Prospectus
May 1, 2019
Parnassus FundSM
Investor Shares: PARNX | Institutional Shares: PFPRX
Parnassus Core Equity FundSM
Investor Shares: PRBLX | Institutional Shares: PRILX
Parnassus Endeavor FundSM
Investor Shares: PARWX | Institutional Shares: PFPWX
Parnassus Mid Cap FundSM
Investor Shares: PARMX | Institutional Shares: PFPMX
Parnassus Fixed Income FundSM
Investor Shares: PRFIX | Institutional Shares: PFPLX
Like securities of all mutual funds, these securities have
not been approved or disapproved by the Securities and Exchange Commission
(SEC), and the SEC has not determined if this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
Beginning on January 1,
2021, as permitted by regulations adopted by the SEC, paper copies of the Funds’
shareholder reports will no longer be sent by mail, unless you specifically
request paper copies of the reports from the Funds or from your financial
intermediary, such as a broker-dealer or bank. Instead, the reports will be made
available on the Funds’ website (www.parnassus.com), and you will be notified by
mail each time a report is posted and provided with a website link to access the
report.
If you already elected to
receive shareholder reports electronically, you will not be affected by this
change and you need not take any action. You may elect to receive shareholder
reports and other communications from the Funds by contacting your financial
intermediary (such as a broker-dealer or bank) or, if you are a direct investor,
by calling 800-999-3505 or by sending an email
request to [email protected].
You may elect to receive all
future reports in paper copies free of charge. If you invest through a financial
intermediary, you can contact your financial intermediary to request that you
continue to receive paper copies of your shareholder reports. If you invest
directly with the Funds, you can call 800-999-3505 or send an email request
to [email protected] to let the Funds know you wish to continue
receiving paper copies of your shareholder reports. Your election to receive
paper copies of reports will apply to all funds held in your account if you
invest through your financial intermediary.
Table of Contents
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Prospectus • 2019 |
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SUMMARY SECTION
Parnassus Fund
Investment Objective
The Parnassus Fund has the overall investment
objective of capital appreciation.
Fees and Expenses
This table describes the fees and expenses
that you may pay if you buy and hold shares of the Parnassus Fund.
Parnassus Fund
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Annual Fund Operating Expenses (%) |
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(expenses that you pay each year as a percentage of the value
of your investment) |
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Investor Shares |
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Institutional Shares |
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Management
Fees |
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0.62 |
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0.62 |
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Distribution (12b-1) Fees |
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None |
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None |
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Other
Expenses |
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0.23 |
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0.07 |
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Service Fees |
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0.13 |
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None |
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All remaining other expenses |
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0.10 |
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0.07 |
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Total Annual Fund Operating Expenses |
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0.85 |
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0.69 |
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For additional information about the Parnassus
Fund’s expenses, please see “Financial Highlights” in the prospectus.
Example
This example is intended to help you compare
the cost of investing in the Parnassus Fund with the cost of investing in other
mutual funds. The example assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each
year, and that the Fund’s operating expenses remain the same. Although your
actual costs may be higher or lower, under these assumptions, your costs would
be:
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1 Year |
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3 Years |
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5 Years |
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10 Years |
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Investor Shares |
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$87 |
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$271 |
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$471 |
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$1,049 |
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Institutional Shares |
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$70 |
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$221 |
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$384 |
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$859 |
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Portfolio Turnover
The Parnassus Fund pays transaction costs,
such as commissions, when it buys and sells securities (or “turns over” its
portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 47.3% of the average value of its
portfolio.
Principal Investment Strategies
The Parnassus Fund invests in undervalued
stocks. This Fund follows a “contrarian” strategy of seeking to invest in stocks
that are currently out of favor with the financial community and are therefore,
in the opinion of the Fund’s investment adviser (Adviser), deeply undervalued.
The Adviser expects that if these undervalued companies are financially strong
and have good prospects for the future, they will come back into favor and
increase in market value. The Parnassus Fund is a “multi-cap” fund in that it can invest in
companies of any size, from larger, well-established companies to smaller
companies. The Fund invests mainly in domestic stocks of companies that are
financially sound and have good prospects for the future, and to a lesser extent
may also invest in foreign securities of similar companies. The Fund may
purchase foreign securities directly on foreign markets. The Fund is fossil-fuel free, as it does not invest in
companies that derive significant revenues from the extraction, exploration,
production or refining of fossil fuels; the Fund may invest in companies that
use fossil fuel-based energy to power their operations or for other purposes. To
determine a company’s prospects, the Adviser reviews the company’s income
statement, cash flow statement and balance sheet, and analyzes the company’s
sustainable strategic advantage and management team. Upon initial investment, a
company’s stock must be trading below its intrinsic value, which means that the
Adviser seeks to purchase stock trading at a discount to the Adviser’s
assessment
1
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Prospectus • 2019 |
of the company’s estimated value. The Adviser
also takes environmental, social and governance (“ESG”) factors into account in
making investment decisions. The Fund will sell a security if the Adviser
believes a company’s fundamentals will deteriorate, if it believes a company’s
stock has little potential for appreciation or if the company no longer meets
the Adviser’s ESG criteria.
Principal Risks
All investments involve risk, and investing in
the Parnassus Fund is no exception. You could lose money investing in the Fund.
The likelihood of loss may be greater if you invest for a shorter period of
time. The Fund is intended for investors who can accept that there will be
fluctuations in value. Investments in the Fund are not deposits, endorsements or
guarantees of any bank and are not insured by the Federal Deposit Insurance
Corporation or any other government agency. The Fund’s principal risks include
the following:
∎ |
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Stock Market
Risk. The Fund invests in common stocks, whose prices fluctuate in
response to the fortunes of individual companies and in response to
general market and economic conditions both in the U.S. and abroad. In the
past decade financial markets throughout the world have experienced
increased volatility, decreased liquidity and heightened uncertainty. The
Fund’s holdings can vary significantly from broad stock market indices.
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∎ |
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Large-Capitalization Company Risk. Large-capitalization
companies may be unable to respond quickly to new competitive challenges
and also may not be able to attain the high growth rate of successful
smaller companies, especially during extended periods of economic
expansion. |
∎ |
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Small- and
Mid-Capitalization Company
Risk. This is a “multi-cap”
fund. In addition to large-capitalization
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companies, the
Fund may invest in small- and/or mid-capitalization companies, which can
be particularly sensitive to changing economic conditions since they do
not have the financial resources or the well-established businesses of
large-capitalization companies. Relative to the stocks of
large-capitalization companies, the stocks of small- and mid-capitalization companies are often
thinly traded, and purchases and sales may result in higher transaction
costs. Also, small-capitalization companies tend to perform poorly during
times of economic stress. |
∎ |
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Management
Risk. The Adviser may be wrong in its assessment of a company’s value
and/or the stocks the Fund holds may not reach what the Adviser believes
are their full values. From time to time, “value” investing falls out of
favor with investors, and during those periods the Fund’s relative
performance may suffer. |
∎ |
|
Foreign
Securities Risk. The Fund may invest up to 20% of its assets in
foreign securities. Foreign markets can be more volatile than the U.S.
market due to increased risks of adverse issuer, political, regulatory,
market or economic developments and can perform differently from the U.S.
market. Policy and legislative changes in foreign countries and other
events affecting global markets, such as the United Kingdom’s expected
exit from the European Union (or Brexit), may contribute to decreased
liquidity and increased volatility in the financial markets. Further,
foreign companies may be subject to significantly higher levels of
taxation than U.S. companies, including potentially confiscatory levels of
taxation, thereby reducing the earnings potential of such foreign
companies. Substantial withholding taxes may also apply to distributions
from foreign companies. |
2
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Prospectus • 2019 |
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Performance Information
The bar chart and table that follow contain
information that allows you to evaluate the Parnassus Fund’s performance using
several measures, such as yearly changes in performance, best and worst
quarterly returns, and average annual total returns before and after taxes
compared to a broad measure of market performance. The bar chart shows the
performance of the Fund’s Investor Shares, and the performance of the Fund’s
Institutional Shares will differ from those shown to the extent that the classes
of shares do not have the same expenses or inception date. How the Fund
performed in the past (before and after taxes) is not necessarily an indication
of how it will perform in the future. Updated performance information is
available on the Fund’s website, www.parnassus.com, or by calling toll-free at
(800) 999-3505.
During the ten-year period shown in the bar chart, the
highest return for a quarter was 19.9% (quarter ended September 30, 2009), and
the lowest return for a quarter was a loss of 19.4% (quarter ended
September 30, 2011).
Following is a table
comparing the performance of the Parnassus Fund’s two share classes with that of
the S&P 500®
Index (see “Index Descriptions” in the prospectus) and the Lipper Multi-Cap Core Funds Average. Figures are
average annual returns for the one-,
five- and ten-year periods ended
December 31, 2018. The table is intended to demonstrate the risk of
investing in the Parnassus Fund by showing how the Fund’s average annual total
returns, before and after taxes, compare with a broad measure of market
performance, the S&P 500®
Index, and a group of similar mutual funds, the Lipper Multi-Cap Core Funds Average, and also how
the Fund’s performance varies from year to year.
Parnassus Fund
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Average Annual Total Returns (%) |
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(all periods ended December 31, 2018) |
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One
Year |
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Five
Years |
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Ten
Years |
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Investor Shares |
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Return before Taxes |
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-9.73 |
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6.45 |
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14.26 |
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Return after Taxes on Distributions |
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-11.24
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4.29 |
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12.34 |
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Return after Taxes on Distributions and Sale of Fund
Shares |
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-4.56
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4.92
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11.82
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Institutional Shares |
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Return before Taxes |
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-9.57 |
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6.56 |
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14.32 |
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S&P 500®
Index (reflects no deduction for fees, expenses or
taxes) |
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-4.38 |
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8.49 |
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13.12 |
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Lipper Multi-Cap Core Funds
Average |
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-7.88 |
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5.52 |
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11.61 |
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The after-tax returns are calculated using the
historical highest individual stated federal marginal income tax rates and do
not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s
individual tax situation and may differ from those shown. After-tax returns are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts. Return After Taxes on Distributions and
Sale of Fund Shares may be higher than other returns for the same period due to
a tax benefit of realizing a capital loss upon the sale of Fund shares. After-tax returns are shown for Investor
Shares only. After-tax returns for
Institutional Shares will vary.
Parnassus Fund—Institutional Shares
were incepted on April 30, 2015. Performance shown prior to the inception
of the Institutional Shares reflects the performance of the Parnassus
Fund—Investor Shares and includes expenses that are not applicable to and are
higher than those of the Institutional Shares.
The Adviser
Parnassus Investments is the investment
adviser to the Parnassus Fund. For more information on the Adviser, please see
“Management of the Funds” in the prospectus and “The Adviser” in the statement
of additional information.
Portfolio Managers
Ian E. Sexsmith is a Co-Portfolio Manager of the Parnassus Fund
and has served as a portfolio manager since 2013. He is equally responsible for
the day-to-day management of the Parnassus
Fund with the other Portfolio Manager of the Fund.
Robert J. Klaber is a Co-Portfolio Manager of the Parnassus Fund
and has served as a portfolio manager since 2016. He is equally responsible for
the day-to-day management of the Parnassus
Fund with the other Portfolio Manager of the Fund.
For more information, please see “Management
of the Funds” in the prospectus and “Portfolio Managers” in the statement of
additional information.
For important information about the
purchase and sale of Fund shares, tax information and payments to financial
intermediaries, please turn to “Additional Summary Information” on page 17 of
the prospectus.
3
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Prospectus • 2019 |
Parnassus Core Equity Fund
Investment Objective
The Parnassus Core Equity Fund’s objective is
to achieve both capital appreciation and current income.
Fees and Expenses
This table describes the fees and expenses
that you may pay if you buy and hold shares of the Parnassus Core Equity Fund.
Parnassus Core Equity Fund
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Annual Fund Operating Expenses (%) |
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(expenses that you pay each year as a percentage of the value
of your investment) |
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Investor Shares |
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Institutional Shares |
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Management
Fees |
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0.58 |
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0.58 |
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Distribution (12b-1) Fees |
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None |
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None |
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Other
Expenses |
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0.29 |
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0.05 |
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Service Fees |
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0.23 |
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None |
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All remaining other expenses |
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0.06 |
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0.05 |
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Total Annual Fund Operating Expenses |
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0.87 |
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0.63 |
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For additional information about the Parnassus
Core Equity Fund’s expenses, please see “Financial Highlights” in the
prospectus.
Example
This example is intended to help you compare
the cost of investing in the Parnassus Core Equity Fund with the cost of
investing in other mutual funds. The example assumes that you invest $10,000 in
the Fund for the time periods indicated and then redeem all of your shares at
the end of those periods. The example also assumes that your investment has a 5%
return each year, and that the Fund’s operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions, your
costs would be:
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1 Year |
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3 Years |
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5 Years |
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10 Years |
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Investor
Shares |
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$89 |
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$278 |
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$482 |
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$1,073 |
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Institutional Shares |
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$64 |
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$202 |
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$351 |
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$786 |
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Portfolio Turnover
The Parnassus Core Equity Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 31.4% of the
average value of its portfolio.
Principal Investment Strategies
The Parnassus Core Equity
Fund’s objective is to achieve both capital appreciation and current income by
investing primarily in a diversified portfolio of equity securities. Equity
securities include common and preferred stock. Under normal circumstances, the
Fund will invest a minimum of 80% of its net assets (plus borrowings for
investment purposes) in equity securities. At least 75% of the Fund’s total
assets will normally be invested in equity securities that pay interest or
dividends. The remaining 25% may be invested in non-dividend-paying equity securities,
short-term instruments and money-market instruments (i.e., “cash” or cash
equivalents). The Parnassus Core Equity Fund is primarily a large-cap fund, which means that it normally
invests more than half of its net assets in large, well-established companies.
The Fund considers a large-cap company
to be one that has a market capitalization that is greater than the median
market capitalization of the Russell 1000®
Index (which was $10.3 billion as of February 28, 2019) measured at
the time of purchase. The Fund may invest to a lesser extent in small- and mid-capitalization companies. The portfolio
managers focus on seeking downside protection. The Fund may purchase foreign
securities directly on foreign markets. The Fund invests mainly in domestic
stocks of companies that are financially sound and have good prospects for the
future, and to a lesser extent may also invest in foreign securities of similar
companies. Using a value-oriented investment process, the Fund seeks to invest
in equity securities that pay dividends, have the potential for capital
appreciation and which the Fund’s investment adviser
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Prospectus • 2019 |
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(Adviser) believes have the capacity to raise
dividends in the future. To determine a company’s prospects, the Adviser reviews
the company’s income statement, cash flow statement and balance sheet, and
analyzes the company’s sustainable strategic advantage and management team.
Upon initial investment, a company’s stock
must be trading below its intrinsic value, which means that the Adviser seeks to
purchase stock trading at a discount to the Adviser’s assessment of the
company’s estimated value. The Adviser also takes environmental, social and
governance (“ESG”) factors into account in making investment decisions. The Fund
will sell a security if the Adviser believes a company’s fundamentals will
deteriorate, if it believes a company’s stock has little potential for
appreciation or if the company no longer meets the Adviser’s ESG criteria.
Principal Risks
All investments involve risk, and investing in
the Parnassus Core Equity Fund is no exception. You could lose money investing
in the Fund. The likelihood of loss may be greater if you invest for a shorter
period of time. The Fund is intended for investors who can accept that there
will be fluctuations in value. Investments in the Fund are not deposits,
endorsements or guarantees of any bank and are not insured by the Federal
Deposit Insurance Corporation or any other government agency. The Fund’s
principal risks include the following:
∎ |
|
Stock Market
Risk. The Fund invests in common stocks, whose prices fluctuate in
response to the fortunes of individual companies and in response to
general market and economic conditions both in the U.S. and abroad. In the
past decade financial markets throughout the world have experienced
increased volatility, decreased liquidity and heightened uncertainty. The
Fund’s holdings can vary significantly from broad stock market indices.
|
∎ |
|
Large-Capitalization Company Risk. Large-capitalization
companies may be unable to respond |
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quickly to new
competitive challenges and also may not be able to attain the high growth
rate of successful smaller companies, especially during extended periods
of economic expansion. |
∎ |
|
Small- and
Mid-Capitalization Company
Risk. In addition to large-capitalization companies, the Fund may
invest in small- and/or mid-capitalization companies, which can
be particularly sensitive to changing economic conditions since they do
not have the financial resources or the well-established businesses of
large-capitalization companies. Relative to the stocks of
large-capitalization companies, the stocks of small- and mid-capitalization companies are often
thinly traded, and purchases and sales may result in higher transaction
costs. Also, small-capitalization companies tend to perform poorly during
times of economic stress. |
∎ |
|
Management
Risk. The Adviser may be wrong in its assessment of a company’s value
and/or the stocks the Fund holds may not reach what the Adviser believes
are their full values. From time to time, “value” investing falls out of
favor with investors, and during those periods the Fund’s relative
performance may suffer. |
∎ |
|
Foreign
Securities Risk. The Fund may invest up to 20% of its assets in
foreign securities. Foreign markets can be more volatile than the U.S.
market due to increased risks of adverse issuer, political, regulatory,
market or economic developments and can perform differently from the U.S.
market. Policy and legislative changes in foreign countries and other
events affecting global markets, such as the United Kingdom’s
expected exit from the European Union (or Brexit), may contribute to
decreased liquidity and increased volatility in the financial markets.
