure American's long equity positions are limited to US companies. Likewise, Pure Foreign's are limited to foreign companies only, and bear similar regional weightings to the Total Return Fund described above. OUTLOOK Our bullish forecast made over a year ago calling for outsized returns following a long bear market has not changed. We maintain that significant gains could be ahead, and we see nothing on the horizon that causes us to retract this view. The basic reasoning behind our bullish outlook remains intact. The US is in the 2nd half of the Presidential Cycle, historically the strongest for US stocks. Monetary conditions are accommodative, interest rates remain low, and fiscal policy in the US and European nations offers additional stimulus. Geopolitical risks have significantly abated since the end of major combat in Iraq, and the fervor for increased regulatory intervention in corporate affairs that followed the WorldCom and Enron incidents is diminishing. Instead, investor risk aversion is waning, and the focus is shifting toward improved earnings and increasingly positive economic data. Each of the Funds is poised to continue participation in future equity gains and to outpace respective benchmarks. Following a bear market our research shows that there is generally a sharp move upward in a relatively short amount of time. We believe the recent rally in world equity markets is the beginning of a more substantial period of appreciation. As always, if we were to see anything ahead largely ignored by others that we think indicates a high probability of substantial capital loss, we would take appropriate defensive action. At the moment we look forward to a continued period of prosperity for equity investors. Thank you for your continued interest and support. Sincerely, Kenneth L. Fisher Chairman and Chief Investment Officer Fisher Investments, Inc. 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. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any security. The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. One cannot invest directly in an index. Mutual fund investing involves risk. Principal loss is possible. Foreign investing involves special risks, including greater volatility and political, economic and currency risks and differences in accounting methods. This material must be preceded or accompanied by a prospectus. Please read it carefully before you invest or send money. Purisima Securities, LLC, Distributor, 08/03 PERFORMANCE SUMMARIES FOR YEAR ENDED AUGUST 31, 2003 PURISIMA TOTAL RETURN FUND GROWTH OF $10,000 PURISIMA TOTAL RETURN FUND CUMULATIVE TOTAL RETURN VERSUS MSCI WORLD INDEX $10,000 INVESTED FROM INCEPTION ON 10/31/96 TO 8/31/03* [GRAPH] Total Return MSCI World Index ---------------------------------------- 31-Oct-96 10,000 10,000 30-Nov-96 10,260 10,558 31-Dec-96 10,100 10,387 ---------------------------------------- 31-Jan-97 10,550 10,511 28-Feb-97 10,480 10,629 31-Mar-97 10,250 10,417 30-Apr-97 10,860 10,755 30-May-97 11,520 11,417 30-Jun-97 12,200 11,984 31-Jul-97 12,770 12,534 31-Aug-97 11,870 11,693 30-Sep-97 12,610 12,327 31-Oct-97 11,910 11,676 30-Nov-97 12,150 11,880 31-Dec-97 12,384 12,023 ---------------------------------------- 31-Jan-98 12,755 12,356 28-Feb-98 13,576 13,190 31-Mar-98 14,228 13,745 30-Apr-98 14,709 13,877 31-May-98 14,568 13,701 30-Jun-98 14,929 14,024 31-Jul-98 14,929 13,999 31-Aug-98 12,494 12,130 30-Sep-98 12,845 12,343 31-Oct-98 14,157 13,456 30-Nov-98 15,199 14,254 31-Dec-98 16,035 14,948 ---------------------------------------- 31-Jan-99 16,806 15,274 28-Feb-99 16,305 14,866 31-Mar-99 16,836 15,483 30-Apr-99 17,117 16,091 31-May-99 16,606 15,501 30-Jun-99 17,728 16,222 31-Jul-99 17,388 16,171 31-Aug-99 17,498 16,141 30-Sep-99 17,147 15,982 31-Oct-99 18,350 16,810 30-Nov-99 18,961 17,281 31-Dec-99 19,940 18,677 ---------------------------------------- 31-Jan-00 19,037 17,605 29-Feb-00 19,198 17,651 31-Mar-00 20,321 18,869 30-Apr-00 19,709 18,069 31-May-00 19,398 17,610 30-Jun-00 20,351 18,200 31-Jul-00 19,378 17,685 31-Aug-00 19,709 18,258 30-Sep-00 18,887 17,285 31-Oct-00 18,957 16,993 30-Nov-00 18,235 15,959 31-Dec-00 18,461 16,215 ---------------------------------------- 31-Jan-01 18,295 16,534 28-Feb-01 18,970 15,135 31-Mar-01 19,136 14,130 30-Apr-01 18,700 15,168 31-May-01 18,659 14,955 30-Jun-01 18,482 14,486 31-Jul-01 18,970 14,299 31-Aug-01 19,448 13,611 30-Sep-01 20,071 12,411 31-Oct-01 19,936 12,648 30-Nov-01 19,352 13,394 31-Dec-01 19,214 13,477 ---------------------------------------- 31-Jan-02 19,145 13,067 28-Feb-02 19,594 12,952 31-Mar-02 19,214 13,549 30-Apr-02 19,433 13,064 31-May-02 18,937 13,086 30-Jun-02 17,832 12,291 31-Jul-02 16,323 11,253 31-Aug-02 16,196 11,273 30-Sep-02 14,341 10,031 31-Oct-02 15,136 10,771 30-Nov-02 16,092 11,350 31-Dec-02 14,994 10,799 ---------------------------------------- 31-Jan-03 14,691 10,469 28-Feb-03 14,376 10,286 31-Mar-03 14,341 10,252 30-Apr-03 15,659 11,160 31-May-03 16,638 11,795 30-Jun-03 16,731 11,998 31-Jul-03 17,303 12,241 31-Aug-03 17,851 12,504 ONE-YEAR Average Annual Total Return 2** 10.22% FIVE-YEAR Average Annual Total Return 2** 7.40% SINCE INCEPTION (10/28/96) Cumulative Total Return 1** 78.51% Average Annual Total Return 2** 8.84% 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 Morgan Stanley MSCI World is obtained from Morgan Stanley and is an unmanaged global stock index comprised of various world stock markets, including the U.S. Purisima total return of a $10,000 investment includes all expenses. Fund's month-end inception was 10/31/96 with actual inception on 10/28/96. + The S&P 500 is obtained from Standard & Poors corp. It is an unmanaged stock index that measures the performance of 500 large cap companies traded in the U.S. Total return of a $10,000 investment in Purisima includes all expenses. Fund's month-end inception was 9/30/98 with actual inception on 9/29/98. ++ The EAFE Index is obtained from Morgan Stanley. It is an unmanaged stock index that measures the performance of selected stock markets outside the U.S. Purisima total return of a $10,000 investment includes all expenses. Fund's month-end inception was 9/30/98 with actual inception