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Purisima Funds
- --------------------------------------------------------------------------------
Semi-Annual Report February 28, 1999
Total Return
Pure American
Pure Foreign
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
"Perhaps the only investment you'll need."
<PAGE>
The Purisima
Fund Family
Fisher Investments manages over $2 billion for large institutions and
high-net-worth individuals. We built our business by offering personal service,
a history of performance and generally low fees to large investors. We create
domestic, foreign and global portfolios for our clients. Yet few investors have
the over $500,000 necessary to build a customized portfolio of stocks. That's
why we created the Purisima Funds.
These mutual funds allow us to pool the money of many investors
together and buy enough stocks to create a diversified portfolio, while also
having sufficient assets under management to keep costs relatively low. Our
funds are made up of what we believe are three ideal portfolios: domestic,
foreign and global. Purisima Pure American is composed of the domestic
securities we believe will most likely appreciate. Purisima Pure Foreign
contains those foreign securities we think are the best investments. Purisima
Total Return has a portfolio that contains both foreign and domestic securities.
Pure American. Many investors, large and small, simply don't want to
own foreign stocks. They wish to avoid the political and economic issues of
foreign countries or the currency risks involved in overseas investments. Fisher
Investments satisfies the desire for a handpicked U.S. only portfolio by
offering the Purisima Pure American Fund, which invests only in American
securities and seeks to consistently beat the S&P 500 stock index.
Pure Foreign. Some investors like to pick their own U.S. stocks, but
don't feel comfortable selecting foreign ones. Yet, they want the advantages of
global diversification that requires owning foreign securities. Pure Foreign
allows them to obtain this foreign diversification, which should help lower the
volatility and risks of their entire investment portfolio. The Purisima Pure
Foreign Fund owns the foreign securities Fisher Investments believes will most
likely appreciate and, by combining it with a U.S. portfolio, investors can
create a complete global portfolio.
Total Return. This fund might be the only investment you need to make.
It combines our top U.S. and foreign security picks in one mutual fund. We
believe the Purisima Total Return Fund is the single best way for small
investors to manage their money. Through global diversification targeted at
securities, which we anticipate will outpace the market, it strives for the high
total return and reduced level of risk many large investors have sought from
Fisher Investments.
2
<PAGE>
A Letter to our
Shareholders
We are pleased to bring you the semi-annual report of the Purisima
Funds for the six-month period ended February 28, 1999. During the reporting
period, we continued to pursue our investment objective of seeking a high total
return for our shareholders, and the Purisima Funds recorded solid performance.
Also, on September 29, 1998, the Purisima Total Return Fund was joined by two,
new no-load mutual funds managed by Fisher Investments: the Purisima Pure
American Fund and the Purisima Pure Foreign Fund.
The Pure American Fund is a no-load fund holding our top U.S. stock
picks. The Pure Foreign Fund holds our foreign selections. We still think the
Purisima Total Return Fund, which combines both our top U.S. and foreign picks
in what we believe is the ideal global mix of expected return and risk, is the
investment vehicle best suited for most folks. Yet for those who don't want to
hold any foreign stocks, the Purisima Pure American Fund exposes investors to
just the advantages of Ken Fisher's insights into the domestic market.
Meanwhile, the Pure Foreign Fund enables folks who like to pick their own
American stocks but still desire the advantages of foreign diversification, a
method for gaining a portfolio of Ken's top foreign stock picks.
Domestic Overview
During the reporting period, America's economic expansion rolled on,
exceeding ninety months in duration. October posted the biggest one-month
percentage gain of new home starts in over a year, and housing construction was
healthy throughout the period. A record sixty-seven percent of American
households now own the homes they live in according to third quarter, calendar
year statistics. Also, recent holiday spending was strong, while auto sales
remained healthy. What's more, both inflation and unemployment remained low, as
this Goldilocks economy, which has been neither too hot nor too cold, continued
its powerful performance.
Positive economic fundamentals contributed to solid stock market
performance. The S&P 500 hit a new high in January, but then leveled off in
February. We believe the market was simply digesting some of its substantial
gains, before continuing higher. For much of the reporting period super caps -
those stocks larger than the S&P 500's average - led the broader market. The
biggest of big stocks contributed much of the market's gains, while other
domestic investment styles had largely lackluster performance.