Further, foreign companies may be subject to significantly higher levels
of taxation than U.S. companies, including potentially confiscatory levels
of taxation, thereby reducing the earnings potential of such foreign
companies. Substantial withholding taxes may also apply to distributions
from foreign companies. |
5
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Prospectus • 2019 |
Performance Information
The bar chart and table that follow contain
information that allows you to evaluate the Parnassus Core Equity Fund’s
performance using several measures, such as yearly changes in performance, best
and worst quarterly returns, and average annual total returns before and after
taxes compared to a broad measure of market performance. The bar chart shows the
performance of the Fund’s Investor Shares, and the performance of the Fund’s
Institutional Shares will differ from those shown to the extent that the classes
of shares do not have the same expenses or inception date. How the Fund
performed in the past (before and after taxes) is not necessarily an indication
of how it will perform in the future. Updated performance information is
available on the Fund’s website, www.parnassus.com, or by calling toll-free at
(800) 999-3505.
During the ten-year period shown in the bar chart, the
highest return for a quarter was 17.7% (quarter ended June 30, 2009), and
the lowest return for a quarter was a loss of 11.1% (quarter ended
September 30, 2011).
Following is a table
comparing the performance of the Parnassus Core Equity Fund’s two share classes
with that of the S&P 500®
Index (see “Index Descriptions” in the prospectus) and the Lipper Equity Income
Funds Average. Figures are average annual returns for the one-, five- and ten-year periods ended
December 31, 2018. The table is intended to demonstrate the risk of
investing in the Fund by showing how the Fund’s average annual total returns,
before and after taxes, compare with a broad measure of market performance, the
S&P 500®
Index, and a group of similar mutual funds, the Lipper Equity Income Funds
Average, and also how the Fund’s performance varies from year to year.
Parnassus Core Equity Fund
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Average Annual Total Returns (%) |
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(all periods ended December 31, 2018) |
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One
Year |
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Five
Years |
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Ten
Years |
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Investor Shares |
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Return before Taxes |
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-0.18 |
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7.90 |
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12.58 |
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Return after Taxes on Distributions |
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-2.21 |
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6.29 |
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11.40 |
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Return after Taxes on Distributions and Sale of Fund
Shares |
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1.45 |
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6.09 |
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10.40 |
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Institutional Shares |
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Return before Taxes |
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0.05 |
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8.13 |
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12.80 |
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|
S&P 500®
Index (reflects no deduction for fees, expenses or
taxes) |
|
|
-4.38 |
|
|
|
8.49 |
|
|
|
13.12 |
|
|
|
|
|
Lipper Equity
Income Funds Average |
|
|
-7.25 |
|
|
|
5.44 |
|
|
|
10.61 |
|
The after-tax returns are calculated using the
historical highest individual stated federal marginal income tax rates and do
not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s
individual tax situation and may differ from those shown. After-tax returns are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts. Return After Taxes on Distributions and
Sale of Fund Shares may be higher than other returns for the same period due to
a tax benefit of realizing a capital loss upon the sale of Fund shares. After-tax returns are shown for Investor
Shares only. After-tax returns for
Institutional Shares will vary.
The Adviser
Parnassus Investments is the investment
adviser to the Parnassus Core Equity Fund. For more information on the Adviser,
please see “Management of the Funds” in the prospectus and “The Adviser” in the
statement of additional information.
Portfolio Managers
Todd C. Ahlsten is the lead Portfolio
Manager of the Parnassus Core Equity Fund and has been a portfolio manager of
the Fund since 2001. He is also a Vice President of the Parnassus Funds.
Benjamin E. Allen is a Portfolio
Manager of the Parnassus Core Equity Fund and has served in this capacity since
2012. He is also President of the Parnassus Funds.
For more information, please see “Management
of the Funds” in the prospectus and “Portfolio Managers” in the statement of
additional information.
For important information about the
purchase and sale of Fund shares, tax information and payments to financial
intermediaries, please turn to “Additional Summary Information” on page 17 of
the prospectus.
6
|
|
|
|
|
|
|
|
Prospectus • 2019 |
|
|
|
|
Parnassus Endeavor Fund
Investment Objective
The Parnassus Endeavor Fund has the overall
investment objective of capital appreciation.
Fees and Expenses
This table describes the fees and expenses
that you may pay if you buy and hold shares of the Parnassus Endeavor Fund.
Parnassus Endeavor Fund
|
|
|
|
|
|
|
|
|
|
Annual Fund Operating Expenses (%) |
|
(expenses that you pay each year as a percentage of the value
of your investment) |
|
|
|
|
|
|
Investor Shares |
|
|
Institutional Shares |
|
|
|
|
Management
Fees |
|
|
0.66 |
|
|
|
0.66 |
|
|
|
|
Distribution (12b-1) Fees |
|
|
None |
|
|
|
None |
|
|
|
|
Other
Expenses |
|
|
0.29 |
|
|
|
0.06 |
|
|
|
|
Service Fees |
|
|
0.22 |
|
|
|
None |
|
|
|
|
All remaining other expenses |
|
|
0.07 |
|
|
|
0.06 |
|
|
|
|
Total Annual Fund Operating Expenses |
|
|
0.95 |
|
|
|
0.72 |
|
For additional information about the Parnassus
Endeavor Fund’s expenses, please see “Financial Highlights” in the prospectus.
Example
This example is intended to help you compare
the cost of investing in the Parnassus Endeavor Fund with the cost of investing
in other mutual funds. The example assumes that you invest $10,000 in the Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods. The example also assumes that your investment has a 5% return
each year, and that the Fund’s expenses are equal to the net annual fund
operating expenses for the first year and the total annual fund operating
expenses for the remaining years. Although your actual costs may be higher or
lower, under these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
|
|
|
|
|
Investor
Shares |
|
|
$97 |
|
|
|
$303 |
|
|
|
$525 |
|
|
|
$1,166 |
|
|
|
|
|
|
Institutional Shares |
|
|
$74 |
|
|
|
$230 |
|
|
|
$401 |
|
|
|
$894 |
|
Portfolio Turnover
The Parnassus Endeavor Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 71.0% of the average value of its
portfolio.
Principal Investment Strategies
The Parnassus Endeavor Fund normally invests
at least 80% of its net assets (plus borrowings for investment purposes) in
companies believed by the Fund’s investment adviser (Adviser) to provide good
workplaces for their employees. Companies with good workplaces usually are able
to recruit and retain better employees, and perform at a higher level than
competitors in terms of innovation, productivity, customer loyalty and
profitability. While no company is perfect, the Adviser makes a judgment as to
which companies have good workplaces based on factors such as respectful and
fair treatment of employees, employee satisfaction and engagement, pay and
benefits, family-friendly policies, and support for volunteerism and
philanthropy. These companies must, in the Adviser’s opinion, be undervalued,
but they must also have good prospects for long-term capital appreciation over
the course of the expected holding period. The Parnassus Endeavor Fund is
primarily a large-cap fund, which means
that it normally invests more than half of its net assets in large,
well-established companies. The Fund may invest to a lesser extent in small- and
mid-capitalization companies. The Fund
may purchase foreign securities directly on foreign markets. The Fund invests
mainly in domestic stocks of companies that are financially sound and have good
prospects for the future, and to a lesser extent may also invest in foreign
securities of similar companies. The Fund is fossil-fuel free, as it does not
invest in companies that derive significant revenues from the extraction,
exploration, production
7
|
|
|
|
|
|
|
|
|
|
|
|
Prospectus • 2019 |
or refining of fossil fuels; the Fund may
invest in companies that use fossil fuel-based energy to power their operations
or for other purposes. To determine a company’s prospects, the Adviser reviews
the company’s income statement, cash flow statement and balance sheet, and
analyzes the company’s sustainable strategic advantage and management team. Upon
initial investment, a company’s stock must be trading below its intrinsic value,
which means that the Adviser seeks to purchase stock trading at a discount to
the Adviser’s assessment of the company’s estimated value. The Adviser also
takes environmental, social and governance (“ESG”) factors into account in
making investment decisions. The Fund will sell a security if the Adviser
believes a company’s fundamentals will deteriorate, if it believes a company’s
stock has little potential for appreciation or if the company no longer meets
the Adviser’s ESG criteria.
Principal Risks
All investments involve risk, and investing in
the Parnassus Endeavor Fund is no exception. You could lose money investing in
the Fund. The likelihood of loss may be greater if you invest for a shorter
period of time. The Fund is intended for investors who can accept that there
will be fluctuations in value. Investments in the Fund are not deposits,
endorsements or guarantees of any bank and are not insured by the Federal
Deposit Insurance Corporation or any other government agency. The Fund’s
principal risks include the following:
∎ |
|
Stock Market
Risk. The Fund invests in common stocks, whose prices fluctuate in
response to the fortunes of individual companies and in response to
general market and economic conditions both in the U.S. and abroad. In the
past decade financial markets throughout the world have experienced
increased volatility, decreased liquidity and heightened uncertainty. The
Fund’s holdings can vary significantly from broad stock market indices.
|
∎ |
|
Large-Capitalization Company Risk. Large-capitalization
companies may be unable to respond quickly to new competitive challenges
and also may |
|
|
not be able to
attain the high growth rate of successful smaller companies, especially
during extended periods of economic expansion.
|
∎ |
|
Small- and
Mid-Capitalization Company
Risk. In addition to large-capitalization companies, the Fund may
invest in small- and/or mid-capitalization companies, which can
be particularly sensitive to changing economic conditions since they do
not have the financial resources or the well-established businesses of
large-capitalization companies. Relative to the stocks of
large-capitalization companies, the stocks of small- and mid-capitalization companies are often
thinly traded, and purchases and sales may result in higher transaction
costs. Also, small-capitalization companies tend to perform poorly during
times of economic stress. |
∎ |
|
Management
Risk. The Adviser may be wrong in its assessment of a company’s value
and/or the stocks the Fund holds may not reach what the Adviser believes
are their full values. From time to time, “value” investing falls out of
favor with investors, and during those periods the Fund’s relative
performance may suffer. |
∎ |
|
Foreign
Securities Risk. The Fund may invest up to 20% of its assets in
foreign securities. Foreign markets can be more volatile than the U.S.
market due to increased risks of adverse issuer, political, regulatory,
market or economic developments and can perform differently from the U.S.
market. Policy and legislative changes in foreign countries and other
events affecting global markets, such as the United Kingdom’s expected
exit from the European Union (or Brexit), may contribute to decreased
liquidity and increased volatility in the financial markets. Further,
foreign companies may be subject to significantly higher levels of
taxation than U.S. companies, including potentially confiscatory levels of
taxation, thereby reducing the earnings potential of such foreign
companies. Substantial withholding taxes may also apply to distributions
from foreign companies. |
8
|
|
|
|
|
|
|
|
Prospectus • 2019 |
|
|
|
|
Performance Information
The bar chart and table that follow contain
information that allows you to evaluate the Parnassus Endeavor Fund’s
performance using several measures, such as yearly changes in performance, best
and worst quarterly returns, and average annual total returns before and after
taxes compared to a broad measure of market performance. The bar chart shows the
performance of the Fund’s Investor Shares, and the performance of the Fund’s
Institutional Shares will differ from those shown to the extent that the classes
of shares do not have the same expenses or inception date. How the Fund
performed in the past (before and after taxes) is not necessarily an indication
of how it will perform in the future. Updated performance information is
available on the Fund’s website, www.parnassus.com, or by calling toll-free at
(800) 999-3505.
During the ten-year period shown in the bar
chart, the highest return for a quarter was 26.7% (quarter ended June 30,
2009), and the lowest return for a quarter was a loss of 17.1% (quarter ended
December 31, 2018).
Following is a table
comparing the performance of the Parnassus Endeavor Fund’s two share classes
with that of the S&P 500®
Index (see “Index Descriptions” in the prospectus) and the Lipper Multi-Cap Core Funds Average. Figures are
average annual returns for the one-,
five- and ten-year periods ended December 31, 2018. The table is intended
to demonstrate the risk of investing in the Fund by showing how the Fund’s
average annual total returns, before and after taxes, compare with a broad
measure of market performance, the S&P 500®
Index, and a group of similar mutual funds, the Lipper Multi-Cap Core Funds Average, and also how
the Fund’s performance varies from year to year.
Parnassus Endeavor Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Annual Total Returns (%) |
|
(all periods ended December 31, 2018) |
|
|
|
|
|
|
|
One
Year |
|
|
Five
Years |
|
|
Ten
Years |
|
|
|
|
|
Investor Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return before Taxes |
|
|
-13.49 |
|
|
|
9.02 |
|
|
|
16.08 |
|
|
|
|
|
Return after Taxes on Distributions |
|
|
-15.62 |
|
|
|
7.14 |
|
|
|
14.54 |
|
|
|
|
|
Return after Taxes on Distributions and Sale of Fund
Shares |
|
|
-6.24 |
|
|
|
7.01 |
|
|
|
13.52 |
|
|
|
|
|
Institutional Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return before Taxes |
|
|
-13.25 |
|
|
|
9.18 |
|
|
|
16.17 |
|
|
|
|
|
S&P 500®
Index (reflects no deduction for fees, expenses or taxes) |
|
|
-4.38 |
|
|
|
8.49 |
|
|
|
13.12 |
|
|
|
|
|
Lipper Multi-Cap Core Funds
Average |
|
|
-7.88 |
|
|
|
5.52 |
|
|
|
11.61 |
|
The after-tax returns are calculated using the
historical highest individual stated federal marginal income tax rates and do
not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s
individual tax situation and may differ from those shown. After-tax returns are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts. Return After Taxes on Distributions and
Sale of Fund Shares may be higher than other returns for the same period due to
a tax benefit of realizing a capital loss upon the sale of Fund shares. After-tax returns are shown for Investor
Shares only. After-tax returns for
Institutional Shares will vary.
Parnassus Endeavor Fund—Institutional
Shares were incepted on April 30, 2015. Performance shown prior to the
inception of the Institutional Shares reflects the performance of the Parnassus
Endeavor Fund—Investor Shares and includes expenses that are not applicable to
and are higher than those of the Institutional Shares.
The Adviser
Parnassus Investments is the investment
adviser to the Parnassus Endeavor Fund. For more information on the Adviser,
please see “Management of the Funds” in the prospectus and “The Adviser” in the
statement of additional information.
Portfolio Managers
Jerome L. Dodson is the lead Portfolio
Manager of the Parnassus Endeavor Fund and has served in this capacity since its
inception in 2005. He is also Chairman and a Trustee of the Parnassus Funds.
Billy J. Hwan is a Portfolio Manager of
the Parnassus Endeavor Fund and has served in this capacity since 2018.
For more information, please see “Management
of the Funds” in the prospectus and “Portfolio Managers” in the statement of
additional information.
For important information about the
purchase and sale of Fund shares, tax information and payments to financial
intermediaries, please turn to “Additional Summary Information” on page 17 of
the prospectus.
9
|
|
|
|
|
|
|
|
|
|
|
|
Prospectus • 2019 |
Parnassus Mid Cap Fund
Investment Objective
The Parnassus Mid Cap Fund has the overall
investment objective of capital appreciation.
Fees and Expenses
This table describes the fees and expenses
that you may pay if you buy and hold shares of the Parnassus Mid Cap Fund.
Parnassus Mid Cap Fund
|
|
|
|
|
|
|
|
|
|
Annual Fund Operating Expenses (%) |
|
(expenses that you pay each year as a percentage of the value
of your investment) |
|
|
|
|
|
|
Investor Shares |
|
|
Institutional Shares |
|
|
|
|
Management
Fees |
|
|
0.71 |
|
|
|
0.71 |
|
|
|
|
Distribution (12b-1) Fees |
|
|
None |
|
|
|
None |
|
|
|
|
Other
Expenses |
|
|
0.31 |
|
|
|
0.04 |
|
|
|
|
Service Fees |
|
|
0.22 |
|
|
|
None |
|
|
|
|
All remaining other expenses |
|
|
0.09 |
|
|
|
0.04 |
|
|
|
|
Total Annual Fund
Operating Expenses |
|
|
1.02 |
|
|
|
0.75 |
|
|
|
|
Expense
Reimbursement |
|
|
0.03 |
|
|
|
None |
|
|
|
|
Total Annual Fund Operating Expenses After Expense
Reimbursement |
|
|
0.99 |
1 |
|
|
0.75 |
1 |
1 The
investment adviser has contractually agreed to reduce its investment advisory
fee to the extent necessary to limit total operating expenses to 0.99% of net
assets for the Parnassus Mid Cap Fund—Investor Shares and to 0.77% of net assets
for the Parnassus Mid Cap Fund—Institutional Shares. This agreement will not be
terminated prior to May 1, 2020, and may be continued indefinitely by the
investment adviser on a year-to-year basis.
For additional information about the Parnassus
Mid Cap Fund’s expenses, please see “Financial Highlights” in the prospectus.
