Prospectus
Parnassus Core Equity
FundSM
Investor Shares: PRBLX | Institutional Shares: PRILX
Parnassus Growth Equity
FundSM
Investor Shares: PFGEX | Institutional Shares: PFPGX
Parnassus Value Equity
FundSM
Investor Shares: PARWX | Institutional Shares: PFPWX
Parnassus Mid Cap
FundSM
Investor Shares: PARMX | Institutional Shares: PFPMX
Parnassus Mid Cap Growth
FundSM
Investor Shares: PARNX | Institutional Shares: PFPRX
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 truthful or
complete. Any representation to the contrary is a criminal offense.
Table of Contents
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Prospectus • 2024 |
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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, hold and sell
shares of the Parnassus Core Equity Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and example below.
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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0.57 |
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0.57 |
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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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0.25 |
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0.05 |
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Service Fees |
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0.20 |
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None |
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All Remaining Other Expenses |
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0.05 |
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0.05 |
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Total Annual Fund
Operating Expenses |
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0.82 |
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0.62 |
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Expenses
Reimbursement |
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0.00 |
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0.01 |
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Total Annual Fund Operating Expenses after
Expenses Reimbursement(1) |
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0.82 |
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0.61 |
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(1) The investment adviser has
contractually agreed to reimburse the Fund for expenses to the extent necessary
to limit total annual fund operating expenses to 0.82% of net assets for the
Parnassus Core Equity Fund—Investor Shares and to 0.61% of net assets for the
Parnassus Core Equity Fund—Institutional Shares. This agreement will not be
terminated prior to May 1, 2025 and may be continued indefinitely by the
investment adviser on a year-to-year basis.
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
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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$84 |
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$262 |
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$455 |
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$1,014 |
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Institutional Shares |
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$62 |
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$198 |
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$345 |
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$773 |
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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 29.0% 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 65% of the
Fund’s total assets will normally be invested in equity securities that pay
interest or dividends. The remaining 35% 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 $14.9
billion as of March 31, 2024) measured at the time of purchase. The Fund may
invest to a lesser
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Prospectus • 2024 |
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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 that the
Fund’s investment adviser, Parnassus Investments, LLC, (the “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. As part of the
Adviser’s investment approach, the Adviser seeks to invest in companies with
sustainable business practices, in alignment with our investment philosophy, as
we believe these factors are relevant to our assessment of quality and the
risk-return profiles of companies in the Funds. The Fund will evaluate whether
it will continue to hold or 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
sustainable investment expectations and the Adviser does not believe it is an
appropriate investment for the Fund following such changes.
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:
∎ |
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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. Risks associated with
rising inflation, trade tensions, ongoing armed conflicts between Ukraine
and Russia in Europe and among Israel, Hamas, and other militant groups in
the Middle East, and the impact of epidemic and pandemic diseases.
Additionally, risks associated with volatility and disruptions in the
banking sector (including bank failures), interest rate increases,
political events, rising government debt in the U.S. and the possibility
of a national or global recession could affect the economies of many
nations, including the United States, in ways that cannot be foreseen at
the present time, and may adversely impact the markets in which the Fund
invests. The Fund’s holdings can vary significantly from broad stock
market indices. |
∎ |
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Equity Securities Risk. The Fund may
invest in equity securities including common stocks, which include the
common stock of any class or series of domestic or foreign corporations or
any similar equity interest, such as a trust or partnership interest. The
value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the industries in
which the issuers of securities held by the Fund participate, or facts
relating to specific companies in which the Fund invests. These
investments may or may not pay dividends and may or may not carry voting
rights. Common stock occupies the most junior position in a company’s
capital structure. |
∎ |
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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.
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 |
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Prospectus • 2024 |
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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 investment process
used by the Adviser to select securities for the Fund’s investment
portfolio may not prove effective, and the Adviser’s judgments about the
attractiveness, value and potential appreciation of the Fund’s investments
may prove to be incorrect in that the investments chosen by the Adviser
may not perform as anticipated. Certain risks are inherent in the
ownership of any security, and there is no assurance that the Fund’s
investment objective will be achieved. |
∎ |
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Environmental, Social, and Governance (ESG)
Investing Risk. ESG investing risk refers to the risk stemming from
the environmental, social, and governance factors that the Fund applies in
selecting securities. The Fund seeks to invest in high quality companies
with sustainable business practices and to avoid investments in companies
that do not meet its quality expectations. This may affect the Fund’s
exposure to certain companies or industries and cause the Fund to forego
certain investment opportunities. The Fund’s returns may be lower than
other funds that do not consider ESG factors in security
selection. |
∎ |
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Foreign Securities Risk. The Fund may
invest up to 20% of its assets in foreign securities. Foreign markets can
be more volatile and less liquid 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 international conflicts and wars, epidemic and pandemic
diseases, 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. |
∎ |
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American Depositary Receipts (ADR) Risk.
ADRs are receipts, issued by depository banks in the United States, for
shares of a foreign-based company that entitle the holder to dividends and
capital gains on the underlying security. ADRs may be sponsored or
unsponsored. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary’s transaction fees.
Under an unsponsored ADR arrangement, the foreign issuer assumes no
obligations and the depositary’s transaction fees are paid directly by the
ADR holders. In addition to the risks of investing in foreign securities,
there is no guarantee that an ADR issuer will continue to offer a
particular ADR. As a result, the Fund may have difficulty selling the ADR
or selling them quickly and efficiently at the prices at which they have
been valued. The issuers of unsponsored ADRs are not obligated to disclose
information that is considered material in the U.S. and voting rights with
respect to the deposited securities are not passed through. ADRs may not
track the prices of the underlying foreign securities on which they are
based, and their values may change materially at times when U.S. markets
are not open for trading. |
∎ |
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Real Estate Investment Trust (REIT) Risk.
Investing in REITs involves certain unique risks in addition to
those risks associated with investing in the real estate industry in
general. REITs may be affected by changes in the value of the underlying
property owned by the REITs, while mortgage REITs may be affected by the
quality of any credit extended. REITs are dependent upon management
skills, may not be diversified geographically or by property/ mortgage
asset type, and are subject to heavy cash flow dependency, default by
borrowers and self-liquidation. REITs may be more volatile and/or more
illiquid than other types of equity securities. REITs (especially mortgage
REITs) are subject to interest rate risks. REITs may incur significant
amounts of leverage. The Fund will indirectly bear a portion of the
expenses, including management fees, paid by each REIT in which it
invests, in addition to the expenses of the Fund. REITs must also meet
certain requirements under the Internal Revenue Code of 1986, as amended
(the “Code”) to avoid entity level tax and be eligible to pass-through
certain tax attributes of their income to shareholders. REITs are
consequently subject to the risk of failing to meet these requirements for
favorable tax treatment and |
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Prospectus • 2024 |
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of
failing to maintain their exemptions from registration under the
Investment Company Act of 1940. REITs are subject to the risks of changes
in the Code affecting their tax status. |
∎ |
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Tax Law Change Risk: All statements
contained in this prospectus regarding the U.S. federal income tax
consequences of an investment in the Fund are based on current law, which
is subject to change at any time, potentially with retroactive effect. For
example, tax legislation enacted in 2017 (the Tax Cuts and Jobs Act)
resulted in fundamental changes to the Internal Revenue Code (some of
which are set to expire in the next few years). More recently, the
Inflation Reduction Act of 2022 will add a 15% alternative minimum tax on
large corporations and a 1% excise tax on repurchases of stock by publicly
traded corporations and certain affiliates. The excise tax on repurchases
of stock may cause some corporations in which the Fund invests to reduce
liquidity opportunities for its investors, which could potentially reduce
the value of your investment in the Fund. Such legislation, as well as
possible future U.S. tax legislation and administrative guidance, could
materially affect the tax consequences of your investment in the Fund and
the Fund’s investments or holding structures. |
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
that 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
17.9% (quarter ended June 30, 2020), and the lowest return for a quarter
was a loss of 16.9% (quarter ended March 31, 2020).
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). Figures are average annual returns for the
one-, five-and ten-year periods ended December 31, 2023. 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 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,
2023) |
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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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24.93 |
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15.48 |
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11.63 |
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Return After Taxes on Distributions |
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23.15 |
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13.39 |
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9.44 |
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Return After Taxes on Distributions and Sale of
Fund Shares |
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15.91 |
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12.08 |
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8.98 |
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Institutional Shares |
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Return Before Taxes |
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25.21 |
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15.73 |
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11.86 |
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S&P 500® Index (reflects no
deduction for fees, expenses or taxes) |
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26.29 |
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15.69 |
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12.03 |
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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.
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Prospectus • 2024 |
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The Adviser
Parnassus
Investments, LLC 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
(“SAI”).
Portfolio Managers
The
lead Portfolio Manager and the other Portfolio Manager of the Fund are jointly
and primarily responsible for the day-to-day management of the Fund’s portfolio.
While decisions are generally made by consensus, the lead Portfolio Manager
exercises final discretion in the event of any conflict.
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 and a Trustee of the Parnassus Funds.
Andrew S. Choi is a Portfolio Manager of the
Parnassus Core Equity Fund and has served in this capacity since 2022.
For
more information, please see “Management of the Funds” in the prospectus and
“Portfolio Managers” in the SAI.
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 31 of the prospectus.
5
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Prospectus • 2024 |
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Parnassus Growth Equity
Fund
Investment Objective
The
Parnassus Growth Equity 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, hold and sell
shares of the Parnassus Growth Equity Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and example below.
Parnassus
Growth 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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0.75 |
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0.75 |
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Distribution
(12b-1) Fees |
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None |
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None |
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Other Expenses(1) |
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2.14 |
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1.11 |
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Service Fees |
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0.14 |
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None |
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All Remaining Other Expenses |
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2.00 |
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1.11 |
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Total Annual Fund
Operating Expenses |
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2.89 |
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1.86 |
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Expense
Reimbursement |
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2.05 |
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1.23 |
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Total Annual Fund Operating Expenses After
Expense Waiver and Reimbursement(2) |
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0.84 |
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0.63 |
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(1) “Other Expenses” are estimated
for the current fiscal year. Actual expenses may differ from
estimates.
(2) The investment adviser has contractually
agreed to reimburse the Fund for expenses to the extent necessary to limit total
annual fund operating expenses to 0.84% of net assets for the Parnassus Growth
Equity Fund—Investor Shares and to 0.63% of net assets for the Parnassus Growth
Equity Fund—Institutional Shares. This agreement will not be terminated prior to
May 1,
2025 and may be continued indefinitely by the investment adviser
on a year-to-year basis.
Example
This
example is intended to help you compare the cost of investing in the Parnassus
Growth 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 are equal to the total annual fund operating expenses
after
expense
reimbursement 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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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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$86 |
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$701 |
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$1,342 |
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$3,066 |
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Institutional Shares |
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$64 |
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$465 |
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$891 |
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$2,079 |
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Portfolio Turnover
The
Parnassus Growth 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 34.9% of the average value of its
portfolio.
Principal Investment
Strategies
The
Parnassus Growth Equity Fund normally invests at least 80% of its net assets
(plus borrowings for investment purposes) in equity securities of large-sized
growth companies. Equity securities include common stocks, depositary receipts,
and interests in real estate investment trusts. The Fund considers a large-sized
company to be one that has a market capitalization that is greater than the
median market capitalization of the Russell 1000® Growth Index (which was
$20.2 billion as of March 31, 2024) measured at the time of purchase. 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 1000® Growth Index, which are
subject to change. The Fund may normally invest up to 20% of its net assets in
small-and mid-capitalization companies. A growth company is a company that the
Adviser believes has a superior and pragmatic growth strategy and the potential
for above-average revenue and earnings growth. The Fund invests mainly in
domestic stocks of companies that are financially sound and have good prospects
for the
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Prospectus • 2024 |
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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.
To determine a company’s prospects, the Fund’s investment adviser, Parnassus
Investments, LLC (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. As part of the Adviser’s investment
approach, the Adviser seeks to invest in companies with sustainable business
practices, in alignment with our investment philosophy, as we believe these
factors are relevant to our assessment of quality and the risk-return profiles
of companies in the Funds. The Fund will evaluate whether it will continue to
hold or 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 sustainable
investment expectations and the Adviser does not believe it is an appropriate
investment for the Fund following such
changes.
Principal Risks
All
investments involve risk, and investing in the Parnassus Growth 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. Risks associated with
rising inflation, trade tensions, ongoing armed conflicts between Ukraine
and Russia in Europe and among Israel, Hamas, and other militant groups in
the Middle East, and the impact of epidemic and pandemic diseases.
Additionally, risks associated with volatility and disruptions in the
banking sector (including bank failures), interest rate
increases, |
|
|
political
events, rising government debt in the U.S. and the possibility of a
national or global recession could affect the economies of many nations,
including the United States, in ways that cannot be foreseen at the
present time, and may adversely impact the markets in which the Fund
invests. The Fund’s holdings can vary significantly from broad stock
market indices. |
∎ |
|
Equity Securities Risk. The Fund may
invest in equity securities including common stocks, which include the
common stock of any class or series of domestic or foreign corporations or
any similar equity interest, such as a trust or partnership interest. The
value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the industries in
which the issuers of securities held by the Fund participate, or facts
relating to specific companies in which the Fund invests. These
investments may or may not pay dividends and may or may not carry voting
rights. Common stock occupies the most junior position in a company’s
capital structure. |
∎ |
|
Growth Investing Risk. The Adviser may be
wrong in its assessment of a company’s potential for growth and the growth
stocks the Fund holds may not grow as the Adviser anticipates. Finally,
there are periods when investing in growth stocks falls out of favor with
investors and these stocks may
underperform. |
∎ |
|
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. |
∎ |
|
Management Risk. The investment process
used by the Adviser to select securities for the Fund’s investment
portfolio may not prove effective, and the Adviser’s judgments about the
attractiveness, value and potential appreciation of the Fund’s investments
may prove to be incorrect in that the investments chosen by the Adviser
may not perform as anticipated. Certain risks are inherent in the
ownership of any security, and there is no assurance that the Fund’s
investment objective will be
achieved. |
∎ |
|
Environmental, Social, and Governance (ESG)
Investing Risk. ESG investing risk refers to the risk stemming from
the environmental, social,
and |
7
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Prospectus • 2024 |
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governance
factors that the Fund applies in selecting securities. The Fund seeks to
invest in high quality companies with sustainable business practices and
to avoid investments in companies that do not meet its quality
expectations. This may affect the Fund’s exposure to certain companies or
industries and cause the Fund to forego certain investment opportunities.
