-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FZ/rsI5cN4+CM13YGrzNzoN4Na2QZWA1dVQ2/OMRSU+ycqSYX3VnxOygepcm7cDZ eU5lvFgeYRVud1DDIWMzUw== 0000950149-03-001997.txt : 20030820 0000950149-03-001997.hdr.sgml : 20030820 20030820172346 ACCESSION NUMBER: 0000950149-03-001997 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030820 EFFECTIVENESS DATE: 20030820 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARNASSUS FUND CENTRAL INDEX KEY: 0000747546 IRS NUMBER: 946579180 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04044 FILM NUMBER: 03858664 BUSINESS ADDRESS: STREET 1: ONE MARKET STEUART TOWER STREET 2: STE 1600 CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4157780200 MAIL ADDRESS: STREET 1: ONE MARKET STEUART TOWER STREET 2: SUITE 1600 CITY: SAN FRANCISCO STATE: CA ZIP: 94105 FORMER COMPANY: FORMER CONFORMED NAME: RENAISSANCE FUND/MA DATE OF NAME CHANGE: 19841206 N-CSRS 1 f92617nvcsrs.txt FORM N-CSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSRS CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-04044 The Parnassus Fund ---------------------------------------------------- (Exact name of registrant as specified in charter) One Market -- Steuart Tower #1600, San Francisco, California 94105 ---------------------------------------------------- (Address of principal executive offices) (Zip code) Bryant Cherry The Parnassus Fund One Market -- Steuart Tower #1600, San Francisco, California 94105 ---------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (415) 778-0200 Date of fiscal year end: December 31 Date of reporting period: June 30, 2003 Item 1: Report(s) to Shareholders THE PARNASSUS FUND SEMIANNUAL REPORT JUNE 30, 2003 August 4, 2003 DEAR SHAREHOLDER: As of June 30, 2003, the net asset value per share (NAV) of the Parnassus Fund was $29.65, so the overall return for the second quarter was a gain of 15.77%. This compares to a gain of 15.39% for the S&P, 21.11% for the Nasdaq and 15.86% for the average multi-cap core fund followed by Lipper, Inc. For the quarter, then, we had returns that were almost identical to the S&P and the Lipper average, but we finished behind the Nasdaq which is again soaring to speculative heights. For the year-to-date, the Fund is up 14.97% compared to a gain of 11.76% for the S&P, 21.82% for the Nasdaq and 12.03% for the Lipper average. So we're significantly ahead of the S&P and the Lipper average, but behind the soaring Nasdaq Composite index. Below is a table comparing the Parnassus Fund with the S&P, the Nasdaq and the Lipper Multi-Cap Core Average over the past one, three, five and ten-year periods. The total return figures are reduced by the amount of the maximum sales charge (3.5%), while the overall return figures give investment performance only. The performance figures for the average multi-cap core fund do not deduct any sales charges that may apply.
- ---------------------------------------------------------------------------------------------------------------- Periods Ending Average Annual Average Annual S&P 500 Lipper Multi-Cap Nasdaq June 30, 2003 Total Return Overall Return Index Core Average Index - ---------------------------------------------------------------------------------------------------------------- One Year (0.72%) 2.89% 0.25% (0.42%) 11.44% Three Years (11.49%) (10.44%) (11.16%) (9.12%) (25.48%) Five Years 7.27% 8.03% (1.60%) (0.01%) (2.72%) Ten Years 9.07% 9.46% 10.02% 9.19% 8.71% - ----------------------------------------------------------------------------------------------------------------
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 S&P 500 and the Nasdaq Composite are unmanaged indices of common stocks and it is not possible to invest directly in an index. Index figures do not take any expenses into account, but mutual fund returns do. Returns shown do not reflect the deduction of taxes a shareholder would pay on fund distributions or redemption of shares. Page 1 of 18 ANALYSIS As you can tell by looking at the financial statements at the end of this report, as of June 30, 2003, the Fund had 79% of its assets in cash and cash equivalents. This is the highest percentage in the history of the Fund since its inception in 1985. The reason for all the cash is that we can't find enough companies selling at reasonable valuations, so