THE PARNASSUS FUND
Supplement to the Prospectus dated May 1, 1997
as previously revised December 8, 1997
At a special meeting of shareholders scheduled for March 26, 1998 ("Special
Meeting"), shareholders of the Fund will be asked to approve proposals
relating to the following:
1. Investment Objective. Shareholders of the Fund will be asked to change
its investment objectives by deleting current income as a secondary
objective.
2. Investment Restrictions. Shareholders will be asked to approve
elimination of the Fund's fundamental investment restrictions regarding
restricted securities, securities owned by affiliated persons, warrants,
foreign securities or currencies and investing for control and to approve
modification of its fundamental investment restrictions regarding
diversification and loans. Also, shareholders will be asked to consider a
shareholder request that the Fund be permitted to invest in companies that
produce wine.
3. Advisory Fee. Shareholders will be asked to approve eliminating the
breakpoints in the investment advisory fee payable to the Adviser on Fund
assets in excess of $400 million.
This Supplement is dated December 30, 1997.
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THE PARNASSUS FUND
Supplement to the Statement of Additional Information
Dated May 1, 1997
The following information supplements and supersedes any contrary information
contained in the Statement of Additional Information:
Investment Restrictions. At a special meeting of shareholders scheduled for
March 26, 1998 ("Special Meeting"), shareholders of the Fund will be asked to
approve elimination and modification of certain of the Fund's fundamental
investment restrictions. If approved, the following investment restrictions will
supersede and replace the restrictions listed in the "Investment Restrictions"
section:
The Fund may not:
(1) With respect to 75% of its total net assets, purchase any security,
other than obligations of the U.S. Government, its agencies or
instrumentalities ("U.S. Government securities"), if as a result: (i)
more than 5% of the Fund's total net assets would then be invested in
securities of a single issuer or (ii) the Fund would hold more than 10%
of the outstanding voting securities of any one issuer.
(2) Purchase any security if, as a result, the Fund would have 25% or
more of its net assets (at current value) invested in a single
industry.
(3) Purchase securities on margin (but the Fund may obtain such
short-term credits as may be necessary for the clearance of
transactions).
(4) Make short sales of securities, purchase on margin or purchase
puts, calls, straddles or spreads.
(5) Issue senior securities, borrow money or pledge its assets except
that the Fund may borrow from a bank for temporary or emergency
purposes in amounts not exceeding 10% (taken at the lower of cost or
current value) of its total assets (not including the amount borrowed)
and pledge its assets to secure such borrowings. The Fund will not make
additional purchases while borrowings are outstanding.
(6) Buy or sell commodities or commodity contracts including futures
contracts or real estate, real estate limited partnerships or other
interests in real estate although it may purchase and sell securities
which are secured by real estate and securities of companies which
invest or deal in real estate.
(7) Act as underwriter except to the extent that in connection with the
disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
(8) Participate on a joint (or joint and several) basis in any trading
account in securities.
(9) Invest in securities of other registered investment companies
except that the Fund may invest up to 10% of its assets (taken at
current value) in other funds, but no more than 5% of its assets in any
one fund and the Fund may not own more than 3% of the outstanding
voting shares of any one fund except as part of a merger, consolidation
or other acquisition.
(10) Invest in interests in oil, gas or other mineral exploration or
development programs or in oil, gas or other mineral leases although it
may invest in the common stocks of companies which invest in or sponsor
such programs.
(11) Make loans except through repurchase agreements; however, the Fund
may engage in securities lending and may also acquire debt securities
and other obligations consistent with the Fund's investment objective
and its other investment policies and restrictions. Investing in a debt
instrument that is convertible into equity or investing in a community
loan fund is not considered the making of a loan.
If the Fund's current fundamental investment restrictions regarding
investment in warrants and foreign securities or currencies are
eliminated as proposed, the Fund intends to implement the following
new, operating policies on these matters:
(1) The Fund may purchase warrants up to a maximum 5% of the value of
its total net assets.
(2) The Fund may not hold or purchase foreign currency except as may be
necessary in the settlement of foreign securities transactions.
This Supplement is dated December 30, 1997.