The Fund’s returns may be lower than other funds that do not consider ESG
factors in security selection. |
∎ |
|
Foreign Securities Risk. The Fund may
invest up to 20% of its assets in foreign securities. Foreign markets can
be more volatile and less liquid 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 international conflicts and wars, epidemic and pandemic
diseases, 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. |
∎ |
|
American Depositary Receipts (ADR) Risk.
ADRs are receipts, issued by depository banks in the United States, for
shares of a foreign-based company that entitle the holder to dividends and
capital gains on the underlying security. ADRs may be sponsored or
unsponsored. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary’s transaction fees.
Under an unsponsored ADR arrangement, the foreign issuer assumes no
obligations and the depositary’s transaction fees are paid directly by the
ADR holders. In addition to the risks of investing in foreign securities,
there is no guarantee that an ADR issuer will continue to offer a
particular ADR. As a result, the Fund may have difficulty selling the ADR
or selling them quickly and efficiently at the prices at which they have
been valued. The issuers of unsponsored ADRs are not obligated to disclose
information that is considered material in the U.S. and voting rights with
respect to the deposited securities are not passed through. ADRs may not
track the prices of the underlying foreign
securities |
|
|
on
which they are based, and their values may change materially at times when
U.S. markets are not open for
trading. |
∎ |
|
Real Estate Investment Trust (REIT) Risk.
Investing in REITs involves certain unique risks in addition to
those risks associated with investing in the real estate industry in
general. REITs may be affected by changes in the value of the underlying
property owned by the REITs, while mortgage REITs may be affected by the
quality of any credit extended. REITs are dependent upon management
skills, may not be diversified geographically or by property/ mortgage
asset type, and are subject to heavy cash flow dependency, default by
borrowers and self- liquidation. REITs may be more volatile and/or more
illiquid than other types of equity securities. REITs (especially mortgage
REITs) are subject to interest rate risks. REITs may incur significant
amounts of leverage. The Fund will indirectly bear a portion of the
expenses, including management fees, paid by each REIT in which it
invests, in addition to the expenses of the Fund. REITs must also meet
certain requirements under the Internal Revenue Code of 1986, as amended
(the “Code”) to avoid entity level tax and be eligible to pass-through
certain tax attributes of their income to shareholders. REITs are
consequently subject to the risk of failing to meet these requirements for
favorable tax treatment and of failing to maintain their exemptions from
registration under the Investment Company Act of 1940. REITs are subject
to the risks of changes in the Code affecting their tax
status. |
∎ |
|
Tax Law Change Risk: All statements
contained in this prospectus regarding the U.S. federal income tax
consequences of an investment in the Fund are based on current law, which
is subject to change at any time, potentially with retroactive effect. For
example, tax legislation enacted in 2017 (the Tax Cuts and Jobs Act)
resulted in fundamental changes to the Internal Revenue Code (some of
which are set to expire in the next few years). More recently, the
Inflation Reduction Act of 2022 will add a 15% alternative minimum tax on
large corporations and a 1% excise tax on repurchases of stock by publicly
traded corporations and certain affiliates. The excise tax on repurchases
of stock may cause some corporations in which the Fund invests to reduce
liquidity opportunities for its investors, which could potentially reduce
the value of your investment in the Fund. Such legislation, as well as
possible future U.S. tax legislation and administrative
guidance, |
8
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Prospectus • 2024 |
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could
materially affect the tax consequences of your investment in the Fund and
the Fund’s investments or holding
structures. |
Performance Information
The bar chart
and table that follow contain information that allows you to evaluate the
Parnassus Growth 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 Institutional Shares. 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 period shown in the bar chart, the highest return for a
quarter was 15.5% (quarter ended March 31,
2023), and the lowest return for a quarter
was a loss of 2.4% (quarter ended September 30,
2023).
Following
is a table comparing the performance of the Parnassus Growth Equity Fund’s two
share classes with that of the Russell 1000® Growth Index (see “Index
Descriptions” in the prospectus). Figures are average annual returns for the one
year and since inception periods ended December 31, 2023. 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 1000® Growth Index, and also how
the Fund’s performance varies from year to year.
*
The Fund’s inception date was
December 28,
2022.
Parnassus
Growth Equity Fund
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Average Annual
Total Returns (%) |
|
(all periods period ended
December 31, 2023 |
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One Year |
|
|
Since Inception* |
|
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| |
Investor Shares |
|
|
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| |
|
| |
|
| |
Return Before Taxes |
|
|
44.82 |
|
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|
43.91 |
|
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| |
Return After Taxes on Distributions |
|
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44.02 |
|
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|
43.02 |
|
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| |
Return After Taxes on Distributions and Sale of
Fund Shares |
|
|
26.64 |
|
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33.13 |
|
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| |
Institutional Shares |
|
|
|
| |
|
| |
|
| |
Return Before Taxes |
|
|
45.09 |
|
|
|
44.17 |
|
|
| |
Russell 1000® Growth
Index |
|
|
42.68 |
|
|
|
45.01 |
|
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, LLC is the investment adviser to the Parnassus Growth Equity Fund.
For more information on the Adviser, please see “Management of the Fund” in this
prospectus and “The Adviser” in the Statement of Additional Information
(“SAI”).
Portfolio Managers
The
lead Portfolio Manager and the other Portfolio Manager of the Fund are jointly
and primarily responsible for the day-to-day management of the Fund’s portfolio.
While decisions are generally made by consensus, the lead Portfolio Manager
exercises final discretion in the event of any conflict.
Andrew S. Choi is the lead Portfolio Manager of
the Parnassus Growth Equity Fund and has served as a portfolio manager of the
Fund since its inception on December 28, 2022.
Shivani R. Vohra is a Portfolio Manager of the
Parnassus Growth Equity Fund and has served as a portfolio manager of the Fund
since its inception on December 28, 2022.
For
more information, please see “Management of the Fund” in this prospectus and
“Portfolio Managers” in the SAI.
9
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Prospectus • 2024 |
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Parnassus Value Equity
Fund
(formerly
Parnassus Endeavor Fund)
Investment Objective
The
Parnassus Value Equity 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, hold and sell
shares of the Parnassus Value Equity Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and example below.
Parnassus
Value 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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0.66 |
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0.66 |
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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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0.27 |
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0.06 |
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Service Fees |
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0.21 |
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None |
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| |
All Remaining Other Expenses |
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0.06 |
|
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0.06 |
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Total Annual Fund
Operating Expenses |
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0.93 |
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0.72 |
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Expense
Reimbursement |
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0.05 |
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0.07 |
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Total Annual Fund Operating Expenses After
Expense Waiver and Reimbursement(1) |
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0.88 |
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0.65 |
|
1 The investment adviser has contractually
agreed to reimburse the Fund for expenses to the extent necessary to limit total
annual fund operating expenses to 0.88% of net assets for the Parnassus Value
Equity Fund—Investor Shares and to 0.65% of net assets for the Parnassus Value
Equity Fund—Institutional Shares. This agreement will not be terminated prior to
May 1,
2025 and may be continued indefinitely by the investment adviser
on a year-to-year basis.
For
additional information about the Parnassus Value 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
Value 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 expenses are equal to the total annual fund operating
expenses after expense reimbursement 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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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 |
|
|
$90 |
|
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|
$291 |
|
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$510 |
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$1,138 |
|
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Institutional Shares |
|
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$66 |
|
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$223 |
|
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$394 |
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$888 |
|
Portfolio Turnover
The
Parnassus Value 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 30.2% of the average value of its
portfolio.
Principal Investment
Strategies
The
Parnassus Value Equity Fund’s objective is to achieve capital appreciation 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. 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 Value 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 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
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Prospectus • 2024 |
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lesser
extent may also invest in foreign securities of similar companies. To determine
a company’s prospects, the Fund’s investment adviser, Parnassus Investments, LLC
(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 deemed to
represent relative value. To determine whether the company demonstrates relative
value, the Adviser considers the companies valuation relative to its own
valuation history and relative to similar companies operating in the same
industry. As part of the Adviser’s investment approach, the Adviser seeks to
invest in companies with sustainable business practices, in alignment with our
investment philosophy, as we believe these factors are relevant to our
assessment of quality and the risk-return profiles of companies in the Funds.
The Fund will evaluate whether it will continue to hold or 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 sustainable investment expectations and the Adviser
does not believe it is an appropriate investment for the Fund following such
changes.
Principal Risks
All
investments involve risk, and investing in the Parnassus Value 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. Risks associated with
rising inflation, trade tensions, ongoing armed conflicts between Ukraine
and Russia in Europe and among Israel, Hamas, and other militant groups in
the |
|
|
Middle
East, and the impact of epidemic and pandemic diseases. Additionally,
risks associated with volatility and disruptions in the banking sector
(including bank failures), interest rate increases, political events,
rising government debt in the U.S. and the possibility of a national or
global recession could affect the economies of many nations, including the
United States, in ways that cannot be foreseen at the present time, and
may adversely impact the markets in which the Fund invests. The Fund’s
holdings can vary significantly from broad stock market
indices. |
∎ |
|
Equity Securities Risk. The Fund may
invest in equity securities including common stocks, which include the
common stock of any class or series of domestic or foreign corporations or
any similar equity interest, such as a trust or partnership interest. The
value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the industries in
which the issuers of securities held by the Fund participate, or facts
relating to specific companies in which the Fund invests. These
investments may or may not pay dividends and may or may not carry voting
rights. Common stock occupies the most junior position in a company’s
capital structure. |
∎ |
|
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 investment process
used by the Adviser to select securities for the
Fund’s |
11
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Prospectus • 2024 |
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investment
portfolio may not prove effective, and the Adviser’s judgments about the
attractiveness, value and potential appreciation of the Fund’s investments
may prove to be incorrect in that the investments chosen by the Adviser
may not perform as anticipated. Certain risks are inherent in the
ownership of any security, and there is no assurance that the Fund’s
investment objective will be
achieved. |
∎ |
|
Environmental, Social, and Governance (ESG)
Investing Risk. ESG investing risk refers to the risk stemming from
the environmental, social, and governance factors that the Fund applies in
selecting securities. The Fund seeks to invest in high quality companies
with sustainable business practices and to avoid investments in companies
that do not meet its quality expectations. This may affect the Fund’s
exposure to certain companies or industries and cause the Fund to forego
certain investment opportunities. The Fund’s returns may be lower than
other funds that do not consider ESG factors in security
selection. |
∎ |
|
Foreign Securities Risk. The Fund may
invest up to 20% of its assets in foreign securities. Foreign markets can
be more volatile and less liquid 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 international conflicts and wars, epidemic and pandemic
diseases, 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. |
∎ |
|
American Depositary Receipts (ADR) Risk.
ADRs are receipts, issued by depository banks in the United States, for
shares of a foreign-based company that entitle the holder to dividends and
capital gains on the underlying security. ADRs may be sponsored or
unsponsored. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary’s transaction fees.
Under an unsponsored ADR arrangement, the foreign issuer assumes no
obligations and the
depositary’s |
|
|
transaction
fees are paid directly by the ADR holders. In addition to the risks of
investing in foreign securities, there is no guarantee that an ADR issuer
will continue to offer a particular ADR. As a result, the Fund may have
difficulty selling the ADR or selling them quickly and efficiently at the
prices at which they have been valued. The issuers of unsponsored ADRs are
not obligated to disclose information that is considered material in the
U.S. and voting rights with respect to the deposited securities are not
passed through. ADRs may not track the prices of the underlying foreign
securities on which they are based, and their values may change materially
at times when U.S. markets are not open for
trading. |
∎ |
|
Value Investing Risk. The risk associated
with the Fund’s investment in companies it considers undervalued relative
to their peers or the general stock market insofar as these securities may
decline or may not reach what the Adviser believes are their full
value. |
∎ |
|
Real Estate Investment Trust (REIT) Risk.