3
<PAGE>
Foreign Overview
Europe continued to enjoy the fruits of its economic recovery and
transition to the Euro. The percent of jobless in the EU fell below ten percent
in September. Falling interest rates in most European countries also boosted
investors' expectations. All eleven countries participating in the new Euro
currency coordinated an interest rate cut in December that brought their
short-term rates to three percent, excluding Italy which fell to 3.5 percent.
Contributing to both investor confidence and low interest rates was the
subsequent, successful introduction of the Euro. Japan, however, showed little
signs of recovery for most of the reporting period, while the relatively small
economies of many developing nations remained unstable in our opinion.
Over the previous six months, European markets posted largely positive
performance, while Japanese stocks showed limited signs of a possible turnaround
only at the end of the period in our opinion. Yet the U.S. stock market, as
measured by the S&P 500, still led the way versus most markets. The stock
exchanges of many developing countries evidenced turbulence, as investors
remained concerned about their respective economies.
Portfolio Update
Our domestic strategy of holding only super cap stocks helped the
Purisima Pure American Fund beat the Standard & Poor's 500 for the period
beginning on its inception date of September 29, 1998 and ending on the Fund's
February 28, 1999 report date. Meanwhile, the performance of our foreign stocks
lagged our American picks. However, they were still strong enough to allow the
Purisima Pure Foreign Fund's cumulative return to edge out the Morgan Stanley
EAFE Foreign Index, which is a benchmark of foreign market performance, during
the period from the Fund's inception on September 29, 1998 through February 28,
1999.
4
<PAGE>
Over the course of the entire six-month reporting period, both our
foreign and U.S. stock picks combined with their respective allocations, helped
the Purisima Total Return Fund beat its comparable benchmark, the MSCI World
Index. Yet, net-of-fees, five and six month returns are in our opinion too short
of a time period to effectively judge a portfolio's performance. Although we're
happy about our comparatively strong showing for the reporting period, we remain
committed to increasing returns and lowering risks over the long-term.
Sincerely,
/s/ Kenneth L. Fisher
Kenneth L. Fisher
Chairman and Chief Investment Officer
Fisher Investments, Inc.
5
<PAGE>
Schedule of Investments
Purisima Total Return
February 28, 1999
Unaudited
% OF MARKET
# OF SHARES COMMON STOCKS NET ASSETS VALUE
- ----------- ------------- ---------- -----
AUTOMOBILE 4.2%
4,516 DaimlerChrysler AG - ADR $ 424,222
30,840 Fiat SPA - ADR 458,745
8,100 Ford Motor Co. 480,431
5,700 Volvo AB - ADR 145,350
-----------
1,508,748
-----------
BANKING 7.7%
18,200 Banco Bilbao Vizcaya - ADR 268,450
12,015 BankAmerica Corp. 784,730
49,650 Bank of Tokyo - Mitsubishi - ADR 589,594
14,600 Espirito Santo Finl - ADR 239,075
2,800 National Australia Bank LTD - ADR 232,050
12,696 San Paolo - IMI Spa - ADR 441,186
7,800 WestPac Banking - ADR 260,325
-----------
2,815,410
-----------
CHEMICALS 2.5%
9,700 Hoechst Ag Sponsored ADR 455,900
13,200 Norsk Hydro A/S - ADR 447,975
-----------
903,875
-----------
COMMUNICATION EQUIPMENT 4.5%
5,600 Alcatel Alsthom - ADR 121,450
5,200 Ericsson (LM) Tel. - ADR 135,200
8,100 Lucent Technologies, Inc. 822,656
4,200 Nokia Corp. - ADR A 569,625
-----------
1,648,931
-----------