Example
This example is intended to help you compare
the cost of investing in the Parnassus Mid Cap Fund with the cost of investing
in other mutual funds. The example assumes that you invest $10,000 in the Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods. The example also assumes that your investment has a 5% return
each year, and that the Fund’s expenses are equal to the net annual fund
operating expenses for the first year and the total annual fund operating
expenses for the remaining years. Although your actual costs may be
higher or lower, under these assumptions, your
costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
|
|
|
|
|
Investor
Shares |
|
|
$101 |
|
|
|
$322 |
|
|
|
$560 |
|
|
|
$1,245 |
|
|
|
|
|
|
Institutional Shares |
|
|
$77 |
|
|
|
$240 |
|
|
|
$417 |
|
|
|
$930 |
|
Portfolio Turnover
The Parnassus Mid Cap Fund pays transaction
costs, such as commissions, when it buys and sells securities (or “turns over”
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable
account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 31.5% of the average value of its
portfolio.
Principal Investment Strategies
The Parnassus Mid Cap Fund
normally invests at least 80% of its net assets in mid-sized companies. The Fund considers a
mid-sized company to be one that has a
market capitalization between that of the smallest and largest constituents of
the Russell Midcap®
Index (which was between $2.5 billion and $34.7 billion as of
May 11, 2018) measured at the time of purchase. The Russell Midcap®
Index includes approximately 800 of the smallest companies in the Russell
1000®
Index. The Fund will not automatically sell or cease to purchase stock of a
company it already owns just because the company’s market capitalization grows
or falls outside the ranges of the Russell Midcap®
Index, which are subject to change. The Fund may normally invest up to 20% of
its net assets in smaller- and larger-capitalization companies. The portfolio
managers focus on seeking downside protection. The Fund invests mainly in
domestic stocks of companies that are financially sound and have good prospects
for the future, and may invest up to 20% of its assets in foreign securities of
similar companies. The Fund may purchase foreign securities directly on foreign
markets. Using a value-oriented investment process, the Fund
10
|
|
|
|
|
|
|
|
Prospectus • 2019 |
|
|
|
|
seeks to invest in equity securities that have
the potential for long-term capital appreciation. To determine a company’s
prospects, the Adviser reviews the company’s income statement, cash flow
statement and balance sheet, and analyzes the company’s sustainable strategic
advantage and management team. Upon initial investment, a company’s stock must
be trading below its intrinsic value, which means that the Adviser seeks to
purchase stock trading at a discount to the Adviser’s assessment of the
company’s estimated value. The Adviser also takes environmental, social and
governance (“ESG”) factors into account in making investment decisions. The Fund
will sell a security if the Adviser believes a company’s fundamentals will
deteriorate, if it believes a company’s stock has little potential for
appreciation or if the company no longer meets the Adviser’s ESG criteria.
Principal Risks
All investments involve risk, and investing in
the Parnassus Mid Cap Fund is no exception. You could lose money investing in
the Fund. The likelihood of loss may be greater if you invest for a shorter
period of time. The Fund is intended for investors who can accept that there
will be fluctuations in value. Investments in the Fund are not deposits,
endorsements or guarantees of any bank and are not insured by the Federal
Deposit Insurance Corporation or any other government agency. The Fund’s
principal risks include the following:
|
• |
|
Stock Market
Risk. The Fund invests in common stocks, whose prices fluctuate in
response to the fortunes of individual companies and in response to
general market and economic conditions both in the U.S. and abroad. In the
past decade financial markets throughout the world have experienced
increased volatility, decreased liquidity and heightened uncertainty. The
Fund’s holdings can vary significantly from broad stock market indices.
|
|
• |
|
Small- and
Mid-Capitalization Company
Risk. The Fund invests primarily in mid-capitalization companies and may
also invest in small-capitalization companies, both of which can be
particularly sensitive to changing economic conditions since they do not
have the financial resources or the well-established businesses of
large-capitalization companies. Relative to the stocks of
large-capitalization companies, the stocks of small- and mid-capitalization companies are often
thinly traded, and purchases and sales may result in higher transaction
costs. Also, smaller capitalization companies tend to perform poorly
during times of economic stress. |
|
• |
|
Management
Risk. The Adviser may be wrong in its assessment of a company’s value
and/or the stocks the Fund holds may not reach what the Adviser believes
are their full values. From time to time, “value” investing falls out of
favor with investors, and during those periods the Fund’s relative
performance may suffer. |
|
• |
|
Foreign
Securities Risk. The Fund may invest up to 20% of its assets in
foreign securities. Foreign markets can be more volatile than the U.S.
market due to increased risks of adverse issuer, political, regulatory,
market or economic developments and can perform differently from the U.S.
market. Policy and legislative changes in foreign countries and other
events affecting global markets, such as the United Kingdom’s expected
exit from the European Union (or Brexit), may contribute to decreased
liquidity and increased volatility in the financial markets. Further,
foreign companies may be subject to significantly higher levels of
taxation than U.S. companies, including potentially confiscatory levels of
taxation, thereby reducing the earnings potential of such foreign
companies. Substantial withholding taxes may also apply to distributions
from foreign companies. |
11
|
|
|
|
|
|
|
|
|
|
|
|
Prospectus • 2019 |
Performance Information
The bar chart and table that follow contain
information that allows you to evaluate the Parnassus Mid Cap Fund’s performance
using several measures, such as yearly changes in performance, best and worst
quarterly returns, and average annual total returns before and after taxes
compared to a broad measure of market performance. The bar chart shows the
performance of the Fund’s Investor Shares, and the performance of the Fund’s
Institutional Shares will differ from those shown to the extent that the classes
of shares do not have the same expenses or inception date. How the Fund
performed in the past (before and after taxes) is not necessarily an indication
of how it will perform in the future. Updated performance information is
available on the Fund’s website, www.parnassus.com, or by calling toll-free at
(800) 999-3505.
During the ten-year period shown in the bar chart, the
highest return for a quarter was 18.3% (quarter ended June 30, 2009), and
the lowest return for a quarter was a loss of 17.3% (quarter ended
September 30, 2011).
Following is a table
comparing the performance of the Parnassus Mid Cap Fund’s two share classes with
that of the Russell Midcap®
Index (see “Index Descriptions” in the prospectus) and the Lipper Multi-Cap Core Funds Average. Figures are
average annual returns for one-, five-
and ten-year periods ended
December 31, 2018. The table is intended to demonstrate the risk of
investing in the Fund by showing how the Fund’s average annual total returns,
before and after taxes, compare with a broad measure of market performance, the
Russell Midcap®
Index, and a group of similar mutual funds, the Lipper Multi-Cap Core Funds Average, and also how
the Fund’s performance varies from year to year.
Parnassus Mid Cap Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Annual Total Returns (%) |
|
(all periods ended December 31, 2018) |
|
|
|
|
|
|
|
One
Year |
|
|
Five
Years |
|
|
Ten Years |
|
|
|
|
|
Investor Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return before Taxes |
|
|
-6.64 |
|
|
|
6.71 |
|
|
|
13.40 |
|
|
|
|
|
Return after Taxes on Distributions |
|
|
-7.44 |
|
|
|
5.77 |
|
|
|
12.53 |
|
|
|
|
|
Return after Taxes on Distributions and Sale of Fund
Shares |
|
|
-3.31 |
|
|
|
5.19 |
|
|
|
11.19 |
|
|
|
|
|
Institutional Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return before Taxes |
|
|
-6.39 |
|
|
|
6.89 |
|
|
|
13.50 |
|
|
|
|
|
Russell Midcap®
Index (reflects no deduction for fees, expenses or taxes) |
|
|
-9.06 |
|
|
|
6.26 |
|
|
|
14.03 |
|
|
|
|
|
Lipper Multi-Cap Core Funds
Average |
|
|
-7.88 |
|
|
|
5.52 |
|
|
|
11.61 |
|
The after-tax returns are calculated using the
historical highest individual stated federal marginal income tax rates and do
not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s
individual tax situation and may differ from those shown. After-tax returns are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts. Return After Taxes on Distributions and
Sale of Fund Shares may be higher than other returns for the same period due to
a tax benefit of realizing a capital loss upon the sale of Fund shares. After-tax returns are shown for Investor
Shares only. After-tax returns for
Institutional Shares will vary.
Parnassus Mid Cap Fund—Institutional
Shares were incepted on April 30, 2015. Performance shown prior to the
inception of the Institutional Shares reflects the performance of the Parnassus
Mid Cap Fund—Investor Shares and includes expenses that are not applicable to
and are higher than those of the Institutional Shares.
The Adviser
Parnassus Investments is the investment
adviser to the Parnassus Mid Cap Fund. For more information on the Adviser,
please see “Management of the Funds” in the prospectus and “The Adviser” in the
statement of additional information.
Portfolio Managers
Matthew D. Gershuny is the lead
Portfolio Manager of the Parnassus Mid Cap Fund and has served as a portfolio
manager of the Fund since 2008.
Lori A. Keith is a Portfolio Manager of
the Parnassus Mid Cap Fund and has served in this capacity since 2008.
For more information, please see “Management
of the Funds” in the prospectus and “Portfolio Managers” in the statement of
additional information.
For important information about the
purchase and sale of Fund shares, tax information and payments to financial
intermediaries, please turn to “Additional Summary Information” on page 17 of
the prospectus.
12
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Prospectus • 2019 |
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Parnassus Fixed Income Fund
Investment Objective
The Parnassus Fixed Income Fund’s objective is
a high level of current income consistent with safety and preservation of
capital.
Fees and Expenses
This table describes the fees and expenses
that you may pay if you buy and hold shares of the Parnassus Fixed Income Fund.
Parnassus Fixed Income Fund
|
|
|
|
|
|
|
|
|
|
Annual Fund Operating Expenses (%) |
|
(expenses that you pay each year as a percentage of the value
of your investment) |
|
|
|
|
|
|
Investor Shares |
|
|
Institutional Shares |
|
|
|
|
Management
Fees |
|
|
0.50 |
|
|
|
0.50 |
|
|
|
|
Distribution (12b-1) Fees |
|
|
None |
|
|
|
None |
|
|
|
|
Other
Expenses |
|
|
0.36 |
|
|
|
None |
|
|
|
|
Service Fees |
|
|
0.19 |
|
|
|
None |
|
|
|
|
All remaining other expenses |
|
|
0.17 |
|
|
|
None |
|
|
|
|
Total Annual Fund
Operating Expenses |
|
|
0.86 |
|
|
|
0.50 |
|
|
|
|
Expense
Reimbursement |
|
|
0.18 |
|
|
|
0.05 |
|
|
|
|
Total Annual Fund Operating Expenses After Expense
Reimbursement |
|
|
0.68 |
1 |
|
|
0.45 |
1 |
1 The
investment adviser has contractually agreed to reduce its investment advisory
fee to the extent necessary to limit total operating expenses to 0.68% of net
assets for the Parnassus Fixed Income Fund—Investor Shares and to 0.48%
of net assets for the Parnassus Fixed Income Fund—Institutional Shares. This
agreement will not be terminated prior to May 1, 2020, and may be continued
indefinitely by the investment adviser on a year-to-year basis.
For additional information about the Parnassus
Fixed Income Fund’s expenses, please see “Financial Highlights” in the
prospectus.
Example
This example is intended to help you compare
the cost of investing in the Parnassus Fixed Income Fund with the cost of
investing in other mutual funds. The example assumes that you invest $10,000 in
the Fund for the time periods indicated and then redeem all of your shares at
the end of those periods. The example also assumes that your investment has a 5%
return each year, and that the Fund’s expenses are equal to the net annual fund
operating expenses for the first year and the total annual fund operating
expenses for
the remaining years. Although your actual
costs may be higher or lower, under these assumptions, your costs would be:
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
|
|
|
|
|
Investor
Shares |
|
|
$69 |
|
|
|
$256 |
|
|
|
$459 |
|
|
|
$1,044 |
|
|
|
|
|
|
Institutional Shares |
|
|
$46 |
|
|
|
$144 |
|
|
|
$252 |
|
|
|
$567 |
|
Portfolio Turnover
The Parnassus Fixed Income Fund pays
transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate
higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. During the
most recent fiscal year, the Fund’s portfolio turnover rate was 46.4% of the
average value of its portfolio.
Principal Investment Strategies
The Parnassus Fixed Income Fund normally
invests at least 80% of its net assets (plus borrowings for investment purposes)
in a diversified portfolio of bonds and other fixed income instruments. Fixed
income instruments may include, but are not limited to, U.S. Treasuries and
Agency debt, debt of government-related entities, corporate bonds, commercial
and residential mortgage-backed securities, convertible bonds and
asset-backed securities. The Fund invests mainly in domestic securities, and to
a lesser extent may also invest in U.S. dollar denominated foreign securities.
The Fund may purchase foreign securities directly on foreign markets. The Fund’s
investment adviser (Adviser) also takes environmental, social and governance
(“ESG”) factors into account when making investment decisions. The Fund normally
invests at least 80% of its net assets in fixed income securities that have
investment-grade ratings (namely rated at least BBB- by Standard & Poor’s Rating
Group (“S&P”) or at least Baa3 by Moody’s Investors Services, Inc.
(“Moody’s”)) or, if unrated, have been determined by the Adviser to be of
13
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Prospectus • 2019 |
similar economic quality. At any given time,
up to 20% of the portfolio may be invested in non-investment grade fixed income securities
(otherwise known as “high-yield” or “junk bonds”) or unrated fixed income
securities determined by the Adviser to be of similar economic quality. Non-investment grade and unrated securities
are more risky than investment-grade securities. The Fund may also invest in
preferred securities. The Fund may sell a security if the Adviser believes it no
longer meets the Fund’s investment objective or if the issuer no longer meets
the Adviser’s ESG criteria. The Fund may invest in long-term, intermediate-term
or short-term fixed income securities or any combination thereof, depending on
market conditions, and these securities may also have floating or variable
interest rates. As of March 31, 2019, the dollar-weighted average maturity
of the Fund’s portfolio was 8.64 years.
Principal Risks
All investments involve risk, and investing in
the Parnassus Fixed Income Fund is no exception. You could lose money investing
in the Fund. The likelihood of loss may be greater if you invest for a shorter
period of time. The Fund is intended for investors who can accept that there
will be fluctuations in value. Investments in the Fund are not deposits,
endorsements or guarantees of any bank and are not insured by the Federal
Deposit Insurance Corporation or any other government agency. The Fund’s
principal risks include the following:
∎ |
|
Interest Rate
Risk. In general, bond prices are inversely related to interest rates.
As interest rates drop, bond prices will likely go up, and as interest
rates go up, the value of bonds will likely go down. The Fund may be
subject to greater risk of rising interest rates due to the current period
of historically low interest rates. |
∎ |
|
Credit
Risk. There is a possibility that issuers of debt obligations will not
pay the Fund interest or principal or that their credit rating may be
downgraded by a ratings agency. |
∎ |
|
Duration
Risk. Duration is a measure that relates the expected price volatility
of a fixed-income instrument to changes in interest rates. The duration of
a fixed-income security may be shorter than or equal to full maturity of
the fixed-income security. Fixed-income securities with longer durations
have more risk and will decrease in price as interest rates
|
|
|
rise. For
example, a fixed-income security with a duration of three years would be
expected to decrease in value by approximately 3% if interest rates
increase by 1%. |
∎ |
|
Market
Risk. A security’s value may also be affected by market activity or by
supply and demand. In the past decade financial markets throughout the
world have experienced increased volatility, decreased liquidity and
heightened uncertainty. If the Fund is unable to find buyers for a given
security, this can have a negative effect on the Fund’s net asset value.
|
∎ |
|
Non-Investment Grade Risk and Unrated
Bond Risk. Non-investment
grade bonds (otherwise known as “high-yield” or “junk bonds”) and bonds
that have not been rated by a nationally recognized statistical rating
organization carry additional credit risk and are considered to be less
safe than investment-grade bonds. |
∎ |
|
Mortgage-Backed Securities Risk. Mortgage-backed securities
are defined as obligations with pools of mortgages providing collateral,
interest income and principal repayment. Such securities can be originated
by private institutions or government sponsored enterprises, like Fannie
Mae and Freddie Mac, and the underlying mortgages can be either commercial
or residential. Mortgage-backed securities, like all fixed income
investments, have interest rate and credit risk. However, these securities
also have extension and prepayment risk. Extension risk is the risk that a
rise in interest rates or lack of refinancing opportunities can cause the
Fund’s average maturity to lengthen unexpectedly due to a drop in expected
prepayments of mortgage-backed securities. This would increase the Fund’s
sensitivity to rising rates and its potential for price declines.