Investing in REITs involves certain unique risks in addition to
those risks associated with investing in the real estate industry in
general. REITs may be affected by changes in the value of the underlying
property owned by the REITs, while mortgage REITs may be affected by the
quality of any credit extended. REITs are dependent upon management
skills, may not be diversified geographically or by property/ mortgage
asset type, and are subject to heavy cash flow dependency, default by
borrowers and self-liquidation. REITs may be more volatile and/or more
illiquid than other types of equity securities. REITs (especially mortgage
REITs) are subject to interest rate risks. REITs may incur significant
amounts of leverage. The Fund will indirectly bear a portion of the
expenses, including management fees, paid by each REIT in which it
invests, in addition to the expenses of the Fund. REITs must also meet
certain requirements under the Internal Revenue Code of 1986, as amended
(the “Code”) to avoid entity level tax and be eligible to pass-through
certain tax attributes of their income to shareholders. REITs are
consequently subject to the risk of failing to meet these requirements for
favorable tax treatment and of failing to maintain their exemptions from
registration under the Investment Company Act of 1940. REITs are subject
to the risks of changes in the Code affecting their tax
status. |
12
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Prospectus • 2024 |
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∎ |
|
Tax Law Change Risk: All statements
contained in this prospectus regarding the U.S. federal income tax
consequences of an investment in the Fund are based on current law, which
is subject to change at any time, potentially with retroactive effect. For
example, tax legislation enacted in 2017 (the Tax Cuts and Jobs Act)
resulted in fundamental changes to the Internal Revenue Code (some of
which are set to expire in the next few years). More recently, the
Inflation Reduction Act of 2022 will add a 15% alternative minimum tax on
large corporations and a 1% excise tax on repurchases of stock by publicly
traded corporations and certain affiliates. The excise tax on repurchases
of stock may cause some corporations in which the Fund invests to reduce
liquidity opportunities for its investors, which could potentially reduce
the value of your investment in the Fund. Such legislation, as well as
possible future U.S. tax legislation and administrative guidance, could
materially affect the tax consequences of your investment in the Fund and
the Fund’s investments or holding
structures. |
Performance Information
The bar chart
and table that follow contain information that allows you to evaluate the
Parnassus Value 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 25.9% (quarter ended December 31,
2020), and the lowest return for a quarter
was a loss of 25.0% (quarter ended March 31,
2020).
Following
is a table comparing the performance of the Parnassus Value Equity Fund’s two
share classes with that of the Russell 1000® Value Index (see
“Index
Descriptions”
in the prospectus). Figures are average annual returns for the one-, five-and
ten-year periods ended December 31, 2023. 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 1000® Value, and also how the
Fund’s performance varies from year to year.
Parnassus
Value Equity Fund
|
|
|
|
|
|
|
|
|
|
|
| |
|
Average Annual Total Returns (%)
|
|
(all periods ended
December 31, 2023) |
|
|
|
| |
|
|
One Year |
|
|
Five Years |
|
|
Ten Years |
|
|
|
| |
Investor Shares |
|
|
|
| |
|
|
| |
|
| |
|
|
| |
Return Before Taxes |
|
|
13.70 |
|
|
|
16.89 |
|
|
|
12.89 |
|
|
|
| |
Return After Taxes on Distributions |
|
|
13.21 |
|
|
|
15.68 |
|
|
|
11.26 |
|
|
|
| |
Return After Taxes on Distributions and Sale
of Fund Shares |
|
|
8.43 |
|
|
|
13.63 |
|
|
|
10.23 |
|
|
|
| |
Institutional Shares |
|
|
|
| |
|
|
| |
|
| |
|
|
| |
Return Before Taxes |
|
|
13.94 |
|
|
|
17.14 |
|
|
|
13.10 |
|
|
|
| |
Russell 1000® Value Index (reflects
no deduction for fees, expenses or taxes) |
|
|
11.46 |
|
|
|
10.91 |
|
|
|
8.40 |
|
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
Value Equity 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 Value Equity Fund—Investor Shares and includes
expenses that are not applicable to and are higher than those of the
Institutional Shares.
13
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| |
Prospectus • 2024 |
|
| |
| |
|
The Adviser
Parnassus
Investments, LLC is the investment adviser to the Parnassus Value 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
(“SAI”).
Portfolio Managers
The
lead Portfolio Manager and the other Portfolio Manager of the Fund are jointly
and primarily responsible for the day-to-day management of the Fund’s portfolio.
While decisions are generally made by consensus, the lead Portfolio Manager
exercises final discretion in the event of any conflict.
Billy J. Hwan is the lead Portfolio Manager of
the Parnassus Value Equity Fund and has served as a portfolio manager of the
Fund since 2018.
Krishna S. Chintalapalli is a Portfolio Manager
of the Parnassus Value Equity Fund and has served as a portfolio manager of the
Fund since 2022.
For
more information, please see “Management of the Funds” in the prospectus and
“Portfolio Managers” in the SAI.
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 31 of the prospectus
14
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Prospectus • 2024 |
|
| |
|
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, hold and sell
shares of the Parnassus Mid Cap Fund. You may pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and example below.
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 |
|
|
0.27 |
|
|
|
0.05 |
|
|
| |
Service Fees |
|
|
0.21 |
|
|
|
None |
|
|
| |
All Remaining Other Expenses |
|
|
0.06 |
|
|
|
0.05 |
|
|
| |
Total Annual Fund
Operating Expenses |
|
|
0.98 |
|
|
|
0.76 |
|
|
| |
Expense
Reimbursement |
|
|
0.02 |
|
|
|
0.01 |
|
|
| |
Total Annual Fund Operating Expenses After
Expense Reimbursement(1) |
|
|
0.96 |
|
|
|
0.75 |
|
1 The investment adviser has contractually
agreed to reimburse the Fund for expenses to the extent necessary to limit total
annual fund operating expenses to 0.96% of net assets for the Parnassus Mid Cap
Equity Fund—Investor Shares and to 0.75% of net assets for the Parnassus Mid Cap
Equity Fund—Institutional Shares. This agreement will not be terminated prior to
May 1,
2025 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
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 |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
|
|
|
| |
Investor
Shares |
|
|
$98 |
|
|
|
$310 |
|
|
|
$540 |
|
|
|
$1,200 |
|
|
|
|
| |
Institutional Shares |
|
|
$77 |
|
|
|
$242 |
|
|
|
$421 |
|
|
|
$941 |
|
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 42.5% of the average value of its
portfolio.
Principal Investment
Strategies
The
Parnassus Mid Cap Fund normally invests at least 80% of its net assets (plus
borrowings for investment purposes) 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
$2.4 billion and $47.0 billion as of April 28, 2023) 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.
15
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| |
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|
| |
Prospectus • 2024 |
|
| |
| |
|
Using
a value-oriented investment process, the Fund seeks to invest in equity
securities that have the potential for long-term capital appreciation. To
determine a company’s prospects, the Fund’s investment adviser, Parnassus
Investments, LLC (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. As part of the Adviser’s investment approach, the
Adviser seeks to invest in companies with sustainable business practices, in
alignment with our investment philosophy, as we believe these factors are
relevant to our assessment of quality and the risk-return profiles of companies
in the Funds. The Fund will evaluate whether it will continue to hold or 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 sustainable investment expectations and
the Adviser does not believe it is an appropriate investment for the Fund
following such changes.
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. Risks associated with
rising inflation, trade tensions, ongoing armed conflicts between Ukraine
and Russia in Europe and among Israel, Hamas, and other militant groups in
the |
|
|
Middle
East, and the impact of epidemic and pandemic diseases. Additionally,
risks associated with volatility and disruptions in the banking sector
(including bank failures), interest rate increases, political events,
rising government debt in the U.S. and the possibility of a national or
global recession could affect the economies of many nations, including the
United States, in ways that cannot be foreseen at the present time, and
may adversely impact the markets in which the Fund invests. The Fund’s
holdings can vary significantly from broad stock market
indices. |
∎ |
|
Equity Securities Risk. The Fund may
invest in equity securities including common stocks, which include the
common stock of any class or series of domestic or foreign corporations or
any similar equity interest, such as a trust or partnership interest. The
value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the industries in
which the issuers of securities held by the Fund participate, or facts
relating to specific companies in which the Fund invests. These
investments may or may not pay dividends and may or may not carry voting
rights. Common stock occupies the most junior position in a company’s
capital structure. |
∎ |
|
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 investment process
used by the Adviser to select securities for the Fund’s investment
portfolio may not prove effective, and the Adviser’s judgments about the
attractiveness, value and potential appreciation of the Fund’s investments
may prove to be incorrect in that the investments chosen by the Adviser
may not perform as anticipated. Certain risks are inherent in
the |
16
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| |
| |
| |
| |
Prospectus • 2024 |
|
| |
|
|
|
ownership
of any security, and there is no assurance that the Fund’s investment
objective will be achieved. |
∎ |
|
Environmental, Social, and Governance (ESG)
Investing Risk. ESG investing risk refers to the risk stemming from
the environmental, social, and governance factors that the Fund applies in
selecting securities. The Fund seeks to invest in high quality companies
with sustainable business practices and to avoid investments in companies
that do not meet its quality expectations. This may affect the Fund’s
exposure to certain companies or industries and cause the Fund to forego
certain investment opportunities. The Fund’s returns may be lower than
other funds that do not consider ESG factors in security
selection. |
∎ |
|
Foreign Securities Risk. The Fund may
invest up to 20% of its assets in foreign securities. Foreign markets can
be more volatile and less liquid 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 international conflicts and wars, epidemic and pandemic
diseases, 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. |
∎ |
|
American Depositary Receipts (ADR) Risk.
ADRs are receipts, issued by depository banks in the United States, for
shares of a foreign-based company that entitle the holder to dividends and
capital gains on the underlying security. ADRs may be sponsored or
unsponsored. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary’s transaction fees.
Under an unsponsored ADR arrangement, the foreign issuer assumes no
obligations and the depositary’s transaction fees are paid directly by the
ADR holders. In addition to the risks of investing in foreign securities,
there is no guarantee that an ADR issuer will continue to offer a
particular ADR. As a result, the Fund may have difficulty selling the ADR
or selling them quickly and efficiently at the prices at which they have
been valued. The issuers
of |
|
|
unsponsored
ADRs are not obligated to disclose information that is considered material
in the U.S. and voting rights with respect to the deposited securities are
not passed through. ADRs may not track the prices of the underlying
foreign securities on which they are based, and their values may change
materially at times when U.S. markets are not open for
trading. |
∎ |
|
Real Estate Investment Trust (REIT) Risk.
Investing in REITs involves certain unique risks in addition to
those risks associated with investing in the real estate industry in
general. REITs may be affected by changes in the value of the underlying
property owned by the REITs, while mortgage REITs may be affected by the
quality of any credit extended. REITs are dependent upon management
skills, may not be diversified geographically or by property/ mortgage
asset type, and are subject to heavy cash flow dependency, default by
borrowers and self- liquidation. REITs may be more volatile and/or more
illiquid than other types of equity securities. REITs (especially mortgage
REITs) are subject to interest rate risks. REITs may incur significant
amounts of leverage. The Fund will indirectly bear a portion of the
expenses, including management fees, paid by each REIT in which it
invests, in addition to the expenses of the Fund. REITs must also meet
certain requirements under the Internal Revenue Code of 1986, as amended
(the “Code”) to avoid entity level tax and be eligible to pass-through
certain tax attributes of their income to shareholders. REITs are
consequently subject to the risk of failing to meet these requirements for
favorable tax treatment and of failing to maintain their exemptions from
registration under the Investment Company Act of 1940. REITs are subject
to the risks of changes in the Code affecting their tax
status. |
∎ |
|
Tax Law Change Risk: All statements
contained in this prospectus regarding the U.S. federal income tax
consequences of an investment in the Fund are based on current law, which
is subject to change at any time, potentially with retroactive effect. For
example, tax legislation enacted in 2017 (the Tax Cuts and Jobs Act)
resulted in fundamental changes to the Internal Revenue Code (some of
which are set to expire in the next few years). More recently, the
Inflation Reduction Act of 2022 will add a 15% alternative minimum tax on
large corporations and a 1% excise tax on repurchases of stock by publicly
traded corporations and certain affiliates. The
excise |
17
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| |
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|
|
| |
|
|
| |
Prospectus • 2024 |
|
| |
| |
|
|
|
tax
on repurchases of stock may cause some corporations in which the Fund
invests to reduce liquidity opportunities for its investors, which could
potentially reduce the value of your investment in the Fund. Such
legislation, as well as possible future U.S. tax legislation and
administrative guidance, could materially affect the tax consequences of
your investment in the Fund and the Fund’s investments or holding
structures. |
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 19.9% (quarter ended June 30,
2020), and the lowest return for a quarter
was a loss of 23.6% (quarter ended March 31,
2020).
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). Figures are average annual returns for one-,
five-and ten-year periods ended December 31, 2023. 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 also how the
Fund’s performance varies from year to year.
Parnassus
Mid Cap Fund
|
|
|
|
|
|
|
|
|
|
|
| |
|
Average Annual Total Returns (%)
|
|
(all periods ended
December 31, 2023) |
|
|
|
| |
|
|
One
Year |
|
|
Five
Years |
|
|
Ten Years |
|
|
|
| |
Investor Shares |
|
|
|
| |
|
|
| |
|
| |
|
|
| |
Return Before Taxes |
|
|
12.67 |
|
|
|
8.76 |
|
|
|
7.73 |
|
|
|
| |
Return After Taxes on Distributions |
|
|
12.02 |
|
|
|
7.89 |
|
|
|
6.75 |
|
|
|
| |
Return After Taxes on Distributions and Sale
of Fund Shares |
|
|
7.90 |
|
|
|
6.85 |
|
|
|
6.03 |
|
|
|
| |
Institutional Shares |
|
|
|
| |
|
|
| |
|
| |
|
|
| |
Return Before Taxes |
|
|
12.92 |
|
|
|
8.99 |
|
|
|
7.94 |
|
|
|
| |
Russell Midcap® Index (reflects no
deduction for fees, expenses or taxes) |
|
|
17.23 |
|
|
|
12.68 |
|
|
|
9.42 |
|
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.
18
|
|
|
|
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|
|
|
|
| |
|
|
|
|
| |
| |
| |
| |
Prospectus • 2024 |
|
| |
|
The Adviser
Parnassus
Investments, LLC 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
(“SAI”).
Portfolio Managers
The
Portfolio Managers of the Fund are jointly and primarily responsible for the
day-to-day management of the Fund’s portfolio.
Matthew D. Gershuny is a 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.