rather than investing in overpriced stocks, we've chosen to hold cash. I'll talk more about this in the "Outlook and Strategy" section of the report, but first I'd like to discuss how we were able to beat the S&P for the quarter while holding so much cash. The answer is twofold. First, the stocks that we did hold during the quarter did very well. Second, most of the move into cash didn't begin until well into May, so we were substantially invested for half of the period. Twelve stocks in the portfolio each gained enough to move the NAV higher by at least 11 cents per fund share. In contrast, there was only one company that caused a substantial drop in the Fund's NAV. That company was Johnson & Johnson whose stock fell 11.8% during the quarter as it went from $57.87 to $51.07, for a decline of 10 cents in the NAV. J&J reported record first quarter profits, but the stock fell as investors focused on the company's weak pharmaceutical pipeline and new competition from Boston Scientific in the market for coated stents that prop open clogged arteries. We feel that the company's long-term prospects are solid, and it should have good earnings this year. We are keeping the stock in the portfolio. Fortunately, the list of winners was much longer than the single entry loser's list. Genentech was the Fund's biggest winner, adding 88 cents to the NAV as the stock rose 69.5% from $35.01 to $59.35, which was the average price we sold it for during the quarter. In May, the company announced very positive clinical data for Avastin, its cancer drug designed to shrink the blood supply to tumors. In response, Genentech's stock soared an amazing $15 per share in one day--going from about $38 to $53. Unfortunately, we sold some of our stock in the low 50's. A short time later, the stock went into the 70's where we sold the rest of it to make an average selling price of around $60. While we feel that Avastin will be a very successful product for Genentech, we think that at $70, Genentech is overvalued. Although I felt remorse when the stock went to $70 after I had sold some in the low 50's. I'm delighted that the stock made such a strong contribution to the Fund's return this quarter. Many years ago, someone asked financier Bernard Baruch how he had done so well in the stock market. "I sold too soon," he said. Cisco Systems contributed 41 cents to the NAV as the stock rose 25.1% from $12.90 at the beginning of the quarter to $16.14 which was our average selling price. Despite a 4% sales decline in the second quarter compared to the same quarter last year, Cisco reported a profit increase of 35% because of strong cost control. We sold our shares in Cisco because of a weak revenue outlook. Although we consider good cost control a very important attribute of a successful company, it can't keep increasing a company's earnings indefinitely. Sales have to increase as well. In Cisco's case, sales are not increasing so we sold the stock. Charles Schwab added 31 cents to the NAV as the stock jumped 43.9% from $7.22 to $10.39 where we sold our shares. In June, the company announced that second quarter profits would be at least 15% above plan due to higher trading volume. We sold the stock because it was trading over 30 times estimated 2003 earnings, and we expect trading volume to decline during the slow summer months. Vitesse Semiconductor, a designer of communications and storage chips, saw its stock climb 42% from $2.14 to our average selling price of $3.04. This added 31 cents to the NAV. The Page 2 of 18 company's chips were designed into some new products, and this spurred hopes of a recovery. Since we don't think that the company will return to profitability until next year, we concluded that the upward move in the stock was premature, so we sold it. Intel had a good quarter as the stock rose 17.7% from $16.28 to our average selling price of $19.16, thereby increasing the NAV by 28 cents. The company announced chip sales for its personal computers were at the high end of its projected range for the June quarter. While Intel's business prospects are improving, the stock trades at 25 times our 2004 earnings estimate. We sold our shares since we feel this recovery is already priced into the stock. Target jumped 29% from $29.26 to $37.84 and increased the Fund's NAV