COMPUTER COMPONENTS & SOFTWARE 5.6%
8,112 Cisco Systems, Inc.* 793,455
5,700 Microsoft Corp.* 855,713
8,100 NEC Corp. - ADR 403,988
-----------
2,053,156
-----------
COMPUTERS 4.3%
9,600 Dell Computer Corp.* 769,200
4,700 IBM Corp. 799,000
-----------
1,568,200
-----------
CONSUMER PRODUCTS 2.1%
12,000 Coca-Cola Co. 767,250
-----------
ELECTRIC UTILITIES 1.0%
13,600 Endesa S.A. - ADR 358,700
-----------
ELECTRICAL EQUIPMENT 5.6%
27,700 ABB AB - ADR 313,356
8,000 General Electric Co. 802,500
8,050 Hitachi Ltd - ADR 500,609
6,250 Philips Electronics 435,156
-----------
2,051,621
-----------
FINANCIAL SERVICES 4.6%
14,450 Citigroup Inc. 848,938
9,600 Federal National Mortgage Association 672,000
2,800 ING Groep N. V. 156,625
-----------
1,677,563
-----------
FOOD 1.3%
6,300 Unilever N.V. 456,356
-----------
HOUSEHOLD PRODUCTS 2.2%
8,700 Procter & Gamble Co. 778,650
-----------
HOUSEHOLD AUDIO & VIDEO EQUIPMENT 1.1%
5,400 Sony Corp. - ADR 403,312
-----------
INSURANCE 5.5%
200 Aegon N.V. - ADR 20,925
7,637 American Int'l Group 870,141
4,700 Axa SA - ADR 312,550
335 Berkshire Hathaway Inc-B* 796,965
-----------
2,000,581
-----------
6
<PAGE>
% OF MARKET
# OF SHARES COMMON STOCKS NET ASSETS VALUE
- ----------- ------------- ---------- -----
OIL & GAS 4.8%
3,300 Elf Aquitaine - ADR 170,363
11,600 Exxon Corp. 772,125
4,200 Repsol SA - ADR 220,500
6,200 Royal Dutch Petroleum 272,025
6,150 Total SA - ADR 317,494
-----------
1,752,507
-----------
PHARMACEUTICALS 17.3%
5,100 Abbott Laboratories 236,831
6,600 American Home Products 392,700
18,900 Astra AB - ADR - A 374,456
6,500 Bristol-Myers Squibb Co. 818,594
9,600 Johnson & Johnson 819,600
9,000 Lilly (Eli) & Co. 852,188
10,100 Merck & Co., Inc. 825,675
200 Novartis AG - ADR 17,542
4,900 Novo-Nordisk A/S- ADR 279,912
6,300 Pfizer, Inc. 831,206
4,800 Rhone - Poulenc SA - ADR 220,800
11,500 Schering-Plough Corp. 643,281
-----------
6,312,785
-----------
PHOTOGRAPHY 0.9%
8,700 Fuji Photo Film - ADR 321,900
-----------
RADIO & TV BROADCASTING EQUIPMENT 0.7%
1,500 Matsushita Electric Industrial Co., Ltd 246,656
-----------
RETAIL 3.9%
10,600 Home Depot 632,688
9,200 Wal-Mart Stores, Inc. 794,650
-----------
1,427,338
-----------
SEMI-CONDUCTORS 2.1%
6,500 Intel Corp. 779,594
-----------
TELECOMMUNICATIONS 14.5%
9,450 AT&T Corp. 776,081
12,200 Bell Atlantic Corp. 700,737
16,950 Bellsouth Corp. 783,937
10,900 Deutsche Telekom - ADR 497,313
10,500 MCI Worldcom, Inc.* 866,250
6,400 Portugal Telecom SA 313,600
15,200 SBC Communications Inc. 803,700
2,500 Tele Danmark A/S - ADR 150,625
2,900 Telefonica De Espana - ADR 398,750
-----------
5,290,993
-----------
TOBACCO PRODUCTS 1.7%
16,150 Philip Morris Cos., Inc. 631,869
-----------
TOTAL COMMON STOCKS 98.1% 35,755,995
(cost $30,055,158) -----------
SHORT-TERM INVESTMENTS 2.3%
UMB Bank, n.a. Money Market Fiduciary 845,141
(cost $845,141) -----------
TOTAL INVESTMENTS 100.4% 36,601,136
(cost $30,900,299) -----------
LIABILITIES, LESS OTHER ASSETS -0.4% -158,085
-----------
NET ASSETS 100.0% $36,443,051
===========
ADR - American Depository Receipt
* Non-income producing security
See Accompanying Notes to Financial Statements
7
<PAGE>
Schedule of Investments
Pure American
February 28, 1999
Unaudited
% OF MARKET
# OF SHARES COMMON STOCKS NET ASSETS VALUE
- ----------- ------------- ---------- -----
BANKING 3.5%
350 BankAmerica Corp. 22,859
-----------
COMMUNICATION EQUIPMENT 3.5%
225 Lucent Technologies, Inc. 22,852
-----------
COMPUTER COMPONENTS & SOFTWARE 6.2%
225 Cisco Systems, Inc.* 22,008