Ian E. Sexsmith is a Portfolio Manager of the
Parnassus Mid Cap Fund and has served in this capacity since January 1,
2024.
For
more information, please see “Management of the Funds” in the prospectus and
“Portfolio Managers” in the SAI.
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 31 of the prospectus.
19
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|
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|
| |
|
|
|
| |
|
|
| |
Prospectus • 2024 |
|
| |
|
Parnassus Mid Cap Growth
Fund
Investment Objective
The
Parnassus Mid Cap Growth 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, hold and sell
shares of the Parnassus Mid Cap Growth Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and example below.
Parnassus
Mid Cap Growth 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 |
|
|
0.62 |
|
|
|
0.62 |
|
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| |
Distribution
(12b-1) Fees |
|
|
None |
|
|
|
None |
|
|
| |
Other
Expenses |
|
|
0.19 |
|
|
|
0.09 |
|
|
| |
Service Fees |
|
|
0.10 |
|
|
|
None |
|
|
| |
All Remaining Other Expenses |
|
|
0.09 |
|
|
|
0.09 |
|
|
| |
Total Annual Fund
Operating Expenses |
|
|
0.81 |
|
|
|
0.71 |
|
|
| |
Expense
Reimbursement |
|
|
0.01 |
|
|
|
0.03 |
|
|
| |
Total Annual Fund Operating Expenses After
Expense Reimbursement(1) |
|
|
0.80 |
|
|
|
0.68 |
|
1 The investment adviser has contractually
agreed to reimburse the Fund for expenses to the extent necessary to limit total
annual fund operating expenses to 0.80% of net assets for the Parnassus Mid Cap
Growth Fund—Investor Shares and to 0.68% of net assets for the Parnassus Mid Cap
Growth Fund—Institutional Shares. This agreement will not be terminated prior to
May 1,
2025 and may be continued indefinitely by the investment adviser
on a year-to-year basis.
For
additional information about the Parnassus Mid Cap Growth 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 Growth 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 |
|
|
10 Years |
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| |
Investor
Shares |
|
|
$82 |
|
|
|
$258 |
|
|
|
$449 |
|
|
|
$1,001 |
|
|
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| |
Institutional Shares |
|
|
$69 |
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|
|
$224 |
|
|
|
$392 |
|
|
|
$880 |
|
Portfolio Turnover
The
Parnassus Mid Cap Growth 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 47.5% of the average value of its
portfolio.
Principal Investment
Strategies
The
Parnassus Mid Cap Growth Fund normally invests at least 80% of its net assets
(plus borrowings for investment purposes) in mid-sized growth 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® Growth Index (which was
between $2.4 billion and $47.0 billion as of April 28, 2023) measured at
the time of purchase. 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® Growth Index, which are
subject to change. The Fund may normally invest up to 20% of its net assets in
smaller-and larger-capitalization companies. A growth company is a company that
the Adviser believes has a superior and pragmatic growth strategy and the
potential for above-average revenue and earnings growth. 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
20
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Prospectus • 2024 |
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foreign
markets. To determine a company’s prospects, the Fund’s investment adviser,
Parnassus Investments, LLC (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. As part of the Adviser’s
investment approach, the Adviser seeks to invest in companies with sustainable
business practices, in alignment with our investment philosophy, as we believe
these factors are relevant to our assessment of quality and the risk-return
profiles of companies in the Funds. The Fund will evaluate whether it will
continue to hold or 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
sustainable investment expectations and the Adviser does not believe it is an
appropriate investment for the Fund following such
changes.
Principal Risks
All
investments involve risk, and investing in the Parnassus Mid Cap Growth 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. Risks associated with
rising inflation, trade tensions, ongoing armed conflicts between Ukraine
and Russia in Europe and among Israel, Hamas, and other militant groups in
the Middle East, and the impact of epidemic and pandemic diseases.
Additionally, risks associated with volatility and disruptions in the
banking sector (including bank failures), interest rate increases,
political events, rising government debt in the U.S. and the possibility
of a national or global
recession |
|
|
could
affect the economies of many nations, including the United States, in ways
that cannot be foreseen at the present time, and may adversely impact the
markets in which the Fund invests. The Fund’s holdings can vary
significantly from broad stock market
indices. |
∎ |
|
Equity Securities Risk. The Fund may
invest in equity securities including common stocks, which include the
common stock of any class or series of domestic or foreign corporations or
any similar equity interest, such as a trust or partnership interest. The
value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the industries in
which the issuers of securities held by the Fund participate, or facts
relating to specific companies in which the Fund invests. These
investments may or may not pay dividends and may or may not carry voting
rights. Common stock occupies the most junior position in a company’s
capital structure. |
∎ |
|
Growth Investing Risk. The Adviser may be
wrong in its assessment of a company’s potential for growth and the growth
stocks the Fund holds may not grow as the Adviser anticipates. Finally,
there are periods when investing in growth stocks falls out of favor with
investors and these stocks may
underperform. |
∎ |
|
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, small-capitalization
companies tend to perform poorly during times of economic
stress. |
∎ |
|
Management Risk. The investment process
used by the Adviser to select securities for the Fund’s investment
portfolio may not prove effective, and the Adviser’s judgments about the
attractiveness, value and potential appreciation of the Fund’s investments
may prove to be incorrect in that the investments chosen by the Adviser
may not perform as |
21
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Prospectus • 2024 |
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anticipated.
Certain risks are inherent in the ownership of any security, and there is
no assurance that the Fund’s investment objective will be
achieved. |
∎ |
|
Environmental, Social, and Governance (ESG)
Investing Risk. ESG investing risk refers to the risk stemming from
the environmental, social, and governance factors that the Fund applies in
selecting securities. The Fund seeks to invest in high quality companies
with sustainable business practices and to avoid investments in companies
that do not meet its quality expectations. This may affect the Fund’s
exposure to certain companies or industries and cause the Fund to forego
certain investment opportunities. The Fund’s returns may be lower than
other funds that do not consider ESG factors in security
selection. |
∎ |
|
Foreign Securities Risk. The Fund may
invest up to 20% of its assets in foreign securities. Foreign markets can
be more volatile and less liquid 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 international conflicts and wars, epidemic and pandemic
diseases, 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. |
∎ |
|
American Depositary Receipts (ADR) Risk.
ADRs are receipts, issued by depository banks in the United States, for
shares of a foreign-based company that entitle the holder to dividends and
capital gains on the underlying security. ADRs may be sponsored or
unsponsored. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary’s transaction fees.
Under an unsponsored ADR arrangement, the foreign issuer assumes no
obligations and the depositary’s transaction fees are paid directly by the
ADR holders. In addition to the risks of investing in foreign securities,
there is no guarantee that an ADR issuer will continue to offer a
particular ADR. As a result, the Fund may have difficulty selling the ADR
or selling them quickly and efficiently at the prices
at |
|
|
which
they have been valued. The issuers of unsponsored ADRs are not obligated
to disclose information that is considered material in the U.S. and voting
rights with respect to the deposited securities are not passed through.
ADRs may not track the prices of the underlying foreign securities on
which they are based, and their values may change materially at times when
U.S. markets are not open for
trading. |
∎ |
|
Real Estate Investment Trust (REIT) Risk.
Investing in REITs involves certain unique risks in addition to
those risks associated with investing in the real estate industry in
general. REITs may be affected by changes in the value of the underlying
property owned by the REITs, while mortgage REITs may be affected by the
quality of any credit extended. REITs are dependent upon management
skills, may not be diversified geographically or by property/ mortgage
asset type, and are subject to heavy cash flow dependency, default by
borrowers and self- liquidation. REITs may be more volatile and/or more
illiquid than other types of equity securities. REITs (especially mortgage
REITs) are subject to interest rate risks. REITs may incur significant
amounts of leverage. The Fund will indirectly bear a portion of the
expenses, including management fees, paid by each REIT in which it
invests, in addition to the expenses of the Fund. REITs must also meet
certain requirements under the Internal Revenue Code of 1986, as amended
(the “Code”) to avoid entity level tax and be eligible to pass-through
certain tax attributes of their income to shareholders. REITs are
consequently subject to the risk of failing to meet these requirements for
favorable tax treatment and of failing to maintain their exemptions from
registration under the Investment Company Act of 1940. REITs are subject
to the risks of changes in the Code affecting their tax
status. |
∎ |
|
Tax Law Change Risk: All statements
contained in this prospectus regarding the U.S. federal income tax
consequences of an investment in the Fund are based on current law, which
is subject to change at any time, potentially with retroactive effect. For
example, tax legislation enacted in 2017 (the Tax Cuts and Jobs Act)
resulted in fundamental changes to the Internal Revenue Code (some of
which are set to expire in the next few years). More recently, the
Inflation Reduction Act of 2022 will add a 15% alternative minimum tax on
large corporations and a 1% excise tax on repurchases of stock by publicly
traded corporations and certain affiliates. The
excise |
22
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Prospectus • 2024 |
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|
tax
on repurchases of stock may cause some corporations in which the Fund
invests to reduce liquidity opportunities for its investors, which could
potentially reduce the value of your investment in the Fund. Such
legislation, as well as possible future U.S. tax legislation and
administrative guidance, could materially affect the tax consequences of
your investment in the Fund and the Fund’s investments or holding
structures. |
Performance Information
The bar chart
and table that follow contain information that allows you to evaluate the
Parnassus Mid Cap Growth 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 25.8% (quarter ended June 30,
2020), and the lowest return for a quarter
was a loss of 21.9% (quarter ended June 30,
2022).
Following
is a table comparing the performance of the Parnassus Mid Cap Growth Fund’s two
share classes with that of the Russell Midcap® Growth Index. Figures are
average annual returns for the one-, five-and ten-year periods ended
December 31, 2023. The table is intended to demonstrate the risk of
investing in the Parnassus Mid Cap Growth 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® Growth Index, and also how
the Fund’s performance varies from year to
year.
Parnassus
Mid Cap Growth Fund
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|
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| |
|
Average Annual Total Returns (%)
|
|
(all periods ended
December 31, 2023) |
|
|
|
| |
|
|
One
Year |
|
|
Five
Years |
|
|
Ten Years |
|
|
|
| |
Investor Shares |
|
|
|
| |
|
|
| |
|
| |
|
|
| |
Return Before Taxes |
|
|
35.60 |
|
|
|
10.48 |
|
|
|
8.45 |
|
|
|
| |
Return After Taxes on Distributions |
|
|
34.61 |
|
|
|
9.46 |
|
|
|
6.74 |
|
|
|
| |
Return After Taxes on Distributions and Sale
of Fund Shares |
|
|
21.66 |
|
|
|
8.19 |
|
|
|
6.33 |
|
|
|
| |
Institutional Shares |
|
|
|
| |
|
|
| |
|
| |
|
|
| |
Return Before Taxes |
|
|
35.77 |
|
|
|
10.62 |
|
|
|
8.58 |
|
|
|
| |
Russell Midcap® Growth Index (reflects
no deduction for fees, expenses or taxes) |
|
|
25.87 |
|
|
|
13.81 |
|
|
|
10.57 |
|
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 Growth 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 Growth Fund—Investor Shares and
includes expenses that are not applicable to and are higher than those of the
Institutional Shares.
23
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Prospectus • 2024 |
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|
The Adviser
Parnassus
Investments, LLC is the investment adviser to the Parnassus Mid Cap Growth 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
(“SAI”).
Portfolio Managers
The
lead Portfolio Manager and the other Portfolio Manager of the Fund are jointly
and primarily responsible for the day-to-day management of the Fund’s portfolio.
While decisions are generally made by consensus, the lead Portfolio Manager
exercises final discretion in the event of any conflict.
Ian E. Sexsmith is the lead Portfolio Manager
of the Parnassus Mid Cap Growth Fund and has served as a portfolio manager of
the Fund since 2013.
Robert J. Klaber is a Portfolio Manager of the
Parnassus Mid Cap Growth Fund and has served as a portfolio manager of the Fund
since 2016.
For
more information, please see “Management of the Funds” in the prospectus and
“Portfolio Managers” in the SAI.
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 31 of the prospectus.
24
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Prospectus • 2024 |
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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, hold and sell
shares of the Parnassus Fixed Income Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and example below.
Parnassus
Fixed Income Fund
|
|
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|
|
|
|
| |
|
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 |
|
|
0.49 |
|
|
|
0.49 |
|
|
| |
Distribution
(12b-1) Fees |
|
|
None |
|
|
|
None |
|
|
| |
Other
Expenses |
|
|
0.32 |
|
|
|
0.12 |
|
|
| |
Service Fees |
|
|
0.17 |
|
|
|
None |
|
|
| |
All Remaining Other Expenses(1) |
|
|
0.15 |
|
|
|
0.12 |
|
|
| |
Total Annual Fund
Operating Expenses |
|
|
0.81 |
|
|
|
0.61 |
|
|
| |
Expense Waiver and
Reimbursement |
|
|
0.23 |
|
|
|
0.22 |
|
|
| |
Total Annual Fund Operating Expenses After
Expense Waiver and Reimbursement(2) |
|
|
0.58 |
|
|
|
0.39 |
|
(1) “All Remaining Other
Expenses” include Acquired Fund Fees and Expenses (“AFFE”) of less than one
basis point. AFFE are not directly borne by the Fund, and they are not reflected
in the Fund’s financial statements. As a result, the information presented in
the expense table may differ from that presented in the Fund’s financial
highlights, which does not include AFFE.