on 9/29/98. ** The Total Returns shown do not reflect the deduction of taxes a shareholder would pay on fund distributions or redumption of fund shares. * Purisima Securities, LLC Woodside, CA 94062 PURE AMERICAN FUND GROWTH OF $10,000 PURE AMERICAN FUND CUMULATIVE TOTAL RETURN VERSUS S&P 500 INDEX $10,000 INVESTED FROM INCEPTION ON 9/30/98 TO 8/31/03+ [GRAPH] Pure American S&P 500 Index ------------------------------------- 30-Sep-98 10,000 10,000 31-Oct-98 11,190 10,812 30-Nov-98 11,920 11,467 31-Dec-98 12,810 12,128 ------------------------------------- 31-Jan-99 13,300 12,635 28-Feb-99 12,630 12,242 31-Mar-99 12,940 12,731 30-Apr-99 13,040 13,224 31-May-99 12,630 12,912 30-Jun-99 13,390 13,629 31-Jul-99 12,930 13,203 31-Aug-99 13,000 13,137 30-Sep-99 12,530 12,777 31-Oct-99 13,560 13,586 30-Nov-99 13,760 13,862 31-Dec-99 13,893 14,677 ------------------------------------- 31-Jan-00 13,433 13,940 29-Feb-00 12,333 13,677 31-Mar-00 13,553 15,014 30-Apr-00 13,533 14,563 31-May-00 13,463 14,264 30-Jun-00 13,843 14,616 31-Jul-00 13,413 14,388 31-Aug-00 13,493 15,282 30-Sep-00 13,423 14,475 31-Oct-00 13,803 14,414 30-Nov-00 13,333 13,278 31-Dec-00 13,275 13,343 ------------------------------------- 31-Jan-01 13,234 13,817 28-Feb-01 13,774 12,557 31-Mar-01 13,889 11,761 30-Apr-01 13,587 12,675 31-May-01 13,618 12,760 30-Jun-01 13,566 12,450 31-Jul-01 14,065 12,328 31-Aug-01 13,757 11,556 30-Sep-01 14,011 10,622 31-Oct-01 13,933 10,825 30-Nov-01 13,909 11,655 31-Dec-01 13,909 11,758 ------------------------------------- 31-Jan-02 13,851 11,586 28-Feb-02 14,118 11,363 31-Mar-02 13,851 11,790 30-Apr-02 13,828 11,075 31-May-02 13,491 10,993 30-Jun-02 12,668 10,211 31-Jul-02 11,867 9,415 31-Aug-02 11,844 9,476 30-Sep-02 10,498 8,446 31-Oct-02 11,160 9,190 30-Nov-02 11,763 9,731 31-Dec-02 11,048 9,160 ------------------------------------- 31-Jan-03 10,788 8,920 28-Feb-03 10,635 8,786 31-Mar-03 10,729 8,871 30-Apr-03 11,567 9,602 31-May-03 12,144 10,108 30-Jun-03 12,286 10,238 31-Jul-03 12,698 10,418 31-Aug-03 12,899 10,621 ONE-YEAR Average Annual Total Return 2** 8.91% SINCE INCEPTION (9/29/98) Cumulative Total Return 1** 28.99% Average Annual Total Return 2** 5.31% -------------------------------------------------------------------------------- PURE FOREIGN FUND GROWTH OF $10,000 PURE FOREIGN FUND CUMULATIVE TOTAL RETURN VERSUS EAFE FOREIGN INDEX $10,000 INVESTED FROM INCEPTION ON 9/30/98 TO 8/31/03++ [GRAPH] Pure Foreign MSCI EAFE Index --------------------------------------- 30-Sep-98 10,000 10,000 31-Oct-98 10,710 11,042 30-Nov-98 11,430 11,607 31-Dec-98 11,740 12,065 --------------------------------------- 31-Jan-99 12,150 12,028 28-Feb-99 11,750 11,742 31-Mar-99 12,350 12,232 30-Apr-99 12,740 12,727 31-May-99 12,320 12,072 30-Jun-99 13,210 12,543 31-Jul-99 13,410 12,915 31-Aug-99 13,520 12,963 30-Sep-99 13,660 13,094 31-Oct-99 14,190 13,585 30-Nov-99 14,980 14,056 31-Dec-99 17,132 15,318 --------------------------------------- 31-Jan-00 15,991 14,346 29-Feb-00 17,290 14,732 31-Mar-00 17,850 15,303 30-Apr-00 17,153 14,498 31-May-00 16,804 14,145 30-Jun-00 17,871 14,698 31-Jul-00 16,794 14,082 31-Aug-00 17,311 14,204 30-Sep-00 16,297 13,513 31-Oct-00 15,991 13,194 30-Nov-00 15,378 12,699 31-Dec-00 15,782 13,150 --------------------------------------- 31-Jan-01 15,815 13,154 28-Feb-01 16,428 12,170 31-Mar-01 16,643 11,343 30-Apr-01 16,245 12,123 31-May-01 16,234 11,674 30-Jun-01 16,127 11,194 31-Jul-01 16,503 11,001 31-Aug-01 17,233 10,722 30-Sep-01 17,536 9,636 31-Oct-01 17,491 9,883 30-Nov-01 17,399 10,248 31-Dec-01 17,328 10,308 --------------------------------------- 31-Jan-02 17,176 9,761 28-Feb-02 17,528 9,829 31-Mar-02 17,317 10,408 30-Apr-02 17,657 10,429 31-May-02 17,352 10,561 30-Jun-02 16,661 10,141 31-Jul-02 14,681 9,140 31-Aug-02 15,313 9,119 30-Sep-02 13,415 8,140 31-Oct-02 14,411 8,577 30-Nov-02 15,313 8,966 31-Dec-02 14,509 8,665 --------------------------------------- 31-Jan-03 14,059 8,303 28-Feb-03 13,621 8,113 31-Mar-03 13,378 7,954 30-Apr-03 14,606 8,734 31-May-03 15,457 9,263 30-Jun-03 15,859 9,487 31-Jul-03 16,528 9,717 31-Aug-03 16,990 9,951 ONE-YEAR Average Annual Total Return 2** 10.95% SINCE INCEPTION (9/29/98) Cumulative Total Return 1** 69.90% Average Annual Total Return 2** 11.37% TOTAL RETURN FUND -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS AT AUGUST 31, 2003 -------------------------------------------------------------------------------- SHARES VALUE ================================================================================ COMMON STOCKS: 99.2% AEROSPACE/DEFENSE EQUIPMENT: 2.5% 47,100 Lockheed Martin Corp. $ 2,412,933 46,600 United Technologies Corp. 3,739,650 ------------ 6,152,583 ------------ AUTOMOTIVE: 4.0% 65,800 DaimlerChrysler AG 2,515,534 278,100 Delphi Corp. 2,519,586 217,000 Nissan Motor Co. Ltd. - ADR 4,708,900 ------------ 9,744,020 ------------ BANKING: 13.7% 387,100 Banco Santander Central - ADR 3,321,318 94,700 Barclays Plc - ADR 2,801,226 39,500 Comerica, Inc. 1,948,930 148,500 Credit Suisse Group - ADR 4,673,295 45,000 HSBC Holdings Plc - ADR 2,894,400 432,500 Mitsubishi Tokyo Finance - ADR 2,538,775 16,000 National Australia Bank Ltd. - ADR 1,617,600 66,775 National City Corp. 2,115,432 126,996 San Paolo - IMI SpA - ADR 2,451,023 38,100 SunTrust Banks, Inc. 2,329,053 47,800 UBS AG 2,599,364 107,300 Washington Mutual, Inc. 4,182,554 ------------ 33,472,970 ------------ CHEMICALS: 1.3% 87,225 Rohm & Haas Co. 3,168,884 ------------ COMPUTERS: 4.2% 119,200 Dell Computer Corp.* 3,889,496 110,400 Electronic Data Systems Corp. 2,410,032 305,100 EMC Corp.