THE PARNASSUS EQUITY INCOME FUND
ONE MARKET-STEUART TOWER #1600 SAN FRANCISCO CA 94105 800-999-3505
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PROFILE
- --------------------------------------------------------------------------------
October 1, 1999
- --------------------------------------------------------------------------------
This Profile summarizes key information about the Fund that is included in the
prospectus. The prospectus contains additional information including a more
detailed description of the risks associated with investing in the Fund that you
may want to consider before you invest. You may obtain the prospectus and other
information about the Fund at no cost by calling 800-999-3505.
Fund Objectives/ Goals
The Parnassus Equity Income Fund invests primarily in stocks that pay a dividend
and its investment objective is both current income and growth of capital.
Principal Investment Strategies of the Fund
The Fund invests primarily in a diversified portfolio of equity securities.
Equity securities may include common and preferred stock as well as convertible
bonds. At least 75% of the Fund's total assets will normally be invested in
equity securities that pay interest or dividends. The remaining 25% may be
invested in non-dividend paying equity securities, in investment grade debt
securities or in money market instruments. The Fund seeks to invest in equity
securities that pay above-average dividends and which the Adviser believes have
the capacity to raise dividends in the future and also have the potential for
capital appreciation. To determine a company's prospects, the Adviser reviews
the company's profit and loss statement, sales, earnings and dividend histories,
net cash flow and outlook for future earnings.
The Fund takes social as well as financial factors into account in making
investment decisions. In general, The Parnassus Equity Income Fund looks for
companies that respect the environment, treat their employees well, have
effective equal employment opportunity policies and good community relations as
well as ethical business dealings. The Fund will not invest in companies that
are involved with gambling or manufacture alcohol or tobacco products. The Fund
also screens out weapons contractors and those that generate electricity from
nuclear power.
Additional information about the Fund's investments is available in the Fund's
annual and semiannual reports to shareholders. In these reports, you will find a
discussion of the market conditions and investment strategy that significantly
affected the Fund's performance during the last fiscal year.
Principal Risks of Investing in the Fund
Investing in the Fund may result in a loss of money when you sell your shares.
The Fund's share price changes daily based on the value of its holdings. Stock
values fluctuate in response to activities of individual companies and general
market and economic conditions both here and abroad. When you sell your shares
of the Fund, they may be worth more or less than what you paid for them.
The bar chart below gives some indication of the risks of investing in the Fund
by showing changes in the Fund's performance from year to year. How the Fund has
performed in the past is not necessarily an indication of how the Fund will
perform in the future.
(Bar Chart Here)
During the six-year period shown in the bar chart, the highest return for a
quarter was 23.4% (last quarter of 1998) and the lowest return for a quarter was
a loss of 11.6% (third quarter of 1998). Below is a table comparing the
performance of the Parnassus Equity Income Fund with the S&P 500 index (a broad
unmanaged measure of market performance) and the average equity income fund
followed by Lipper, Inc. Figures are average annual returns for the one and
five-year periods and for the life of the Fund (since inception on August 31,
1992).
<TABLE>
<CAPTION>
Average Annual Total Returns
Periods ended September 30, 1999 Past 1 Year Past 5 Years Life of Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Parnassus Equity Income Fund 33.60% 15.24% 13.26%
Lipper Equity Income Average 13.27% 16.27% 14.38%
Standard & Poor's 500 Index 27.80% 25.01% 19.91%
</TABLE>
Investment Adviser and Portfolio Manager
The Fund's investment adviser is Parnassus Investments. Jerome L. Dodson, the
adviser's president, is the person primarily responsible for the day-to-day
management of the Fund's portfolio. He has served in that capacity since the
Fund's inception in 1992.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Shareholder Fees (paid by the investor directly):
Maximum Sales Charge (Load) Imposed on Purchases ...........................None
Redemption Fee..............................................................None
Annual Fund Operating Expenses (paid from Fund assets):
Management Fees (before fee waiver) ......................................0.74%
Distribution & Service (12b-1) Fees ........................................None
Other Expenses ............................................................0.55%
Total Annual Fund Operating Expenses ......................................1.29%
Fee Waiver/Expense Reimbursement ..........................................0.19%
Net Expenses ..............................................................1.10%
The example in the following table is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. This
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, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$131 $409 $708 $1,556
The expenses shown above are the total fees you would pay throughout the time
period indicated -- not ones you would pay every year. For example, the figure
for ten years is not the annual expense figure, but the total cumulative
expenses a shareholder would have paid for the entire ten-year period.