(2) The investment adviser has
contractually agreed to waive 0.10% of its management fee for each class, and to
reimburse the Fund for expenses to the extent necessary to limit total annual
fund operating expenses to 0.58% of net assets for the Parnassus Fixed Income
Fund—Investor Shares and to 0.39% of net assets for the Parnassus Fixed Income
Fund— Institutional Shares. This agreement will not be terminated prior to
May 1, 2025, 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 also assumes that your
investment has a 5% return each year, and that the Fund’s expenses are equal to
the total annual fund operating expenses after expense waiver and reimbursement
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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1 Year |
|
|
3 Years |
|
|
5 Years |
|
|
10 Years |
|
|
|
|
| |
Investor
Shares |
|
|
$59 |
|
|
|
$236 |
|
|
|
$427 |
|
|
|
$980 |
|
|
|
|
| |
Institutional Shares |
|
|
$40 |
|
|
|
$173 |
|
|
|
$318 |
|
|
|
$741 |
|
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 48.7% 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. The Fund principally invests in corporate
bonds, U.S. Treasuries and supranational bonds, with an emphasis on corporate
bonds. Other investments may include convertible bonds, preferred stock, and
fixed income exchange traded funds, and the Fund may buy and sell futures
contracts based on fixed income securities and interest rates to seek to enhance
returns, manage duration, hedge interest rate risk, and reduce volatility. The
Fund may also invest in U.S. governmental agencies, commercial and residential
mortgage-
25
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Prospectus • 2024 |
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backed
securities and other 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 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 Fund’s investment adviser, Parnassus Investments, LLC
(the “Adviser”) to be of 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 stocks. As part of the
Adviser’s investment approach, the Adviser seeks to invest in companies with
sustainable business practices, in alignment with our investment philosophy, as
we believe these factors are relevant to our assessment of quality and the
risk-return profiles of companies in the Funds. The Fund will evaluate whether
it will continue to hold or 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 sustainable investment expectations and the Adviser does not believe
it is an appropriate investment for the Fund following such changes. 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, 2024,
the dollar-weighted average maturity of the Fund’s portfolio was 11.91 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. A rising interest rate environment may cause
investors to move out of bonds and other debt securities on a large scale,
which could adversely affect the price and liquidity of such securities.
Recent inflationary price movements may cause bonds and other debt
securities and related markets to experience heightened levels of interest
rate volatility and liquidity risk. |
∎ |
|
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. During
time periods characterized by recessionary market pressures such as
inflationary price movements, rising interest rates, bank failures and
other negative market stresses, credit risk increases.
|
∎ |
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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%.
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∎ |
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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. Risks
associated with rising inflation, trade tensions, ongoing armed conflicts
between Ukraine and Russia in Europe and among Israel, Hamas, and other
militant groups in the Middle East, and the impact of epidemic and
pandemic diseases. Additionally, risks associated with volatility and
disruptions in the banking sector (including bank failures), interest rate
increases, political events, rising government debt in the U.S. and the
possibility of a national or global recession
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Prospectus • 2024 |
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could
affect the economies of many nations, including the United States, in ways
that cannot be foreseen at the present time, and may adversely impact the
markets in which the Fund invests. 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. |
∎ |
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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.
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∎ |
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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.
Prepayment may reduce the Fund’s share price and income distribution.
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∎ |
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Exchange Traded Fund (ETF) Risk. ETFs are investment companies
that trade like stocks. The price of an ETF is derived from and based upon
the securities held by the ETF. However, like stocks, shares of ETFs are
not traded at net asset value, but may trade at prices above or below the
value of their underlying portfolios. The level of risk involved in the
purchase or sale of an ETF is similar to the risk involved in the purchase
or sale of a traditional common stock, except that the pricing mechanism
for an ETF is based on a basket of securities. Thus,
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the
risks of owning an ETF generally reflect the risks of owning the
underlying securities they are designed to track, although lack of
liquidity in an ETF could result in it being more volatile than the
underlying portfolio of securities. Disruptions in the markets for the
securities underlying ETFs purchased or sold by a Fund could result in
losses on a Fund’s investment in ETFs. ETFs are subject to management fees
and other fees that may increase their costs versus the costs of owning
the underlying securities directly. |
∎ |
|
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. 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 Stock Risk. Preferred stocks
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 stocks are subject to issuer-
specific and market risks applicable generally to equity securities.
Because many preferred stocks allow the issuer to convert their preferred
stock into common stock, preferred stocks are often sensitive to declining
common stock values. A company’s preferred stock generally pays dividends
only after the company makes required payments to holders of its bonds and
other debt. For this reason, the value of preferred stocks will usually
react more strongly than bonds and other debt to actual or perceived
changes in the company’s financial condition or prospects.
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∎ |
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Derivatives Risk. The Fund’s use of
futures based on fixed income instruments to enhance returns or hedge
against market declines subjects the Fund to potentially greater
volatility and/or losses. Even a small investment in futures can have a
large impact on the Fund’s interest rate and securities market exposure.
Therefore, using futures can disproportionately increase losses and reduce
opportunities for gains when interest rates are
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Prospectus • 2024 |
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changing.
The Fund may not fully benefit from or may lose money on its investment in
futures if changes in their value do not correspond accurately to changes
in the value of the Fund’s holdings. The other party to certain futures
presents the same types of credit risks as issuers of fixed income
securities. Investing in futures can also make the Fund’s assets less
liquid and harder to value, especially in declining markets.
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∎ |
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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.
|
∎ |
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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 investment process
used by the Adviser to select securities for the Fund’s investment
portfolio may not prove effective, and the Adviser’s judgments about the
attractiveness, value and potential appreciation of the Fund’s investments
may prove to be incorrect in that the investments chosen by the Adviser
may not perform as anticipated. Certain risks are inherent in the
ownership of any security, and there is no assurance that the Fund’s
investment objective will be achieved. |
∎ |
|
Environmental, Social, and Governance (ESG)
Investing Risk. ESG investing risk refers to the risk stemming from
the environmental, social, and governance factors that the Fund applies in
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selecting
securities. The Fund seeks to invest in high quality companies with
sustainable business practices and to avoid investments in companies that
do not meet its quality expectations. This may affect the Fund’s exposure
to certain companies or industries and cause the Fund to forego certain
investment opportunities. The Fund’s returns may be lower than other funds
that do not consider ESG factors in security selection.
|
∎ |
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Foreign Securities Risk. The Fund may
invest up to 20% of its assets in foreign securities. Foreign markets can
be more volatile and less liquid 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 international conflicts and wars, epidemic and pandemic
diseases, 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.
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∎ |
|
Tax Law Change Risk: All statements
contained in this prospectus regarding the U.S. federal income tax
consequences of an investment in the Fund are based on current law, which
is subject to change at any time, potentially with retroactive effect. For
example, tax legislation enacted in 2017 (the Tax Cuts and Jobs Act)
resulted in fundamental changes to the Internal Revenue Code (some of
which are set to expire in the next few years). More recently, the
Inflation Reduction Act of 2022 will add a 15% alternative minimum tax on
large corporations and a 1% excise tax on repurchases of stock by publicly
traded corporations and certain affiliates. The excise tax on repurchases
of stock may cause some corporations in which the Fund invests to reduce
liquidity opportunities for its investors, which could potentially reduce
the value of your investment in the Fund. Such legislation, as well as
possible future U.S. tax legislation and administrative guidance, could
materially affect the tax consequences of your investment in the Fund and
the Fund’s investments or holding structures.
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Prospectus • 2024 |
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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
7.4% (quarter ended December 31, 2023), and the lowest return for a quarter
was a loss of 6.7% (quarter ended March 31, 2022).
Following
is a table comparing the performance of the Parnassus Fixed Income Fund’s two
share classes with that of the Bloomberg U.S. Aggregate Bond Index (formerly
known as the Bloomberg Barclays U.S. Aggregate Bond Index) (see “Index
Descriptions” in the prospectus). Figures are average annual returns for the
one-, five- and ten-year periods ended December 31, 2023. 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 U.S. Aggregate Bond Index,
and a group of similar mutual funds, and also how the Fund’s performance varies
from year to year.
Parnassus
Fixed Income Fund
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Average Annual Total Returns (%) |
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(all periods ended December 31,
2023) |
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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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6.71 |
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1.17 |
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1.53 |
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Return After Taxes on Distributions |
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5.35 |
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0.20 |
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0.53 |
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Return After Taxes on Distributions and Sale
of Fund Shares |
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3.96 |
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0.53 |
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0.77 |
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Institutional Shares |
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Return Before Taxes |
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6.95 |
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1.38 |
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1.72 |
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Bloomberg U.S.
Aggregate Bond Index (reflects no deduction for fees, expenses or
taxes) |
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5.53 |
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1.10 |
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1.81 |
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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
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, LLC 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 (“SAI”).
Portfolio Managers
The
lead Portfolio Manager and the other Portfolio Manager of the Fund are jointly
and primarily responsible for the day-to-day management of the Fund’s portfolio.
While decisions are generally made by consensus, the lead Portfolio Manager
exercises final discretion in the event of any conflict.
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Prospectus • 2024 |
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Samantha D. Palm is the lead Portfolio Manager
of the Parnassus Fixed Income Fund and has been a portfolio manager of the Fund
since 2013.
Minh T. Bui is a Portfolio Manager of the
Parnassus Fixed Income Fund and has served in this capacity since
2020.
For
more information, please see “Management of the Funds” in the prospectus and
“Portfolio Managers” in the SAI.
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 31 of the prospectus.
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Prospectus • 2024 |
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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
(“NYSE”) is open. You may redeem or purchase Fund shares online through our
website at www.parnassus.com, by mail (Parnassus Funds, c/o Ultimus Fund
Solutions, LLC, P.O. Box 541150, Omaha, NE 68154-9150), 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 38
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
SAI.
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Prospectus • 2024 |
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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
current intention of doing so, the Funds may change their investment objectives
and investment strategies 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 sustainable
investment expectations.
Once
a security is purchased, the Adviser may continue to hold it even if it is no
longer undervalued or no longer possesses superior growth potential, as the case
may be.
Under
normal circumstances, each of the Parnassus Core Equity Fund, the Parnassus
Growth Equity Fund the Parnassus Value Equity Fund, the Parnassus Mid Cap Fund
and the Parnassus Mid Cap Growth 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 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. At least 65% of the Fund’s total
assets will normally be invested in equity securities that pay a dividend or
interest. The remaining 35% of the Fund’s total assets may be invested in
non-dividend-paying equity securities, short-term instruments and money-market
instruments. 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 $14.9
billion as of March 31, 2024) measured at the time of purchase. 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 Growth Equity Fund
The
Parnassus Growth Equity Fund seeks capital appreciation through investing
primarily (normally at least 80% of its net assets) in large-sized growth
companies. The Fund considers a large-sized company to be one that has a market
capitalization that is greater than the median market capitalization of the
Russell 1000® Growth
Index (which was $20.2 billion as of March 31, 2024) measured at the time of
purchase. A growth company is a company that the Adviser believes has an
above-average revenue and earnings growth opportunity. The Fund may normally
invest up to 20% of its net assets in small- and mid- capitalization
companies.
Parnassus Value Equity Fund
The
Parnassus Value Equity Fund seeks capital appreciation by investing primarily in
a diversified portfolio of equity securities. Equity securities include common
and preferred stock. The Adviser looks for undervalued companies that have
proven businesses and good prospects for long-term capital appreciation. The
Parnassus Value 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 may invest to a lesser extent in small- and
mid-capitalization companies.
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
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Prospectus • 2024 |
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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
$2.4 billion and $47.0 billion as of April 28, 2023) 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.
Parnassus Mid Cap Growth Fund
The
Parnassus Mid Cap Growth Fund seeks capital appreciation through investing
primarily (normally at least 80% of its net assets) in mid-sized growth
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® Growth
Index (which was between $2.4 billion and $47.0 billion as of April 28,
2023) measured at the time of purchase. A growth company is a company that the
Adviser believes has a superior and pragmatic growth strategy and the potential
for above-average revenue and earnings 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 sustainable investment
expectations.
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 SAI for a
description of bond ratings. Fixed income instruments include, but are not
limited to, U.S. Treasuries and debt of U.S. governmental agencies, debt of
government-related entities, obligations of supranational organizations,
corporate bonds, commercial and residential mortgage-backed securities,
convertible bonds preferred stock, fixed income exchange traded funds,
asset-backed securities and futures contracts based on fixed income
securities.
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-
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Prospectus • 2024 |
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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 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 defensive positions, the Fund may not achieve its
investment objective.
Sustainable Investment
Guidelines
When
making investment decisions, the Adviser conducts fundamental research to
evaluate a company’s financial health, business prospects, corporate governance,
and management of sustainability-related risks and opportunities. As part of the
investment process, the Funds evaluate companies with sustainable business
practices, in alignment with our Principles, as we believe these factors are
relevant to our assessment of quality and the risk-return profile of companies
in the Funds’ portfolios. Issues that may fall under these factors include, but
are not limited to:
∎ |
|
Corporate
governance and business ethics |
∎ |
|
Employee
pay, benefits, health, safety and corporate
culture |
∎ |
|
Product
quality and safety |
∎ |
|
Customers
and supply chain |
∎ |
|
Climate
change and environmental impact |
With
regard to the Parnassus Fixed Income Fund, the Adviser will take into
consideration factors specific to fixed income investments when making
investment decisions. The Fixed Income Fund may invest in securities that are
appropriate based on their specific considerations, but that may not be
appropriate for the U.S. equity funds.
Integration and
Stewardship
The
Adviser integrates sustainability-related risks and opportunities into
investment decision making, proxy voting, and engagement strategies. The Adviser
aims to invest in high quality companies considering competitive advantages,
relevance, management, sustainable business practices, and other factors that we
believe are relevant to investment performance. We do not generally expect to
invest in companies that operate contrary to our Principles and investment
philosophy as described in this prospectus and our Sustainable Investment
Policy.