Prepayment risk is the risk that the borrower will prepay some or all of
the principal owed to the issuer. If prepayment occurs, the Fund may have
to replace the security by investing the proceeds in a less attractive
security. This may reduce the Fund’s share price and income distribution.
|
∎ |
|
Convertible
Securities Risk. If market interest rates rise, the value of a
convertible security usually falls. The issuer of a convertible security
may not be able to pay interest or dividends when due, and their market
value may change based on actual or perceived changes in the issuer’s
creditworthiness. |
14
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|
Prospectus • 2019 |
|
|
|
|
|
|
Convertible
securities are also subject to the same types of risk that apply to the
underlying security. The Fund may be forced to convert a convertible
security at an inopportune time, which may decrease the Fund’s return and
result in investment losses. |
∎ |
|
Preferred
Securities Risk. Preferred securities may pay fixed or adjustable
rates of return and are subject to many of the risks associated with debt
securities (e.g., interest rate risk, call risk and extension risk). In
addition, preferred securities are subject to issuer-specific and market
risks applicable generally to equity securities. Because many preferred
securities allow the issuer to convert their preferred security into
common stock, preferred securities are often sensitive to declining common
stock values. A company’s preferred securities generally pay dividends
only after the company makes required payments to holders of its bonds and
other debt. For this reason, the value of preferred securities will
usually react more strongly than bonds and other debt to actual or
perceived changes in the company’s financial condition or prospects.
|
∎ |
|
Liquidity
Risk. Liquidity risk is the risk, due to certain investments trading
in lower volumes or to market and economic conditions, that the Fund may
be unable to find a buyer for its investments when it seeks to sell them
or to receive the price it expects based on the Fund’s valuation of the
investments. Events that may lead to increased redemptions, such as market
disruptions, may also negatively impact the liquidity of the Fund’s
investments when it needs to dispose of them. The potential for liquidity
risk may be magnified by a rising interest rate environment or other
circumstances where investor redemptions from fixed income mutual funds
may be higher than normal, potentially causing increased supply in the
market due to |
|
|
selling activity.
If the Fund is forced to sell its investments at an unfavorable time
and/or under adverse conditions in order to meet redemption requests, such
sales could negatively affect the Fund. Liquidity issues may also make it
difficult to value the Fund’s investments. |
∎ |
|
Regulatory
Risk. Changes in government regulations may adversely affect the value
of a security. An insufficiently regulated industry or market might also
permit inappropriate practices that adversely affect an investment.
|
∎ |
|
Information
Risk. The risk that information about a security or issuer or the
market might not be available, complete, accurate, or comparable.
|
∎ |
|
Management
Risk. The Adviser may be wrong in its assessment of a security’s value
and the Fund’s holdings may not reach what the Adviser believes are their
full values. |
∎ |
|
Foreign
Securities Risk. The Fund may invest up to 20% of its assets in
foreign securities. Foreign markets can be more volatile than the U.S.
market due to increased risks of adverse issuer, political, regulatory,
market or economic developments and can perform differently from the U.S.
market. Policy and legislative changes in foreign countries and other
events affecting global markets, such as the United Kingdom’s expected
exit from the European Union (or Brexit), may contribute to decreased
liquidity and increased volatility in the financial markets. Further,
foreign companies may be subject to significantly higher levels of
taxation than U.S. companies, including potentially confiscatory levels of
taxation, thereby reducing the earnings potential of such foreign
companies. Substantial withholding taxes may also apply to distributions
from foreign companies. |
15
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|
|
|
|
|
|
|
|
|
Prospectus • 2019 |
Performance Information
The bar chart and table that follow contain
information that allows you to evaluate the Parnassus Fixed Income Fund’s
performance using several measures, such as yearly changes in performance, best
and worst quarterly returns, and average annual total returns before and after
taxes compared to a broad measure of market performance. The bar chart shows the
performance of the Fund’s Investor Shares, and the performance of the Fund’s
Institutional Shares will differ from those shown to the extent that the classes
of shares do not have the same expenses or inception date. How the Fund
performed in the past (before and after taxes) is not necessarily an indication
of how it will perform in the future. Updated performance information is
available on the Fund’s website, www.parnassus.com, or by calling toll-free at
(800) 999-3505.
During the ten-year period shown in the bar chart, the
highest return for a quarter was 4.4% (quarter ended September 30, 2009),
and the lowest return for a quarter was a loss of 2.7% (quarter ended
December 31, 2016).
Following is a table comparing the performance
of the Parnassus Fixed Income Fund’s two share classes with that of the
Bloomberg Barclays U.S. Aggregate Bond Index (formerly known as the Barclays
U.S. Aggregate Bond Index) (see “Index Descriptions” in the prospectus) and the
Lipper Core Bond Funds Average. Figures are average annual returns for the one-,
five- and ten-year periods ended
December 31, 2018. The table is intended to demonstrate the risk of
investing in the Fund by showing how the Fund’s average annual total returns,
before and after taxes, compare with a broad measure of market performance, the
Bloomberg Barclays U.S. Aggregate Bond Index, and a group of similar mutual
funds, the Lipper Core Bond Funds Average, and also how the Fund’s performance
varies from year to year.
Parnassus Fixed Income Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Annual Total Returns (%) |
|
(all periods ended December 31, 2018) |
|
|
|
|
|
|
|
One
Year |
|
|
Five
Years |
|
|
Ten
Years |
|
|
|
|
|
Investor Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return before Taxes |
|
|
-1.12 |
|
|
|
1.90 |
|
|
|
2.97 |
|
|
|
|
|
Return after Taxes on Distributions |
|
|
-1.75 |
|
|
|
1.28 |
|
|
|
2.34 |
|
|
|
|
|
Return after Taxes on Distributions and Sale of Fund
Shares |
|
|
-0.22 |
|
|
|
1.44 |
|
|
|
2.41 |
|
|
|
|
|
Institutional Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return before Taxes |
|
|
-0.89 |
|
|
|
2.05 |
|
|
|
3.05 |
|
|
|
|
|
Bloomberg Barclays U.S.
Aggregate Bond Index (reflects no deduction for fees, expenses
or taxes) |
|
|
0.01 |
|
|
|
2.52 |
|
|
|
3.48 |
|
|
|
|
|
Lipper Core
Bond Funds Average |
|
|
-0.69 |
|
|
|
2.20 |
|
|
|
4.18 |
|
The after-tax returns are calculated using the
historical highest individual stated federal marginal income tax rates and do
not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s
individual tax situation and may differ from those shown. After-tax returns are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts. Return After Taxes on Distributions and
Sale of Fund Shares may be higher than other returns for the same period due to
a tax benefit of realizing a capital loss upon the sale of Fund shares. After-tax returns are shown for Investor
Shares only. After-tax returns for
Institutional Shares will vary.
Parnassus Fixed Income
Fund—Institutional Shares were incepted on April 30, 2015. Performance
shown prior to the inception of the Institutional Shares reflects the
performance of the Parnassus Fixed Income Fund—Investor Shares and includes
expenses that are not applicable to and are higher than those of the
Institutional Shares.
The Adviser
Parnassus Investments is the investment
adviser to the Parnassus Fixed Income Fund. For more information on the Adviser,
please see “Management of the Funds” in the prospectus and “The Adviser” in the
statement of additional information.
Portfolio Manager
Samantha D. Palm is the Portfolio
Manager of the Parnassus Fixed Income Fund and has served in this capacity since
2013.
For more information, please see “Management
of the Funds” in the prospectus and “Portfolio Managers” in the statement of
additional information.
For important information about the
purchase and sale of Fund shares, tax information and payments to financial
intermediaries, please turn to “Additional Summary Information” on page 17 of
the prospectus.
16
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|
Prospectus • 2019 |
|
|
|
|
Additional Summary Information
Purchase and Sale of Fund Shares
The minimum initial purchase for the Investor
Shares is $2,000 per Fund, with a minimum of $500 per Fund for certain custodial
accounts and IRAs. The minimum initial purchase for the Institutional Shares is
$100,000. The minimum subsequent investment is $50 per Fund. After making an
initial investment, the minimum investment in an automatic investment plan is
$50 per Fund.
You may redeem and purchase shares of a Fund
each day the New York Stock Exchange is open. You may redeem or purchase Fund
shares online through our website at www.parnassus.com, by mail (Parnassus
Funds, 1 Market Street, Suite 1600, San Francisco, CA 94105), or by
telephone at (800) 999-3505.
Investors who wish to redeem or purchase shares through a broker-dealer or other
financial intermediary should contact the intermediary regarding the hours
during which orders may be placed.
For additional information, please see
“Investing with Parnassus Funds” on page 24 of the prospectus.
Tax Information
The Funds’ distributions generally will be
taxable to you, whether they are paid in cash or reinvested in Fund shares,
unless you invest through a tax-deferred arrangement, such as a 401(k)
plan or an individual retirement account, in which case such distributions may
be taxable at a later date.
Financial Intermediary Compensation
If you purchase a Fund through a broker-dealer
or other financial intermediary (such as a bank), the Fund and its related
companies may pay the intermediary for the sale of Fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to recommend the Fund
over another investment. Ask your salesperson or visit your financial
intermediary’s website for more information.
For additional information, please see
“Distribution Agreement,” “Shareholder Servicing Plan” and “Additional Marketing
and Support Payments” in the statement of additional information.
17
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|
Prospectus • 2019 |
Investment Objectives and
Policies and Non-Principal Risks
Set forth below is information about the
investment objectives and policies of the Funds and certain risks associated
with the Funds. Although the Funds have no intention of doing so, the Funds may
change their investment objectives without obtaining shareholder approval.
Equity Funds
Selection Process for Equity Securities
“Equity securities” consist of common stocks
or securities that can be converted into common stocks, which include
convertible bonds, convertible preferred stock, warrants, American Depositary
Receipts and American Depositary Shares. In general, the Adviser uses six basic
criteria in identifying equity securities eligible for the equity funds.
Companies must be sound and priced attractively relative to their potential
reward and risk profile; have increasingly relevant products or services; have
clear and sustainable competitive advantages; have a quality management team
with appropriate incentives; be suitable, at the time of purchase, for a
multi-year investment; and meet Parnassus’s responsible investment
(environmental, social and governance or “ESG”) criteria. Once a security is
purchased, we may continue to hold it even if it is no longer undervalued.
Once a security is purchased, the Adviser may
continue to hold it even if it is no longer undervalued.
Under normal circumstances, each of the
Parnassus Fund, the Parnassus Core Equity Fund, the Parnassus Endeavor Fund and
the Parnassus Mid Cap Fund will have virtually all its assets invested in equity
securities. If the Adviser cannot find enough securities that meet its
investment criteria, the Funds may invest a substantial portion of their assets
in money-market instruments (i.e., “cash” or cash equivalents).
Parnassus Fund
The Parnassus Fund seeks capital appreciation
through investing mainly in domestic stocks of any size, from smaller firms to
larger, well-established companies. The Adviser can change the composition of
the portfolio between smaller, medium and larger companies depending on the
Adviser’s view of the economic environment and the markets, with the goal of
capital appreciation. The Parnassus Fund follows a “contrarian” strategy of
seeking to invest in stocks that are currently out of favor with the financial
community and are, therefore, deeply undervalued. The Adviser expects that if
these undervalued companies are
financially strong and have good prospects for
the future, they will eventually come back into favor and increase in market
value.
Parnassus Core Equity Fund
The investment objective of the Parnassus Core
Equity Fund is both capital appreciation and current income. The Fund tries to
achieve these objectives by investing primarily in a diversified portfolio of
equity securities. Equity securities include common and preferred stock. As an
operating policy, at least 75% of the Fund’s total assets will normally be
invested in equity securities that pay a dividend or interest. The remaining 25%
of the Fund’s total assets may be invested in non-dividend-paying equity securities,
short-term instruments and money-market instruments. Using a value-oriented
investment process, the Fund seeks to invest in equity securities that pay
dividends, have the potential for capital appreciation and which the Adviser
believes have the capacity to raise dividends in the future.
Parnassus Endeavor Fund
The Parnassus Endeavor Fund seeks capital
appreciation through investing primarily (normally at least 80% of its net
assets) in the common stocks of companies believed by the Adviser to provide
good workplaces for their employees. The Adviser will make a judgment as to
which companies have good workplaces based on factors such as respectful and
fair treatment of employees, good two-way communication, equitable pay and
benefits, family-friendly policies and support for volunteerism and charitable
contributions to the community. The Adviser looks for undervalued companies that
have proven businesses and good prospects for long-term capital appreciation.
Parnassus Mid Cap Fund
The Parnassus Mid Cap Fund
seeks capital appreciation through investing primarily (normally at least 80% of
its net assets) in mid-sized companies.
The Fund considers a mid-sized company
to be one that has a market capitalization between that of the smallest and
largest constituents of the Russell Midcap®
Index
18
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Prospectus • 2019 |
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|
(which was between $2.5 billion and
$34.7 billion as of May 11, 2018) measured at the time of purchase.
The Adviser looks for undervalued companies that have proven businesses and good
prospects for long-term growth. While mid-capitalization companies can be riskier
than larger companies, they can also possess more potential for future growth.
Fixed Income Fund
Selection Process for Fixed Income Securities
In general, the Adviser uses the following
methodology to select securities for the Parnassus Fixed Income Fund: First, a
macroeconomic view is formulated for the next three to five years, with
important factors considered including key economic indicators, monetary and
fiscal policies and changes in market-implied growth expectations. Next, the
fixed income market is reviewed for sector-specific risks, relative historical
performance and expected future performance, including consideration of market
risk and credit risk. The Advisor then determines the optimal sector allocations
relative to the benchmark index. Finally, the Adviser selects securities that
meet the duration, asset class and sector targets established in the previous
steps. The key criteria for each individual investment includes credit quality,
absolute and relative yields and valuation. A meaningful percentage of our
holdings are corporate securities. To be eligible for the fund, companies must
have increasingly relevant products or services; have clear and sustainable
competitive advantages; have a quality management team with appropriate
incentives; be suitable, at the time of purchase, for a multi-year investment;
and meet Parnassus’s responsible investment (environmental, social and
governance or “ESG”) criteria.
Parnassus Fixed Income Fund
The investment objective of the Parnassus
Fixed Income Fund is a high level of current income consistent with safety and
preservation of capital. The Adviser seeks to achieve this objective by
investing in a diversified portfolio of bonds and other fixed income
instruments. The Parnassus Fixed Income Fund normally invests at least 80% of
its net assets in fixed income securities that have investment-grade ratings
(namely, rated at least BBB- by S&P
or at least Baa3 by Moody’s), or, if unrated, have been determined by the
Adviser to be of similar economic quality. Up to 20% of the portfolio may be
invested in non-investment grade
securities, otherwise known as “high yield” or “junk”
bonds. Obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities need not have a rating. See
Annex A in the statement of additional information for a description of bond
ratings.
The Parnassus Fixed Income Fund invests
primarily in investment-grade securities. Because of this emphasis on quality
and safety, the Fund’s yield may not be as high as it otherwise might be.
The Fund may also invest in mortgage-backed
securities, unrated securities and convertible securities, which may or may not
be investment grade, and other non-investment grade securities.
Specifically, the Fund may, as an operating policy, invest up to 20% of its
assets in non-investment grade bonds,
or securities determined by the Adviser to be of equal credit quality. These
investments are considered more risky due to their non-investment grade status. The holders of
non-investment grade bonds are
typically compensated for the increased risk by higher available yields. The
Fund may also invest in convertible debentures (bonds that can be converted into
stock or other equity in the issuing company) or convertible preferred stock.
Convertible securities may not have an investment-grade rating and only need a
rating of B- or better, or, if unrated,
must have been determined by the Adviser to be of comparable credit quality. If
these instruments are converted into stock, the Fund may hold the stock until
sale.
The Parnassus Fixed Income Fund may invest in
long-term, intermediate-term or short-term fixed income securities or any
combination thereof, depending on market conditions, and these securities may
also have floating or variable interest rates. Securities in this Fund may
include preferred stock, convertible preferred stock and convertible bonds, as
well as securities that represent interests in pools of mortgage loans or other
assets assembled for sale to investors by various U.S. governmental agencies,
government-related organizations and private issuers. These investments may
include, on a non-principal basis,
derivative securities such as collateralized mortgage obligations and
asset-backed securities.
For temporary defensive purposes or in
response to adverse market, economic or political conditions, the Fund may
invest a substantial portion of its assets in short-term, money-market
instruments. To the extent that the assets of the Fund are invested in temporary
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Prospectus • 2019 |
defensive positions, the Fund may not achieve
its investment objective.
Responsible Investment Policy
The Adviser conducts fundamental research to
determine a company’s financial health and its business prospects, and also
takes environmental, social and governance factors into account in making
investment decisions. The Funds seek to invest in companies with positive
performance on environmental, social and governance criteria. The ESG factors
the Adviser evaluates include:
∎ |
|
Corporate
governance and business ethics |
∎ |
|
Employee benefits
and corporate culture |
∎ |
|
Customers and
supply chain |
No company is perfect in all these areas, but
the Adviser makes value judgments in deciding which companies best meet the
criteria. With regard to the Parnassus Fixed Income Fund, the Adviser will take
into consideration factors specific to fixed income investments when making
these value judgments. The Fixed Income Fund may invest in securities that are
appropriate based on their specific criteria, but that may not be appropriate
for the U.S. equity funds.
The Funds will not invest in companies that
derive significant revenues from the manufacture of alcohol or tobacco products
or from direct involvement with gambling. The Funds do not invest in companies
with significant revenues derived from the manufacture of weapons or the
generation of electricity from nuclear power. The Parnassus Fund and the
Parnassus Endeavor Fund are fossil-fuel free, meaning they do not invest in
companies that derive significant revenues from the extraction, exploration,
production or refining of fossil fuels; each Fund may invest in companies that
use fossil fuel-based energy to power their operations or for other purposes.
The responsible investment criteria of the
Funds limit the availability of investment opportunities. However, the Funds’
Boards of Trustees and the Adviser believe that there are sufficient investments
available that can meet the Funds’ responsible investment criteria and still
enable the Funds to provide a competitive rate of return.