125 Microsoft Corp.* 18,766
-----------
40,774
-----------
COMPUTERS 8.4%
500 Compaq Computer Corp. 17,625
200 Dell Computer Corp.* 16,025
125 IBM Corp. 21,250
-----------
54,900
-----------
CONSUMER PRODUCTS 3.4%
350 Coca-Cola Co. 22,378
-----------
ELECTRICAL EQUIPMENT 3.4%
225 General Electric Co. 22,570
-----------
FINANCIAL SERVICES 4.9%
425 Citigroup Inc. 24,969
100 Federal National Mortgage Association 7,000
-----------
31,969
-----------
HOUSEHOLD PRODUCTS 1.0%
75 Procter & Gamble Co. 6,712
-----------
INSURANCE 7.2%
225 American Int'l Group 25,636
9 Berkshire Hathaway Inc-B* 21,411
-----------
47,047
-----------
OIL & GAS 3.0%
300 Exxon Corp. 19,969
-----------
PHARMACEUTICALS 24.3%
375 American Home Products 22,313
175 Bristol-Myers Squibb Co. 22,039
250 Johnson & Johnson 21,344
250 Lilly (Eli) & Co. 23,672
300 Merck & Co., Inc. 24,525
175 Pfizer, Inc. 23,089
400 Schering-Plough Corp. 22,375
-----------
159,357
-----------
8
<PAGE>
% OF MARKET
# OF SHARES COMMON STOCKS NET ASSETS VALUE
- ----------- ------------- ---------- -----
PUBLISHING AND PRINTING 1.2%
125 Time Warner, Inc. 8,062
-----------
RETAIL 6.9%
400 Home Depot 23,875
250 Wal-Mart Stores, Inc. 21,594
-----------
45,469
-----------
SEMI-CONDUCTORS 3.2%
175 Intel Corp. 20,989
-----------
TELECOMMUNICATIONS 16.2%
250 AT&T Corp. 20,531
350 Bell Atlantic Corp. 20,103
475 Bellsouth Corp. 21,969
275 MCI Worldcom, Inc.* 22,687
400 SBC Communications Inc. 21,150
-----------
106,440
-----------
TOBACCO PRODUCTS 2.8%
475 Philip Morris Cos., Inc. 18,584
-----------
TOTAL COMMON STOCKS 99.1% 650,931
(cost $619,962) -----------
SHORT-TERM INVESTMENTS 0.9%
UMB Bank, n.a. Money Market Fiduciary 5,898
(cost $5,898) -----------
TOTAL INVESTMENTS 100.0% 656,829
(cost $625,860) -----------
OTHER ASSETS, LESS LIABILITIES 0.0% 165
-----------
NET ASSETS 100.0% $ 656,994
===========
* Non-income producing security
See Accompanying Notes to Financial Statements
9
<PAGE>
Schedule of Investments
Pure Foreign
February 28, 1999
Unaudited
% OF MARKET
# OF SHARES COMMON STOCKS NET ASSETS VALUE
- ----------- ------------- ---------- -----
AUTOMOBILE 10.5%
50 DaimlerChrysler AG - ADR $ 4,697
300 Fiat SPA - ADR 4,463
150 Volvo AB - ADR 3,825
-----------
12,985
-----------
BANKING 11.3%
300 Bank of Tokyo - Mitsubishi - ADR 3,563
156 San Paolo - IMI Spa - ADR 5,421
150 WestPac Banking - ADR 5,006
-----------
13,990
-----------
CHEMICALS 6.6%
100 Hoechst Ag Sponsored ADR 4,700
100 Norsk Hydro A/S - ADR 3,394
-----------
8,094
-----------
COMMUNICATION EQUIPMENT 11.1%
200 Alcatel Alsthom - ADR 4,338
100 Ericsson (LM) Tel. - ADR 2,600
50 Nokia Corp. - ADR A 6,781
-----------
13,719
-----------
COMPUTER COMPONENTS & SOFTWARE 4.1%
100 NEC Corp. - ADR 4,988
-----------
ELECTRIC UTILITIES 3.2%
150 Endesa S.A. - ADR 3,956
-----------
ELECTRICAL EQUIPMENT 10.0%
350 ABB AB - ADR 3,959
50 Hitachi Ltd - ADR 3,109
75 Philips Electronics 5,222
-----------
12,290
-----------
FINANCIAL SERVICES 3.4%
75 ING Groep N. V. 4,195
-----------
FOOD 2.9%
50 Unilever N.V. 3,622
-----------
HOUSEHOLD AUDIO & VIDEO EQUIPMENT 3.0%
50 Sony Corp. - ADR 3,734
-----------
INSURANCE 2.7%
50 Axa SA - ADR 3,325
-----------
10
<PAGE>
# OF SHARES COMMON STOCKS NET ASSETS VALUE
- ----------- ------------- ---------- -----
OIL & GAS 10.0%
50 Elf Aquitaine - ADR 2,581
75 Repsol SA - ADR 3,937
75 Royal Dutch Petroleum 3,291
50 Total SA - ADR 2,581
-----------
12,390
-----------
PHARMACEUTICALS 5.1%
50 Novo-Nordisk A/S- ADR 2,856
75 Rhone - Poulenc SA - ADR 3,450
-----------
6,306