In
accordance with this investment approach, the Funds may have no or limited
exposure to companies that we believe have concerning sustainability-related
practices or performance.
The
Adviser uses strategic engagement with company management teams to encourage
improvements in strategy, execution, governance and sustainability-related risks
and opportunities. Such engagement may include the submission of
non-binding shareholder proposals that recommend specific positive changes at
companies held in the Funds. The Adviser votes proxies consistent with its proxy
voting policies and procedures, which are stated in the SAI.
Parnassus’s
Principles and Sustainable Investment Policy describe our approach to investing
sustainably and outline the conduct that we believe will help companies succeed
and create enduring value for investors. Both are available on our website at
www.parnassus.com.
Non-Principal Strategies
and Risks
In
addition to the principal risks under the caption “Summary Section,” and
incorporated herein by reference, there are non-principal risks related to the
Funds’ investment in money-market securities, which is a non-principal
investment strategy. For temporary purposes, a Fund may invest a portion of its
assets in money-market instruments. Although a money-market
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Prospectus • 2024 |
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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, on a non-principal basis, up to 2% of its
assets in “Impact Investments,” which include 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 Impact
Investments, which include 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
matters are a non-principal risk of the Funds. For example, 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 agents and financial intermediaries) to suffer data breaches, data
corruption or lose operational functionality.
Redemptions
present a non-principal risk to the Funds. 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.
Disclosure of Portfolio
Holdings
The
SAI 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 • 2024 |
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Management of the Funds
Parnassus
Investments, LLC, 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. Parnassus Investments, LLC is the
successor in interest to Parnassus Investments, effective as of October 1,
2021, and is referred to herein as the “Adviser” or “Parnassus Investments.” The
Adviser has been the investment manager of the Parnassus Funds trust since 1984
and of the Parnassus Income Funds trust since 1992.
The
lead Portfolio Manager and the other Portfolio Manager(s) of a Fund are jointly
and primarily responsible for the day-to-day management of the Fund’s portfolio.
While decisions are generally made by consensus, the lead Portfolio Manager
exercises final discretion in the event of any conflict.
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 and a Trustee of the Funds.
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 an Executive Vice President and Chief Investment Officer at
Parnassus Investments, where he has worked since 1995, and is also a Vice
President of the Funds.
Andrew S. Choi is a Portfolio Manager of the
Parnassus Core Equity Fund and has served in this capacity since 2022. He is
also the lead portfolio manager of the Parnassus Growth Equity Fund and has
served in this capacity since its inception on December 28, 2022. He is a
Senior Analyst at Parnassus Investments, where he has worked since
2018.
Matthew D. Gershuny is a Portfolio Manager of
the Parnassus Mid Cap Fund and has been as a Portfolio Manager of the Fund since
2008. He is 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 a Vice
President and Director of Research at Parnassus Investments, where she has
worked since 2005.
Ian E. Sexsmith, CFA, is the lead Portfolio
Manager of the Parnassus Mid Cap Growth Fund and has been a portfolio manager of
the Fund since 2013. He is also a portfolio manager of the Parnassus Mid Cap
Fund and has served in this capacity since January 1, 2024. He is a Senior
Analyst at Parnassus Investments, where he has worked since 2011.
Robert J. Klaber is a Portfolio Manager of the
Parnassus Mid Cap Growth Fund and has served in this capacity since 2016. He is
Director of ESG Research at Parnassus Investments, where he has worked since
2012.
Billy J. Hwan, CPA, CFA, is the lead Portfolio
Manager of the Parnassus Value Equity Fund and has served as a portfolio manager
of the Fund since 2018. He is a Senior Analyst at Parnassus Investments, where
he has worked since 2012.
Krishna S. Chintalapalli, is a Portfolio
Manager of the Parnassus Value Equity Fund and has served as a portfolio manager
of the Fund since 2022. He is a Senior Analyst at Parnassus Investments, where
he has worked since 2022.
Samantha D. Palm is the lead Portfolio Manager
of the Parnassus Fixed Income Fund and has served in this capacity since 2013.
She is a Senior Analyst at Parnassus Investments, where she has worked since
2013.
Minh T. Bui is a Portfolio Manager of the
Parnassus Fixed Income Fund and has served in this capacity since 2020. He is a
Senior Analyst at Parnassus Investments, where he has worked since 2005.
Shivani R. Vohra is a Portfolio Manager of the
Parnassus Growth Equity Fund and has served in this capacity since its inception
on December 28, 2022. She is a Senior Analyst at Parnassus Investments
where she has worked since 2019.
The
SAI 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
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Prospectus • 2024 |
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annual
percentages of each Fund’s average daily net assets are used:
∎ |
|
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
Growth 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
Value Equity 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
Mid Cap Growth 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
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 2023:
∎ |
|
For
the Parnassus Core Equity Fund, the net investment advisory fee was 0.56%
and the gross investment advisory fee was
0.57%. |
∎ |
|
For
the Parnassus Growth Equity Fund, the net investment advisory fee was
(0.62)% and the gross investment advisory fee was
0.75%. |
∎ |
|
For
the Parnassus Value Equity Fund, the net investment advisory fee was 0.61%
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 Mid Cap Growth Fund, the net investment advisory fee was
0.60% and the gross investment advisory fee was
0.62%. |
∎ |
|
For
the Parnassus Fixed Income Fund, the net investment advisory fee was 0.27%
and the gross investment advisory fee was 0.49%. |
The
differences between the gross and net investment advisory fees for the Funds are
the result of expense reimbursements by Parnassus Investments, LLC, as described
below. In addition, the Adviser has contractually agreed to waive 0.10% of its
management fee for each class of the Parnassus Fixed Income Fund.
Parnassus
Investments, LLC has contractually agreed to reimburse the Funds for expenses to
the extent necessary to limit total operating expenses for the Funds, as stated
below (as a percentage of net assets):
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Investor Shares |
|
|
Institutional Shares |
|
Parnassus
Core Equity Fund |
|
|
0.82 |
% |
|
|
0.61 |
% |
Parnassus
Growth Equity Fund |
|
|
0.84 |
% |
|
|
0.63 |
% |
Parnassus
Value Equity Fund |
|
|
0.88 |
% |
|
|
0.65 |
% |
Parnassus
Mid Cap Fund |
|
|
0.96 |
% |
|
|
0.75 |
% |
Parnassus
Mid Cap Growth Fund |
|
|
0.80 |
% |
|
|
0.68 |
% |
Parnassus
Fixed Income Fund |
|
|
0.58 |
% |
|
|
0.39 |
% |
The
contractual figures shown in the table above, and the management fee waiver for
the Parnassus Fixed Income Fund, 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, which include the expense limitations for the Funds and the
management fee waiver for the Parnassus Fixed Income Fund, will not be
terminated prior to May 1, 2025, and all of the agreements 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 Parnassus Investments, LLC 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 • 2024 |
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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 due to redemptions, and that are not subject to an exception to the
minimum, may 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 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 Automatic
Investment Plan section for more information. For further information regarding
plan administration, custodial fees and other details, investors should contact
Parnassus Funds.
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 name(s) of the
trustee(s), with the application. An initial minimum investment must be at least
$2,000 per fund; however,
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Prospectus • 2024 |
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the
minimum is lowered to $500 per fund if you sign up for our automatic investment
plan. See the Automatic Investment Plan section for more information.
Coverdell Education Savings Account
You
can open an education savings account for the benefit of a minor. Withdrawals
must be used to pay for qualified educational expenses and the Responsible
Individual must be a parent or guardian. An initial investment must be at least
$500 per Fund; however, the minimum is waived if you sign up for our automatic
investment plan. For further information regarding plan administration,
custodial fees and other details, investors should contact Parnassus
Funds.
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 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 Funds debit your bank account.
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 also 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 $25 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 mailed to the following address:
Parnassus
Funds
c/o
Ultimus Fund Solutions
P.O.
Box 541150
Omaha,
NE 68154-9150
For
overnight delivery, use the following address:
Parnassus
Funds
c/o
Ultimus Fund Solutions
4221
N. 203rd Street, Suite 100
Elkhorn,
NE 68022
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. 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).
Wire Transfers
If
you wish to wire money to make an investment in a Fund, please call Parnassus
Funds at (800) 999-3505 for wiring instructions and to notify the Funds
that a wire transfer is coming. The Funds will normally accept wired funds for
investment on the day received if they are received by the Funds’ designated
bank before the close of regular trading on the NYSE. Your bank may charge you a
fee for wiring same-day funds. The Funds are not responsible for delays
resulting from the banking or Federal Reserve wire system.
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 Automatic
Investment Plan (“AIP”). 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. You can elect this option by filling out the AIP section on
the new account form. If you already have an account, you may fill out the
Automatic Investment Plan form, or sign up online at www.parnassus.com.
Parnassus
Funds reserves the right to reject any purchase order. If an investment order is
received in good order before 4:00 p.m. Eastern Time, it will be
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Prospectus • 2024 |
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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 $25 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 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 Boards of Trustees. 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 NYSE (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 |
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Prospectus • 2024 |
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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 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. A fee will be
assessed for shipping.
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, 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.
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. If you own an IRA or other retirement plan, you must indicate
on your redemption request whether the Fund should withhold federal income tax.
Unless you elect in your redemption request that you do not want to have federal
tax withheld, the redemption will be subject to withholding. Send the request
to:
Parnassus
Funds
c/o
Ultimus Fund Solutions, LLC
P.O.
Box 541150
Omaha,
NE 68154-9150
For
overnight delivery, please send the request to:
Parnassus
Funds
c/o
Ultimus Fund Solutions
4221
N. 203rd Street, Suite 100
Elkhorn,
NE 68022
Fax
The
maximum amount that can be redeemed through request by fax is $50,000 per
account. You can fax your redemption request to (402) 963-9094. 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,
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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, LLC. Shareholders who
elect to use telephone transaction privileges must indicate this on the account
application form. Neither the Funds nor their transfer agent, Ultimus Fund
Solutions, 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. If you own an IRA, you will be asked whether or not the Fund should
withhold federal income tax.
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 their
transfer agent, Ultimus Fund Solutions, 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 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
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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.
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) |
∎ |
|
Redemptions
that exceed $100,000 |
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. The Funds may waive the
requirement
for a Medallion Signature Guarantee in certain circumstances.
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
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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.
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 Funds may convert the shares into Investor Shares. Parnassus Funds
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.
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Net Asset Value
The
NAV for the Funds will be calculated on each day the NYSE is open for trading.
If the NYSE is not open, then the Funds do not determine their net asset value,
and investors may not purchase or redeem shares of the Funds. The NYSE is closed
for trading on weekends, New Year’s Day, Dr. Martin Luther King, Jr. Day,
Washington’s Birthday, Good Friday, Memorial Day, Juneteenth National
Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. 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. If the NYSE closes early, then the NAV of the Funds will be
calculated as of the early close of the NYSE. 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 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
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 SAI for
more details.
The
Boards of Trustees have appointed the Adviser as the Funds’ valuation designee
under Rule 2a-5 of the 1940 Act, to perform all fair valuations of the Funds’
portfolio investments, subject to the Board’s oversight. As the valuation
designee, the Adviser has established procedures for its fair valuation of the
Funds’ portfolio investments.
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 1000® Growth Index
The
Russell 1000® Growth
Index measures the performance of the large cap growth segment of the U.S.
equity universe. It includes those Russell 1000 companies with relatively higher
price-to-book ratios and higher expected earnings growth rates. The Russell
1000® Growth Index is
constructed to provide a comprehensive and unbiased barometer for the large- cap
growth segment. The Index does not reflect any deductions for fees, expenses or
taxes. A direct investment in an index is not possible. The Russell 1000® Growth Index is a trademark
of the Frank Russell Company. The index is used herein for comparative purposes
in accordance with SEC regulations.
Russell 1000® Value Index
The
Russell 1000® Value Index
measures the performance of the large-cap value segment of the U.S. equity
universe. It includes those Russell 1000® companies with lower
price-to-book ratios and lower expected growth values. The Russell 1000® Value Index is constructed
to provide a comprehensive and unbiased barometer for the large-cap value
segment. The Index does not reflect any deductions for fees, expenses or taxes.
A direct investment in an index is not possible. The Russell 1000® Value Index is a trademark
of the Frank Russell Company. 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
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Prospectus • 2024 |
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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.
Russell Midcap® Growth Index
The
Russell Midcap® Growth
Index measures the performance of those Russell Midcap® Index companies with higher
price-to-book ratios and higher forecasted growth values. The Russell Midcap® Growth Index is constructed
to provide a comprehensive and unbiased barometer of the mid-cap growth market.
The Index does not reflect any deductions for fees, expenses or taxes. A direct
investment in an index is not possible. The Russell Midcap® Growth Index is a trademark
of the Frank Russell Company. The index is used herein for comparative purposes
in accordance with SEC regulations.
Bloomberg U.S. Aggregate
Bond Index
The
Bloomberg U.S. Aggregate Bond Index is made up of the Bloomberg 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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Distributions and Taxes
Each
Fund will make distributions of net investment income annually (except that the
Parnassus Core Equity Fund will make distributions quarterly and the Parnassus
Fixed Income Fund will make distributions monthly), and each Fund will
distribute net capital gains, if any, at least annually, typically in November.
A Fund may make additional payments of dividends or distributions if it deems it
desirable at any other time during the year.
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. The Funds’ default cost basis method is Average Cost. 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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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 for the year ended December 31, 2023 has been derived from the
financial statements audited by PricewaterhouseCoopers LLP, whose report, along
with the Funds’ financial statements, is included in the
Annual
Report of the Funds, which is available upon request. The information for years
prior to 2021 was audited by Deloitte & Touche LLP, the Funds’
prior auditor. Financial information is not available for the Parnassus Growth
Equity Fund because the Fund had not commenced operations prior to the date of
this amended and restated prospectus.