by 24 cents. While Target's earnings per share were flat in the April quarter versus a year ago, the company is positioned for growth the rest of the year due to sales gains, cost control and an expanding credit card business. Agere, the communications and storage chip maker that was spun off from Lucent, added 20 cents per fund share as its stock rose 20.6% from $1.60 to our average selling price of $1.93. Agere is losing money, but has contained its losses based on good cost control. While Agere has strong design wins that should boost growth, we sold our shares as profitability is at least two quarters away. Home Depot added 20 cents to the Fund's value as the stock increased 35.9% to $33.12. After losing market share to competitor Lowes the past few years, especially with women shoppers, CEO Robert Nardelli has begun to improve Home Depot's marketing and store layout. For example, the company's Design Place layout is now easier to shop with appliance, kitchen, bath and lighting areas grouped together with better signage. Mentor Graphics, the Portland, Oregon-based company that sells electronic design automation (EDA) software, boosted the NAV by 17 cents as the stock rose 17% to our average selling price of $10.46. Despite the current weak economy, Mentor's business is strong, driven by its Calibre product which helps chipmakers verify that designs can be manufactured properly. We admire Mentor for its leading products and social responsibility, but we sold our shares based on the outlook for a summer demand slowdown. The Gap rose 29.5% to $18.76 from $14.49 and increased each fund share by 15 cents. After two years of declining same store sales, new CEO Paul Pressler is leading a turnaround at Gap. May same store sales jumped 10% versus last year, based on better fashion and strong sales at Old Navy and Gap. Nokia, the world's largest cell phone maker, added 15 cents to the NAV as the stock increased 20.2% to $16.85, the price where we sold our shares. In mid-June, the company blamed soft handset sales on the SARS outbreak in China. Despite this news, the stock rose as investors focused on the prospect for a second half recovery. We're not as optimistic, so we sold the stock. Costco added 11 cents to each fund share as the stock climbed 21.9% to $36.60. The company reported 17% earnings growth versus last year and strong same store sales of 6% during the May quarter. Costco's low-priced, brand-name merchandise continues to generate strong customer traffic. OUTLOOK AND STRATEGY As I indicated earlier, the Fund has 79% of its assets in cash which is a new high for us. The reason we have so much cash is that we can't find any reasonably priced stocks to buy. The market as a whole, as measured by the S&P 500, is trading around 35 times earnings. Page 3 of 18 Historically, the S&P's price/earnings ratio is between 15 and 20. Other ratios such as price/sales and price/book also show very high valuations. There are very few bargains around, so we've decided to stay on the sidelines for a while. If the economy were stronger and earnings were rapidly increasing, the high valuations might make more sense, but from where I sit, the economy looks very weak. The unemployment rate has increased to 6.4% and will probably go higher. Manufacturing output is contracting, retail sales are sluggish and technology spending is anemic. I admit that there are some positives such as low interest rates, a reasonably strong housing market and the need to make technology investments that have been deferred. Nevertheless, it doesn't seem as if the economy will be making a strong recovery this year. The other factor at work is the strong seasonality of the stock market. Most years, the stock market goes down in the summer and keeps falling until sometime in October when it hits bottom. Upward movement usually starts in November and normally continues into May or June. This is another reason to be cautious until late this fall. As contrarians, we also take investor sentiment into account. When most investors are positive, the market usually falls off. When investor sentiment is negative, the market usually goes up. At the present time, investor sentiment is wildly bullish. This is probably an indication of a big decline to come. The majority of investors are bullish