* 3,890,025 ------------ 10,189,553 ------------ ELECTRICAL EQUIPMENT: 3.8% 71,700 General Electric Co. 2,120,169 72,800 Hitachi Ltd. - ADR 3,977,792 240,700 Matsushita Electric Industrial Co., Ltd - ADR 3,083,367 ------------ 9,181,328 ------------ FINANCIAL SERVICES: 2.9% 116,700 ING Groep N.V. - ADR 2,302,491 71,600 Lehman Brothers Holdings, Inc. 4,706,268 ------------ 7,008,759 ------------ FOODS: 2.2% 135,800 Sara Lee Corp. 2,577,484 47,525 Unilever N.V. - ADR 2,660,449 ------------ 5,237,933 ------------ HOUSEHOLD AUDIO & VIDEO EQUIPMENT: 0.8% 60,100 Sony Corp. - ADR 1,980,295 ------------ SHARES VALUE ================================================================================ HOUSEHOLD PRODUCTS: 1.9% 47,700 Kimberly-Clark Corp. $ 2,437,947 24,600 Procter & Gamble Co. 2,147,334 ------------ 4,585,281 ------------ INSURANCE: 5.7% 94,900 Allstate Corp. 3,392,675 41,544 American International Group, Inc. 2,474,776 158,800 Axa S.A. - ADR 2,823,464 42,200 CIGNA Corp. 2,012,096 64,800 Marsh & McLennan Co. 3,240,000 ------------ 13,943,011 ------------ MACHINERY: 2.3% 77,600 Caterpillar, Inc. 5,574,008 ------------ MEDIA: 3.2% 119,300 News Corporation Ltd. - ADR 4,097,955 181,900 Walt Disney Co. 3,728,950 ------------ 7,826,905 ------------ MEDICAL INSTRUMENTS: 1.0% 51,200 Guidant Corp. 2,570,240 ------------ MINING: 1.6% 45,400 Rio Tinto Plc - ADR 4,019,716 ------------ MISCELLANEOUS MANFACTURING: 5.3% 150,200 Alcoa, Inc. 4,289,712 45,200 Illinois Tool Works 3,267,508 87,800 Siemens AG - ADR 5,468,184 ------------ 13,025,404 ------------ OIL & GAS: 8.4% 67,000 Anadarko Petroleum Corp. 2,914,500 108,900 Baker Hughes, Inc. 3,643,794 69,100 BASF AG - ADR 3,202,785 42,100 ConocoPhillips 2,350,864 100,600 Royal Dutch Petroleum Co. - ADR 4,513,922 49,357 Total Fina S.A. - ADR 3,800,983 ------------ 20,426,848 ------------ PAPER & FOREST PRODUCTS: 1.4% 83,300 International Paper Co. 3,377,815 ------------ PHARMACEUTICALS: 5.7% 75,000 Astrazeneca Plc - ADR 2,973,750 52,276 Aventis - ADR 2,561,524 77,400 GlaxoSmithKline Plc - ADR 3,005,442 49,100 Johnson & Johnson 2,434,378 3,521 Medco Health Solutions, Inc.* 94,011 29,200 Merck & Co., Inc. 1,469,344 40,400 Novartis AG - ADR 1,493,588 ------------ 14,032,037 ------------ PHOTOGRAPHY: 1.4% 112,200 Fuji Photo Film - ADR 3,376,098 ------------ SHARES VALUE ================================================================================ RETAIL: 5.1% 126,900 Albertson's, Inc. $ 2,667,438 94,600 Costco Wholesale Corp.* 3,035,714 67,200 Lowe's Companies, Inc. 3,686,592 71,300 Sears, Roebuck & Co. 3,138,626 ------------ 12,528,370 ------------ SEMICONDUCTORS: 5.8% 177,500 Intel Corp. 5,080,050 111,200 KLA-Tencor Corp.* 6,600,832 179,500 Micron Technology, Inc.* 2,577,620 ------------ 14,258,502 ------------ SOFTWARE: 5.4% 95,400 First Data Corp. 3,663,360 104,200 Microsoft Corp. 2,763,384 320,800 Oracle Corp.* 4,099,824 263,000 Siebel Systems, Inc.* 2,651,040 ------------ 13,177,608 ------------ TELECOMMUNICATIONS: 4.5% 42,200 Alltel Corp. 1,932,760 155,350 Bellsouth Corp. 3,914,820 88,600 BT Group Plc - ADR 2,600,410 73,561 Telefonica, S.A. - ADR 2,611,416 ------------ 11,059,406 ------------ TELECOMMUNICATIONS EQUIPMENT: 1.0% 147,100 Nokia Corp. - ADR 2,396,259 ------------ TRANSPORTATION: 1.4% 49,900 Fedex Corp. 3,348,290 ------------ UTILITIES: 2.7% 93,400 Duke Energy Corp. 1,595,272 47,500 E. ON AG - ADR 2,467,150 85,700 Enel SpA - ADR 2,626,705 ------------ 6,689,127 ------------ TOTAL COMMON STOCKS (cost $243,616,716) 242,351,250 ------------ SHORT-TERM INVESTMENT: 0.5% 1,145,120 SEI Daily Income Trust Government Class B 1,145,120 (cost $1,145,120) TOTAL INVESTMENTS IN SECURITIES (cost $244,761,836): 99.7% 243,496,370 Other Assets less Liabilities: 0.3% 639,871 ------------ NET ASSETS: 100.0% $244,136,241 ============ ADR - American depositary receipt. * Non-income producing security. See accompanying Notes to Financial Statements. PURE AMERICAN FUND -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS AT AUGUST 31, 2003 -------------------------------------------------------------------------------- SHARES VALUE ================================================================================ COMMON STOCKS: 99.2% AEROSPACE/DEFENSE EQUIPMENT: 3.0% 450 Lockheed Martin Corp. $ 23,053 650 Northrop Grumman Corp. 62,062 ------------ 85,115 ------------ AUTOMOTIVE: 1.9% 6,000 Delphi Corp. 54,360 ------------ BANKING: 8.0% 1,225 Bank of America Corp. 97,081 1,150 Comerica, Inc. 56,741 2,250 National City Corp. 71,280 ------------ 225,102 ------------ CHEMICALS: 2.3% 1,750 Rohm & Haas Co. 63,577 ------------ COMPUTER COMPONENTS & SOFTWARE: 6.3% 3,175 Cisco Systems, Inc.* 60,801 1,850 Microsoft Corp. 49,062 3,400 Siebel Systems, Inc.* 34,272 1,000 Veritas Software Corp.* 34,480 ------------ 178,615 ------------ COMPUTERS: 7.8% 1,100 Dell Computer Corp.* 35,893 1,650 Electronic Data Systems Corp. 36,019 4,800 EMC Corp.* 61,200 600 IBM Corp. 49,206 9,500 Sun Microsystems, Inc.* 36,670 ------------ 218,988 ------------ CONSUMER PRODUCTS: 2.5% 775 Coca Cola Co. (The) 33,728 625 Nike, Inc. - Class B 35,613 ------------ 69,341 ------------ ELECTRICAL EQUIPMENT: 4.0% 1,600 General Electric Co. 47,312 675 Johnson Controls, Inc. 66,825 ------------ 114,137 ------------ FINANCIAL SERVICES: 6.9% 1,466 Citigroup, Inc. 63,551 850 Fannie Mae 55,072 425 Lehman Brothers Holdings, Inc. 27,935 900 Merrill Lynch & Co., Inc. 48,402 ------------ 194,960 ------------ SHARES VALUE ================================================================================ FOODS: 1.9% 2,800 Sara Lee Corp. $ 53,144 ------------ HEALTH CARE EQUIPMENT: 2.0% 1,150 Medtronic, Inc. 57,017 ------------ HOUSEHOLD PRODUCTS: 1.5% 475 Procter & Gamble Co. 41,463 ------------ INSURANCE: 4.0% 487 American International Group 29,011 33 Berkshire Hathaway, Inc. - Class B* 83,490 ------------ 112,501 ------------ MACHINERY: 3.0% 1,175 Caterpillar, Inc. 84,400 ------------ MEDIA: 2.0% 2,800 Walt Disney Co. 57,400 ------------ MISCELLANEOUS MANUFACTURING: 3.0% 600 3M Co. 85,482 ------------ OIL & GAS: 6.5% 975 ChevronTexaco Corp. 71,048 925 ConocoPhillips 51,652 1,600 Exxon Mobil Corp. 60,320 ------------ 183,020 ------------ PAPER & FOREST PRODUCTS: 2.1% 1,450 International Paper Co. 58,798 ------------ PHARMACEUTICALS: 7.4% 750 Johnson & Johnson 37,185 850 Lilly (Eli) & Co. 56,551 114 Medco Health Solutions, Inc.* 3,044 950 Merck & Co., Inc. 47,804 1,325 Schering-Plough Corp. 20,127 1,000 Wyeth 42,850 ------------ 207,561 ------------ RESTAURANTS: 2.1% 2,600 McDonald's Corp. 58,292 ------------ RETAIL: 4.6% 925 Costco Wholesale Corp.* 29,683 1,250 Sears, Roebuck & Co. 55,025 750 Wal-Mart Stores, Inc. 44,378 ------------ 129,086 ------------ SHARES VALUE ================================================================================ SEMI-CONDUCTORS: 5.9% 2,500 Intel Corp. $ 71,550 700 KLA-Tencor Corp.