The figures in the table above overstate the expenses you would actually pay
since they are based on the Total Annual Fund Operating Expenses before fee
waivers/reimbursements and not on the Net Expenses. The Adviser is contractually
obligated to provide the fee waivers indicated during the effective period of
this Profile. The SEC, however, requires that the calculations be made on the
basis of pre-waiver expenses to show what expenses might potentially be in the
future.
* The 5% return figure is an example that regulations require all mutual funds
to use as an illustration. It should not be considered a representation of past
or future performance. Actual performance and expenses may be more or less than
those shown.
Purchase of Fund Shares
The Fund has a minimum initial investment of $2,000 and a minimum subsequent
investment of $50. Retirement and Uniform Gift to Minor accounts and
participants in the automatic investment plan have an initial minimum investment
of $500. There is no sales charge assessed on fund purchases.
Sale of Fund Shares
Your shares may be redeemed in total or in part on any business day by written
request. There is no redemption charge.
Fund Distributions and Tax Information
The Fund intends to make income distributions once a quarter in March, June,
September and December and a capital gain distribution once a year in December.
You may choose to receive distributions in cash or reinvest them in additional
shares of the Fund without a sales charge. The Fund intends to make
distributions that may be taxed as ordinary income or capital gains (which may
be taxable at different rates) depending on the length of time that the Fund
holds its assets.
Other Available Services
The Fund maintains a toll-free 24-hour telephone system (800-999-3505) to
provide shareholders with the current share price and other information. Between
8:30 a.m. and 5:00 p.m. San Francisco time, you may obtain your account balance.
Automated purchase and distribution plans are available. Shareholders receive
annual, semiannual and quarterly account statements and a confirmation each time
shares are purchased or redeemed.
<PAGE>
THE PARNASSUS FIXED-INCOME FUND
ONE MARKET-STEUART TOWER #1600 SAN FRANCISCO CA 94105 800-999-3505
- --------------------------------------------------------------------------------
PROFILE
- --------------------------------------------------------------------------------
October 1, 1999
- --------------------------------------------------------------------------------
This Profile summarizes key information about the Fund that is included in the
prospectus. The prospectus contains additional information including a more
detailed description of the risks associated with investing in the Fund that you
may want to consider before you invest. You may obtain the prospectus and other
information about the Fund at no cost by calling 800-999-3505.
Fund Objectives/ Goals
The Parnassus Fixed-Income Fund invests in a diversified portfolio of bonds and
other fixed-income instruments and its investment objective is a high level of
current income consistent with safety and capital preservation.
Principal Investment Strategies of the Fund
The Fund invests in investment grade bonds which means they are rated within the
four highest categories as determined by a nationally-recognized rating service.
Ordinarily, at least 65% of the Fund's total net assets will be invested in
bonds rated "A" or better. The Fund may invest in a combination of long-term,
intermediate-term or short-term fixed-income securities depending on market
conditions, and these securities may also have floating or variable interest
rates. The portfolio may be comprised of U.S. Government obligations, corporate
bonds, preferred stock, convertible preferred stock and convertible bonds. The
Fund will not invest in "high-yield" or "junk" bonds.