Other Policies and Non-Principal Risks
In addition to the principal risks under the
caption “Summary Section,” there are risks related to the Funds’ investment in
money-market securities. For temporary purposes, a Fund may invest a portion of
its assets in money-market instruments. Although a money-market instrument is
designed to be a relatively low-risk investment, it is not free of risk. For
example, increases in interest rates may negatively impact money-market
instruments. A Fund may also invest up to 2% of its assets in
community-development loan funds. This may limit the potential for capital
appreciation and high current income since these securities do not appreciate in
value and tend to produce less income than longer-term bonds.
As noted above, each of the Funds may invest
up to 2% of its assets in community-development loan funds, such as those that
provide financing for small businesses and for low- and moderate-income housing. None of the
Funds will make loans to a project itself, but rather will invest money in an
intermediary, such as in certificates of deposit issued by community banks and
credit unions, or in debt obligations issued by micro-finance institutions. Each
of the Funds may invest in obligations issued by the intermediary at
below-market interest rates if the projects financed have a strong, positive
social impact. Generally, there is no secondary market and thus, no liquidity
for these investments. Also, community-development loan funds do not have the
same kind of resources that large commercial enterprises do. In general, each of
the Funds seeks to invest in community organizations that have had a successful
record in making these kinds of loans and that are deemed creditworthy by the
Adviser.
The Parnassus Fixed Income Fund will consider
the ratings of nationally recognized statistical rating organizations (“NRSRO”)
when making investment decisions. The ratings of an NRSRO, however, represent
only that NRSRO’s opinion as to the quality of the fixed income securities it
rates, and such ratings are not absolute standards or guarantees of the quality
of those securities.
Cybersecurity incidents may allow an
unauthorized party to gain access to Fund assets, customer data (including
private shareholder information), or proprietary information, or cause a Fund,
the Adviser and/or the Funds’ service providers (including, but not limited to,
Fund accountants, custodians, sub-custodians, transfer
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Prospectus • 2019 |
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agents and financial intermediaries) to suffer
data breaches, data corruption or lose operational functionality.
A Fund may experience periods of heavy
redemptions that could cause the Fund to liquidate its assets at inopportune
times or at a loss or depressed value, particularly during periods of declining
or illiquid markets. Redemption risk is greater to the extent that a Fund has
investors with large shareholdings, short investment horizons, or unpredictable
cash flow needs. In addition, redemption risk is heightened during periods of
overall market turmoil. The redemption by one or more large shareholders of
their holdings in a
Fund could hurt performance and/or cause the
remaining shareholders in the Fund to lose money. If a Fund is forced to
liquidate its assets under unfavorable conditions or at inopportune times, the
value of your investment could decline.
The statement of additional information for
the Funds, which is incorporated by reference into this prospectus, contains a
description of the Funds’ policies and procedures with respect to the disclosure
of their portfolio holdings. These policies and procedures are also available on
the Funds’ website, www.parnassus.com.
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Prospectus • 2019 |
Management of the Funds
Parnassus Investments, 1 Market Street,
Suite 1600, San Francisco, California 94105, acts as investment adviser to
the Funds, subject to the oversight of the Funds’ Boards of Trustees, and as
such, supervises and arranges the purchase and sale of securities held in the
Funds’ portfolios. The Adviser has been the investment manager of the Parnassus
Funds trust since 1984 and of the Parnassus Income Funds trust since 1992.
Benjamin E. Allen is a Portfolio
Manager of the Parnassus Core Equity Fund and has served in this capacity since
2012. He is President and Chief Executive Officer of Parnassus Investments,
where he has worked since 2005, and is also President of the Funds.
Jerome L. Dodson is the lead Portfolio
Manager of the Parnassus Endeavor Fund and has been a Portfolio Manager of the
Fund since its inception in 2005. Mr. Dodson is the Chairman of the board
of Parnassus Investments and is also Chairman and a Trustee of the Funds. He has
been with Parnassus Investments since founding the firm in 1984.
Todd C. Ahlsten is the lead Portfolio
Manager of the Parnassus Core Equity Fund and has been a Portfolio Manager of
the Fund since 2001. He is a Vice President and Chief Investment Officer at
Parnassus Investments, where he has worked since 1995, and is also a Vice
President of the Funds.
Matthew D. Gershuny is the lead
Portfolio Manager of the Parnassus Mid Cap Fund and has been as a Portfolio
Manager of the Fund since 2008. He is the Director of Research and a Vice
President at Parnassus Investments, where he has worked since 2006.
Lori A. Keith is a Portfolio Manager of
the Parnassus Mid Cap Fund and has served in this capacity since 2008. She is
also a Senior Research Analyst at Parnassus Investments, where she has worked
since 2005.
Ian E. Sexsmith, CFA, is a Portfolio
Manager of the Parnassus Fund and has served in this capacity since 2013. He is
also a Senior Research Analyst at Parnassus Investments, where he has worked
since 2011.
Robert J. Klaber is a Portfolio Manager
of the Parnassus Fund and has served in this capacity since 2016. He is also a
Senior Research Analyst at Parnassus Investments, where he has worked since
2012.
Billy J. Hwan, CPA, CFA, is a Portfolio
Manager of the Parnassus Endeavor Fund and has served in this capacity since
2018. He is also a Senior Research Analyst at Parnassus Investments, where he
has worked since 2012.
Samantha D. Palm is the Portfolio
Manager of the Parnassus Fixed Income Fund and has served in this capacity since
2013.
The statement of additional information for
the Funds, which is incorporated by reference into this prospectus, provides
additional information about the portfolio managers’ compensation, other
accounts managed by the portfolio managers and the portfolio managers’ ownership
of securities in the Funds.
Each of the Funds, under an Investment
Advisory Agreement between the respective Fund and the Adviser, pays the Adviser
a fee. The fee is computed and payable at the end of each month. The following
annual percentages of each Fund’s average daily net assets are used:
∎ |
|
Parnassus Fund:
0.70% of the first $100 million in assets; 0.65% of the next
$100 million and 0.60% of the amount above $200 million.
|
∎ |
|
Parnassus Core
Equity Fund: 0.75% of the first $30 million in assets; 0.70% of the
next $70 million; 0.65% of the next $400 million; 0.60% of the
next $9.5 billion and 0.55% of the amount above $10 billion.
|
∎ |
|
Parnassus
Endeavor Fund: 0.85% of the first $100 million in assets; 0.80% of
the next $100 million; 0.75% of the next $300 million and 0.65%
of the amount above $500 million. |
∎ |
|
Parnassus Mid Cap
Fund: 0.85% of the first $100 million in assets; 0.80% of the next
$100 million; 0.75% of the next $300 million and 0.70% of the
amount above $500 million. |
∎ |
|
Parnassus Fixed
Income Fund: 0.50% of the first $200 million in assets; 0.45% of the
next $200 million and 0.40% of the amount above $400 million.
|
After taking into account the expense
reimbursements (more fully described below), the following details what was
actually charged in 2018:
∎ |
|
For the Parnassus
Fund, the net investment advisory fee was 0.62% and the gross investment
advisory fee was 0.62%. |
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Prospectus • 2019 |
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∎ |
|
For the Parnassus
Core Equity Fund, the net investment advisory fee was 0.58% and the gross
investment advisory fee was 0.58%. |
∎ |
|
For the Parnassus
Endeavor Fund, the net investment advisory fee was 0.66% and the gross
investment advisory fee was 0.66%. |
∎ |
|
For the Parnassus
Mid Cap Fund, the net investment advisory fee was 0.69% and the gross
investment advisory fee was 0.71%. |
∎ |
|
For the Parnassus
Fixed Income Fund, the net investment advisory fee was 0.35% and the gross
investment advisory fee was 0.50%. |
The differences between the gross and net
investment advisory fees for the Parnassus Mid Cap Fund and Parnassus Fixed
Income Fund are the result of contractual investment advisory fee waivers by
Parnassus Investments.
Parnassus Investments has contractually agreed
to reduce its investment advisory fee to the extent necessary to limit total
operating expenses for the following Funds, as stated below (as a percentage of
net assets):
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Investor Shares |
|
|
Institutional Shares |
|
Parnassus Fund |
|
|
0.99 |
% |
|
|
0.71 |
% |
Parnassus Core Equity Fund |
|
|
0.87 |
% |
|
|
0.65 |
% |
Parnassus Endeavor Fund |
|
|
0.95 |
% |
|
|
0.75 |
% |
Parnassus Mid Cap Fund |
|
|
0.99 |
% |
|
|
0.77 |
% |
Parnassus Fixed Income
Fund |
|
|
0.68 |
% |
|
|
0.48 |
% |
The contractual figures shown in the table
above represent a cap on the total operating expenses. The actual total
operating expenses of a Fund may be lower than this cap. See the Summary Section
for each Fund for more information.
These agreements will not be terminated prior
to May 1, 2020 and may be continued indefinitely by the Adviser on a year-to-year basis.
A discussion regarding the basis for the
Boards of Trustees approving the renewal of each of the investment advisory
agreements with the Adviser is available in the Funds’ most recent semiannual
report to shareholders for the most recent semiannual period ended June 30.
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Prospectus • 2019 |
Investing with Parnassus Funds
How to Purchase Shares
You can open an account directly with the
Funds, or you can purchase and sell shares of the Funds through an intermediary,
such as a broker-dealer, a financial institution or other service provider.
These service providers may charge fees for the services they provide or impose
restrictions that may be in addition to, or different from, those applicable to
investors purchasing shares directly from the Funds.
Choosing a Share Class
Each of the Funds offers two classes of
shares: Investor Shares and Institutional Shares. The two types of shares have
the same portfolio of investments and the same rights, and differ only in the
expenses they are subject to and their required minimum investments. Investor
Shares may be subject to fees resulting from account servicing charged to the
Fund. Institutional Shares are available to investors who invest directly in the
Fund and have a minimum investment of $100,000. Institutional Shares are also
available through certain financial intermediaries and service providers.
If you invest through a financial
intermediary, the $100,000 minimum for Institutional Shares may be met if
your financial intermediary aggregates your investments with those of other
clients, including group retirement plans, for which the intermediary provides
services, into a single group, or omnibus, account that meets the minimum. Group
retirement plans include defined benefit and defined contribution plans such as
401(k), 403(b) and 457(b) plans that maintain an omnibus account. The $100,000
minimum for Institutional Shares may be met if the investor intends to invest at
least $100,000 in the Institutional Shares within a period of 12 months.
The minimum initial investment may be waived
at the discretion of the Parnassus Funds for Institutional Shares purchased by
individual accounts of a financial intermediary that charges an ongoing fee to
its customers for its services, and for accounts invested through fee-based advisory accounts and similar
programs with approved intermediaries.
The minimum initial investment may be waived
at the discretion of the Parnassus Funds for Investor Shares purchased by a
group retirement plan or individual accounts of a financial intermediary that
charges an
ongoing fee to its customers for its services
or offers Investor Shares through a no-load network or platform, and for accounts
invested through fee-based advisory
accounts and similar programs with approved intermediaries.
Accounts invested in Institutional Shares that
fall below the $100,000 minimum investment value, and that are not subject to an
exception to the minimum, will be converted to the Investor share class via a
tax-free share class conversion. The
Funds will give shareholders whose shares are subject to this conversion 60
days’ prior written notice in which to purchase sufficient shares to avoid this
conversion.
Types of Accounts
The Funds offer the following types of
accounts. The initial account minimums in this section refer to the Investor
Shares. The initial account minimums for the Institutional Shares are described
above.
Individual or Joint Ownership Account
You can open a regular account that is owned
by an individual or by two owners. An initial minimum investment must be at
least $2,000 per fund; however, the minimum is lowered to $500 per fund if you
sign up for our automatic investment plan. See the Parnassus Automatic
Investment Plan section for more information.
Custodial Account
You can open a custodial account for a minor.
The Funds offer both UGMA (Uniform Gift to Minor’s Act) and UTMA (Uniform
Transfer to Minor’s Act) accounts. An initial minimum investment must be at
least $500 per fund.
Traditional IRA, Roth IRA or SEP IRA Accounts
Through the Funds, you can open tax-deferred retirement accounts for
individuals. An initial investment must be at least $500 per fund; however, the
minimum is waived if you sign up for our automatic investment plan. See the
Parnassus Automatic Investment Plan section for more information. For further
information regarding plan administration, custodial fees and other details,
investors should contact Parnassus Investments.
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Prospectus • 2019 |
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Trust Account
A legal trust can open an account. The Funds
require the front page and signature page of the trust agreement, including
title of the trust and names of the trustee(s), with the application. An initial
minimum investment must be at least $2,000 per fund; however, the minimum is
lowered to $500 per fund if you sign up for our automatic investment plan. See
the Parnassus Automatic Investment Plan section for more information.
Corporate Account
A partnership or corporation can open an
account. The Funds require the Articles of Incorporation or Partnership
Agreement with the appropriate signatures for the account. An initial minimum
investment must be at least $2,000 per fund; however, the minimum is lowered to
$500 per fund if you sign up for our automatic investment plan. See the
Parnassus Automatic Investment Plan section for more information.
Subsequent investments for all accounts must
be at least $50 per fund.
Direct Purchase of Shares
You can open an account or purchase additional
shares in the following ways:
Internet
To open an account online, go to
www.parnassus.com and follow the instructions on the website. By accessing your
account online, you can purchase shares and have Parnassus debit your bank
account. If an account has more than one owner or authorized person, the Funds
will accept online instructions from any one owner or authorized person.
Mail
To open an account by mail, an investor should
complete and mail the application form along with a check payable to “Parnassus
Funds.” With additional investments, shareholders should write the name and
number of the account on the check. Checks do not need to be certified, but are
accepted subject to collection and must be drawn in United States dollars on
United States banks. A fee of $20 will be assessed if a check is returned to the
Funds unpaid due to insufficient funds, stop payment or for any other reason.
The application should be sent to the following address:
Parnassus Investments
1 Market Street, Suite 1600
San Francisco, CA 94105
Telephone
If your account is eligible, you can call the
Funds at (800) 999-3505 to make an
exchange or purchase additional shares. The telephone purchase option may not be
used for initial purchases of shares of the Funds, but may be used for
subsequent purchases. If an account has more than one owner or authorized
person, the Funds will accept telephone instructions from any one owner or
authorized person. Once a telephone transaction has been placed, it cannot be
canceled or modified after the close of regular trading on the NYSE (generally,
4:00 p.m. Eastern Time).
Parnassus Automatic Investment Plan
After making an initial investment to open an
account, a shareholder may purchase additional shares of the Funds
($50 minimum per fund) via the Parnassus Automatic Investment Plan
(“PAIP”). On a monthly or quarterly basis, your money will automatically be
transferred from your bank account to your Fund account on the day of your
choice (the 3rd or 18th day of the month). You can elect this option by filling
out the PAIP section on the new account form. If you already have an account,
you may fill out the Parnassus Automatic Investment Plan form, or sign up online
at www.parnassus.com.
Parnassus Investments reserves the right to
reject any purchase order. If an investment order is received in good order
before 4:00 p.m. Eastern Time, which is 1:00 p.m. San Francisco time,
it will be processed at the net asset value (NAV) calculated on the same
business day. If an investment is received in good order after 4:00 p.m.
Eastern Time, it will be processed at the NAV calculated on the next business
day. The Funds consider a purchase, redemption or exchange request to be in
“good order” if it is timely submitted and contains the name of the applicable
Fund, the number of shares or dollar amount to be purchased, redeemed or
exchanged, your name and (if applicable) your account number and your signature.
See the caption “Net Asset Value” for a discussion on the calculation of NAV. A
fee of $20 will be assessed if the purchase by electronic bank transfer cannot
be made due to insufficient funds, stop payment or for any other reason.
There is no sales charge for the purchase of
shares from the Funds, but investors may be charged a
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Prospectus • 2019 |
transaction fee or other fee on their behalf
by an investment adviser, a brokerage firm or other financial institution, in
connection with purchases or redemptions of shares of the Funds.
In compliance with the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), please note that the
transfer agent will verify certain information on your application as part of
the Funds’ Anti-Money Laundering Program. As requested on the application, you
must supply your full name, date of birth, social security number and permanent
street address. The Funds may request additional information about you (which
may include certain documents, such as articles of incorporation for companies)
to help the transfer agent verify your identity. If you are opening the account
in the name of a legal entity (e.g., partnership, limited liability company,
business trust, corporation, etc.), you must also supply the identity of the
beneficial owners. Such information will be used only for compliance with the
USA PATRIOT Act or other applicable laws, regulations and rules in connection
with money laundering, terrorism or economic sanctions. Permanent addresses
containing only a P.O. Box will not be accepted. The Funds’ Anti-Money
Laundering Program is supervised by the Funds’ Anti-Money Laundering Officer,
subject to the oversight of the Board of Directors. It is the Funds’ policy to
cooperate fully with appropriate regulators in any investigations conducted with
respect to potential money laundering, terrorism or other illicit activities.
Purchasing Shares from Broker-Dealers, Financial
Institutions and Others
Some broker-dealers may sell shares of the
Funds. These broker-dealers may charge investors a fee at either the time of
purchase or redemption. The fee, if charged, is retained by the broker-dealer
and not remitted to the Funds or to the Adviser. Some broker-dealers may
purchase and redeem shares on a three-day settlement basis.