* 41,552 3,800 Micron Technology, Inc.* 54,568 ------------ 167,670 ------------ TELECOMMUNICATIONS: 1.5% 1,650 BellSouth Corp. 41,580 ------------ TOBACCO PRODUCTS: 1.4% 950 Altria Group, Inc. 39,159 ------------ TRANSPORTATION: 5.4% 2,200 Burlington Northern Santa Fe Corp. 62,370 1,350 Fedex Corp. 90,585 ------------ 152,955 ------------ UTILITIES: 2.2% 2,200 Southern Co. 62,436 ------------ TOTAL COMMON STOCKS (cost $2,878,583) 2,796,159 ------------ SHORT-TERM INVESTMENT: 0.7% 19,050 SEI Daily Income Trust Government Class B 19,050 (cost $19,050) ------------ TOTAL INVESTMENTS IN SECURITIES (cost $2,897,633): 99.9% 2,815,209 Other Assets less Liabilities: 0.1% 3,470 ------------ NET ASSETS: 100% $ 2,818,679 ============ * Non-income producing security. See accoumpanying Notes to Financial Statements. PURE FOREIGN FUND -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS AT AUGUST 31, 2003 -------------------------------------------------------------------------------- SHARES VALUE ================================================================================ COMMON STOCKS: 98.4% AUSTRALIA: 6.3% 5,800 BHP Billiton Ltd. - ADR $ 82,766 350 National Australia Bank Ltd. - ADR 35,385 1,550 News Corp. Ltd. - ADR 53,242 ------------ 171,393 ------------ DENMARK: 0.9% 700 Novo-Nordisk A/S - ADR 25,025 ------------ FINLAND: 1.0% 1,700 Nokia Corp. - ADR 27,693 ------------ FRANCE: 10.6% 800 Aventis S.A. - ADR 39,200 3,650 Axa S.A. - ADR 64,897 2,950 Groupe Danone - ADR 81,213 1,347 Total Fina S.A. - ADR 103,732 ------------ 289,042 ------------ GERMANY: 10.1% 1,100 BASF AG - ADR 50,985 2,100 DaimlerChrysler AG 80,283 1,400 SAP AG - ADR 41,916 1,650 Siemens AG - ADR 102,762 ------------ 275,946 ------------ ITALY: 4.5% 1,600 Enel SpA - ADR 49,040 2,506 San Paolo - IMI SpA - ADR 48,366 990 Telecom Italia SpA - ADR* 23,364 ------------ 120,770 ------------ JAPAN: 18.9% 1,200 Canon, Inc. - ADR 58,152 2,600 Fuji Photo Film - ADR 78,234 1,600 Hitachi, Ltd. - ADR 87,424 600 Kyocera Corp. - ADR 37,998 5,400 Matsushita Electric Industrial Co., Ltd. - ADR 69,174 1,050 Millea Holdings, Inc. - ADR 53,697 2,900 Nissan Motor Co. Ltd. - ADR 62,930 2,000 Sony Corp. - ADR 65,900 ------------ 513,509 ------------ SHARES VALUE ================================================================================ NETHERLANDS: 9.1% 2,598 ABN AMRO Holding N.V. - ADR $ 45,829 1,350 Akzo Nobel N.V. - SPON ADR 44,050 2,150 ING Groep N.V. - ADR 42,419 825 Royal Dutch Petroleum Co. - ADR 37,018 2,600 TPG N.V. - ADR 48,984 519 Unilever N.V. - ADR 29,054 ------------ 247,354 ------------ NORWAY: 2.3% 1,200 Norsk Hydro A/S - ADR 62,760 ------------ PORTUGAL: 1.5% 5,732 Portugal Telecom S.A. - ADR 41,614 ------------ SPAIN: 6.6% 3,900 Banco Bilbao Vizcaya Argentaria S.A. - ADR 41,925 5,575 Banco Santander Central Hispano S.A. - ADR 47,834 2,600 Repsol S.A. - ADR 44,018 1,301 Telefonica, S.A. - ADR 46,186 ------------ 179,963 ------------ SWEDEN: 3.0% 3,400 Volvo AB - ADR 82,790 ------------ SWITZERLAND: 7.5% 5,200 Adecco S.A. - ADR 66,040 1,250 Novartis AG - ADR 46,213 1,700 UBS AG - ADR 92,446 ------------ 204,699 ------------ UNITED KINGDOM: 16.1% 500 AstraZeneca Plc - ADR 19,825 1,900 Barclays Plc - ADR 56,202 500 BP Plc - ADR 20,860 1,000 BT Group Plc - ADR 29,350 2,750 Cadbury Schweppes Plc - ADR 67,595 550 GlaxoSmithKline Plc - ADR 21,357 1,150 HSBC Holdings Plc - ADR 73,968 700 National Grid Group - ADR 21,595 1,150 Rio Tinto Plc - ADR 101,821 2,400 Royal & Sun Alliance Insurance Group Plc - ADR 26,520 ------------ 439,093 ------------ TOTAL COMMON STOCKS (cost $2,710,140) 2,681,651 ------------ SHARES VALUE ================================================================================ SHORT-TERM INVESTMENT: 0.4% 10,169 SEI Daily Income Trust Government Class B $ 10,169 (cost $10,169) ------------ TOTAL INVESTMENTS IN SECURITIES (cost $2,720,309): 98.8% 2,691,820 Other Assets less Liabilities: 1.2% 33,706 ------------ NET ASSETS: 100.0% $ 2,725,526 ============ ADR - American depositary receipt. * Non-income producing security. See accompanying Notes to Financial Statements. PURE FOREIGN FUND -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS BY INDUSTRY at August 31, 2003 -------------------------------------------------------------------------------- % OF INDUSTRY NET ASSETS ================================================================================ Automobile Manufacturers 8.3% Banking 12.8% Chemicals 3.5% Commercial Services 2.4% Electric 5.8% Electronics 1.4% Financial Services 3.4% Foods 6.5% Home Furnishing 5.0% Insurance 6.9% Media 1.9% Mining 6.8% Miscellaneous Manufacturing 6.6% Office/Business Equipment 2.1% Oil & Gas 9.9% Pharmaceuticals 5.6% Software 1.5% Telecommunications 6.2% Transportation 1.8% ------------ TOTAL COMMON STOCK 98.4% SHORT-TERM INVESTMENTS 0.4% ------------ TOTAL INVESTMENTS IN SECURITIES 98.8% Other Assets less Liabilities 1.2% ------------ NET ASSETS 100.0% ============ See accompanying Notes to Financial Statements. PURISIMA FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AT AUGUST 31, 2003 ======================================================================================================== TOTAL RETURN PURE AMERICAN PURE FOREIGN FUND FUND FUND -------------- -------------- -------------- ASSETS Investments in securities, at cost $ 244,761,836 $ 2,897,633 $ 2,720,309 ============== ============== ============== Investments in securities, at value $ 243,496,370 $ 2,815,209 $ 2,691,820 Cash -- -- 24,495 Receivables: Dividends and interest 615,110 5,580 8,015 Fund shares sold 447,257 -- -- Other assets 14,977 -- 4,579 -------------- -------------- -------------- Total Assets 244,573,714 2,820,789 2,728,909 -------------- -------------- -------------- LIABILITIES Payable for fund shares redeemed 83,906 -- -- Accrued advisory fees (Note 3) 198,729 2,110 3,383 Accrued distribution fees (Note 4) 50,128 -- -- Accrued administration fees (Note 3) 19,066 -- -- Other accrued expenses 85,644 -- -- -------------- -------------- -------------- Total Liabilities 437,473 2,110 3,383 -------------- -------------- -------------- NET ASSETS $ 244,136,241 $ 2,818,679 $ 2,725,526 ============== ============== ============== Number of shares issued and outstanding (unlimited shares authorized, $0.01 par value) 15,945,893 257,535 193,277 ============== ============== ============== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 15.31 $ 10.94 $ 14.10 ============== ============== ============== COMPONENTS OF NET ASSETS Paid-in capital $ 257,908,794 $ 3,123,233 $ 3,065,330 Accumulated net investment income 1,073,550 12,758 54,360 Accumulated net realized loss on investments (13,580,637) (234,888) (365,675) Net unrealized depreciation on investments (1,265,466) (82,424) (28,489) -------------- -------------- -------------- Net assets $ 244,136,241 $ 2,818,679 $ 2,725,526 ============== ============== ==============