-----------
PHOTOGRAPHY 3.0%
100 Fuji Photo Film - ADR 3,700
-----------
RADIO & TV BROADCASTING EQUIPMENT 3.3%
25 Matsushita Electric Industrial Co., Ltd 4,111
-----------
TELECOMMUNICATIONS 9.5%
100 Deutsche Telekom - ADR 4,563
75 Portugal Telecom SA 3,675
25 Telefonica De Espana - ADR 3,437
-----------
11,675
-----------
TOTAL COMMON STOCKS 99.7% 123,080
(cost $105,532) -----------
SHORT-TERM INVESTMENTS 0.4%
UMB Bank, n.a. Money Market Fiduciary 496
(cost $496) -----------
TOTAL INVESTMENTS 100.1% 123,576
(cost $106,028) -----------
LIABILITIES, LESS OTHER ASSETS -0.1% -149
-----------
NET ASSETS 100.0% $ 123,427
===========
ADR - American Depository Receipt
See Accompanying Notes to Financial Statements
11
<PAGE>
Statements of
Assets and Liabilities
February 28, 1999
Unaudited
<TABLE>
<CAPTION>
Total Pure Pure
Return American Foreign
Fund Fund Fund
----------- ----------- -----------
ASSETS
<S> <C> <C> <C>
Investments at market value $36,601,136 $ 656,829 $ 123,576
(cost of $30,900,299, $625,860, $106,028)
Dividends and interest receivable 18,830 769 2
Deferred organizational costs, net 72,040 -- --
Prepaid expenses 29,535 -- --
----------- ----------- -----------
Total assets 36,721,541 657,598 123,578
----------- ----------- -----------
LIABILITIES
Payable for securities purchased 180,256 -- --
Payable to adviser (Note 3) 19,903 604 151
Other accrued expenses 78,331 -- --
----------- ----------- -----------
Total liabilities 278,490 604 151
----------- ----------- -----------
NET ASSETS $36,443,051 $ 656,994 $ 123,427
=========== =========== ===========
COMPOSITION OF NET ASSETS
Capital stock $30,978,131 $ 607,646 $ 104,861
Accumulated net investment loss -56,353 -251 -411
Accumulated net realized gain
(loss) on investments -179,564 18,630 1,429
Net unrealized appreciation on investments 5,700,837 30,969 17,548
----------- ----------- -----------
NET ASSETS $36,443,051 $ 656,994 $ 123,427
=========== =========== ===========
Number of shares issued and outstanding
($0.01 par value, unlimited shares authorized) 2,240,533 51,998 10,508
=========== =========== ===========
Net Asset Value Per Share $ 16.27 $ 12.63 $ 11.75
=========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements
12
<PAGE>
Statements of
Operations
Unaudited
<TABLE>
<CAPTION>
Total Pure Pure
Return American Foreign
Fund Fund Fund
---------- ---------- ----------
For the Six
Months Ended 9/29/98+ to 9/29/98+ to
2/28/99 2/28/99 2/28/99
---------- ---------- ----------
INVESTMENT INCOME
<S> <C> <C> <C>
Dividends $ 141,096 $ 951 $ 184
Interest 6,473 519 107
---------- ---------- ----------
Total income 147,569 1,470 291
---------- ---------- ----------
EXPENSES
Investment advisory 147,520 1,721 702
Distribution 36,852 -- --
Administration 19,836 -- --
Federal and state registration 13,087 -- --
Amortization of organizational costs 12,375 -- --
Fund accounting 10,134 -- --
Auditing & Tax 9,794 -- --
Transfer agent 8,614 -- --
Legal 5,204 -- --
Custody 4,066 -- --
Printing 1,653 -- --
Insurance 1,487 -- --
Trustees 1,322 -- --
Other 1,798 -- --
---------- ---------- ----------
Total expenses before reimbursement 273,742 1,721 702
Less: reimbursement of expenses
by Adviser (Note 3) -52,149 -- --
---------- ---------- ----------
Net expenses 221,593 1,721 702
---------- ---------- ----------
Net investment loss -74,024 -251 -411
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments -83,441 18,630 1,429
Change in unrealized appreciation
on investments 7,442,440 30,969 17,548
---------- ---------- ----------
