THE PARNASSUS FUND
Quarterly Report September 30, 2000
--------------------------------------------------------------------------------
November 6, 2000
Dear Shareholder:
As of September 30, 2000, the net asset value per share (NAV) of The
Parnassus Fund was $55.95 so the overall return for the quarter was a loss of
12.80%. This compares to a gain of 0.24% for the Wilshire 5000 and a loss of
0.97% for the S&P 500. Although we underperformed for the quarter, we are still
ahead of the indices for the year-to-date. Since the first of the year, the Fund
is up 10.42% compared to a loss of 0.60% for the Wilshire and a loss of 1.39%
for the S&P 500.
The average mid-cap value fund followed by Lipper, Inc. gained 6.81% during
the quarter and 11.70% year-to-date. This means that we're about 1.3% behind the
average mid-cap value fund for the year-to-date, but we're substantially ahead
of the averages for the one, three, five and ten-year periods.
Below is a table comparing The Parnassus Fund with the Lipper Mid-Cap Value
Average, the Wilshire 5000 and the S&P 500 over the past one, three, five and
ten-year periods. The overall return figures give investment performance only
while the total return figures are reduced by the amount of the maximum sales
charge (3.5%). The performance figures for the average mid-cap value fund do not
deduct any sales charges that may apply.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Periods Ending Average Annual Average Annual Lipper Mid-Cap Wilshire 5000 S&P 500
September 30, 2000 Total Return Overall Return Value Average Index Index
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One Year 35.45% 40.36% 24.24% 17.56% 13.28%
Three Years 11.45% 12.78% 7.40% 15.52% 16.41%
Five Years 15.55% 16.37% 14.25% 20.40% 21.62%
Ten Years 20.86% 21.29% 15.88% 19.26% 19.36%
----------------------------------------------------------------------------------------------------------------
<FN>
Past performance is no guarantee of future returns. Principal value will
fluctuate and an investor's shares, when redeemed, may be worth more or less
than their original cost. The Wilshire 5000 and the S&P 500 are unmanaged
indices of common stocks and it is not possible to invest directly in an index.
An index has no expenses subtracted from its returns, as do mutual funds.
</FN>
</TABLE>
<PAGE>
WHY DID WE COME UP SHORT?
After strongly outperforming the indices over the past two years, why did
the Fund lag so much during the quarter? The answer is that while technology led
the way for us over most of the past two years, technology stocks--especially
semiconductor and semiconductor capital equipment--pulled the Fund down during
the quarter. After two years of strong returns, these companies have turned the
tables on us.
While the broad market indices were about flat for the quarter, the
technology-laden Nasdaq was down 7.36%. With a loss of 12.80%, we were down even
more than the Nasdaq because the technology sectors we concentrated on were the
weakest. While semiconductors and capital equipment held up well during the
technology slump earlier in the year, they lost more ground than other
technology stocks in the third quarter.
This third quarter slump in the semiconductor sector was strange because it
did not reflect the underlying business fundamentals. Normally, stocks plunge
when business is bad, not when business is good. Not only is business good in
the semiconductor sector, but revenue, earnings and orders are at all-time
highs. What, then, is going on?
Like most technology issues, semiconductor shares are highly cyclical.
Business booms for about 4 years, then slumps for 18 months or so and then booms
again. Each cycle, though, is slightly different than the others and each cycle
lasts for different periods of time. Investors try to put their money into
semiconductor stocks just before the cycle turns up and then try to sell these
stocks just a few months before the cycle turns down. That makes these issues
very volatile.
The current up-cycle began at the end of 1998 so it's a little less than
two years old. From a business standpoint, it appears that the up-cycle has at
least another two years to run. However, one semiconductor analyst predicted a
few months ago that the cycle was just about over. Although this analyst did not
have a very good track record, some investors sold the stocks and this caused
momentum to change.
To complicate things, Intel, the largest and best-known semiconductor
company, announced in late September that its revenue growth from the second to
the third quarter would be in the range of 3-5% instead of the 10% expected by
analysts. In one day, the stock dropped from $60 to $50 a share and by early
October, the stock had dropped to $35 a share from a high of $75 reached earlier
in the year.
From the high to the low, then, Intel lost over half its value. The company
isn't losing money. Sales are not declining, they are still going up, but only
at a rate of 5% instead of 10% per quarter. Sales are strong in most of the
world, but European demand was softer because of the slumping Euro and the
Europeans' leisurely habit of closing down for the month of August.