See accompanying Notes to Financial Statements. PURISIMA FUNDS
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2003 ============================================================================================================ TOTAL RETURN PURE AMERICAN PURE FOREIGN FUND FUND FUND -------------- -------------- -------------- INVESTMENT INCOME Income Dividends (net of foreign taxes witheld of $377,433, $0, and $11,605, respectively) $ 4,013,399 $ 49,527 $ 100,889 Interest 10,445 123 118 -------------- -------------- -------------- Total income 4,023,844 49,650 101,007 -------------- -------------- -------------- Expenses Advisory fees 1,964,219 36,892 42,595 Distribution fees 491,055 -- -- Administration fees 192,285 -- -- Transfer agent fees 142,863 -- -- Fund accounting fees 78,525 -- -- Custody fees 49,377 -- -- Registration fees 47,156 -- -- Reports to shareholders 37,502 -- -- Insurance expense 31,492 -- -- Legal fees 18,468 -- -- Audit fees 14,998 -- -- Trustee fees 3,074 -- -- Miscellaneous 5,812 -- -- -------------- -------------- -------------- Total expenses 3,076,826 36,892 42,595 Less: fees waived (Note 3) (129,719) -- -- -------------- -------------- -------------- Net expenses 2,947,107 36,892 42,595 -------------- -------------- -------------- NET INVESTMENT INCOME 1,076,737 12,758 58,412 -------------- -------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments: Securities (4,677,248) (209,661) (348,963) Options 4,958 -- -- Net unrealized appreciation on investments 27,195,122 386,082 488,304 -------------- -------------- -------------- Net realized and unrealized gain on investments 22,522,832 176,421 139,341 -------------- -------------- -------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 23,599,569 $ 189,179 $ 197,753 ============== ============== ==============
See accompanying Notes to Financial Statements. PURISIMA FUNDS STATEMENT OF CHANGES IN NET ASSETS ================================================================================ TOTAL RETURN FUND YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS FROM: AUGUST 31, 2003 AUGUST 31, 2002 -------------- -------------- OPERATIONS Net investment income $ 1,076,737 $ 1,701,906 Net realized gain (loss) on investments Securities (4,677,248) (4,615,141) Options 4,958 558,434 Net unrealized appreciation (depreciation) on investments 27,195,122 (31,931,932) -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 23,599,569 (34,286,733) -------------- -------------- DISTRIBUTION TO SHAREHOLDERS From net investment income (649,922) (1,395,913) From net realized gain (1,595,178) (12,127,092) -------------- -------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,245,100) (13,523,005) -------------- -------------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares (a) 41,210,454 107,016,302 -------------- -------------- TOTAL INCREASE IN NET ASSETS 62,564,923 59,206,564 NET ASSETS Beginning of year 181,571,318 122,364,754 -------------- -------------- END OF YEAR $ 244,136,241 $ 181,571,318 ============== ============== Accumulated net investment income $ 1,073,550 $ 646,735 ============== ============== (a) A summary of capital share transactions is as follows:
YEAR ENDED YEAR ENDED AUGUST 31, 2003 AUGUST 31, 2002 --------------------------------- --------------------------------- SHARES VALUE SHARES VALUE -------------- -------------- -------------- -------------- Shares sold 5,057,337 $ 68,171,437 7,196,010 $ 119,292,657 Shares issued on reinvestment of distributions 167,234 2,202,476 794,173 13,397,691 Shares redeemed (2,195,711) (29,163,459) (1,606,721) (25,674,046) -------------- -------------- -------------- -------------- Net increase 3,028,860 $ 41,210,454 6,383,462 $ 107,016,302 ============== ============== ============== ==============
See accompanying Notes to Financial Statements. PURISIMA FUNDS STATEMENT OF CHANGES IN NET ASSETS ================================================================================ PURE AMERICAN FUND YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS FROM: AUGUST 31, 2003 AUGUST 31, 2002 -------------- -------------- OPERATIONS Net investment income $ 12,758 $ 41,317 Net realized loss on investments : Securities (209,661) (8,289) Options -- (16,938) Net unrealized appreciation (depreciation) on investments 386,082 (466,565) -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 189,179 (450,475) -------------- -------------- DISTRIBUTION TO SHAREHOLDERS From net investment income (41,305) (114,026) From net realized gain -- (39,141) -------------- -------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (41,305) (153,167) -------------- -------------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets derived from net change in outstanding shares (a) 53,362 (1,283,697) -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 201,236 (1,887,339) NET ASSETS Beginning of year 2,617,443 4,504,782 -------------- -------------- END OF YEAR $ 2,818,679 $ 2,617,443 ============== ============== Accumulated net investment income $ 12,758 $ 41,305 ============== ============== (a) A summary of capital share transactions is as follows:
YEAR ENDED YEAR ENDED AUGUST 31, 2003 AUGUST 31, 2002 --------------------------------- --------------------------------- SHARES VALUE SHARES VALUE -------------- -------------- -------------- -------------- Shares sold 67,395 $ 667,749 115,219 $ 1,407,861 Shares issued on reinvestment of distributions 4,325 41,305 12,420 148,667 Shares redeemed (70,463) (655,692) (233,282) (2,840,225) -------------- -------------- -------------- -------------- Net increase (decrease) 1,257 $ 53,362 (105,643) $ (1,283,697) ============== ============== ============== ==============
See accompanying Notes to Financial Statements. PURISIMA FUNDS STATEMENT OF CHANGES IN NET ASSETS ================================================================================ PURE FOREIGN FUND YEAR ENDED YEAR ENDED INCREASE (DECREASE) IN NET ASSETS FROM: AUGUST 31, 2003 AUGUST 31, 2002 -------------- -------------- OPERATIONS Net investment income $ 58,412 $ 167,727 Net realized gain (loss) on investments: Securities (348,963) 7,820 Options -- (23,081) Net unrealized appreciation (depreciation) on investments 488,304 (591,908) -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 197,753 (439,442) -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income (122,709) (190,682) From net realized gain -- -- -------------- -------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (122,709) (190,682) -------------- -------------- CAPITAL SHARE TRANSACTIONS Net decrease in net assets derived from net change in outstanding shares (a) (743,643) (4,877,317) -------------- -------------- TOTAL DECREASE IN NET ASSETS (668,599) (5,507,441) NET ASSETS Beginning of year 3,394,125 8,901,566 -------------- -------------- END OF YEAR $ 2,725,526 $ 3,394,125 ============== ============== Accumulated net investment income $ 54,360 $ 118,657 ============== ============== (a) A summary of capital share transactions is as follows:
YEAR ENDED YEAR ENDED AUGUST 31, 2003 AUGUST 31, 2002 --------------------------------- --------------------------------- SHARES VALUE SHARES VALUE -------------- -------------- -------------- -------------- Shares sold 32,333 $ 395,974 54,423 $ 834,081 Shares issued on reinvestment of distributions 10,175 122,709 12,224 181,160 Shares redeemed (108,954) (1,262,326) (386,039) (5,892,558) -------------- -------------- -------------- -------------- Net decrease (66,446) $ (743,643) (319,392) $ (4,877,317) ============== ============== ============== ==============
See accompanying Notes to Financial Statements. PURISIMA FUNDS 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.
TOTAL RETURN FUND ---------------------------------------------------------------- YEAR ENDED AUGUST 31, ---------------------------------------------------------------- 2003 2002 2001 2000 1999 -------- -------- -------- -------- -------- Net asset value, beginning of year $ 14.06 $ 18.73 $ 19.65 $ 17.46 $ 12.47 -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.07 0.09 0.31 ^ (0.01) (0.01) Net realized and unrealized gain (loss) on investments 1.34 (2.91) (0.61)^ 2.22 5.00 -------- -------- -------- -------- -------- Total from investment operations 1.41 (2.82) (0.30)^ 2.21 4.99 -------- -------- -------- -------- -------- LESS DISTRIBUTIONS: From net investment income (0.05) (0.19) -- (0.02) -- From net realized gain (0.11) (1.66) (0.62) -- -- -------- -------- -------- -------- -------- Total distributions (0.16) (1.85) (0.62) (0.02) -- -------- -------- -------- -------- -------- Net asset value, end of year $ 15.31 $ 14.06 $ 18.73 $ 19.65 $ 17.46 ======== ======== ======== ======== ======== Total return 10.22% (16.72%) (1.33%) 12.64% 40.05% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (millions) $ 244.1 $ 181.6 $ 122.4 $ 89.8 $ 53.2 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived and expenses absorbed or recouped 1.56% 1.51% + 1.61% + 1.62% 1.82% After fees waived and expenses absorbed or recouped 1.50% 1.50% + 1.50% + 1.50% 1.50% RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS # 0.55% 1.03% 1.68% (0.04%) 0.00% Portfolio turnover rate 12.57% 60.76% 105.90% 38.42% 12.72%
# Net of fees waived. ^ Calculations are based on average shares outstanding for the period. + Without dividend expense on securities sold short, which was 0.10% for 2002 and 0.05% for 2001. See accompanying Notes to Financial Statements. PURISIMA FUNDS 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.
PURE AMERICAN FUND ------------------------------------------------------------------- SEPTEMBER 29, YEAR ENDED AUGUST 31, 1998+ -------------------------------------------------- THROUGH AUGUST 31, 2003 2002 2001 2000 1999 -------- -------- -------- -------- -------- Net asset value, beginning of period $ 10.21 $ 12.45 $ 13.49 $ 13.00 $ 10.00 -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.05 0.43 0.28 ^ (0.03) (0.02) Net realized and unrealized gain (loss) on investments 0.84 (2.07) (0.02) ^ 0.52 3.02 -------- -------- -------- -------- -------- Total from investment operations 0.89 (1.64) 0.26 ^ 0.49 3.00 -------- -------- -------- -------- -------- LESS DISTRIBUTIONS: From net investment income (0.16) (0.58) (0.28) -- -- From net realized gain -- (0.02) (1.02) (0.00)++ -- -------- -------- -------- -------- -------- Total distributions (0.16) (0.60) (1.30) (0.00)++ -- -------- -------- -------- -------- -------- Net asset value, end of period $ 10.94 $ 10.21 $ 12.45 $ 13.49 $ 13.00 ======== ======== ======== ======== ======== Total return 8.91% (13.90%)1 1.96% 1 3.79% 30.00% ** RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (millions) $ 2.8 $ 2.6 $ 4.5 $ 1.1 $ 1.5 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived 1.50% 1.50% + 1.50% + 1.50% 1.50% * After fees waived n/a 1.13% + 1 0.00% + 1 n/a n/a RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS 0.52% 1.35% 4.09% (0.13%) (0.34%)* Portfolio turnover rate 31.47% 75.54% 265.29% 45.48% 29.73% **
* Annualized. ** Not Annualized. + Commencement of operations. ++ Amount represents less than $0.01 per share. ^ Calculations are based on average shares outstanding for the period. + Without dividend expense on securities sold short, which was 0.06% for 2002 and 0.08% for 2001. 1 The Adviser voluntarily waived all of its management fees for the period December 21, 2000 to December 1, 2001. See accompanying Notes to Financial Statements. PURISIMA FUNDS 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.