right now, and they would argue that economists are predicting an economic recovery and a stock market increase usually comes months before an upturn in the economy. I agree with the point that the stock market usually rises 6-9 months before an economic recovery, but I don't see the recovery coming before the middle of next year. If I'm correct, the bull market wouldn't really start before November. In the meantime, there's a strong possibility that the market could have a major decline. For that reason, we're staying mostly in cash until a price drop brings more reasonable valuations. PERSONNEL MATTERS This summer, we have six very accomplished interns helping us research companies. Skip Zwahlen is a graduate of Oregon State University where he was co-captain of the golf team. He also studied in the Advanced Management Program at the Haas School of Business at the University of California at Berkeley. He is currently an MBA candidate at the Marshall School at the University of Southern California. His work experience includes nine years with Hewlett-Packard in increasingly responsible executive positions, most recently as a national accounts manager. Megha Mehra will be a junior at the Wharton Business School at the University of Pennsylvania where she is concentrating in finance and marketing. At school, she was active in the Wharton India Economic Forum that gives an annual conference on business in India. Her work experience includes stints at the Student Federal Credit Union in Philadelphia and at Gillette India in New Delhi where she was a marketing intern. While a high school student in New Delhi, she did volunteer work for the Save Our Souls Organization that provides housing, food, clothing, education and a sense of family to homeless children. Megha is the sister of Shikha Mehra who interned with us last summer and the cousin of Dev Puri, an American medical doctor who interned with us five years ago when he was a medical student. Dev now holds a fellowship at the Sloan-Kettering Memorial Cancer Institute in New York. We're happy to have had three people from a great family joining us at Parnassus. Page 4 of 18 Speaking of family, we're also happy to have Daniel Conrad join us this summer as an intern. Daniel is the son of one of my classmates from Harvard Business School, Bud Conrad, who is now on the faculty of Golden Gate University here in San Francisco. Although an interesting connection, that's not the reason Daniel is with us this summer. He was referred by his friend, Neil Ahlsten, brother of Todd Ahlsten, who is the portfolio manager of the Parnassus Equity Income Fund. Neil is working with us part-time during the summer before he goes to Princeton University in the fall to study international economic development in the graduate school. Neil also interned with us in the spring of 1999 and he has spent two years in Africa with Food for the Hungry where he worked in famine relief and agricultural development. But I digress. Getting back to Daniel Conrad, he is in the MBA program at Yale. He graduated from the University of California at Davis where he received both a bachelor's and a master's in economics. His work experience includes being a telecommunications analyst with the Law and Economics Consulting Group and the director of business development at YellowGiant Corporation, an internet advertising company. He has also worked as a camp counselor for disadvantaged youth. Keye Chow is a graduate of Stanford University and the Harvard Business School. His work experience includes serving as director of business development for Documentum, a software firm specializing in technology for document handling. He has also worked as director of corporate development at RSA Security, an enterprise security software company. Other experience includes investment banking as an associate with Merrill Lynch and venture capital with the Hong Kong office of Warburg Pincus. Ciera Graves will be a senior in business administration at California Polytechnic State University in San Luis Obispo, California. At Cal Poly, her activities include student government and serving as a counselor to other students during welcome week. Ciera's work experience includes a financial analyst internship at Medtronic in Santa Rosa, California and work