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) |
|
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Total
From Investment Operations(a) |
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Dividends From
Net Investment Income |
|
|
Distributions From
Net Realized Gains on Securities |
|
|
Total Dividends and Distributions |
|
Parnassus
Core Equity Fund – Investor Shares |
|
2023 |
|
|
$46.92 |
|
|
|
$0.29 |
|
|
|
$11.21 |
|
|
|
$11.50 |
|
|
|
$(0.31 |
) |
|
|
$(3.00 |
) |
|
|
$(3.31 |
) |
2022 |
|
|
63.41 |
|
|
|
0.23 |
|
|
|
(11.97 |
) |
|
|
(11.74 |
) |
|
|
(0.23 |
) |
|
|
(4.52 |
) |
|
|
(4.75 |
) |
2021 |
|
|
53.65 |
|
|
|
0.23 |
|
|
|
14.46 |
|
|
|
14.69 |
|
|
|
(0.53 |
) |
|
|
(4.40 |
) |
|
|
(4.93 |
) |
2020 |
|
|
47.03 |
|
|
|
0.33 |
|
|
|
9.44 |
|
|
|
9.77 |
|
|
|
(0.31 |
) |
|
|
(2.84 |
) |
|
|
(3.15 |
) |
2019 |
|
|
38.99 |
|
|
|
0.36 |
|
|
|
11.45 |
|
|
|
11.81 |
|
|
|
(0.34 |
) |
|
|
(3.43 |
) |
|
|
(3.77 |
) |
Parnassus Core Equity Fund – Institutional
Shares |
|
2023 |
|
|
47.03 |
|
|
|
0.40 |
|
|
|
11.25 |
|
|
|
11.65 |
|
|
|
(0.42 |
) |
|
|
(3.00 |
) |
|
|
(3.42 |
) |
2022 |
|
|
63.55 |
|
|
|
0.34 |
|
|
|
(12.00 |
) |
|
|
(11.66 |
) |
|
|
(0.34 |
) |
|
|
(4.52 |
) |
|
|
(4.86 |
) |
2021 |
|
|
53.75 |
|
|
|
0.36 |
|
|
|
14.49 |
|
|
|
14.85 |
|
|
|
(0.65 |
) |
|
|
(4.40 |
) |
|
|
(5.05 |
) |
2020 |
|
|
47.10 |
|
|
|
0.44 |
|
|
|
9.46 |
|
|
|
9.90 |
|
|
|
(0.41 |
) |
|
|
(2.84 |
) |
|
|
(3.25 |
) |
2019 |
|
|
39.05 |
|
|
|
0.46 |
|
|
|
11.47 |
|
|
|
11.93 |
|
|
|
(0.45 |
) |
|
|
(3.43 |
) |
|
|
(3.88 |
) |
Parnassus Growth Equity Fund – Investor
Shares |
|
2023 |
|
|
14.95 |
|
|
|
0.02 |
|
|
|
6.68 |
|
|
|
6.70 |
|
|
|
(0.35 |
) |
|
|
- |
|
|
|
(0.35 |
) |
For
the period ended December 31, 2022(d) |
|
|
15.00 |
|
|
|
- |
(f) |
|
|
(0.05 |
) |
|
|
(0.05 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Parnassus Growth Equity Fund – Institutional
Shares |
|
2023 |
|
|
14.95 |
|
|
|
0.05 |
|
|
|
6.68 |
|
|
|
6.73 |
|
|
|
(0.38 |
) |
|
|
- |
|
|
|
(0.38 |
) |
For
the period ended December 31, 2022(d) |
|
|
15.00 |
|
|
|
- |
(f) |
|
|
(0.05 |
) |
|
|
(0.05 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Parnassus Value Equity Fund – Investor
Shares |
|
2023 |
|
|
45.27 |
|
|
|
0.59 |
|
|
|
5.57 |
|
|
|
6.16 |
|
|
|
(0.60 |
) |
|
|
(0.29 |
) |
|
|
(0.89 |
) |
2022 |
|
|
54.03 |
|
|
|
0.53 |
|
|
|
(7.99 |
) |
|
|
(7.46 |
) |
|
|
(0.54 |
) |
|
|
(0.76 |
) |
|
|
(1.30 |
) |
2021 |
|
|
48.31 |
|
|
|
0.69 |
|
|
|
14.08 |
|
|
|
14.77 |
|
|
|
(0.97 |
) |
|
|
(8.08 |
) |
|
|
(9.05 |
) |
2020 |
|
|
38.18 |
|
|
|
0.28 |
|
|
|
10.19 |
|
|
|
10.47 |
|
|
|
(0.34 |
) |
|
|
- |
|
|
|
(0.34 |
) |
2019 |
|
|
28.87 |
|
|
|
0.25 |
|
|
|
9.36 |
|
|
|
9.61 |
|
|
|
(0.30 |
) |
|
|
- |
|
|
|
(0.30 |
) |
Parnassus Value Equity Fund – Institutional
Shares |
|
2023 |
|
|
45.36 |
|
|
|
0.70 |
|
|
|
5.58 |
|
|
|
6.28 |
|
|
|
(0.71 |
) |
|
|
(0.29 |
) |
|
|
(1.00 |
) |
2022 |
|
|
54.10 |
|
|
|
0.64 |
|
|
|
(8.00 |
) |
|
|
(7.36 |
) |
|
|
(0.62 |
) |
|
|
(0.76 |
) |
|
|
(1.38 |
) |
2021 |
|
|
48.36 |
|
|
|
0.80 |
|
|
|
14.11 |
|
|
|
14.91 |
|
|
|
(1.09 |
) |
|
|
(8.08 |
) |
|
|
(9.17 |
) |
2020 |
|
|
38.19 |
|
|
|
0.36 |
|
|
|
10.22 |
|
|
|
10.58 |
|
|
|
(0.41 |
) |
|
|
- |
|
|
|
(0.41 |
) |
2019 |
|
|
28.89 |
|
|
|
0.34 |
|
|
|
9.36 |
|
|
|
9.70 |
|
|
|
(0.40 |
) |
|
|
- |
|
|
|
(0.40 |
) |
48
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| |
| |
| |
Prospectus • 2024 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
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 Core Equity Fund – Investor Shares |
|
|
$55.11 |
| |
|
24.93 |
% |
|
|
0.82 |
% |
|
|
0.82 |
% |
|
|
0.56 |
% |
|
|
29.01 |
% |
|
|
$12,929,826 |
|
|
46.92 |
| |
|
(18.61 |
) |
|
|
0.85 |
| |
|
0.82 |
| |
|
0.42 |
| |
|
39.63 |
| |
|
11,173,977 |
|
|
63.41 |
| |
|
27.55 |
| |
|
0.82 |
| |
|
0.82 |
| |
|
0.38 |
| |
|
25.82 |
| |
|
15,405,636 |
|
|
53.65 |
| |
|
21.19 |
| |
|
0.84 |
| |
|
0.84 |
| |
|
0.69 |
| |
|
37.15 |
| |
|
11,906,386 |
|
|
47.03 |
| |
|
30.69 |
| |
|
0.86 |
| |
|
0.86 |
| |
|
0.78 |
| |
|
36.88 |
| |
|
9,998,994 |
|
|
Parnassus Core Equity Fund – Institutional Shares |
|
|
55.26 |
| |
|
25.21 |
| |
|
0.62 |
| |
|
0.61 |
| |
|
0.77 |
| |
|
29.01 |
| |
|
14,868,509 |
|
|
47.03 |
| |
|
(18.45 |
) |
|
|
0.62 |
| |
|
0.61 |
| |
|
0.64 |
| |
|
39.63 |
| |
|
12,736,208 |
|
|
63.55 |
| |
|
27.81 |
| |
|
0.61 |
| |
|
0.61 |
| |
|
0.60 |
| |
|
25.82 |
| |
|
16,869,763 |
|
|
53.75 |
| |
|
21.47 |
| |
|
0.62 |
| |
|
0.62 |
| |
|
0.91 |
| |
|
37.15 |
| |
|
11,320,933 |
|
|
47.10 |
| |
|
30.96 |
| |
|
0.63 |
| |
|
0.63 |
| |
|
1.02 |
| |
|
36.88 |
| |
|
8,660,689 |
|
|
Parnassus Growth Equity Fund – Investor Shares |
|
|
21.30 |
| |
|
44.82 |
| |
|
2.89 |
| |
|
0.84 |
| |
|
0.10 |
| |
|
34.94 |
| |
|
8,006 |
|
|
14.95 |
| |
|
(0.33 |
)(h) |
|
|
7.83 |
(g) |
|
|
0.84 |
(g) |
|
|
3.52 |
(g) |
|
|
- |
| |
|
227 |
|
|
Parnassus Growth Equity Fund – Institutional Shares |
|
|
21.30 |
| |
|
45.09 |
| |
|
1.86 |
| |
|
0.63 |
| |
|
0.30 |
| |
|
34.94 |
| |
|
22,529 |
|
|
14.95 |
| |
|
(0.33 |
)(h) |
|
|
2.30 |
(g) |
|
|
0.63 |
(g) |
|
|
3.11 |
(g) |
|
|
- |
| |
|
10,573 |
|
|
Parnassus Value Equity Fund – Investor Shares |
|
|
50.54 |
| |
|
13.70 |
| |
|
0.93 |
| |
|
0.88 |
| |
|
1.26 |
| |
|
30.19 |
| |
|
3,267,439 |
|
|
45.27 |
| |
|
(13.81 |
) |
|
|
0.92 |
| |
|
0.88 |
| |
|
1.11 |
| |
|
32.36 |
| |
|
3,008,001 |
|
|
54.03 |
| |
|
31.12 |
| |
|
0.90 |
| |
|
0.90 |
| |
|
1.20 |
| |
|
37.22 |
| |
|
3,768,904 |
|
|
48.31 |
| |
|
27.42 |
| |
|
0.94 |
| |
|
0.94 |
| |
|
0.75 |
| |
|
52.77 |
| |
|
2,238,344 |
|
|
38.18 |
| |
|
33.29 |
| |
|
0.97 |
| |
|
0.95 |
| |
|
0.73 |
| |
|
57.29 |
| |
|
2,737,805 |
|
|
Parnassus Value Equity Fund – Institutional Shares |
|
|
50.64 |
| |
|
13.94 |
| |
|
0.72 |
| |
|
0.65 |
| |
|
1.49 |
| |
|
30.19 |
| |
|
1,652,941 |
|
|
45.36 |
| |
|
(13.61 |
) |
|
|
0.72 |
| |
|
0.65 |
| |
|
1.35 |
| |
|
32.36 |
| |
|
1,518,273 |
|
|
54.10 |
| |
|
31.37 |
| |
|
0.71 |
| |
|
0.71 |
| |
|
1.39 |
| |
|
37.22 |
| |
|
1,654,506 |
|
|
48.36 |
| |
|
27.72 |
| |
|
0.73 |
| |
|
0.71 |
| |
|
0.96 |
| |
|
52.77 |
| |
|
1,025,590 |
|
|
38.19 |
| |
|
33.57 |
| |
|
0.71 |
| |
|
0.71 |
| |
|
0.97 |
| |
|
57.29 |
| |
|
1,104,181 |
|
49
|
|
|
|
|
|
|
| |
|
|
|
| |
|
|
| |
Prospectus • 2024 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
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 |
|
2023 |
|
|
$33.88 |
| |
|
$0.10 |
| |
|
$4.13 |
| |
|
$4.23 |
| |
|
$(0.14 |
) |
|
|
$(0.72 |
) |
|
|
$(0.86 |
) |
2022 |
|
|
45.20 |
| |
|
0.03 |
| |
|
(9.78 |
) |
|
|
(9.75 |
) |
|
|
- |
| |
|
(1.57 |
) |
|
|
(1.57 |
) |
2021 |
|
|
40.78 |
| |
|
(0.04 |
) |
|
|
6.66 |
| |
|
6.62 |
| |
|
(0.01 |
) |
|
|
(2.19 |
) |
|
|
(2.20 |
) |
2020 |
|
|
35.63 |
| |
|
0.12 |
| |
|
5.18 |
| |
|
5.30 |
| |
|
(0.08 |
) |
|
|
(0.07 |
) |
|
|
(0.15 |
) |
2019 |
|
|
28.86 |
| |
|
0.17 |
| |
|
8.08 |
| |
|
8.25 |
| |
|
(0.18 |
) |
|
|
(1.30 |
) |
|
|
(1.48 |
) |
Parnassus Mid Cap Fund – Institutional Shares |
|
2023 |
|
|
34.02 |
| |
|
0.17 |
| |
|
4.16 |
| |
|
4.33 |
| |
|
(0.21 |
) |
|
|
(0.72 |
) |
|
|
(0.93 |
) |
2022 |
|
|
45.39 |
| |
|
0.11 |
| |
|
(9.83 |
) |
|
|
(9.72 |
) |
|
|
(0.08 |
) |
|
|
(1.57 |
) |
|
|
(1.65 |
) |
2021 |
|
|
40.87 |
| |
|
0.05 |
| |
|
6.69 |
| |
|
6.74 |
| |
|
(0.03 |
) |
|
|
(2.19 |
) |
|
|
(2.22 |
) |
2020 |
|
|
35.68 |
| |
|
0.20 |
| |
|
5.20 |
| |
|
5.40 |
| |
|
(0.14 |
) |
|
|
(0.07 |
) |
|
|
(0.21 |
) |
2019 |
|
|
28.90 |
| |
|
0.27 |
| |
|
8.07 |
| |
|
8.34 |
| |
|
(0.26 |
) |
|
|
(1.30 |
) |
|
|
(1.56 |
) |
Parnassus Mid Cap Growth Fund – Investor Shares |
|
2023 |
|
|
42.28 |
| |
|
(0.15 |
) |
|
|
15.03 |
| |
|
14.88 |
| |
|
- |
| |
|
(1.59 |
) |
|
|
(1.59 |
) |
2022 |
|
|
64.36 |
| |
|
(0.17 |
) |
|
|
(21.39 |
) |
|
|
(21.56 |
) |
|
|
- |
| |
|
(0.52 |
) |
|
|
(0.52 |
) |
2021 |
|
|
61.44 |
| |
|
(0.34 |
) |
|
|
6.16 |
| |
|
5.82 |
| |
|
(0.94 |
) |
|
|
(1.96 |
) |
|
|
(2.90 |
) |
2020 |
|
|
50.47 |
| |
|
(0.02 |
) |
|
|
14.19 |
| |
|
14.17 |
| |
|
(0.06 |
) |
|
|
(3.14 |
) |
|
|
(3.20 |
) |
2019 |
|
|
40.54 |
| |
|
0.29 |
| |
|
11.77 |
| |
|
12.06 |
| |
|
(1.28 |
) |
|
|
(0.85 |
) |
|
|
(2.13 |
) |
Parnassus Mid Cap Growth Fund – Institutional Shares |
|
2023 |
|
|
42.42 |
| |
|