<PAGE>
Jittery investors sold Intel and other semiconductor stocks down to bargain
levels because of fear that the cycle was over. Although it's possible that the
cycle is turning, it seems to me that it has a lot longer to run.
It appears that the weakness has more to do with an inventory correction
rather than any weakness in semiconductor demand. Until earlier this year,
computer makers and other semiconductor customers were on allocation since Intel
could not make enough chips to meet orders. Because of this, customers ordered
more chips than they needed and stored them in inventory. Once Intel came off
allocation, customers could buy all the semiconductors they wanted. Since they
already had plenty of inventory, they reduced orders and this caused sales to
increase less than expected.
In our view, semiconductor and semiconductor capital equipment stocks will
come back strongly in the fourth quarter. Demand is growing faster than the
supply of semiconductors and manufacturers will have to order more equipment to
keep up with demand. This means that not only semiconductor makers, but also
equipment makers, should do well in the fourth quarter and into next year. For
that reason, we're holding onto our chip stocks.
MOST OF OUR LOSERS WERE CHIP STOCKS
Ten companies accounted for most of the third quarter decline in our
portfolio and seven of the ten were either semiconductor or capital equipment
stocks. As discussed earlier, we think these losses are temporary, quotational
losses and do not constitute any permanent impairment of capital.
LSI Logic, a manufacturer of custom chips based in Silicon Valley, lost
46.0% as its stock sank from $54.19 to $29.25 during the quarter. LSI makes
chips for several high growth areas including DVD players, wireless
communication and the Sony PlayStation 2. Three events caused the decline in the
stock. First, LSI had difficulty getting enough components from its suppliers to
put into its products. Next, the company was late in installing a new software
system and this caused a delay in shipments until the third quarter which made
revenues lower than expected for the second quarter. Also, Sony had difficulty
in getting components for its PlayStation 2 which meant that it deferred orders
for LSI chips until early next year. These are not lost sales, but rather
deferred sales. Demand is strong for the company's products and revenue is
growing 10-12% per quarter which means about 50% per year. We're holding onto
the stock and we expect it to come back strong over the next few months.
Credence Systems dropped 45.6% during the quarter as its stock went from
$55.19 to $30.00. Orders are very strong at this manufacturer of test equipment
for semiconductors, but rumors of overcapacity in the test market caused the
stock to decline.
<PAGE>
Lam Research makes capital equipment to etch circuits in semiconductors and
also produces machines that polish semiconductors. Lam's etch business has been
very strong, but there have been rumors about weakness in its polishing
business. The stock dropped 44.2% in the quarter as it went from $37.50 to
$20.94. Lam's management denies the rumors so it seems as if the decline is
completely unjustified.
Intel's stock declined 37.7% as it went from $66.84 to $41.63 for the
reasons we discussed above. Applied Materials, the most important manufacturer
of semiconductor capital equipment in the world, saw its stock sink 34.6% as it
went from $90.63 to $59.31. Applied has been having record earnings and orders,
but the stock slumped on concerns about overcapacity. The story at Applied is
similar to the pattern at LSI, Credence, Lam and Intel. Semiconductor companies
are having record years, but the stocks go down by astonishing amounts as
investors sell on fears that the cycle may be over.
Nordstrom went down 27.0% from the beginning of the quarter when it was at
$24.13 until we sold the stock at $17.62. Sales of women's apparel at Nordstrom
have been weak as the company appears to have missed current fashion trends. The
company has spent too much on advertising and margins have declined because of
discounting. Overlaying these trends is overcapacity in the retail industry and
weak management at the company. We have sold the stock for these reasons.
Autodesk, the maker of software for architects, engineers and designers,
dropped 26.9% as its stock sank from $34.69 to $25.38. Earnings were hurt by
weak sales of its AutoCAD design software and specialized applications.
Boise, Idaho-based Micron Technology, the largest American maker of memory
chips, lost 23.1% of its value as the stock dropped from $59.53 to $45.75.
Prices of memory chips are down because of slower PC demand as customers cut
back on orders after having overordered previously when supplies were tight.
This situation should change soon because demand for memory chips is growing
faster than capacity.
Cognex saw its stock drop 23.8% as it plunged from $51.75 to $39.44.