The Funds may enter into agreements with
broker-dealers, financial institutions or other service providers (“Servicing
Agents”) that may include the Funds as an investment alternative in the programs
they offer or administer. Investors purchasing or redeeming through a Servicing
Agent need to check with the Servicing
Agent to determine whether the Servicing Agent
has entered into an agreement with the Funds. Servicing Agents may:
∎ |
|
Become
shareholders of record of the Funds. This means all requests to purchase
additional shares and all redemption requests must be sent through the
Servicing Agent. This also means that purchases made through Servicing
Agents are not subject to the Funds’ minimum purchase requirement.
|
∎ |
|
Use procedures
and impose restrictions that may be in addition to, or different from,
those applicable to investors purchasing shares directly from the Funds.
|
∎ |
|
Charge fees to
their customers for the services provided. Also, the Funds and/or the
Adviser may pay fees to Servicing Agents to compensate them for the
services they provide their customers. |
∎ |
|
Be allowed to
purchase shares by telephone with payment to follow the next day. If the
telephone purchase is made prior to the close of regular trading on the
New York Stock Exchange (normally 4:00 p.m. Eastern Time), it will receive
same day pricing. |
∎ |
|
Be authorized to
accept purchase orders on the Funds’ behalf (and designate other Servicing
Agents to accept purchase orders on the Funds’ behalf). If the Funds have
entered into an agreement with a Servicing Agent pursuant to which the
Servicing Agent (or its designee) has been authorized to accept purchase
orders on the Funds’ behalf, then all purchase orders received in good
order by the Servicing Agent (or its designee) before 4:00 p.m. Eastern
Time will receive that day’s NAV. All purchase orders received in good
order by the Servicing Agent (or its designee) after 4:00 p.m. Eastern
Time will receive the next day’s NAV. See the caption “Net Asset Value”
for a discussion on the calculation of NAV.
|
Depending on your Servicing Agent’s
arrangement with the Parnassus Funds, you may qualify to purchase Institutional
Shares.
If you decide to purchase shares through
Servicing Agents, please carefully review the program materials provided to you
by the Servicing Agent, because particular Servicing Agents may adopt policies
or procedures that are separate from those described in this prospectus. When
you purchase shares of the Funds through a Servicing Agent, it is the
responsibility
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Prospectus • 2019 |
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of the Servicing Agent to place your order
with the Funds on a timely basis. If the Servicing Agent does not place your
order on a timely basis, or if it does not pay the purchase price to the Funds
within the period specified in its agreement with the Funds, it may be held
liable for any resulting fees or losses.
How to Redeem Shares
When you redeem your shares, your proceeds are
normally made by check and sent via mail. You can pre-designate a bank account where you would
like redemption proceeds electronically deposited within three business days.
For a $20 fee, you can have redemption proceeds wired to your bank account of
record in one business day. The Funds normally send out redemption checks by
U.S. mail, but the Funds can send a redemption check by overnight delivery for a
$30 fee.
Redemption amounts of over $50,000 may be
requested only by mail. If a redemption order is received in good order before
4:00 p.m. Eastern Time, which is 1:00 p.m. San Francisco time, it will
be processed at the NAV calculated on the same business day. If a redemption
order is received in good order after 4:00 p.m. Eastern Time, it will be
processed at the NAV calculated on the next business day. The redemption order
must include your account number and indicate the number of shares or the dollar
amount you wish to redeem. All owners of the account must sign the redemption
request unless the account application states that only one signature is
necessary for redemptions. The Funds must have a change-of-address on file for
30 days before the Funds will send redemption or distribution checks to the
new address.
The Funds usually require additional documents
when shares are registered in the name of a corporation, agent or fiduciary, or
if you are a surviving joint owner. In the case of a corporation, the Funds
usually require a corporate resolution signed by the secretary. In the case of
an agent or fiduciary, the Funds usually require an authorizing document. In the
case of a surviving joint owner, the Funds usually require an original certified
copy of the death certificate. Contact the Funds by phone at (800) 999–3505
if you have any questions about the requirements for redeeming your shares.
You can redeem your shares by:
Internet
If your account is eligible, you can redeem
your shares by accessing your account online at www.parnassus.com. If an account
has more than one owner or authorized person, the Funds will accept online
instructions from any one owner or authorized person.
Mail
You can mail your redemption request. Please
be sure to include your account number, the amount of your redemption (dollars
or shares) and the signatures of all account holders. Send the request to:
Parnassus Investments
1 Market Street, Suite 1600
San Francisco, CA 94105
Fax
The maximum amount that can be redeemed
through request by fax is $50,000 per account per week. You can fax your
redemption request to (415) 778–0228. Please be sure to include your
account number, the amount of your redemption (dollars or shares) and the
signatures of all account holders.
Telephone
For eligible accounts, you can redeem your
shares, up to a maximum dollar amount of $50,000 per account per week, by
calling (800) 999–3505. The telephone transaction privilege also allows a
shareholder to effect exchanges from a Fund into an identically registered
account in another Fund managed by Parnassus Investments. Shareholders who elect
to use telephone transaction privileges must indicate this on the account
application form. Neither the Funds nor Parnassus Investments will be liable for
following instructions communicated by telephone reasonably believed to be
genuine; a loss to the shareholder may result due to an unauthorized
transaction. The Funds and the transfer agent will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine. If an
account has more than one owner or authorized person, the Funds will accept
telephone instructions from any one owner or authorized person. Once a telephone
transaction has been placed, it cannot be canceled or modified after the close
of regular trading on the NYSE (generally, 4:00 p.m. Eastern Time). During
periods of high market activity, shareholders may encounter higher than usual
call wait times. Please allow sufficient time to place your telephone
transaction.
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Prospectus • 2019 |
Procedures may include one or more of the
following: recording all telephone calls requesting telephone transactions,
verifying authorization and requiring some form of personal identification prior
to acting upon instructions and sending a statement each time a telephone
transaction is made. The Funds and Parnassus Investments may be liable for any
losses due to unauthorized or fraudulent instructions only if such reasonable
procedures are not followed. Of course, shareholders are not obligated in any
way to authorize telephone transactions and may choose to make all transactions
in writing. The telephone transaction privilege may be modified or discontinued
by the Funds at any time upon 60 days’ prior written notice to shareholders.
Systematic Withdrawal Program
You can have the Funds automatically redeem,
on a periodic basis, a set amount from your account and direct-deposit the
proceeds into your bank account or mail you a check.
Redeeming Shares through Servicing Agent
If your shares are held by a Servicing Agent,
you must redeem your shares through the Servicing Agent. Contact the Servicing
Agent for instructions on how to do so. Servicing Agents may charge you a fee
for this service.
If the Funds have entered into an agreement
with a Servicing Agent pursuant to which the Servicing Agent (or its designee)
has been authorized to accept redemption requests on behalf of the Funds, then
all redemption requests received in good order by the Servicing Agent (or
its designee) before 4:00 p.m. Eastern Time will receive that day’s
NAV. All redemption requests received in good order by the Servicing Agent (or
its designee) after 4:00 p.m. Eastern Time will receive the next day’s NAV.
See the caption “Net Asset Value” for a discussion on the calculation of NAV.
Other Redemption Information
If the Funds have received payment for the
shares you wish to redeem and you have provided the instructions and any other
documents needed in correct form, the Funds will promptly send you a check for
the proceeds from the sale. Ordinarily, the Funds must send you a check within
seven days, but the Funds can suspend redemptions and/or postpone payments of
redemption proceeds beyond seven days at times
when the New York Stock Exchange (“NYSE”) is
closed or during emergency circumstances, as determined by the Securities and
Exchange Commission. However, payment may be delayed for any shares purchased by
check or ACH (Automated Clearing House) for a reasonable time (not to exceed
15 days from the date of such purchase). This delay is necessary for the
Funds to determine that the purchase check or ACH (Automated Clearing House)
will be honored.
The Parnassus Funds may involuntarily redeem a
shareholder’s shares upon certain conditions as may be determined by the
Trustees, including, for example and not limited to, (1) if the shareholder
fails to provide the Funds with identification required by law; (2) if the
Funds are unable to verify the information received from the shareholder; and
(3) to reimburse a Fund for any loss sustained by reason of the failure of
the shareholder to make full payment for shares purchased by the shareholder.
Additionally, as discussed below, shares may be redeemed in connection with the
closing of small accounts.
The Funds will typically expect that a Fund
will hold cash or cash equivalents to meet redemption requests. The Funds may
also use the proceeds from the sale of portfolio securities to meet redemption
requests if consistent with the management of the Fund. These redemption methods
will be used regularly and may also be used in stressed market conditions.
The Funds reserve the right to redeem in-kind. Redemptions in-kind may be used in normal market
conditions, and may also be used in stressed market conditions. Normally, an
in-kind redemption of portfolio
securities will be distributed on a pro rata basis. However, if the Funds
determine that a pro rata distribution of portfolio securities held by a Fund is
not practical or in the best interests of shareholders, the in-kind redemptions may be in the form of
pro-rata slices of a Fund’s portfolio,
individual securities or a representative basket of securities. A shareholder
will be exposed to market risk until the securities are converted to cash and
may incur transaction expenses in converting these securities to cash.
Wire
If you wish to have the redemption proceeds
sent by wire transfer, there will be a charge of $20 per transaction. Wiring
funds will require a Medallion Signature Guarantee unless wiring instructions
were previously filed with the Funds.
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Prospectus • 2019 |
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Medallion Signature Guarantee
Certain types of transactions require a
Medallion Signature Guarantee:
∎ |
|
A redemption
check sent to an address that is not the address of record or has not been
on the Funds’ records for at least 30 days |
∎ |
|
Redemption
proceeds sent to a bank account that is not the bank account of record
|
∎ |
|
A redemption
check made payable or sent to someone other than the named account owner
|
∎ |
|
Changing the
shareholder of record on an account (A Signature Validation Program Stamp
is also acceptable for this change) |
A Medallion Signature Guarantee is meant to
ensure that a signature is genuine. It protects shareholders and the Funds
against fraud. You can typically obtain a Medallion Signature Guarantee from a
bank, a credit union, a savings and loan association or a broker-dealer. A
notary public cannot provide a Medallion Signature Guarantee.
Redemption of Small Accounts
The Funds may, in order to reduce the expenses
of the Funds, redeem all of the shares of any shareholder whose account balance
falls below $500 after a redemption. This will be done at the NAV determined as
of the close of business on the business day preceding the sending of such
notice of redemption. The Funds will give shareholders whose shares are being
redeemed 60 days’ prior written notice in which to purchase sufficient shares to
avoid such redemption. The Funds may immediately, without prior written notice,
redeem all of the shares of any shareholder whose account balance falls below
$100 after a redemption.
Holds on Redemptions
If you purchased shares by check, the Funds
may delay a redemption request for shares that were purchased in the past 15
days, in order to allow the Funds time to determine if your purchase check
cleared.
Online and Telephone Transactions
Depending on the type of account, you may make
shareholder transactions online or over the telephone. The Funds take steps to
confirm your identity to prevent fraud, including confirming some of your
personal information that they have on file. However, the Funds cannot be held
liable for executing instructions the
Funds reasonably believe to be genuine. For
transactions conducted over the Internet, we recommend the use of a secure
Internet browser. In addition, you should verify the accuracy of your
confirmation statements immediately upon receiving them. If you do not want the
ability to conduct transactions online or over the telephone, please indicate
that on your account application or call the Funds at (800) 999–3505.
Inactive Accounts
Your account may be transferred to your state
of residence if no activity occurs within your account during the “inactivity
period” specified in your state’s abandoned property laws. If the Funds are
unable to locate a shareholder, they will determine whether the shareholder’s
account can legally be considered abandoned. The Funds are legally obligated to
escheat (or transfer) abandoned property to the appropriate state’s unclaimed
property administrator in accordance with statutory requirements. The
shareholder’s last known address of record determines which state has
jurisdiction. Interest or income is not earned on redemption or distribution
checks sent to you during the time the check remained uncashed.
Investors with a state of residence in Texas
have the ability to designate a representative to receive legislatively required
unclaimed property due diligence notifications. Please contact the Texas
Comptroller of Public Accounts for further information.
Market Timing Policies and Procedures
Frequent purchases and redemptions of shares
of the Funds may harm other shareholders by interfering with the efficient
management of the Funds’ portfolios, increasing brokerage and administrative
costs, and potentially diluting the value of their shares. The Funds’ Boards of
Trustees have adopted a policy of discouraging frequent purchases and
redemptions of Fund shares that could disrupt the efficient management of the
portfolios. If management of the Funds determines that a shareholder is making
frequent trades (defined as a purchase and redemption within five business days)
in sufficient volume and with sufficient frequency to disrupt a Fund’s
operations, that shareholder will be barred from making future investments in
the Funds. The Funds’ Boards of Trustees and the Adviser do not encourage
frequent trading and will not engage in an agreement with any party to permit
frequent trading.
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Prospectus • 2019 |
Certain types of transactions generally do not
raise frequent trading concerns and normally will not require application of the
Funds’ restrictions on frequent trading. These transactions include, but are not
limited to: (1) reinvestment of dividends; (2) automatic
investment/contribution, asset allocation (including accounts maintained under
model portfolio programs) or withdrawal plans (including regularly scheduled and
required minimum distributions); (3) retirement plan loan distributions and
repayments; (4) certain retirement plan withdrawal events;
(5) transactions initiated by a plan sponsor; and (6) transfers of
assets that are non-investor driven.
The Adviser and the Funds’ Boards of Trustees will continue to monitor trading
activity and the regulatory environment and may alter the policies at any time
without prior notice to shareholders.
If inappropriate trading is detected in an
omnibus account registered in the name of a nominee, financial intermediary or
plan sponsor (collectively, “financial intermediaries”), the Funds may apply
these market timing policies and procedures to the account. The Funds generally
are dependent on the financial intermediaries in monitoring trading frequency
and therefore in applying the Funds’ market timing policies and procedures. In
this regard, the Funds have entered into written agreements with each of the
Funds’ financial intermediaries, under which the intermediaries must, upon
request, provide the Funds with certain shareholder and identity trading
information to assist the Funds in enforcing their market timing policies and
procedures.
The Funds reserve the right to reject any
purchase or exchange transactions at any time. In addition, the Adviser reserves
the right to impose restrictions on purchases or exchanges at any time that are
more restrictive on disruptive, excessive or short-term trading, than those that
are otherwise stated in this prospectus.
Exchanging Shares
The proceeds from a redemption of shares of
one Fund can be used to purchase shares of the other Funds. There is no limit on
the number or dollar amount of exchanges. The Funds reserve the right to modify
or eliminate this exchange privilege in the future. The exchange privilege is
only available in states where the exchange may be legally made. The exchange of
shares is treated as a sale, and an exchanging shareholder may, therefore,
realize a taxable gain or loss.
Converting Shares
Each Fund offers two classes of shares,
Investor Shares and Institutional Shares, which differ only in their ongoing
fees and minimum account sizes. Investor Shares of a Fund may be converted into
Institutional Shares of such Fund if your account balance is at least $100,000.
The transaction will be based on the respective NAV of each class on the trade
date for the conversion. Such a conversion is not a taxable event.
If an investor’s account balance in
Institutional Shares falls below $100,000, Parnassus may convert the shares into
Investor Shares. Parnassus will notify the investor in writing before the
mandatory conversion. The Funds will give shareholders whose shares are being
converted 60 days’ prior written notice in which to purchase sufficient shares
to avoid such conversion.
Net Asset Value
The NAV for the Funds will be calculated on
each day the NYSE is open for trading and on any other day there is a sufficient
degree of trading in investments held by the Funds to affect the NAV. The NYSE
is closed on national holidays, Good Friday and weekends. The NYSE also may be
closed on national days of mourning or due to natural disasters or other
extraordinary events or emergencies. The NAV of the Funds will usually be
calculated as of the close of trading on the NYSE at 4:00 p.m. Eastern
Time. The NAV may not be determined on any day that there are no transactions in
shares of the Funds.
The NAV per share is the value of a Fund’s
assets, less its liabilities, divided by the number of outstanding shares of
that Fund. In general, the value of the Funds’ portfolio securities is the
market value of such securities. However, securities and other assets for which
market quotations are not readily available are valued at their fair value as
determined in good faith by the Adviser under procedures established by and
under the general supervision and responsibility of the Funds’ Board of
Trustees. Types of securities that the Funds may hold for which fair value
pricing might be required include, but are not limited to: (a) illiquid
securities, including “restricted” securities and private placements for which
there is no public market; (b) securities of an issuer that has entered
into a restructuring; (c) securities whose trading has been halted or
suspended; and (d) securities for which a foreign currency exchange rate is
deemed inappropriate for use by the Funds or multiple
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Prospectus • 2019 |
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appropriate rates exist. Valuing securities at
fair value involves greater reliance on judgment than securities that have
readily available market quotations. The fair value of a security may differ
from the last quoted price, and a Fund may not be able to sell a security at the
fair value. See the statement of additional information for more details.
Index Descriptions
S&P 500®
Index
The S&P 500®
Index is a capitalization-weighted index of 500 stocks. The Index is designed to
measure performance of the broad domestic economy through changes in the
aggregate market value of 500 stocks representing all major industries. The
Index does not reflect any deductions for fees, expenses or taxes. A direct
investment in an index is not possible. The S&P 500®
Index is a trademark of Standard & Poor’s Financial Services LLC. The
index is used herein for comparative purposes in accordance with SEC
regulations.