as a sales assistant at Oakwood Worldwide in Newport Beach, California. She studied abroad for a semester at Oxford University in England and also delivered the commencement address at Irvine High School graduation ceremonies. David LaSalle just completed the Masters of Science in finance program at Golden Gate University. He is also a graduate in history from the University of California at Santa Barbara. His previous experience includes work as a credit analyst for Wedbush Morgan Securities and as a trader and institutional sales representative for B. Riley & Co. David has also done some work as an analyst for Indigo Capital Management. Page 5 of 18 Each year, we have a reunion of former Parnassus interns. Below you will find a picture taken at the reunion on June 13, 2003. [PHOTO OF REUNION] Seated in the front row (from left to right) are Lori Keith, Anh Tran, Jane Duong, Iris Lee, Jerome Dodson, Nathan Epstein, Irene Okello, and Carrie Lo. Second Row: Jeff Tha, Kathy Brozek, Christina Woo, Megha Mehra, Daniel Conrad, David La Salle, Todd Ahlsten, Neil Ahlsten, and Andy Rubinson. Back Row: Fred Jones, Ben Suppe, Stephen Dodson, Bill Fraser, Greg Hermanski and Marie Chen. From time to time, we also profile a member of the Parnassus staff. For this report, we're going to talk about Anh Cornell who is in charge of our mailing and fulfillment operation. Some of you may know Anh as "John Cornell" which he uses for business purposes. Anh was born in Saigon, Vietnam in 1971, but in 1980 left the country as a refugee. He fled in a small boat with his mother, his sister, his uncle and three cousins. A Greek ship picked them up in early 1980 and started to take them back to Vietnam. They pleaded not to be sent back, so when another Greek ship headed for Singapore crossed paths with the first Greek ship, they were transferred and taken to a camp in Singapore. They stayed in the refugee camp for six months before being sponsored and sent to the United States in November of 1980. My wife, Thao, is the sister of Anh's mother, so Anh is our nephew. We sponsored the family and they came to live with us in our home in San Francisco. Anh attended public schools in San Francisco. His father died before the family left Vietnam, so his mother was widowed. She remarried in the United States, and Anh's stepfather adopted him, so that's why he has the all-American name of Cornell. Anh studied economics at San Francisco State University and then came to work at Parnassus Investments in 1988, first on a part-time basis and later full-time. He has done a wonderful job for us. He keeps track of our prospectus and manages the mailing of prospectuses and sales literature to people interested in the Fund. (This is called "fulfillment.") He also does a great job of managing mailings. As most of you know, we have to do a lot of mailings at Parnassus Investments: statements, confirmations, IRA documents, tax statements and marketing mailings. Many mutual fund groups farm this out to a mailing house, but we do it all ourselves. Page 6 of 18 The reason we can do this is because Anh is a terrific manager and has a great crew. On many Saturdays, you can see as many as 20 people in our offices stamping and stuffing. Anh has a very positive personality and has excellent relations with his mailing crew. He's also cool in a crisis and a good problem-solver. Although I was reluctant to hire a family member many years ago and only did so after my wife strongly suggested that I hire Anh, I am now very happy that I took her "suggestion." Anh is a very valuable staff member and makes a great contribution to our company. PROXY VOTING POLICIES AND PROCEDURES As many of you may know, mutual funds will soon be required to make public their proxy voting policies and procedures and also disclose their actual votes on proxy issues that come before the annual meetings of companies where they hold shares. We have drafted our proxy voting policies and procedures, and they should be on our website by August 5 and on the Securities and Exchange Commission's website (www.sec.gov) sometime next year. For those shareholders who prefer the old-fashioned way, you can request a copy of our policies by calling our toll-free number. Mutual funds are only required to disclose their actual votes once