Business is strong at the company, but investors sold the stock on rumors that
one of its customers might have weaker sales.
Electro Scientific Industries had a 20.2% drop in its stock price as it
went from $44.03 to $35.13. Business is still good at ESI, but one of its
customers had weaker sales and earnings. Most lines of ESI's business, though,
are still strong.
In summary, then, with the exception of Nordstrom, none of the "losers" are
losers in the business sense. They have lost market value for reasons that are
temporary and not fundamental to the business.
<PAGE>
THERE WERE SOME WINNERS
The Federal Home Loan Mortgage Corporation (better known as Freddie Mac)
buys home mortgage loans in the secondary market and, thereby, provides
liquidity and additional resources for the housing market. The company's stock
rose 33.5% during the quarter as it went from $40.50 to $54.06. Freddie Mac has
a federal charter and a line of credit with the U.S. Treasury. This implied
(though not official) federal guarantee enables it to borrow money from the
public at a very low interest rate. Recently, competitors have lobbied Congress
to take away the federal charter, eliminate the Treasury line of credit and
tighten regulations on the company. This political controversy and rising
interest rates forced down the stock price to low levels. By the end of the
quarter, though, interest rates had stopped rising and sentiment in Congress was
against making changes so the stock recovered. Earnings have continued strong
through the period and the company has hedged to protect itself from interest
rate risk.
The Federal National Mortgage Association (better known as Fannie Mae) is
very similar to Freddie Mac and the same factors were at work. The stock gained
37.0% during the quarter as it went from $52.19 to $71.50.
Avocent, a maker of switches that enable one monitor and keyboard to
control many computers, saw its stock go up 27.6% in the quarter as it climbed
from $43.21 to $55.13. Strong demand for server switches--especially from
Compaq--propelled the stock higher.
Venator, the parent of Foot Locker, had a 20.7% increase in its stock price
as it went from $10.25 to $12.88 a share. Same store sales increased 8% and
margins expanded because of excellent cost control and higher sales in the U.S.
and Europe.
Cardinal Health, a distributor of pharmaceuticals and other medical
supplies, gained 19.2% as the stock climbed from $74.00 to $88.19. Strong
revenue growth of 20%, good cost control, market share gains from competitors
and growth in the use of generic drugs (one of its strengths) all combined to
move the issue higher.
Mentor Graphics, a producer of software for use in designing
semiconductors, moved up 18.6%, going from $19.88 to $23.56. Mentor now has a
record backlog in orders and its Calibre verification product has been selling
strongly.
OUTLOOK AND STRATEGY
Despite the recent downward movement in stock prices, market indices are
still pretty high compared to earnings. For this reason, I expect returns to be
somewhat modest over the next few years.
I do, however, expect technology stocks to bounce back over the next few
months. The fourth quarter has traditionally been strong for technology issues
as earnings come in higher at the end of the year. Because of this traditionally
strong fourth quarter and because business is still strong at technology
companies, we are keeping our semiconductor and capital equipment stocks.
<PAGE>
There is some risk in this strategy. It's possible that the technology
cycle is over and technology shares will stay down for years. In our view,
though, the likelihood is that this will not happen. Technology shares should
come back sharply by the end of the year.
COMPANY NOTES
American Machinist magazine presented its "Excellence in Manufacturing
Technology Achievement Award" to Baldor Electric for reliability, quality and
productivity of the company's motors and drives. Forbes magazine named the
Pottery Barn division of Williams-Sonoma as a "Forbes Favorite" for having the
best website in the home furnishings category.
Those of you who live in the Bay Area know that the San Francisco Giants
had a great year. For the regular season, they had the best record in baseball
while winning the National League Western Division. They also moved into a brand
new ballpark that is one of the best in baseball. Situated directly on San
Francisco Bay (a home run over the right field fence can go right into the
water), Pacific Bell Park has the feel of an intimate, old-time baseball stadium
with lots of architectural charm and up-to-date amenities. In fact, the Giants'
new stadium has replaced my previous favorite, Wrigley Field in Chicago where I
was born and raised. The new park is especially gratifying to Giants fans (I
switched from the Cubs to the Giants in 1961) since we've had the indignity of
having to watch baseball for 40 years in cold, windy, foggy Candlestick Park
with acres of concrete, deplorable restrooms and no charm at all.