Net gain on investments 7,358,999 49,599 18,977
---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $7,284,975 $ 49,348 $ 18,566
========== ========== ==========
</TABLE>
+ Commencement of operations
See Accompanying Notes to Financial Statements
13
<PAGE>
Statement of
Changes in
Net Assets
Total Return Fund
Six Months
Ended 2/28/99 Year Ended
(Unaudited) 8/31/98
----------- -----------
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment income (loss) -$ 74,024 $ 35,808
Net realized loss on investments -83,441 -95,395
Change in unrealized
appreciation (depreciation) on investments 7,442,440 -1,747,710
----------- -----------
Increase (decrease) in net assets
resulting from operations 7,284,975 -1,807,297
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income -7,442 -16,000
----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 10,994,890 21,195,120
Proceeds from shares issued in reinvestment
of net investment income dividends 7,421 15,952
Cost of shares redeemed -3,315,762 -2,144,750
----------- -----------
Net increase from capital share transactions 7,686,549 19,066,322
----------- -----------
Net increase in net assets 14,964,082 17,243,025
NET ASSETS
Beginning of period 21,478,969 4,235,944
----------- -----------
End of period (including, undistributed
(distributions in excess of) net investment
income of ($56,353) and $25,113, respectively) $36,443,051 $21,478,969
=========== ===========
CHANGES IN SHARES
Shares sold 732,048 1,514,495
Shares issued on reinvestment of distributions 463 1,291
Shares redeemed -214,440 -150,179
----------- -----------
Net increase 518,071 1,365,607
=========== ===========
See Accompanying Notes to Financial Statements
14
<PAGE>
Statement of
Changes in
Net Assets
Pure American Fund
September 29, 1998+
to February 28, 1999
(Unaudited)
-----------
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment loss -$ 251
Net realized gain on investments 18,630
Change in unrealized appreciation on investments 30,969
--------
Increase in net assets resulting from operations 49,348
--------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 627,882
Cost of shares redeemed -120,236
--------
Net increase from capital share transactions 507,646
--------
Net increase in net assets 556,994
NET ASSETS
Beginning of period 100,000
--------
End of period (including accumulated
net investment loss of -$251) $656,994
========
CHANGES IN SHARES
Shares sold 51,915
Shares redeemed -9,917
--------
Net increase 41,998
========
+ Commencement of operations
See Accompanying Notes to Financial Statements
15
<PAGE>
Statement of
Changes in
Net Assets
Pure Foreign Fund
February 28, 1999
September 29, 1998+
to February 28, 1999
(Unaudited)
-----------
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment loss -$ 411
Net realized gain on investments 1,429
Change in unrealized appreciation on investments 17,548
--------
Increase in net assets resulting from operations 18,566
--------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 105,100
Cost of shares redeemed -10,239
--------
Net increase from capital share transactions 94,861
--------
Net increase in net assets 113,427
NET ASSETS
Beginning of period 10,000
--------
End of period (including accumulated
net investment loss of -$411) $123,427
========
CHANGES IN SHARES
Shares sold 10,418
Shares redeemed -910
--------
Net increase 9,508
========
+ Commencement of operations
See Accompanying Notes to Financial Statements
16
<PAGE>
Financial Highlights
For a share
outstanding
through the
period.