The Fund takes social as well as financial factors into account in making
investment decisions. In general, The Parnassus Fixed-Income Fund looks for
companies that respect the environment, treat their employees well, have
effective equal employment opportunity policies and good community relations as
well as ethical business dealings. The Fund will not invest in companies that
are involved with gambling or manufacture alcohol or tobacco products. The Fund
also screens out weapons contractors and those that generate electricity from
nuclear power.
Additional information about the Fund's investments is available in the Fund's
annual and semiannual reports to shareholders. In these reports, you will find a
discussion of the market conditions and investment strategy that significantly
affected the Fund's performance during the last fiscal year.
Principal Risks of Investing in the Fund
Investing in the Fund may result in a loss of money when you sell your shares.
The Fund's share price changes daily based on the value of its holdings. The
Fund's average weighted maturity will be between 5 and 20 years. The value of
the Fund will vary inversely with changes in interest rates. As interest rates
go up, the net asset value (NAV) will likely go down and as interest rates drop,
the NAV of the Fund will likely go up. This Fund is intended for investors who
can accept the fact that there will be principal fluctuations. The NAV of the
Fund will also be affected by other factors such as credit risk and general
market conditions. When you sell your shares of the Fund, they may be worth more
or less than what you paid for them.
The bar chart below gives some indication of the risks of investing in the Fund
by showing changes in the Fund's performance from year to year. How the Fund has
performed in the past is not necessarily an indication of how the Fund will
perform in the future.
(Bar Chart Here)
During the six-year period shown in the bar chart, the highest return for a
quarter was 7.5% (second quarter of 1995) and the lowest return for a quarter
was a loss of 4.4% (second quarter of 1994).
Below is a table comparing the performance of the Parnassus Fixed-Income Fund
with the Lehman Government/Corporate Bond Index (a broad unmanaged measure of
market performance) and the average A-rated bond fund followed by Lipper, Inc.
Figures are average annual returns for the one and five-year periods and for the
life of the Fund (since inception on August 31, 1992).
<TABLE>
<CAPTION>
Average Annual Total Returns
Periods ended September 30, 1999 Past 1 Year Past 5 Years Life of Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Parnassus Fixed Income Fund (3.00%) 7.83% 6.27%
Lipper A-Rated Bond Fund Average (2.19%) 7.01% 6.04%
Lehman Government/Corporate Bond Index (1.62%) 7.77% 6.40%
</TABLE>
Investment Adviser and Portfolio Manager
The Fund's investment adviser is Parnassus Investments. Jerome L. Dodson, the
adviser's president, is the person primarily responsible for the day-to-day
management of the Fund's portfolio. He has served in that capacity since the
Fund's inception in 1992.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Shareholder Fees (paid by the investor directly):
Maximum Sales Charge (Load) Imposed on Purchases ...........................None
Redemption Fee..............................................................None
Annual Fund Operating Expenses (paid from Fund assets):
Management Fees (before fee waiver) ......................................0.50%
Distribution & Service (12b-1) Fees ........................................None
Other Expenses ............................................................0.69%
Total Annual Fund Operating Expenses ......................................1.19%
Fee Waiver/Expense Reimbursement ..........................................0.35%
Net Expenses ..............................................................0.84%
The example in the following table is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. This
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, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$121 $378 $654 $1,443
The expenses shown above are the total fees you would pay throughout the time
period indicated -- not ones you would pay every year. For example, the figure
for ten years is not the annual expense figure, but the total cumulative
expenses a shareholder would have paid for the entire ten-year period.
The figures in the table above overstate the expenses you would actually pay
since they are based on the Total Annual Fund Operating Expenses before fee
waivers/reimbursements and not on the Net Expenses. The Adviser is contractually
obligated to provide the fee waivers indicated during the effective period of
this Profile. The SEC, however, requires that the calculations be made on the
basis of pre-waiver expenses to show what expenses might potentially be in the
future.
* The 5% return figure is an example that regulations require all mutual funds
to use as an illustration. It should not be considered a representation of past
or future performance. Actual performance and expenses may be more or less than
those shown.