PURE FOREIGN FUND ------------------------------------------------------------------ SEPTEMBER 29, 1998+ YEAR ENDED AUGUST 31, THROUGH -------------------------------------------------- AUGUST 31, 2003 2002 2001 2000 1999 -------- -------- -------- -------- -------- Net asset value, beginning of period $ 13.07 $ 15.37 $ 16.39 $ 13.52 $ 10.00 -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.28 0.84 0.33 ^ 0.01 0.04 Net realized and unrealized gain (loss) on investments 1.21 (2.47) (0.45)^ 3.69 3.48 -------- -------- -------- -------- -------- Total from investment operations 1.49 (1.63) (0.12)^ 3.70 3.52 -------- -------- -------- -------- -------- LESS DISTRIBUTIONS: From net investment income (0.46) (0.67) (0.35) (0.03) -- From net realized gain -- -- (0.55) (0.80) -- -------- -------- -------- -------- -------- Total distributions (0.46) (0.67) (0.90) (0.83) -- -------- -------- -------- -------- -------- Net asset value, end of period $ 14.10 $ 13.07 $ 15.37 $ 16.39 $ 13.52 ======== ======== ======== ======== ======== Total return 10.95% (11.14%) (0.45%) 28.04% 35.20% ** RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (millions) $ 2.7 $ 3.4 $ 8.9 $ 2.8 $ 0.3 RATIO OF EXPENSES TO AVERAGE NET ASSETS: Before fees waived 1.50% 1.50% + 1.50% + 1.50% 1.50% * After fees waived n/a 1.07% + 0.00% + n/a n/a RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.06% 4.02% 4.21% 0.26% 0.65% * Portfolio turnover rate 22.02% 69.59% 258.66% 51.60% 7.19% **
* Annualized. ** Not Annualized. + Commencement of operations. ^ Calculations are based on average shares outstanding for the period. + Without dividend expense on securities sold short, which was 0.05% for 2002 and 0.08% for 2001. See accompanying Notes to Financial Statements. PURISIMA FUNDS NOTES TO FINANCIAL STATEMENTS August 31, 2003 NOTE 1 - ORGANIZATION The Purisima Funds (the "Trust") was organized as a Delaware business 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 Trust consists of three diversified series (the "Funds"): Purisima Total Return Fund (the "Total Return Fund"), representing the initial series of the Trust which commenced operations on October 28, 1996, and Purisima Pure American Fund (the "Pure American Fund") and Purisima Pure Foreign Fund (the "Pure Foreign Fund") both of which commenced operations on September 29, 1998. Fisher Investments, Inc. (the "Adviser") serves as the investment adviser to the Funds. The investment objectives of the Funds are as follows: The Total Return Fund seeks to produce a high level of total return. It invests primarily in common stocks and other equity-type securities, or securities acquired primarily to produce income, or a combination of both depending on the assessment of market conditions. The Pure American Fund seeks to provide investors with a high level of total return. The Fund may emphasize investments in common stocks and other equity-type securities acquired primarily to produce income, or a combination of both, depending on the assessment of market conditions by the Fund's Investment Adviser. The Fund will concentrate its portfolio holdings to those securities issued by issuers domiciled in the United States. The Pure Foreign Fund seeks to provide investors with a high level of total return. The Fund may emphasize investments in common stocks and other equity-type securities acquired primarily to produce income, or a combination of both, depending on the assessment of market conditions by the Fund's Investment Adviser. Under normal market conditions, the Fund will concentrate its portfolio holdings to those securities issued by issuers domiciled outside of the United States. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their 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. Investments in securities traded on the Nasdaq Stock Market, Inc. ("Nasdaq") will be valued at the Nasdaq Official Closing Price, 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 bid. Securities for which quotations are not PURISIMA FUNDS readily available are valued at their respective fair values as determined in good faith by the Board of Trustees or their designee. Debt securities with remaining maturities of 60 days or less are valued at cost which, when combined with accrued interest, approximates market value. Discounts and Premiums on securities purchased are amortized over the lives of the respective securities using the straight-line method. B. Federal Income and Excise Taxes. The Funds intend to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of their income to its shareholders. Therefore, no federal income or excise tax provision is required. As of August 31, 2003, the Total Return Fund has a capital loss carryforward available to offset future capital gains, if any, of $11,619,847, all of which expires in 2011. The Pure American Fund has a capital loss carryforward available to offset future capital gains, if any, of $31,418, of which $19,013 expires in 2011 and $12,405 expires in 2010, and the Pure Foreign Fund has a capital loss carryforward available to offset future capital gains, if any, of $144,958, of which $770 expires in 2010 and $144,188 expires in 2011. In addition, the Total Return Fund, Pure American Fund and Pure Foreign Fund had net realized capital losses of $1,782,053, $184,040 and $218,152, respectively, during the period November 1, 2002 through August 31, 2003, which are treated for federal income tax purposes as arising during the Funds' tax year ending August 31, 2004. These "post-October" losses may be utilized in future years to offset net realized capital gains prior to distributing such gains to shareholders. C. 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. D. 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. E. 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. F. Options. 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 PURISIMA FUNDS of an option, the acquisition cost or sale proceeds are adjusted by the amount of the premium. When an option is closed, the difference between the premium and the cost to close the position is realized as a gain or loss. G. Securities Sold Short. The Funds engage in selling securities short, which obligates the Funds to replace a security borrowed by purchasing the same security at the current market value. The Funds would incur a loss if the price of the security increases between the date of the short sale and the date on which the Funds replace the borrowed security. The Funds would realize a gain if the price of the security declines between those dates. The Funds are 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 Funds 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. NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS The Total Return Fund (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 Funds. 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 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 also 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, 2003, the Adviser waived fees of $129,719. PURISIMA FUNDS At August 31, 2003, the cumulative unreimbursed amount paid and/or waived by the Adviser on behalf of the Fund is $243,700. The Adviser may recapture $102,939 no later than August 31, 2004, $11,042 no later than August 31, 2005 and $129,719 no later than August 31, 2006. The Pure American and Pure Foreign Funds have a Comprehensive Management Agreement with the Adviser to provide advisory and other ordinary services, including administration, transfer agency, custody and auditing services. For providing these services, the Pure American and Pure Foreign Funds each pay the Adviser a monthly fee at the annual rate of 1.50% of the respective Funds' average daily net assets. This comprehensive fee arrangement requires the Adviser to absorb and pay out of its own resources all operating expenses of the Pure American and Pure Foreign Funds U.S. Bancorp Fund Services, LLC (the "Administrator") acts as the Trust's Administrator under an Administration Agreement. The Administrator prepares various federal and state regulatory filings, reports and returns for the Funds; prepares reports and materials to be supplied to the trustees; monitors the activities of the Funds' custodian, transfer agent and accountants; coordinates the preparation and payment of Fund expenses and reviews the Funds' expense accruals. For its services, the Administrator receives a monthly fee based on the value of the total average net assets of the Trust at an annual rate of 0.10% of the first $200 million of such net assets, 0.05% of the next $300 million, and 0.03% thereafter, subject to a minimum fee of $40,000 per Fund. 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, 2003, the Fund incurred $491,055 in distribution fees. PURISIMA FUNDS NOTE 5 - PURCHASES AND SALES The cost of purchases and the proceeds from sales of securities, excluding short-term investments, for the year ended August 31, 2003 were as follows: FUND PURCHASES SALES ---- --------- ----- Excluding U.S. Government securities: Total Return Fund $ 66,057,525 $ 24,479,384 Pure American Fund 786,262 771,659 Pure Foreign Fund 622,145 1,449,954 U.S. Government securities: Total Return Fund -- -- Pure American Fund 6,831 -- Pure Foreign Fund -- -- NOTE 6 - DISTRIBUTION TO SHAREHOLDERS As of August 31, 2003, the components of distributable earnings on a tax basis were as follows:
Total Return Pure American Pure Foreign ---------------------------------------------------- COST OF INVESTMENTS FOR TAX PURPOSES $ 244,940,573 $ 2,917,063 $ 2,722,874 ---------------------------------------------------- Gross tax unrealized appreciation $ 20,427,426 $ 169,566 $ 177,256 Gross tax unrealized depreciation ($ 21,871,629) ($ 271,420) ($ 208,310) ---------------------------------------------------- Net tax unrealized depreciation ($ 1,444,203) ($ 101,854) ($ 31,054) ==================================================== UNDISTRIBUTED ORDINARY INCOME $ 1,073,550 $ 12,758 $ 54,360 CAPITAL LOSS CARRYFORWARD ($ 11,619,847) ($ 31,418) ($ 144,958) POST-OCTOBER LOSSES ($ 1,782,053) ($ 184,040) ($ 218,152)
The tax composition of dividends are as follows: Long Term Ordinary Income Long Term Capital Gains Income Per Share Capital Gains Per Share ---------------------------------------------------- Total Return Fund 8/31/2003 $ 649,922 $ 0.0465 $1,595,178 $ 0.1141 8/31/2002 5,260,462 0.7179 8,262,543 1.1276 Pure American Fund 8/31/2003 41,305 0.1565 -- -- 8/31/2002 148,984 0.5806 4,183 0.0163 Pure Foreign Fund 8/31/2003 122,709 0.4583 -- -- 8/31/2002 190,682 0.6665 -- -- PURISIMA FUNDS OTHER INFORMATION - UNAUDITED For dividends declared after December 31, 2002, from net investment income under the Jobs and Growth Tax Relief Reconciliation Act of 2003, the Funds designate the following percentages: -------------------------------------------------- Total Return Fund 95.27 -------------------------------------------------- Pure American Fund 95.76% -------------------------------------------------- Pure Foreign Fund 97.44% -------------------------------------------------- OTHER INFORMATION - TRUSTEES AND OFFICER INFORMATION (Unaudited)
Number of Portfolios in Fund Other Position(s) Complex Director- Held Year Principal Overseen by ships Name, Address, Age with Trust Elected1 Occupation(s) During Past Five Years Director Held ------------------ ---------- -------- ------------------------------------ -------- ---- Kenneth L. Fisher* (53) President 1996 Chief Executive Officer and majority 3 None Fisher Investments, Inc. and Trustee shareholder of the Adviser, and has served 13100 Skyline Blvd. in such capacities since the incorporation Woodside, CA 94062 of the Adviser in 1986. Prior thereto, he was the founder of Fisher Investments, a sole proprietorship which commenced operations in 1978. Sherrilyn A. Fisher* (54) Secretary 1996 Senior Vice President and Corporate N/A None Fisher Investments, Inc. Secretary of the Adviser. Ms. Fisher has 13100 Skyline Blvd. been employed by the Adviser since 1986. Woodside, CA 94062 David Ruiz (38) Treasurer 2003 Controller, Fisher Investments, Inc., since N/A None Fisher Investments, Inc. July of 2001. Prior thereto, served as 13100 Skyline Blvd. Controller for Secure.com (internet related Woodside, CA 94062 products) while providing consulting services for Agilent Technologies. Prior to the year 2000, served as the Chief Financial Officer for Nomura Securities in Dallas, Texas. Pierson E. Clair III (55) Trustee 1996 President and Chief Operating Officer of 3 Signature Fisher Investments, Inc. Brown & Haley since 1998 (fine Foods, Inc. 13100 Skyline Blvd. confectioners); Vice President of Blummer Woodside, CA 94062 Chocolate Company from 1980 to 1997, where he had been employed since 1970. Bryan F. Morse (51) Trustee 1996 Sole proprietor of Bryan F. Morse, RIA, a 3 None Fisher Investments, Inc. registered investment adviser since 1990. 13100 Skyline Blvd. Woodside, CA 94062 Grover T. Wickersham (54) Trustee 1996 Attorney in private practice in Palo Alto, 3 None Fisher Investments, Inc. California. Prior to entering private 13100 Skyline Blvd. practice in June of 1981, served as a Branch Woodside, CA 94062 Chief of the Los Angeles Regional Office of the U.S. Securities and Exchange Commission. Scott LeFevre (46) Trustee 2001 Sole proprietor of LeFevre Capital 3 None Fisher Investments, Inc. Management. 13100 Skyline Blvd. Woodside, CA 94062 Alfred D. McKelvy, Jr. (54) Trustee 2003 Executive Director of the law firm of 3 Diablo Fisher Investments, Inc. Berding & Weil, LLP since 1990. Valley 13100 Skyline Blvd. Bank; East Woodside, CA 94062 Bay BOMA.
---------------------------- 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. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE SHAREHOLDERS AND BOARD OF TRUSTEES PURISIMA FUNDS WOODSIDE, CALIFORNIA We have audited the accompanying statement of assets and liabilities, including the schedule of investments of the Purisima Total Return Fund, the Purisima Pure American Fund, and the Purisima Pure Foreign Fund, each a series of shares of the Purisima Funds, as of August 31, 2003, 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 indicated thereon. These financial statements and financial highlights are the responsibility of the Funds' 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 auditing standards generally accepted in the United States of America. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2003, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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, the Purisima Pure American Fund, and the Purisima Pure Foreign Fund as of August 31, 2003, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights indicated thereon, in conformity with accounting principles generally accepted in the United States of America. TAIT, WELLER & BAKER PHILADELPHIA, PENNSYLVANIA SEPTEMBER 26, 2003 PRIVACY NOTICE Fisher Investments, Inc. and The Purisima Funds collect nonpublic 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 do not disclose any nonpublic personal information about our customers or former customers without the customer's authorization, except as required by law or in response to inquires from governmental authorities. We restrict access to your personal and account information to those employees who need to know that information to provide products and services to you. We also may disclose that information to unaffiliated third parties (such as to brokers or custodians) only as permitted by law and only as needed for us to provide agreed services to you. We maintain physical, electronic and procedural safeguards to guard your nonpublic personal information. 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 amendment to its code of ethics during the covered period. The registrant has not granted any waivers from any provisions of the code of ethics during the covered period. 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 offer the registrant adequate oversight for the registrant's level of financial complexity. Item 4. Principal Accountant Fees and Services. ------------------------------------------------- Not required for annul reports filed for periods ending before December 15, 2003. Item 5. Audit Committee of Listed Registrants. ------------------------------------------------ Not applicable to open-end investment companies. Item 6. [Reserved] -------------------- Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End -------------------------------------------------------------------------------- Management Investment Companies. -------------------------------- Not applicable to open-end investment companies. Item 8. [Reserved] -------------------- Item 9. Controls and Procedures. ---------------------------------- (a) Based on their evaluation of the Registrant's Disclosure Controls and Procedures as of a date within 90 days of the Filing Date, the Registrant's President and Treasurer/CFO have determined that the Disclosure Controls and Procedures (as defined in Rule 30a-2(c) under the Act) are designed to ensure that information required to be disclosed by the Registrant is recorded, processed, summarized and reported by the Filing Date, and that information required to be disclosed in the report is communicated to the Registrant's management, as appropriate, to allow timely decisions regarding required disclosure. 2 (b) There were no significant changes in the Registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, and there were no corrective actions with regard to significant deficiencies and material weaknesses. Item 10: Exhibits. ------------------- (a) Code of Ethics. Filed herewith. (b) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. (c) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. 3 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 (Signature and Title) /s/ KENNETH L. FISHER --------------------- Kenneth L. Fisher, President Date 11/7/03 ------------------------------------- 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 (Signature and Title) /s/ KENNETH L. FISHER --------------------- Kenneth L. Fisher, President Date 11/7/03 ------------------------------------- By (Signature and Title) /s/ DAVID RUIZ -------------- David Ruiz, Treasurer Date 11/6/03 ------------------------------------- 4