Given that background, I was delighted to learn that star Giants' pitcher,
Russ Ortiz, had joined with the Claritin division of Schering-Plough to renovate
Muir Street Park, a neglected baseball field in Sacramento. This is part of a
program to renovate neglected ball fields in nine cities around the country that
is sponsored by the Boys & Girls Clubs of America, a national network of 2,600
neighborhood-based facilities serving more than 3.3 million young people
annually, mostly from disadvantaged backgrounds.
James C. Morgan, Chairman and chief executive of Applied Materials, has
been named to the Bay Area Business Hall of Fame for his work in creating the
entrepreneurial environment that led the company to become the world's largest
supplier of capital equipment to the semiconductor industry. Besides
contributing to the advancement of technology, Morgan has been an active
supporter of initiatives aimed at bridging the digital divide and improving math
and science education for children. Under Morgan's leadership, Applied has been
named to Fortune magazine's "50 Best Companies for Minorities," and Industry
Week's list of "100 Best Managed Companies."
<PAGE>
The Long Island Hispanic Chamber of Commerce has named Bristol-Myers Squibb
National Corporation of the Year for its work in its successful Supplier
Diversity Program. Other recent awards for the company include being named one
of the 100 Best Companies for Working Mothers by Working Mother magazine, being
ranked as one of America's Top Corporations for Women's Business Enterprises by
the Women's Business Enterprise National Council and earning the Outstanding
Corporate Support Award from the National Minority Business Council in
recognition of important support of the minority business community.
Archbishop Desmond Tutu won the Delta Prize for Global Understanding which
is sponsored and funded by Delta Air Lines. Also, Cincinnati-based Delta
employees dedicated a Habitat for Humanity house funded by recycled aluminum
beverage cans collected on Delta flights as well as by cash donations from
employees.
The Intel Computer Clubhouse Network is both a physical location and a
proven learning model where underserved young people (10-18) can go after school
to work with adult mentors to learn how to use technology. Autodesk recently
announced the donation of $500,000 worth of design automation software to that
program including 3D Studio Max and Character Studio which are used in the world
of graphic, broadcast, film and video game design. Autodesk also announced that
11 young women received scholarship grants of $500 to $5,000 each to help pay
for college. The Design Your Future Scholarship Program helps young women
prepare for careers in technology and is funded by the Autodesk Piracy
Prevention department which puts part of its monetary recoveries each year into
the program.
DIVIDEND
Each year, we try to estimate the date and amount of the dividend for
shareholders to use in tax planning. Although the date is not yet firm, we
anticipate that the record date will be December 14. If it's not on that date,
it should be close to the 14th. As to the amount, we can't give you an exact
figure yet, but we think the amount will be around $12 per share. Of that
amount, around $10 should be in the form of capital gains so the tax would only
be 20% on that amount. The balance of $2 per share should be an income dividend
on which you would pay ordinary rates. As always, we try to minimize the amount
of the income dividend and have most of our distribution in long-term capital
gains to save on taxes. I'm glad to report that most of the distribution this
year will be capital gains which has a much lower tax rate so it's favorable to
shareholders.
<PAGE>
FALL INTERNS
Catherine Chu is a senior in economics at the University of California at
Berkeley where she has worked as a residence hall counselor and as a computing
assistant at the residence hall computing center. Cathy has also completed an
internship at eBay where she did work on the Blackthorne software. She also
earned a Distinguished Writer Achievement for outstanding college writing and
won a Kraft Scholarship.
Iris Lee is a 1997 graduate of the University of California at Berkeley
where she studied molecular and cell biology. Her work experience includes being
a marketing associate and research assistant in life sciences at SRI
International in Menlo Park, California.
Below you will find a photograph of the intern reunion held on June 9.
Seated in the front row from the left are Sonia Gupta, Anh Tran, Katrina Dodson,
Thao Dodson, Jerry Dodson, Marie Chen, Sheila Alfaro, Jane Liou, Victor Thay and
Keith Bang. Standing in the back row from left are Jeff Wang, Ben Liao, Jeff
Tha, Geddes Golay, Mark Williams, Todd Ahlsten, David Allen, Vince Wood, Bryant
Cherry, Yimen Feng, Greg Hermanski, Shun-Ning Wong, Fred Jones and Allen Young.