Russell Midcap®
Index
The Russell Midcap®
Index measures the
performance of the 800 smallest companies in the Russell 1000®
Index, which measures the performance of the 1,000 largest U.S. companies based
on total market capitalization. The Index does not reflect any deductions for
fees, expenses or taxes. A direct investment in an index is not possible. The
Russell Midcap®
Index is a trademark of the
Frank Russell Company. The index is used herein for comparative purposes in
accordance with SEC regulations.
Bloomberg Barclays U.S. Aggregate Bond Index
The Bloomberg Barclays U.S. Aggregate Bond
Index is made up of the Bloomberg Barclays U.S. Government/Corporate Bond Index,
Mortgage-Backed Securities Index, and Asset-Backed Securities Index, including
securities that are of investment-grade quality or better, have at least one
year to maturity, and have an outstanding par value of at least
$100 million. The Index does not reflect any deductions for fees, expenses
or taxes. A direct investment in an index is not possible. The index is used
herein for comparative purposes in accordance with SEC regulations.
Additional Information Specific to Foreign Securities
The values of any foreign securities held by
the Funds are converted to U.S. dollars using exchange rates determined as of
the close of trading on the NYSE and in accordance with the Fund’s pricing
policies. The Funds generally use the foreign currency exchange rates deemed to
be most appropriate by a foreign currency pricing service that is independent of
the Funds and the Adviser.
Foreign securities held by the Funds may be
traded on days and at times when the NYSE is closed and the NAV is therefore not
calculated. Accordingly, the NAVs of the Funds may be affected on days when
shareholders are not able to purchase or redeem shares. For valuation purposes,
quotations of foreign portfolio securities and other assets and liabilities
stated in foreign currency are translated into U.S. dollar equivalents at the
prevailing market rates.
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Prospectus • 2019 |
Distributions and Taxes
The following discussion regarding federal
income taxes is based on laws that were in effect as of the date of this
prospectus and summarizes only some of the important federal income tax
considerations affecting the Funds and you as a shareholder. It does not apply
to foreign or tax-exempt shareholders
or those holding Fund shares through a tax-advantaged account, such as a 401(k) plan
or IRA. This discussion is not intended as a substitute for careful tax
planning. You should consult your tax advisor about your specific tax situation.
Please see the SAI for additional federal income tax information.
Each Fund has elected to be treated and
intends to qualify each year as a regulated investment company (a “RIC”). A RIC
is not subject to tax at the corporate level on income and gains from
investments that are distributed in a timely manner to shareholders. However, a
Fund’s failure to qualify as a RIC would result in corporate level taxation, and
consequently, a reduction in income available for distribution to you as a
shareholder.
The Funds’ distributions, whether received in
cash or additional shares of a Fund, may be subject to federal, state and local
income tax. These distributions may be taxed as ordinary income, dividend income
or long-term capital gain.
Corporate shareholders may be able to deduct a
portion of their distributions when determining their taxable income.
If you purchase Fund shares shortly before it
makes a taxable distribution, your distribution will, in effect, be a
taxable return of capital. Similarly, if you
purchase Fund shares that have appreciated securities, you will receive a
taxable return of part of your investment if and when the Fund sells the
appreciated securities and distributes the gain. The Funds have built up, or
have the potential to build up, high levels of unrealized appreciation.
The Funds will notify you of the tax status of
ordinary income distributions and capital gain distributions after the end of
each calendar year.
You will generally recognize taxable gain or
loss on a redemption of shares in an amount equal to the difference between the
amount received and your tax basis in such shares. This gain or loss will
generally be capital and will be long-term capital gain or loss if the shares
were held for more than one year.
In general, when a shareholder sells Fund
shares, the Fund must report to the shareholder and the IRS the shareholder’s
cost basis, gain or loss and holding period in the sold shares using a specified
method for determining which shares were sold. You are not bound by this method
and, if timely, can choose a different, permissible method. Please consult
with your tax advisor.
If you hold Fund shares through a broker (or
another nominee), please contact that broker (or nominee) with respect to the
reporting of cost basis and available elections for your account.
When you receive a distribution from the Funds
or redeem shares, you may be subject to backup withholding.
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Prospectus • 2019 |
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Prospectus • 2019 |
Financial Highlights
The financial highlights table is intended to
help you understand each Fund’s financial performance for the past five years.
Certain information reflects financial results for a single Fund share. The
total returns in the table represent the rate that an investor would have earned
(or lost) on an investment in a Fund (assuming reinvestment of all dividends and
distributions). This information has been derived from the financial statements
audited by Deloitte & Touche LLP, whose report, along with the Funds’
financial statements, is included in the Annual Report of the Funds, which is
available upon request.
Selected data for each share of capital stock
outstanding, total return and ratios/supplemental data for each of the five
years ended December 31 are as follows:
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For a Share Outstanding for the Year Ended |
|
Net Asset Value Beginning of Year |
|
|
Net
Investment Income (Loss)(a) |
|
|
Net Realized and Unrealized Gain (Loss) on Securities(a) |
|
|
Total
from Investment Operations(a) |
|
|
Dividends from
Net Investment Income |
|
|
Distributions from Net Realized Gains
on Securities |
|
|
Total Dividends and Distributions |
|
Parnassus Fund – Investor Shares |
|
2018 |
|
|
$48.27 |
|
|
|
$0.50 |
|
|
|
$(5.01 |
) |
|
|
$(4.51 |
) |
|
|
$(0.54 |
) |
|
|
$(2.68 |
) |
|
|
$(3.22 |
) |
2017 |
|
|
44.97 |
|
|
|
0.46 |
|
|
|
6.68 |
|
|
|
7.14 |
|
|
|
(0.45 |
) |
|
|
(3.39 |
) |
|
|
(3.84 |
) |
2016 |
|
|
40.46 |
|
|
|
0.37 |
|
|
|
5.06 |
|
|
|
5.43 |
|
|
|
(0.36 |
) |
|
|
(0.56 |
) |
|
|
(0.92 |
) |
2015 |
|
|
48.09 |
|
|
|
0.32 |
|
|
|
(0.01 |
) |
|
|
0.31 |
|
|
|
(1.78 |
) |
|
|
(6.16 |
) |
|
|
(7.94 |
) |
2014 |
|
|
45.86 |
|
|
|
0.22 |
|
|
|
6.47 |
|
|
|
6.69 |
|
|
|
(1.62 |
) |
|
|
(2.84 |
) |
|
|
(4.46 |
) |
Parnassus Fund – Institutional Shares |
|
2018 |
|
|
48.25 |
|
|
|
0.58 |
|
|
|
(5.02 |
) |
|
|
(4.44 |
) |
|
|
(0.61 |
) |
|
|
(2.68 |
) |
|
|
(3.29 |
) |
2017 |
|
|
44.95 |
|
|
|
0.54 |
|
|
|
6.67 |
|
|
|
7.21 |
|
|
|
(0.52 |
) |
|
|
(3.39 |
) |
|
|
(3.91 |
) |
2016 |
|
|
40.45 |
|
|
|
0.43 |
|
|
|
5.06 |
|
|
|
5.49 |
|
|
|
(0.43 |
) |
|
|
(0.56 |
) |
|
|
(0.99 |
) |
For the period ended
December 31, 2015(d) |
|
|
49.44 |
|
|
|
0.28 |
|
|
|
(1.27 |
) |
|
|
(0.99 |
) |
|
|
(1.84 |
) |
|
|
(6.16 |
) |
|
|
(8.00 |
) |
Parnassus Core Equity Fund – Investor Shares |
|
2018 |
|
|
42.67 |
|
|
|
0.45 |
|
|
|
(0.38 |
) |
|
|
0.07 |
|
|
|
(0.44 |
) |
|
|
(3.31 |
) |
|
|
(3.75 |
) |
2017 |
|
|
39.29 |
|
|
|
0.45 |
|
|
|
5.98 |
|
|
|
6.43 |
|
|
|
(0.55 |
) |
|
|
(2.50 |
) |
|
|
(3.05 |
) |
2016 |
|
|
36.97 |
|
|
|
0.39 |
|
|
|
3.42 |
|
|
|
3.81 |
|
|
|
(0.40 |
) |
|
|
(1.09 |
) |
|
|
(1.49 |
) |
2015 |
|
|
40.69 |
|
|
|
0.40 |
|
|
|
(0.56 |
) |
|
|
(0.16 |
) |
|
|
(0.80 |
) |
|
|
(2.76 |
) |
|
|
(3.56 |
) |
2014 |
|
|
36.68 |
|
|
|
0.43 |
|
|
|
4.84 |
|
|
|
5.27 |
|
|
|
(0.59 |
) |
|
|
(0.67 |
) |
|
|
(1.26 |
) |
Parnassus Core Equity Fund – Institutional Shares |
|
2018 |
|
|
42.73 |
|
|
|
0.55 |
|
|
|
(0.37 |
) |
|
|
0.18 |
|
|
|
(0.55 |
) |
|
|
(3.31 |
) |
|
|
(3.86 |
) |
2017 |
|
|
39.35 |
|
|
|
0.55 |
|
|
|
5.98 |
|
|
|
6.53 |
|
|
|
(0.65 |
) |
|
|
(2.50 |
) |
|
|
(3.15 |
) |
2016 |
|
|
37.03 |
|
|
|
0.48 |
|
|
|
3.41 |
|
|
|
3.89 |
|
|
|
(0.48 |
) |
|
|
(1.09 |
) |
|
|
(1.57 |
) |
2015 |
|
|
40.75 |
|
|
|
0.50 |
|
|
|
(0.58 |
) |
|
|
(0.08 |
) |
|
|
(0.89 |
) |
|
|
(2.75 |
) |
|
|
(3.64 |
) |
2014 |
|
|
36.73 |
|
|
|
0.45 |
|
|
|
4.91 |
|
|
|
5.36 |
|
|
|
(0.67 |
) |
|
|
(0.67 |
) |
|
|
(1.34 |
) |
Parnassus Endeavor Fund – Investor Shares |
|
2018 |
|
|
37.18 |
|
|
|
0.38 |
|
|
|
(5.13 |
) |
|
|
(4.75 |
) |
|
|
(0.52 |
) |
|
|
(3.04 |
) |
|
|
(3.56 |
) |
2017 |
|
|
32.99 |
|
|
|
0.34 |
|
|
|
6.20 |
|
|
|
6.54 |
|
|
|
(0.77 |
) |
|
|
(1.58 |
) |
|
|
(2.35 |
) |
2016 |
|
|
28.07 |
|
|
|
0.19 |
|
|
|
5.80 |
|
|
|
5.99 |
|
|
|
(0.32 |
) |
|
|
(0.75 |
) |
|
|
(1.07 |
) |
2015 |
|
|
29.95 |
|
|
|
0.17 |
|
|
|
0.83 |
|
|
|
1.00 |
|
|
|
(0.87 |
) |
|
|
(2.01 |
) |
|
|
(2.88 |
) |
2014 |
|
|
26.99 |
|
|
|
0.18 |
|
|
|
4.79 |
|
|
|
4.97 |
|
|
|
(0.51 |
) |
|
|
(1.50 |
) |
|
|
(2.01 |
) |
Parnassus Endeavor Fund – Institutional Shares |
|
2018 |
|
|
37.21 |
|
|
|
0.46 |
|
|
|
(5.13 |
) |
|
|
(4.67 |
) |
|
|
(0.61 |
) |
|
|
(3.04 |
) |
|
|
(3.65 |
) |
2017 |
|
|
33.01 |
|
|
|
0.41 |
|
|
|
6.21 |
|
|
|
6.62 |
|
|
|
(0.84 |
) |
|
|
(1.58 |
) |
|
|
(2.42 |
) |
2016 |
|
|
28.06 |
|
|
|
0.24 |
|
|
|
5.83 |
|
|
|
6.07 |
|
|
|
(0.37 |
) |
|
|
(0.75 |
) |
|
|
(1.12 |
) |
For the period ended
December 31, 2015(d) |
|
|
31.03 |
|
|
|
0.16 |
|
|
|
(0.20 |
) |
|
|
(0.04 |
) |
|
|
(0.92 |
) |
|
|
(2.01 |
) |
|
|
(2.93 |
) |
34
|
|
|
|
|
|
|
|
Prospectus • 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset
Value
End of Year |
|
|
Total Overall Return |
|
|
Ratio
of Gross Expenses to Average Net Assets |
|
|
Ratio of Net Expenses to Average Net Assets (Net of Waiver
and Expense
Offset Arrangements)(b),(c) |
|
|
Ratio
of Net Investment Income (Loss) to Average
Net Assets |
|
|
Portfolio Turnover Rate |
|
|
Net Assets End of Year (000s) |
|
|
Parnassus Fund – Investor Shares |
|
|
$40.54 |
|
|
|
(9.73 |
)% |
|
|
0.85 |
% |
|
|
0.85 |
% |
|
|
1.06 |
% |
|
|
47.26 |
% |
|
|
$685,715 |
|
|
48.27 |
|
|
|
16.08 |
|
|
|
0.84 |
|
|
|
0.84 |
|
|
|
0.96 |
|
|
|
37.45 |
|
|
|
923,262 |
|
|
44.97 |
|
|
|
13.46 |
|
|
|
0.86 |
|
|
|
0.86 |
|
|
|
0.90 |
|
|
|
41.70 |
|
|
|
775,818 |
|
|
40.46 |
|
|
|
0.26 |
|
|
|
0.84 |
|
|
|
0.84 |
|
|
|
0.64 |
|
|
|
68.52 |
|
|
|
708,944 |
|
|
48.09 |
|
|
|
14.68 |
|
|
|
0.84 |
|
|
|
0.84 |
|
|
|
0.47 |
|
|
|
60.44 |
|
|
|
679,130 |
|
|
Parnassus Fund – Institutional Shares |
|
|
40.52 |
|
|
|
(9.57 |
) |
|
|
0.69 |
|
|
|
0.69 |
|
|
|
1.21 |
|
|
|
47.26 |
|
|
|
154,445 |
|
|
48.25 |
|
|
|
16.25 |
|
|
|
0.69 |
|
|
|
0.69 |
|
|
|
1.11 |
|
|
|
37.45 |
|
|
|
162,414 |
|
|
44.95 |
|
|
|
13.59 |
|
|
|
0.71 |
|
|
|
0.71 |
|
|
|
1.04 |
|
|
|
41.70 |
|
|
|
78,313 |
|
|
40.45 |
|
|
|
(2.37 |
)(e) |
|
|
0.70 |
(f) |
|
|
0.70 |
(f) |
|
|
0.90 |
(f) |
|
|
42.95 |
(e) |
|
|
45,941 |
|
|
Parnassus Core Equity Fund – Investor Shares |
|
|
38.99 |
|
|
|
(0.18 |
) |
|
|
0.87 |
|
|
|
0.87 |
|
|
|
1.03 |
|
|
|
31.43 |
|
|
|
8,172,571 |
|
|
42.67 |
|
|
|
16.58 |
|
|
|
0.87 |
|
|
|
0.87 |
|
|
|
1.09 |
|
|
|
24.52 |
|
|
|
9,870,059 |
|
|
39.29 |
|
|
|
10.41 |
|
|
|
0.87 |
|
|
|
0.87 |
|
|
|
1.03 |
|
|
|
22.89 |
|
|
|
10,200,768 |
|
|
36.97 |
|
|
|
(0.55 |
) |
|
|
0.88 |
|
|
|
0.88 |
|
|
|
1.03 |
|
|
|
26.90 |
|
|
|
8,368,394 |
|
|
40.69 |
|
|
|
14.48 |
|
|
|
0.87 |
|
|
|
0.87 |
|
|
|
1.11 |
|
|
|
14.32 |
|
|
|
8,558,905 |
|
|
Parnassus Core Equity Fund – Institutional Shares |
|
|
39.05 |
|
|
|
0.05 |
|
|
|
0.63 |
|
|
|
0.63 |
|
|
|
1.24 |
|
|
|
31.43 |
|
|
|
6,543,658 |
|
|
42.73 |
|
|
|
16.81 |
|
|
|
0.64 |
|
|
|
0.64 |
|
|
|
1.31 |
|
|
|
24.52 |
|
|
|
6,245,179 |
|
|
39.35 |
|
|
|
10.61 |
|
|
|
0.66 |
|
|
|
0.66 |
|
|
|
1.25 |
|
|
|
22.89 |
|
|
|
4,597,160 |
|
|
37.03 |
|
|
|
(0.34 |
) |
|
|
0.67 |
|
|
|
0.67 |
|
|
|
1.25 |
|
|
|
26.90 |
|
|
|
3,554,007 |
|
|
40.75 |
|
|
|
14.71 |
|
|
|
0.67 |
|
|
|
0.67 |
|
|
|
1.17 |
|
|
|
14.32 |
|
|
|
3,024,069 |
|
|
Parnassus Endeavor Fund – Investor Shares |
|
|
28.87 |
|
|
|
(13.49 |
) |
|
|
0.95 |
|
|
|
0.95 |
|
|
|
1.04 |
|
|
|
70.96 |
|
|
|
2,758,361 |
|
|
37.18 |
|
|
|
19.81 |
|
|
|
0.92 |
|
|
|
0.92 |
|
|
|
0.94 |
|
|
|
43.21 |
|
|
|
4,185,857 |
|
|
32.99 |
|
|
|
21.42 |
|
|
|
0.97 |
|
|
|
0.95 |
|
|
|
0.64 |
|
|
|
34.08 |
|
|
|
2,507,515 |
|
|
28.07 |
|
|
|
3.25 |
|
|
|
0.98 |
|
|
|
0.95 |
|
|
|
0.56 |
|
|
|
63.23 |
|
|
|
1,325,765 |
|
|
29.95 |
|
|
|
18.51 |
|
|
|
1.02 |
|
|
|
0.95 |
|
|
|
0.62 |
|
|
|
39.51 |
|
|
|
770,332 |