(0.09 |
) |
|
|
15.09 |
| |
|
15.00 |
| |
|
- |
| |
|
(1.59 |
) |
|
|
(1.59 |
) |
2022 |
|
|
64.50 |
| |
|
(0.11 |
) |
|
|
(21.45 |
) |
|
|
(21.56 |
) |
|
|
- |
| |
|
(0.52 |
) |
|
|
(0.52 |
) |
2021 |
|
|
61.49 |
| |
|
(0.26 |
) |
|
|
6.17 |
| |
|
5.91 |
| |
|
(0.94 |
) |
|
|
(1.96 |
) |
|
|
(2.90 |
) |
2020 |
|
|
50.43 |
| |
|
0.05 |
| |
|
14.21 |
| |
|
14.26 |
| |
|
(0.06 |
) |
|
|
(3.14 |
) |
|
|
(3.20 |
) |
2019 |
|
|
40.52 |
| |
|
0.37 |
| |
|
11.75 |
| |
|
12.12 |
| |
|
(1.36 |
) |
|
|
(0.85 |
) |
|
|
(2.21 |
) |
Parnassus Fixed Income Fund – Investor Shares |
|
2023 |
|
|
14.40 |
| |
|
0.47 |
| |
|
0.47 |
| |
|
0.94 |
| |
|
(0.46 |
) |
|
|
- |
| |
|
(0.46 |
) |
2022 |
|
|
17.22 |
| |
|
0.37 |
| |
|
(2.82 |
) |
|
|
(2.45 |
) |
|
|
(0.37 |
) |
|
|
- |
| |
|
(0.37 |
) |
2021 |
|
|
18.01 |
| |
|
0.29 |
| |
|
(0.66 |
) |
|
|
(0.37 |
) |
|
|
(0.29 |
) |
|
|
(0.13 |
) |
|
|
(0.42 |
) |
2020 |
|
|
17.05 |
| |
|
0.29 |
| |
|
1.05 |
| |
|
1.34 |
| |
|
(0.28 |
) |
|
|
(0.10 |
) |
|
|
(0.38 |
) |
2019 |
|
|
15.92 |
| |
|
0.37 |
| |
|
1.15 |
| |
|
1.52 |
| |
|
(0.39 |
) |
|
|
- |
| |
|
(0.39 |
) |
Parnassus Fixed Income Fund – Institutional Shares |
|
2023 |
|
|
14.40 |
| |
|
0.50 |
| |
|
0.48 |
| |
|
0.98 |
| |
|
(0.49 |
) |
|
|
- |
| |
|
(0.49 |
) |
2022 |
|
|
17.22 |
| |
|
0.40 |
| |
|
(2.81 |
) |
|
|
(2.41 |
) |
|
|
(0.40 |
) |
|
|
(0.01 |
) |
|
|
(0.41 |
) |
2021 |
|
|
18.01 |
| |
|
0.33 |
| |
|
(0.67 |
) |
|
|
(0.34 |
) |
|
|
(0.32 |
) |
|
|
(0.13 |
) |
|
|
(0.45 |
) |
2020 |
|
|
17.04 |
| |
|
0.33 |
| |
|
1.06 |
| |
|
1.39 |
| |
|
(0.32 |
) |
|
|
(0.10 |
) |
|
|
(0.42 |
) |
2019 |
|
|
15.92 |
| |
|
0.41 |
| |
|
1.14 |
| |
|
1.55 |
| |
|
(0.43 |
) |
|
|
- |
| |
|
(0.43 |
) |
50
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| |
Prospectus • 2024 |
|
| |
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|
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|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
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 |
|
|
$37.25 |
| |
|
12.67 |
% |
|
|
0.98 |
% |
|
|
0.96 |
% |
|
|
0.28 |
% |
|
|
42.45 |
% |
|
|
$1,477,106 |
|
|
33.88 |
| |
|
(21.56 |
) |
|
|
0.97 |
| |
|
0.96 |
| |
|
0.09 |
| |
|
47.52 |
| |
|
1,974,198 |
|
|
45.20 |
| |
|
16.39 |
| |
|
0.96 |
| |
|
0.96 |
| |
|
(0.08 |
) |
|
|
34.76 |
| |
|
3,155,696 |
|
|
40.78 |
| |
|
14.88 |
| |
|
0.98 |
| |
|
0.98 |
| |
|
0.34 |
| |
|
41.00 |
| |
|
2,749,355 |
|
|
35.63 |
| |
|
28.75 |
| |
|
1.01 |
| |
|
0.99 |
| |
|
0.48 |
| |
|
28.27 |
| |
|
2,381,822 |
|
|
Parnassus Mid Cap Fund – Institutional Shares |
|
|
37.42 |
| |
|
12.92 |
| |
|
0.76 |
| |
|
0.75 |
| |
|
0.49 |
| |
|
42.45 |
| |
|
3,921,694 |
|
|
34.02 |
| |
|
(21.41 |
) |
|
|
0.76 |
| |
|
0.75 |
| |
|
0.30 |
| |
|
47.52 |
| |
|
4,103,007 |
|
|
45.39 |
| |
|
16.63 |
| |
|
0.75 |
| |
|
0.75 |
| |
|
0.13 |
| |
|
34.76 |
| |
|
5,518,086 |
|
|
40.87 |
| |
|
15.16 |
| |
|
0.76 |
| |
|
0.75 |
| |
|
0.58 |
| |
|
41.00 |
| |
|
4,211,267 |
|
|
35.68 |
| |
|
29.02 |
| |
|
0.75 |
| |
|
0.75 |
| |
|
0.77 |
| |
|
28.27 |
| |
|
2,692,990 |
|
|
Parnassus Mid Cap Growth Fund – Investor Shares |
|
|
55.57 |
| |
|
35.60 |
| |
|
0.81 |
| |
|
0.80 |
| |
|
(0.30 |
) |
|
|
47.49 |
| |
|
645,243 |
|
|
42.28 |
| |
|
(33.52 |
) |
|
|
0.80 |
| |
|
0.80 |
| |
|
(0.36 |
) |
|
|
58.11 |
| |
|
514,193 |
|
|
64.36 |
| |
|
9.37 |
| |
|
0.80 |
| |
|
0.80 |
| |
|
(0.52 |
) |
|
|
28.73 |
| |
|
880,724 |
|
|
61.44 |
| |
|
28.61 |
| |
|
0.83 |
| |
|
0.83 |
| |
|
(0.05 |
) |
|
|
82.46 |
| |
|
860,120 |
|
|
50.47 |
| |
|
29.82 |
| |
|
0.84 |
| |
|
0.84 |
| |
|
0.60 |
| |
|
43.61 |
| |
|
803,731 |
|
|
Parnassus Mid Cap Growth Fund – Institutional Shares |
|
|
55.83 |
| |
|
35.77 |
| |
|
0.71 |
| |
|
0.68 |
| |
|
(0.18 |
) |
|
|
47.49 |
| |
|
183,037 |
|
|
42.42 |
| |
|
(33.45 |
) |
|
|
0.70 |
| |
|
0.68 |
| |
|
(0.24 |
) |
|
|
58.11 |
| |
|
144,292 |
|
|
64.50 |
| |
|
9.50 |
| |
|
0.68 |
| |
|
0.68 |
| |
|
(0.40 |
) |
|
|
28.73 |
| |
|
237,137 |
|
|
61.49 |
| |
|
28.81 |
| |
|
0.68 |
| |
|
0.68 |
| |
|
0.09 |
| |
|
82.46 |
| |
|
218,962 |
|
|
50.43 |
| |
|
29.98 |
| |
|
0.68 |
| |
|
0.68 |
| |
|
0.76 |
| |
|
43.61 |
| |
|
182,443 |
|
|
Parnassus Fixed Income Fund – Investor Shares |
|
|
14.88 |
| |
|
6.71 |
| |
|
0.81 |
| |
|
0.58 |
| |
|
3.24 |
| |
|
48.72 |
| |
|
118,945 |
|
|
14.40 |
| |
|
(14.29 |
) |
|
|
0.82 |
| |
|
0.68 |
| |
|
2.42 |
| |
|
58.67 |
| |
|
132,391 |
|
|
17.22 |
| |
|
(2.09 |
) |
|
|
0.76 |
| |
|
0.68 |
| |
|
1.64 |
| |
|
31.29 |
| |
|
230,471 |
|
|
18.01 |
| |
|
7.91 |
| |
|
0.74 |
| |
|
0.68 |
| |
|
1.61 |
| |
|
37.77 |
| |
|
233,496 |
|
|
17.05 |
| |
|
9.63 |
| |
|
0.87 |
| |
|
0.68 |
| |
|
2.22 |
| |
|
53.98 |
| |
|
160,158 |
|
|
Parnassus Fixed Income Fund – Institutional Shares |
|
|
14.89 |
| |
|
6.95 |
| |
|
0.61 |
| |
|
0.39 |
| |
|
3.44 |
| |
|
48.72 |
| |
|
161,471 |
|
|
14.40 |
| |
|
(14.10 |
) |
|
|
0.59 |
| |
|
0.45 |
| |
|
2.66 |
| |
|
58.67 |
| |
|
146,034 |
|
|
17.22 |
| |
|
(1.90 |
) |
|
|
0.56 |
| |
|
0.45 |
| |
|
1.88 |
| |
|
31.29 |
| |
|
233,649 |
|
|
18.01 |
| |
|
8.19 |
| |
|
0.55 |
| |
|
0.45 |
| |
|
1.81 |
| |
|
37.77 |
| |
|
163,671 |
|
|
17.04 |
| |
|
9.82 |
| |
|
0.45 |
| |
|
0.45 |
| |
|
2.44 |
| |
|
53.98 |
| |
|
69,923 |
|
(a)
Income (loss) from operations per share is based on average daily shares
outstanding.
(b)
For the year ended December 31, 2023, Parnassus Investments has
contractually limited expenses to an annualized rate of 0.82% for the Parnassus
Core Equity Fund–Investor Shares, 0.84% for the Parnassus Growth Equity
Fund–Investor Shares, 0.88% for the Parnassus Value Equity Fund–Investor Shares,
0.96% for the Parnassus Mid Cap Fund–Investor Shares, 0.80% for the Parnassus
Mid Cap Growth Fund–Investor Shares and 0.58% for the Parnassus Fixed Income
Fund–Investor Shares.
(c)
For the year ended December 31, 2023, Parnassus Investments has
contractually limited expenses to an annualized rate of 0.61% for the Parnassus
Core Equity Fund–Institutional Shares, 0.63% for the Parnassus Growth Equity
Fund–Institutional Shares, 0.65% for the Parnassus Value Equity
Fund–Institutional Shares, 0.75% for the Parnassus Mid Cap Fund –Institutional
Shares, 0.68% for the Parnassus Mid Cap Growth Fund–Institutional Shares and
0.39% for the Parnassus Fixed Income Fund–Institutional Shares.
(d)
The Parnassus Growth Equity Fund commenced operations on December 28, 2022,
and the period shown is from December 28, 2022 through December 31,
2022.
(f)
Amount less than $0.01.
(g)
Annualized.
(h)
Total return is not annualized for periods less than one year.
51
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Prospectus • 2024 |
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| |
|
General Information
PricewaterhouseCoopers
LLP, 405 Howard Street, Suite 600, 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 Funds’ custodian, sub-administrator and accounting agent.
Ultimus
Fund Solutions, LLC, 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246, is
the Funds’ transfer agent.
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.
52
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| |
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| |
Prospectus • 2024 |
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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. As a
result, we do not provide a means for opting out of our limited sharing of your
information. 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 if you have any questions regarding our privacy
policy. We are open Monday through Friday from 8:30 a.m. to 6:00 p.m. Eastern
Time.
53
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Prospectus • 2024 |
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[THIS
PAGE INTENTIONALLY LEFT BLANK]
54
Investment Adviser
Parnassus
Investments, LLC
1
Market Street, Suite 1600
San
Francisco, CA 94105
Independent Registered
Public Accounting Firm
PricewaterhouseCoopers
LLP
405
Howard Street, Suite 600
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 by accessing your account through
www.parnassus.com/login. You can obtain additional information about each of the
Funds in the statement of additional information (SAI) dated May 1, 2024,
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