STAFF PROFILE
For this report, it gives me great pleasure to feature Marie Chen who has
been my executive assistant since 1994. She has worked in all areas of Parnassus
Investments and because of this, she is invaluable in helping me manage the
firm. She also has a wonderful personality and people enjoy doing business with
her. Most important, she's an efficient and effective manager and that pays
dividends to the company.
One of the most versatile staff members at Parnassus, she's worked in the
shareholder service department, the accounting department and the research
department, gaining a unique overview of the business. Besides helping me with
my duties, Marie manages the office, prepares government reports, helps with
Trustee relations, prices the funds and serves as social coordinator.
Marie was born in Taiwan, but came here in 1972 when she was one year old.
She attended school here in San Francisco and came to work with us as a clerical
employee right out of high school in 1990. She attended Skyline Community
College while she worked at Parnassus and continued working here when she
transferred to San Francisco State University where she graduated in psychology
in 1995. She is now enrolled in the Master's in Business Administration program
at San Francisco State where she concentrates in international business. Marie
expects to receive her Master's in May of 2001. She has continued her studies
while working full time.
Marie enjoys physical activity and plays tennis, hikes, swims and
snowboards. She's also a fan of the San Francisco Giants and the San Francisco
49ers. Her favorite activity is traveling and she's recently taken a
cross-country automobile trip and has also visited Taiwan, Hong Kong, Bali and
Mexico. Marie has a legion of gentlemen admirers, but she hasn't yet picked one
to settle down with.
<PAGE>
SHAREHOLDER PROFILE
As most of you know, we regularly profile our current interns and, more
recently, we've started to profile a Parnassus staff member in each quarterly
report. Earlier this year, we talked about two of our shareholders, Shimon
(Bert) Schwarzschild and Michael Lozeau, who are active environmentalists. These
features have been very popular since most of you like to know about our staff
members and find out who our other shareholders are. Just to show you that we
also have business executives as shareholders, this time we're going to profile
R.S. (Rollie) Boreham, Chairman of Baldor Electric in Ft. Smith, Arkansas.
I first met Rollie over ten years ago when I went to Arkansas to visit
Baldor Electric, a company in which the Fund had a small position, but one where
we were considering making a larger investment. I had heard a lot about Baldor
at the time. Their energy efficient engines were in tune with our environmental
philosophy and I had also heard a lot about Baldor being a great place to work.
Some of Baldor's production employees could not read well and when the
company switched over to high-tech manufacturing, some of these people were no
longer qualified. Rather than discharging these production workers, Baldor under
Rollie's leadership instituted a literacy program that brought staff members up
to minimum reading standards. This struck me as the kind of humane company that
Parnassus should be investing in.
When I arrived in Ft. Smith, Arkansas, I discovered that Rollie was not
your typical CEO. Usually when I visit a company, I only talk with the CEO for
an hour or so and then take a tour with other employees. I like this method
since it gives me a chance to talk with line employees without having top
management around. This gives me a better feel for workplace issues.
I always like to see the assembly line when I visit a manufacturing company
and I'm usually escorted by a first-line supervisor. When I visited Baldor,
Rollie came with me. At first, I was rather disconcerted by his presence because
the Chairman created a commotion wherever he went. Workers would gather around
to talk with him and we became the center of attention. I felt guilty both
because I was disrupting production of electric motors and because I was taking
up the valuable time of the chief executive. However, it didn't seem to bother
Rollie at all.
Although I didn't get a chance to talk confidentially with the employees
then, I did have an opportunity to see the wonderful rapport that Rollie had
with all the manufacturing workers. I've never seen workers who had so much
affection for their chief executive. (The next day I cleverly circled back to
the production line while Rollie was tied up in his office on other business.
When I talked with the employees without Rollie's presence, they were even more
effusive in their praise of him than when he was following me around the
production floor.) Needless to say, after my visit to Baldor, we invested a lot
more money in the company's shares. The investment did very well for us.
<PAGE>
Rollie has had a distinguished career. A native of Los Angeles, he served
in the military in World War II, then earned a bachelor's degree in physics and
meteorology from UCLA before doing graduate work in electrical engineering. He
went to work for Baldor in 1961 as Vice President of Sales, became Executive
Vice President in 1970 and Chief Executive in 1978. He still serves as Chairman,
but he passed the title of Chief Executive to John McFarland a couple of years
ago.