|
|
Parnassus Endeavor Fund – Institutional Shares |
|
|
28.89 |
|
|
|
(13.25 |
) |
|
|
0.72 |
|
|
|
0.72 |
|
|
|
1.25 |
|
|
|
70.96 |
|
|
|
939,280 |
|
|
37.21 |
|
|
|
20.03 |
|
|
|
0.72 |
|
|
|
0.72 |
|
|
|
1.12 |
|
|
|
43.21 |
|
|
|
1,031,525 |
|
|
33.01 |
|
|
|
21.68 |
|
|
|
0.74 |
|
|
|
0.74 |
|
|
|
0.80 |
|
|
|
34.08 |
|
|
|
295,317 |
|
|
28.06 |
|
|
|
(0.22 |
)(e) |
|
|
0.75 |
(f) |
|
|
0.75 |
(f) |
|
|
0.80 |
(f) |
|
|
42.60 |
(e) |
|
|
46,806 |
|
35
|
|
|
|
|
|
|
|
|
|
|
|
Prospectus • 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a Share Outstanding for the Year Ended |
|
Net Asset Value Beginning of Year |
|
|
Net
Investment Income (Loss)(a) |
|
|
Net Realized and Unrealized Gain (Loss) on Securities(a) |
|
|
Total
from Investment Operations(a) |
|
|
Dividends from
Net Investment Income |
|
|
Distributions from Net Realized Gains
on Securities |
|
|
Total Dividends and Distributions |
|
Parnassus Mid Cap Fund – Investor Shares |
|
2018 |
|
|
$32.07 |
|
|
|
$0.23 |
|
|
|
$(2.32 |
) |
|
|
$(2.09 |
) |
|
|
$(0.22 |
) |
|
|
$(0.90 |
) |
|
|
$(1.12 |
) |
2017 |
|
|
28.87 |
|
|
|
0.26 |
|
|
|
4.29 |
|
|
|
4.55 |
|
|
|
(0.48 |
) |
|
|
(0.87 |
) |
|
|
(1.35 |
) |
2016 |
|
|
25.56 |
|
|
|
0.21 |
|
|
|
3.90 |
|
|
|
4.11 |
|
|
|
(0.11 |
) |
|
|
(0.69 |
) |
|
|
(0.80 |
) |
2015 |
|
|
27.40 |
|
|
|
0.21 |
|
|
|
(0.41 |
) |
|
|
(0.20 |
) |
|
|
(0.18 |
) |
|
|
(1.46 |
) |
|
|
(1.64 |
) |
2014 |
|
|
25.10 |
|
|
|
0.22 |
|
|
|
2.60 |
|
|
|
2.82 |
|
|
|
(0.20 |
) |
|
|
(0.32 |
) |
|
|
(0.52 |
) |
Parnassus Mid Cap Fund – Institutional Shares |
|
2018 |
|
|
32.11 |
|
|
|
0.31 |
|
|
|
(2.33 |
) |
|
|
(2.02 |
) |
|
|
(0.29 |
) |
|
|
(0.90 |
) |
|
|
(1.19 |
) |
2017 |
|
|
28.90 |
|
|
|
0.34 |
|
|
|
4.29 |
|
|
|
4.63 |
|
|
|
(0.55 |
) |
|
|
(0.87 |
) |
|
|
(1.42 |
) |
2016 |
|
|
25.57 |
|
|
|
0.27 |
|
|
|
3.89 |
|
|
|
4.16 |
|
|
|
(0.14 |
) |
|
|
(0.69 |
) |
|
|
(0.83 |
) |
For the period ended
December 31, 2015(d) |
|
|
27.58 |
|
|
|
0.20 |
|
|
|
(0.52 |
) |
|
|
(0.32 |
) |
|
|
(0.23 |
) |
|
|
(1.46 |
) |
|
|
(1.69 |
) |
Parnassus Fixed Income Fund – Investor Shares |
|
2018 |
|
|
16.54 |
|
|
|
0.42 |
|
|
|
(0.61 |
) |
|
|
(0.19 |
) |
|
|
(0.43 |
) |
|
|
- |
|
|
|
(0.43 |
) |
2017 |
|
|
16.42 |
|
|
|
0.37 |
|
|
|
0.14 |
|
|
|
0.51 |
|
|
|
(0.39 |
) |
|
|
- |
|
|
|
(0.39 |
) |
2016 |
|
|
16.44 |
|
|
|
0.34 |
|
|
|
0.06 |
|
|
|
0.40 |
|
|
|
(0.36 |
) |
|
|
(0.06 |
) |
|
|
(0.42 |
) |
2015 |
|
|
16.66 |
|
|
|
0.33 |
|
|
|
(0.21 |
) |
|
|
0.12 |
|
|
|
(0.33 |
) |
|
|
(0.01 |
) |
|
|
(0.34 |
) |
2014 |
|
|
16.43 |
|
|
|
0.31 |
|
|
|
0.43 |
|
|
|
0.74 |
|
|
|
(0.37 |
) |
|
|
(0.14 |
) |
|
|
(0.51 |
) |
Parnassus Fixed Income Fund – Institutional Shares |
|
2018 |
|
|
16.54 |
|
|
|
0.46 |
|
|
|
(0.61 |
) |
|
|
(0.15 |
) |
|
|
(0.47 |
) |
|
|
- |
|
|
|
(0.47 |
) |
2017 |
|
|
16.41 |
|
|
|
0.41 |
|
|
|
0.14 |
|
|
|
0.55 |
|
|
|
(0.42 |
) |
|
|
- |
|
|
|
(0.42 |
) |
2016 |
|
|
16.44 |
|
|
|
0.38 |
|
|
|
0.04 |
|
|
|
0.42 |
|
|
|
(0.39 |
) |
|
|
(0.06 |
) |
|
|
(0.45 |
) |
For the period ended
December 31, 2015(d) |
|
|
16.75 |
|
|
|
0.24 |
|
|
|
(0.30 |
) |
|
|
(0.06 |
) |
|
|
(0.24 |
) |
|
|
(0.01 |
) |
|
|
(0.25 |
) |
36
|
|
|
|
|
|
|
|
Prospectus • 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value End of Year |
|
|
Total Overall Return |
|
|
Ratio
of Gross Expenses to Average Net Assets |
|
|
Ratio of Net Expenses to Average Net Assets (Net of Waiver
and Expense Offset Arrangements)(b),(c) |
|
|
Ratio
of Net Investment Income (Loss) to Average
Net Assets |
|
|
Portfolio Turnover Rate |
|
|
Net Assets End of Year (000s) |
|
|
Parnassus Mid Cap Fund – Investor Shares |
|
|
$28.86 |
|
|
|
(6.64 |
)% |
|
|
1.02 |
% |
|
|
0.99 |
% |
|
|
0.71 |
% |
|
|
31.52 |
% |
|
|
$1,752,821 |
|
|
32.07 |
|
|
|
15.79 |
|
|
|
1.01 |
|
|
|
0.99 |
|
|
|
0.83 |
|
|
|
33.27 |
|
|
|
2,021,276 |
|
|
28.87 |
|
|
|
16.07 |
|
|
|
1.01 |
|
|
|
0.99 |
|
|
|
0.75 |
|
|
|
18.81 |
|
|
|
1,490,587 |
|
|
25.56 |
|
|
|
(0.87 |
) |
|
|
1.07 |
|
|
|
0.99 |
|
|
|
0.77 |
|
|
|
58.01 |
|
|
|
543,251 |
|
|
27.40 |
|
|
|
11.24 |
|
|
|
1.09 |
|
|
|
1.09 |
|
|
|
0.84 |
|
|
|
21.62 |
|
|
|
305,297 |
|
|
Parnassus Mid Cap Fund – Institutional Shares |
|
|
28.90 |
|
|
|
(6.39 |
) |
|
|
0.75 |
|
|
|
0.75 |
|
|
|
0.95 |
|
|
|
31.52 |
|
|
|
1,073,093 |
|
|
32.11 |
|
|
|
16.04 |
|
|
|
0.75 |
|
|
|
0.75 |
|
|
|
1.09 |
|
|
|
33.27 |
|
|
|
780,372 |
|
|
28.90 |
|
|
|
16.28 |
|
|
|
0.80 |
|
|
|
0.80 |
|
|
|
0.95 |
|
|
|
18.81 |
|
|
|
285,182 |
|
|
25.57 |
|
|
|
(1.30 |
)(e) |
|
|
0.77 |
(f) |
|
|
0.77 |
(f) |
|
|
1.12 |
(f) |
|
|
34.04 |
(e) |
|
|
11,397 |
|
|
Parnassus Fixed Income Fund – Investor Shares |
|
|
15.92 |
|
|
|
(1.12 |
) |
|
|
0.86 |
|
|
|
0.68 |
|
|
|
2.64 |
|
|
|
46.43 |
|
|
|
157,213 |
|
|
16.54 |
|
|
|
3.10 |
|
|
|
0.82 |
|
|
|
0.68 |
|
|
|
2.25 |
|
|
|
38.48 |
|
|
|
182,161 |
|
|
16.42 |
|
|
|
2.42 |
|
|
|
0.80 |
|
|
|
0.68 |
|
|
|
2.04 |
|
|
|
39.47 |
|
|
|
193,440 |
|
|
16.44 |
|
|
|
0.70 |
|
|
|
0.79 |
|
|
|
0.68 |
|
|
|
1.98 |
|
|
|
35.80 |
|
|
|
182,130 |
|
|
16.66 |
|
|
|
4.49 |
|
|
|
0.78 |
|
|
|
0.68 |
|
|
|
1.84 |
|
|
|
52.57 |
|
|
|
192,614 |
|
|
Parnassus Fixed Income Fund – Institutional Shares |
|
|
15.92 |
|
|
|
(0.89 |
) |
|
|
0.45 |
|
|
|
0.45 |
|
|
|
2.90 |
|
|
|
46.43 |
|
|
|
58,293 |
|
|
16.54 |
|
|
|
3.37 |
|
|
|
0.47 |
|
|
|
0.47 |
|
|
|
2.46 |
|
|
|
38.48 |
|
|
|
47,365 |
|
|
16.41 |
|
|
|
2.55 |
|
|
|
0.49 |
|
|
|
0.49 |
|
|
|
2.22 |
|
|
|
39.47 |
|
|
|
20,733 |
|
|
16.44 |
|
|
|
(0.35 |
)(e) |
|
|
0.49 |
(f) |
|
|
0.49 |
(f) |
|
|
2.14 |
(f) |
|
|
24.24 |
(e) |
|
|
7,731 |
|
(a) Income (loss) from operations per
share is based on average daily shares outstanding.
(b) Parnassus Investments has
contractually limited expenses to an annualized rate of 0.99% for the Parnassus
Mid Cap Fund–Investor Shares and 0.68% for the Parnassus Fixed Income
Fund–Investor Shares.
(c) Parnassus Investments has
contractually limited expenses to an annualized rate of 0.85% for the Parnassus
Mid Cap Fund–Institutional Shares and 0.58% for the Parnassus Fixed Income
Fund–Institutional Shares.
(d) The Parnassus Fund–Institutional
Shares, the Parnassus Endeavor Fund–Institutional Shares, the Parnassus Mid Cap
Fund–Institutional Shares and the Parnassus Fixed Income Fund–Institutional
Shares commenced operations on April 30, 2015, and the period shown is from
April 30, 2015 through December 31, 2015.
(e) Not annualized for periods less
than one year.
(f) Annualized.
37
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Prospectus • 2019 |
General Information
Deloitte & Touche LLP, 555 Mission
Street, San Francisco, California 94105, is the Funds’ independent registered
public accounting firm.
Brown Brothers Harriman & Co., 50
Post Office Square, Boston, Massachusetts 02110, is the custodian of the Funds’
assets.
Parnassus Investments, 1 Market Street, Suite
1600, San Francisco, California 94105, is the Funds’ transfer agent and
accounting agent. Jerome L. Dodson, the Funds’ Chairman of the Board, is the
majority stockholder of Parnassus Investments.
Householding Consent
To minimize expenses, we may mail only one
copy of the Funds’ prospectus and each annual, semiannual and quarterly report
to those addresses shared by two or more accounts. If you wish to receive
individual copies of these documents and are currently receiving these reports
directly from Parnassus Funds, please call us at (800) 999–3505 (or contact
the financial institution that currently sends these reports to you). We will
begin sending you individual copies 30 days after receiving your request.
38
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Prospectus • 2019 |
|
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|
Privacy Policy and Practices
Parnassus is committed to maintaining the
confidentiality, integrity and security of personal information entrusted to us
by current and potential shareholders. We have always treated personal
information as confidential and want you to be aware of our privacy policies.
What Information We Collect
We may collect and maintain the following
nonpublic personal information about you:
∎ |
|
information we
receive from you on applications or other forms, such as your name,
address, e-mail address, phone
number, social security number or tax identification number, assets,
income and date of birth; and |
∎ |
|
information about
your transactions with us, our affiliates or others, such as your account
number, balance, positions, activity, history, cost basis information and
other financial information. |
What Information We Disclose
We do not disclose any nonpublic personal
information about our shareholders or former shareholders to any third parties,
except as permitted or required by law. Parnassus will share information with
affiliates if the information is required to provide a product or service you
have requested. In addition, we may share such information with non-affiliated third parties to the extent
necessary to effect, process, administer or enforce a transaction that you
request or authorize, in connection with maintaining or servicing your account,
as requested by regulatory authorities or as otherwise permitted or required by
law. For example, we may provide such information to third
parties in the course of servicing your
account, such as identity-verification service providers. These companies are
authorized to use your personal information only as necessary to provide
these services to us. Relationships with these parties shall be pursuant to a
non-disclosure agreement, protecting
the release of shareholder information. We may also disclose information to
non-affiliated parties if compelled by
law, such as responding to a subpoena, preventing fraud or complying with an
inquiry by a government agency or regulator.
How We Protect Your Information
We restrict access to nonpublic personal
information about you to those persons who need to know that information to
provide products or services to you. We maintain physical, electronic and
procedural safeguards that comply with federal standards to protect the
confidentiality, integrity and security of your nonpublic personal information.
We will continue to adhere to the privacy
policies and practices in this notice even if your account is closed or becomes
inactive.
Additional Rights
You may have other privacy protections under
applicable state laws. To the extent those state laws apply, we will comply with
them with respect to your nonpublic personal information.
How to Contact Us
Please call us at (800) 999-3505 or email us at
[email protected] if you have any questions regarding our privacy
policy. We are open Monday-Friday from 8:30 a.m. to 5:00 p.m. Pacific Time.
39
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Prospectus • 2019 |
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Prospectus • 2019 |
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[THIS PAGE INTENTIONALLY LEFT BLANK]
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Prospectus • 2019 |
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42
Investment Adviser
Parnassus Investments
1 Market Street, Suite 1600
San Francisco, CA 94105
Independent Registered Public
Accounting Firm
Deloitte & Touche LLP
555 Mission Street
San Francisco, CA 94105
Legal Counsel
Foley & Lardner LLP
777 E. Wisconsin Ave.
Milwaukee, WI 53202
Distributor
Parnassus Funds Distributor, LLC
Three Canal Plaza, Suite 100
Portland, ME 04101
Sign up for electronic
delivery of prospectuses, shareholder reports and account statements at
www.parnassus.com/gopaperless You can obtain additional information about each
of the Funds in the statement of additional information (SAI) dated May 1,
2019, which has been filed with the Securities and Exchange Commission (SEC) and
is incorporated in this prospectus by reference (namely, it legally forms a part
of the prospectus). The Funds also publish an annual and a semiannual report and
two quarterly reports each year that discuss the Funds’ holdings and how recent
market conditions as well as the Funds’ investment strategies affected
performance. For a free copy of any of these documents or to ask questions about
the Funds, call the Parnassus Funds at (800) 999-3505.
The Funds make available
the SAI and the annual and semiannual reports, free of charge, on their Internet
website (http://www. parnassus.com). The general public can review and copy
information about the Funds (including the SAI) on the EDGAR Database on the
SEC’s Internet website at http://www.sec.gov. Copies of this information may be
obtained, upon payment of a duplicating fee, by electronic request at the
following email address: [email protected].
The Investment Company
Act File Number for Parnassus Income Funds is 811-06673. The Investment Company Act File
Number for Parnassus Funds is 811-04044.
1 Market Street, Suite 1600, San Francisco,
CA 94105^(800) 999-3505^www.parnassus.com