Purchase of Fund Shares
The Fund has a minimum initial investment of $2,000 and a minimum subsequent
investment of $50. Retirement and Uniform Gift to Minor accounts and
participants in the automatic investment plan have an initial minimum investment
of $500. There is no sales charge assessed on fund purchases.
Sale of Fund Shares
Your shares may be redeemed in total or in part on any business day by written
request. There is no redemption charge.
Fund Distributions and Tax Information
The Fund intends to make income distributions once a month and a capital gain
distribution once a year in December. You may choose to receive distributions in
cash or reinvest them in additional shares of the Fund without a sales charge.
The Fund intends to make distributions that may be taxed as ordinary income or
capital gains (which may be taxable at different rates) depending on the length
of time that the Fund holds its assets.
Other Available Services
The Fund maintains a toll-free 24-hour telephone system (800-999-3505) to
provide shareholders with the current share price and other information. Between
8:30 a.m. and 5:00 p.m. San Francisco time, you may obtain your account balance.
Automated purchase and distribution plans are available. Shareholders receive
annual, semiannual and quarterly account statements and a confirmation each time
shares are purchased or redeemed.
<PAGE>
THE PARNASSUS CALIFORNIA TAX-EXEMPT FUND
ONE MARKET-STEUART TOWER #1600 SAN FRANCISCO CA 94105 800-999-3505
- --------------------------------------------------------------------------------
PROFILE
- --------------------------------------------------------------------------------
October 1, 1999
- --------------------------------------------------------------------------------
This Profile summarizes key information about the Fund that is included in the
prospectus. The prospectus contains additional information including a more
detailed description of the risks associated with investing in the Fund that you
may want to consider before you invest. You may obtain the prospectus and other
information about the Fund at no cost by calling 800-999-3505.
Fund Objectives/ Goals
The Parnassus California Tax-Exempt Fund is available to California residents
only. It invests in a diversified portfolio of tax-exempt, investment grade
securities issued by California state and local governments and by other public
authorities. Its investment objective is to provide high current income exempt
from both federal and California personal income tax.
Principal Investment Strategies of the Fund
The Fund invests in investment grade bonds which means they are rated within the
four highest categories as determined by a nationally-recognized rating service.
No more than 20% of the Fund's portfolio will be invested in the 4th highest
category. Under normal circumstances, the Fund will invest 100% of its assets in
California municipal obligations.
The Fund takes social as well as financial factors into account in making
investment decisions. The Parnassus California Tax-Exempt Fund seeks a portfolio
that will have a positive social and environmental impact. Examples would be
bonds that support schools, libraries, hospitals, mass transit, low and moderate
income housing and pollution control facilities.
Additional information about the Fund's investments is available in the Fund's
annual and semiannual reports to shareholders. In these reports, you will find a
discussion of the market conditions and investment strategy that significantly
affected the Fund's performance during the last fiscal year.
Principal Risks of Investing in the Fund
Investing in the Fund may result in a loss of money when you sell your shares.
The Fund's share price changes daily based on the value of its holdings. The
Fund's average weighted maturity will be between 5 and 20 years or more. The
value of the Fund will vary inversely with changes in interest rates. As
interest rates go up, the net asset value (NAV) will likely go down and as
interest rates drop, the NAV of the Fund will likely go up. This Fund is
intended for investors who can accept the fact that there will be principal
fluctuations. As the Fund invests primarily in California municipal securities,
there are special risks involved. The NAV of the Fund will be affected by
factors such as changes to the state constitution regarding taxes, changes in
the federal tax status of municipal securities and changes in bond ratings based
on the California economy. When you sell your shares of the Fund, they may be
worth more or less than what you paid for them.
The bar chart below gives some indication of the risks of investing in the Fund
by showing changes in the Fund's performance from year to year. How the Fund has
performed in the past is not necessarily an indication of how the Fund will
perform in the future.