a year in August for the previous fiscal year ending June 30. The first disclosures would be in August of 2004 for the one year period ending June 30 of 2004. Since we are a social investment fund, we have decided to do more than the regulations require and we will be disclosing our actual votes in "real time." In other words, once we're up and running, you will be able to go to our website and see how we voted as soon as a meeting is held. Most annual meetings occur in the spring and cover the previous calendar year so there will be very few proxy votes to disclose until early next year. However, if there are any meetings held later this year, we will disclose our votes on the site. The disclosures will begin sometime late this year. The mutual fund industry opposed disclosure of proxy votes, but the social investment funds were in favor of it. Domini and Calvert were instrumental in getting the proposal passed. We think it's a good policy and it will help to enhance shareholder democracy and further the goals of the social investment movement. Yours truly, Jerome L. Dodson President Page 7 of 18 THE PARNASSUS FUND STOCKS SOLD JANUARY 1, 2003 THROUGH JUNE 30, 2003 (UNAUDITED)
Realized Number Per Sale Per Company Gain (Loss) of Shares Cost Share Proceeds Share - -------------------------------------------------------------------------------------------------------------------------------- Agere Systems, Inc. $ (5,315,685) 7,500,000 $ 19,824,411 $ 2.64 $ 14,508,726 $ 1.93 Agilent Technologies, Inc. (303,110) 375,000 6,144,101 16.38 5,840,991 15.58 American Express Company 632,805 250,000 8,282,755 33.13 8,915,560 35.66 American International Group, Inc. (2,172,961) 155,700 10,965,237 70.43 8,792,276 56.47 Ann Taylor Stores Corporation 452,476 125,000 2,512,385 20.10 2,964,861 23.72 Applied Materials, Inc. (2,121,001) 1,050,000 16,215,137 15.44 14,094,136 13.42 Becton Dickinson & Company (79,786) 175,000 5,246,033 29.98 5,166,247 29.52 Cadence Design Systems (306,866) 325,000 4,166,685 12.82 3,859,819 11.88 Cardinal Health, Inc. (592,272) 225,000 13,059,203 58.04 12,466,931 55.41 Charles Schwab Corporation 2,133,110 1,150,000 9,810,898 8.53 11,944,008 10.39 Cisco Systems, Inc. 1,860,680 1,500,000 22,346,450 14.90 24,207,130 16.14 Cognex Corporation 3,453,506 500,000 7,612,598 15.23 11,066,104 22.13 Costco Wholesale Corporation (89,668) 140,000 4,191,264 29.94 4,101,596 29.30 Credence Systems Corporation (192,522) 100,000 903,637 9.04 711,115 7.11 Cytyc Corporation (157,875) 325,000 3,392,513 10.44 3,234,638 9.95 Electro Scientific Industries, Inc. (46,998) 150,000 1,909,205 12.73 1,862,207 12.41 Ethan Allen Interiors, Inc. 20,177 5,000 149,218 29.84 169,395 33.88 J.D. Edwards & Company (31,467) 100,000 1,146,545 11.47 1,115,078 11.15 FEI Company 422,115 250,000 3,619,419 14.48 4,041,534 16.17 Federal Home Loan Mortgage Coporation (46,827) 75,000 3,826,650 51.02 3,779,823 50.40 Genentech, Inc. 10,240,080 425,000 14,985,282 35.26 25,225,362 59.35 Genuine Parts Company 33,693 10,000 300,181 30.02 333,874 33.39 Home Depot 764,497 75,000 1,602,252 21.36 2,366,749 31.56 IMS Health, Inc. (598,059) 400,000 6,784,991 16.96 6,186,932 15.47 Intel Corporation 682,532 1,150,000 21,347,204 18.56 22,029,736 19.16 Invitrogen Corporation 1,535,927 175,000 4,925,171 28.14 6,461,098 36.92 JDS Uniphase Corporation 307,803 1,000,000 2,544,210 2.54 2,852,013 2.85 KLA Instruments Corporation 195,821 25,000 666,825 26.67 862,646 34.51 LSI Logic Corporation (3,160,504) 1,200,000 9,204,944 7.67 6,044,440 5.04 Lam Research Corporation 15,338 5,000 45,750 9.15 61,088 12.22 Longs Drug Stores Corporation 66,647 25,000 494,622 19.78 561,269 22.45 McKesson Corporation (2,598,856) 350,000 11,116,580 31.76 8,517,724 24.34 MedImmune, Inc. 997,571 175,000 4,106,780 23.47 5,104,351 29.17 Mentor Graphics Corporation 517,132 1,200,000 11,559,731 9.63 12,076,863 10.06 Micron Technology, Inc. (198,281) 200,000 1,969,198 9.85 1,770,917 8.85 Nokia Corporation - ADR 380,896 550,000 8,888,439 16.16 9,269,335 16.85 Novellus Systems 1,294,114 560,000 15,037,574 26.85 16,331,688 29.16 NVIDIA Corporation 515,614 550,000 6,787,431 12.34 7,303,045 13.28 ONYX Software Corporation (1,560,289) 800,000 2,424,262 3.03 863,973 1.08 Plantronics, Inc. 394,936 75,000 999,375 13.33 1,394,311 18.59 SEI