He is an important figure in the motor industry and he has also served on
non-profit boards including the Salvation Army, the American Heart Association,
the United Way, Westark Community College Foundation and the Ft. Smith Museum.
He and his wife have two married daughters.
I am proud to have had R.S. Boreham as a shareholder for years. About
Parnassus, Rollie says, "Both policies, the one about investing in
environmentally aware and friendly companies and the equally important one of
investing in companies that have good relations with their employees are
admirable. Good relations with employees almost always lead to good
relationships with customers which, then, usually lead to good relationships
with shareholders."
I'm proud to have Rollie as a shareholder and I'm proud to have all of you
as shareholders as well.
Yours truly,
Jerome L. Dodson
President
<PAGE>
<TABLE>
<CAPTION>
The Parnassus Fund Portfolio: September 30, 2000*
# of Shares Issuer Market Value Per Share
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
700,000 Adaptec, Inc. $ 14,000,000 $ 20.00
300,000 Applied Materials, Inc. 17,793,750 59.31
400,000 Autodesk, Inc. 10,150,000 25.38
100,000 Avocent Corp. 5,512,500 55.13
100,000 Baldor Electric Company 2,031,250 20.31
200,000 BMC Software, Inc. 3,825,000 19.13
250,000 Bristol Myers Squibb Co. 14,281,250 57.13
300,000 Calgon Carbon Corp. 2,043,750 6.81
175,000 Cardinal Health, Inc. 15,432,813 88.19
200,000 Clorox Company 7,912,500 39.56
200,000 Cognex Corporation 7,887,500 39.44
400,000 Compaq Computer Corp. 11,032,000 27.58
400,000 Credence Systems Corp. 12,000,000 30.00
100,000 Delta Air Lines, Inc. 4,437,500 44.38
60,000 DENTSPLY International, Inc. 2,096,250 34.94
100,000 Electro Scientific Industries 3,512,500 35.13
450,000 Electronics for Imaging, Inc. 11,362,500 25.25
450,000 Federal Home Loan Mortgage Corp. 24,328,125 54.06
300,000 Federal National Mortgage Association 21,450,000 71.50
125,900 Fuller H.B. Co. 3,619,625 28.75
800,000 Intel Corporation 33,300,000 41.63
100,000 JP Morgan & Co. Inc. 16,337,500 163.38
500,000 Kroger Co. 11,281,250 22.56
300,000 Lam Research Corporation 6,281,250 20.94
700,000 LSI Logic Corporation 20,475,000 29.25
150,000 Lucent Technologies Inc. 4,575,000 30.50
125,000 MedQuist, Inc. 2,523,438 20.19
600,000 Mentor Graphics 14,137,500 23.56
175,000 Merck & Co., Inc. 13,026,563 74.44
250,000 Micron Technology, Inc. 11,437,500 45.75
265,000 Novellus Systems, Inc. 12,339,062 46.56
655,000 PetsMart, Inc. 3,070,312 4.69
150,000 Schering-Plough Corporation 6,975,000 46.50
625,000 Target Corp. 16,015,625 25.63
1,000,000 Venator Group, Inc. 12,375,000 12.38
450,000 Wild Oats Markets 5,287,500 11.75
50,000 Williams-Sonoma Inc. 1,737,500 34.75
---------
Total Portfolio $385,883,813
Short Term Investments
and Other Assets $ 11,100,762
-------------
Total Net Assets $396,984,575
------------
The Net Asset Value
as of September 30, 2000 $ 55.95
<FN>
* Portfolio is current at time of printing, but composition is subject to change.
</FN>
</TABLE>
<PAGE>
THE PARNASSUS FUND
One Market-Steuart Tower #1600
San Francisco, California 94105
415-778-0200
800-999-3505
www.parnassus.com
Investment Adviser
Parnassus Investments
One Market-Steuart Tower #1600
San Francisco, California 94105
Legal Counsel
Gardner, Carton & Douglas
321 N. Clark Street
Chicago, IL 60610
Independent Auditors
Deloitte & Touche LLP
50 Fremont Street
San Francisco, California 94105
Custodian
Union Bank of California
475 Sansome Street
San Francisco, California 94111
Distributor
Parnassus Investments
One Market-Steuart Tower #1600
San Francisco, California 94105
This report must be preceded or accompanied by
a current prospectus.
Recycled paper.