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Semi-Annual Report. The
calculations are based on average number of shares outstanding for the period.
<TABLE>
<CAPTION>
Total Pure Pure
Return American Foreign
Fund Fund Fund
For the Periods For the Period For the Period
------------------------------------ -------------- --------------
9/1/98 to 9/29/98+ to 9/29/98+ to
2/28/99 9/1/97 to 10/28/96+ to 2/28/99 2/28/99
(Unaudited) 8/31/98 8/31/97 (Unaudited) (Unaudited)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.47 $ 11.87 $ 10.00 $ 10.00 $ 10.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income (loss) -0.03 0.02 0.02 0.00 -0.04
Net realized and unrealized
gains on investments 3.83 0.60 1.85 2.64 1.79
-------- -------- -------- -------- --------
Total from investment operations 3.80 0.62 1.87 2.64 1.75
-------- -------- -------- -------- --------
Less distributions
Dividends from net investment income 0.00 -0.02 -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period $ 16.27 $ 12.47 $ 11.87 $ 12.64 $ 11.75
======== ======== ======== ======== ========
Total return 30.50%** 5.26% 18.70%** 26.30%** 17.50%**
Net assets at end of period ('000) $ 36,443 $ 21,479 $ 4,236 $ 657 $ 123
Ratio of expenses to average net assets
Before expense reimbursement 1.85%* 2.71% 20.97%* 1.50%* 1.50%*
After expense reimbursement 1.50%* 1.50% 1.50%* n/a n/a
Ratio of net investment income -0.50%# 0.28%# 0.56%# -0.22%* -0.87%*
(loss) to average net assets
Portfolio turnover rate 10.64%** 15.89% 1.35%** 37.13%** 8.01%**
</TABLE>
* Annualized
** Not annualized
+ Commencement of operations
# Net of expense reimbursement
See Accompanying Notes to Financial Statements
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Notes to
Financial
Statements
February 28, 1999
Unaudited
(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 representing a distinct portfolio with
its own investment objectives and policies. The Trust consists of three separate
diversified series (the "Funds"): Purisima Total Return Fund (the "Total Return
Fund"), constituting the initial series of the Trust, organized on October 28,
1996, and Purisima Pure American Fund (the "American Fund") and Purisima Pure
Foreign Fund, (the "Foreign Fund") which both commenced operations on September
29, 1998.
The investment objectives of the Funds are as follows:
The Total Return Fund seeks to produce a high level of total return.
The Fund 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 by the Fund's investment
adviser.
The Pure American Fund seeks to provide investors with a high level of
total return. The Fund limits its portfolio to those securities and assets in
the domestic component of the Total Return Fund.
The Pure Foreign Fund seeks to provide investors with a high level of
total return. The Fund limits its portfolio to those securities and assets in
the foreign component of the Total Return Fund.
Fisher Investments, Inc. (the "Adviser") serves as the investment
adviser to the Funds.
(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 generally accepted accounting
principles ("GAAP"). The presentation of financial statements in conformity with
GAAP 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.
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(a) Investment Valuation
Securities which are traded on a recognized stock exchange are valued
at the last sale price on the securities exchange on which such securities are
traded. Securities traded on over-the-counter markets are valued on the basis of
closing over-the-counter trade prices. Securities for which there were no
transactions are valued at the closing bid prices. Short-term investments are
valued at cost.