Corporation (117,711) 370,000 10,244,004 27.69 10,126,293 27.37 Siebel Systems, Inc. 15,922 100,000 908,050 9.08 923,972 9.24 Solectron Corporation (211,006) 50,000 413,000 8.26 201,994 4.04 SonicWALL, Inc. (12,805,086) 2,500,000 21,888,359 8.76 9,083,273 3.63 Synopsys, Inc. 132,323 20,000 805,719 40.29 938,042 46.90 TECO Energy, Inc. (813,719) 250,000 3,381,169 13.52 2,567,450 10.27 Target Corporation 223,110 50,000 1,493,335 29.87 1,716,445 34.33 Vitesse Semiconductor Corporation (3,726,397) 4,000,000 15,887,873 3.97 12,161,476 3.04 Xilinx, Inc. 39,206 50,000 1,098,950 21.98 1,138,156 22.76 - -------------------------------------------------------------------------------------------------------------------------------- Total $ (9,918,915) $327,235,605 $317,316,690
Page 8 of 18 THE PARNASSUS FUND PORTFOLIO OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF JUNE 30, 2003 (UNAUDITED)
Percent of Shares Common Stocks Net Assets Market Value - -------------------------------------------------------------------------------------------------------- FINANCIAL SERVICES 275,000 Synovus Financial Corp.(2) 1.7% $ 5,912,500 INDUSTRIAL 100,000 Baldor ElectricCompany 0.6% $ 2,060,000 INSURANCE BROKER 75,000 Arthur J. Gallagher & Co.(2) 0.6% $ 2,040,000 PHARMACEUTICAL 200,000 Johnson & Johnson 10,340,000 150,000 MedImmune, Inc.(1) 5,455,500 370,000 Pfizer Inc. 12,635,500 8.1% $ 28,431,000 RETAIL 200,000 Costco Wholesale Corporation(1) 7,320,000 400,000 Gap, Inc.(2) 7,504,000 200,000 The Home Depot, Inc. 6,624,000 200,000 Longs Drug Stores Corp. 3,320,000 300,000 Target Corporation 11,352,000 10.3% $ 36,120,000 Total investment in common stocks (cost $60,608,988) 21.3% $ 74,563,500
Principal Amount Short-Term Investments - -------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY DISCOUNT NOTES $22,000,000 Federal National Mortgage Association Zero Coupon,1.140% equivalent, matures 07/07/03 $ 21,995,820 60,000,000 Federal Home Loan Bank Zero Coupon,1.160% equivalent, matures 07/11/032 59,884,000 29,000,000 Federal Home Loan Bank Zero Coupon,0.900% equivalent, matures 07/21/03 28,985,500 26,000,000 Federal Home Loan Bank Zero Coupon,1.100% equivalent, matures 07/24/03 25,981,728 26,000,000 Federal National Mortgage Association Zero Coupon, 1.130% equivalent, matures 08/06/03 25,970,620 20,000,000 Federal National Mortgage Association Zero Coupon,1.140% equivalent, matures 08/13/03 19,972,767 22,000,000 Federal National Mortgage Association Zero Coupon,1.160% equivalent, matures 08/27/03 21,959,593 20,000,000 Federal Home Loan Bank Zero Coupon,1.020% equivalent, matures 09/03/03 19,963,733 Total (cost $224,713,761) 64.2% $224,713,761
Page 9 of 18
Principal Percent of Amount Short-Term Investments Net Assets Market Value - -------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS $ 922,082 Bank of America Securities LLC Triparty RepurchaseAgreement (Repurchase agreement with The Bank of New York dated 06/30/03, effective yield is 1.440% matures 07/01/03, (3) collateralized by Bank of America MortgageSecurities CMO, par value $922,082, 04/25/33, total market value $922,082) (cost $922,082) 0.3% $ 922,082 CERTIFICATES OF DEPOSIT (4) 100,000 Albina Community Capital Bank 1.550%, matures 01/24/04 97,734 100,000 Community Capital Bank 1.580%, matures 02/05/04 97,591 103,304 Community Bank of the Bay 1.887%, matures 09/04/03 102,557 100,000 Wainwright Bank & Trust Co. 2.030%, matures 10/23/03 98,741 100,000 Vermont Development Credit Union 1.950%, matures 04/25/04 96,716 36,275 Self Help Credit Union 1.329%, matures 01/15/04 35,486 100,000 South Shore Bank Cleveland 1.610%, matures 11/02/03 98,632 100,000 Louisville Community Development Bank 1.150%, matures 05/10/04 96,573 Total (cost $739,579) 0.2% $ 724,030 REGISTERED INVESTMENT COMPANIES - MONEY MARKET FUNDS $13,790,267 Goldman Sachs FS Government Fund variable rate 0.990% $ 13,790,267 13,803,325 Janus Government Fund variable rate 1.090% 13,803,325 50,852 Scudder Government Fund variable rate 0.910% 50,852 Total (cost $27,644,444) 7.9% $ 27,644,444 COMMERCIAL PAPER 5,000,000 Four Winds Funding variable rate 1.550%, matures 07/01/033 (cost $4,999,785) 1.4% $ 4,999,785 FLOATING RATE SECURITIES 2,500,000 American Honda Finance variable rate 1.270%, matures 07/09/033 2,499,250 3,000,000 Bear Stearns Co. FO MTN variable rate 1.505%, matures 02/03/043 3,000,000 2,500,000 Washington Mutual Bank, FA FCD variable rate 1.180%, matures 11/26/033 2,500,000 3,000,000 Washington Mutual Bank, FA FCD variable rate 1.170%, matures 01/16/043 3,000,000 Total (cost $10,999,250) 3.1% $ 10,999,250