(Bar Chart Here)
During the six-year period shown in the bar chart, the highest return for a
quarter was 8.0% (first quarter of 1995) and the lowest return for a quarter was
a loss of 5.7% (first quarter of 1994).
Below is a table comparing the performance of the Parnassus California
Tax-Exempt Fund with the Lehman Municipal Bond Index (a broad unmanaged measure
of market performance) and the average California Municipal Bond fund followed
by Lipper, Inc. Figures are average annual returns for the one and five-year
periods and for the life the Fund (since inception on August 31, 1992).
<TABLE>
<CAPTION>
Average Annual Total Returns
Periods ended September 30, 1999 Past 1 Year Past 5 Years Life of Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Parnassus California Tax-Exempt Fund (1.51%) 6.85% 6.16%
Lipper CA Municipal Bond Fund Average (3.05%) 6.06% 5.60%
Lehman Municipal Bond Index (0.70%) 6.77% 6.25%
</TABLE>
Investment Adviser and Portfolio Manager
The Fund's investment adviser is Parnassus Investments. Jerome L. Dodson, the
adviser's president, is the person primarily responsible for the day-to-day
management of the Fund's portfolio. He has served in that capacity since June of
1998.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Shareholder Fees (paid by the investor directly):
Maximum Sales Charge (Load) Imposed on Purchases ...........................None
Redemption Fee..............................................................None
Annual Fund Operating Expenses (paid from Fund assets):
Management Fees (before fee waiver) ......................................0.50%
Distribution & Service (12b-1) Fees ........................................None
Other Expenses ............................................................0.47%
Total Annual Fund Operating Expenses ......................................0.97%
Fee Waiver/Expense Reimbursement ..........................................0.25%
Net Expenses ..............................................................0.72%
The example in the following table is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. This
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, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$99 $309 $536 $1,190
The expenses shown above are the total fees you would pay throughout the time
period indicated -- not ones you would pay every year. For example, the figure
for ten years is not the annual expense figure, but the total cumulative
expenses a shareholder would have paid for the entire ten-year period.
The figures in the table above overstate the expenses you would actually pay
since they are based on the Total Annual Fund Operating Expenses before fee
waivers/reimbursements and not on the Net Expenses. The Adviser is contractually
obligated to provide the fee waivers indicated during the effective period of
this Profile. The SEC, however, requires that the calculations be made on the
basis of pre-waiver expenses to show what expenses might potentially be in the
future.
* The 5% return figure is an example that regulations require all mutual funds
to use as an illustration. It should not be considered a representation of past
or future performance. Actual performance and expenses may be more or less than
those shown.
Purchase of Fund Shares
The Fund has a minimum initial investment of $2,000 and a minimum subsequent
investment of $50. Retirement and Uniform Gift to Minor accounts and
participants in the automatic investment plan have an initial minimum investment
of $500. There is no sales charge assessed on fund purchases.
Sale of Fund Shares
Your shares may be redeemed in total or in part on any business day by written
request. There is no redemption charge.
Fund Distributions and Tax Information
The Fund intends to make income distributions once a month and capital gain
distributions once a year in December. You may choose to receive distributions
in cash or reinvest them in additional shares of the Fund without a sales
charge. The Fund intends to make dividend distributions that are exempt from
federal and California personal income taxes. Such income may be subject to such
taxes if received by a corporation. Certain dividends may be subject to the
federal alternative minimum tax for individuals and corporations. Distributions
of capital gains are taxable to shareholders as ordinary income or long-term
capital gains (which may be taxable at different rates) depending on the length
of time that the Fund holds its assets.
Other Available Services
The Fund maintains a toll-free 24-hour telephone system (800-999-3505) to
provide shareholders with the current share price and other information. Between
8:30 a.m. and 5:00 p.m. San Francisco time, you may obtain your account balance.
Automated purchase and distribution plans are available. Shareholders receive
annual, semiannual and quarterly account statements and a confirmation each time
shares are purchased or redeemed.