(b) Organization Costs
Costs incurred by the Total Return Fund in connection with its
organization, registration and the initial public offering of shares totaling
$133,629, have been deferred and will be amortized over 5 years. If any of the
original shares of the Total Return Fund are redeemed by any holder thereof
prior to the end of the amortization period, the redemption proceeds will be
reduced by the pro rata share of the unamortized expenses as of the date of
redemption. The pro rata share by which the proceeds are reduced will be derived
by dividing the number of original shares outstanding at the time of redemption.
The Adviser advanced the organization costs discussed above. As of February 28,
1999, the balance payable to the Adviser for organization costs was $51,294.
(c) Federal Income and Excise Taxes
The Funds have elected and qualified and intend to continue to qualify
to meet the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all investment company net
taxable income and net capital gains to shareholders in a manner which results
in no tax cost to the Funds. Therefore, no federal income or excise tax
provision is required.
(d) Distribution to Shareholders
Dividends from net investment income will be declared and paid
annually. Distributions of net realized gains, if any, will be declared at least
annually. Distributions to shareholders are recorded on the ex-dividend date.
The Funds periodically make reclassifications among certain of their capital
accounts as a result of the recognition and characterization of certain income
and capital gain distributions determined annually in accordance with federal
tax regulations which may differ from generally accepted accounting principles.
As of August 31, 1998, the Total Return Fund had available for federal income
tax purposes an unused capital loss carryover of $2,350, which will begin to
expire in 2005. In addition, the Total Return Fund had a post October loss of
$93,773, which will be deferred until September 1, 1999 for tax purposes.
(e) Other
Investment transactions are accounted for on the trade date. The Funds
determine the gain or loss realized from investment transactions by comparing
the original cost of the security lot sold with the net sale proceeds. Dividend
income is recognized on the ex-dividend date and interest income is recognized
on an accrual basis.
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(3) Investment Adviser
The Total Return Fund has an Investment Management Agreement with the
Adviser, with which certain officers and trustees of the Fund are affiliated, to
furnish investment advisory services to the Fund. Under the terms of this
agreement, the Fund will pay the Adviser a monthly fee at the annual rate of
1.00% of the Fund's average daily net assets. The Adviser has agreed to
voluntarily reduce fees for expenses (exclusive of brokerage, interest, taxes
and extraordinary expenses) that exceed the expense limitation of 1.50% of the
Fund's average daily net assets. The Adviser reimbursed the Fund $52,149 and
$157,282 of expenses for the six months ended February 28, 1999 and the year
ended 1998, respectively. The Investment Management Agreement permits the
Adviser to seek reimbursement of any reductions made to its management fee and
payments made to limit expenses which are the responsibility of the Fund within
the three-year period following such reduction, to the extent approved by the
Trust's disinterested Trustees, subject to the Fund's ability to effect such
reimbursement and remain in compliance with applicable expense limitations. At
such time as it appears probable that the Adviser will seek such reimbursement,
the amount of reimbursement that the Fund is able to effect will be accrued as
an expense of the Fund for that current period. As of February 28, 1999, no fees
have been reclaimed.
The American and Foreign Funds have a Comprehensive Management
Agreement with the Adviser to provide advisory and other ordinary services and
expenses, including administration, transfer agency, custody and auditing
services. For providing these services and expenses, the American and Foreign
Funds each pay the Adviser a monthly fee at the annual rate of 1.50% of the
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
American and Foreign Funds that exceed an annual rate of 1.50%.
(4) Service and Distribution Plan
Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted a
Service and Distribution Plan (the "Plan"). 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 at an annual rate of up to 0.25% of the Fund's
average daily net assets.
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(5) Investment Transactions
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the six months ended February 28, 1999 is
summarized below:
Fund Purchases Sales
- ---- --------- -----
Total Return $10,375,791 $3,136,440
Pure American 719,984 118,653
Pure Foreign 113,866 9,740
At February 28, 1999, gross unrealized appreciation and depreciation
of investments were as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Fund Cost Appreciation Depreciation Appreciation
- ---- ---- ------------ ------------ ------------
Total Return $30,900,299 $6,922,703 -$1,221,866 $5,700,837
Pure American 625,860 47,297 -16,328 30,969
Pure Foreign 106,028 19,547 -1,999 17,548
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