Page 10 of 18
Principal Percent of Amount Short-Term Investments Net Assets Market Value - ------------------------------------------------------------------------------------------------------------ COMMUNITY DEVELOPMENT LOANS (4) $ 100,000 Vermont Community Loan Fund $ 97,370 100,000 Boston Community Loan Fund 98,455 Total (cost $200,000) 0.1% $ 195,825 Total short-term securities (cost $270,219,081) 77.2% $270,199,177 Total securities 98.5% $344,762,677 Payable upon return of securities loaned -4.8% (16,921,117) Other assets and liabilities-net 6.3% 22,119,799 - ------------------------------------------------------------------------------------------------------------ Total net assets 100.0% $349,961,359
(1) These securities are non-income producing. (2) This security or partial position of this security is on loan at June 30, 2003 (See Note 1). The total value of securities on loan at June 30, 2003 was $16,556,494. (3) This security was purchased with cash collateral held from securities lending. (4) Market value adjustments have been made on these securities to reflect early withdrawal/call penalties. Fund holdings will vary over time. Fund shares are not FDIC insured. Page 11 of 18 THE PARNASSUS FUND STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2003 (UNAUDITED) Assets Cash $ 21,801,166 Investments in securities, at market value (identified cost $60,608,988) (Note 1) 74,563,500 Temporary investments in short-term securities (identified cost $270,219,081) 270,199,177 Receivables: Dividends and interest 222,370 Capital shares sold 140,107 Securities sold 439,345 Other assets 23,073 Total assets $ 367,388,738 Liabilities Payable upon return of securities loaned 16,921,117 Capital shares redeemed 331,967 Other liabilities 174,295 Total liabilities $ 17,427,379 Net assets (equivalent to $29.65 per share based on 11,802,461 shares of capital stock outstanding) $ 349,961,359 Net assets consisting of Undistributed net investment income $ 823,864 Unrealized appreciation on securities 13,954,512 Undistributed net realized loss (68,317,575) Capital paid-in 403,500,558 Total net assets $ 349,961,359 Computation of net asset value and offering price per share Net asset value and redemption price per share ($349,961,359 divided by 11,802,461 shares) $ 29.65 Offering price per share (100/96.5 of $29.65) $ 30.73
+ On investments of $15,000 or more, the sales charge is reduced as stated in the prospectus in the section entitled "How to Purchase Shares". Page 12 of 18 THE PARNASSUS FUND STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED) Investment income Dividends $ 769,133 Interest 665,162 Other income 0 Total investment income $ 1,434,296 Expenses Investment advisory fees (Note 5) 1,054,146 Transfer agent fees (Note 5) 249,735 Fund administration (Note 5) 40,000 Service provider fees (Note 5) 97,899 Reports to shareholders (Note 5) 64,405 Registration fees and expenses 17,268 Custody fees 37,323 Professional fees 24,057 Trustee fees and expenses 16,757 Other expenses (Note 5) 55,011 Total expenses $ 1,656,600 Fees paid indirectly (Note 5) (24,205) Net expenses 1,632,395 Net investment loss $ (198,099) Realized and unrealized gain on investments Realized gain from securitytransactions: Proceeds from sales 679,678,139 Cost of securities sold (689,352,277) Net realized loss $ (9,674,138) Change in unrealized appreciation of securities: Beginning of period (40,254,364) End of period 13,954,512 Net change in unrealized appreciation of securities $ 54,208,876 Net realized and unrealized gain on securities $ 44,534,738 Net increase in net assets resulting from operations $ 44,336,639
Page 13 of 18 THE PARNASSUS FUND STATEMENTS OF CHANGES IN NET ASSETS SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2002
SIX MONTHS ENDED YEAR ENDED JUNE 30, 2003 DECEMBER 31, 2002 From operations Net investment income (loss) $ (198,099) $ 1,567,647 Net realized loss from security transactions (9,674,138) (59,240,871) Net change in unrealized appreciation 54,208,876 (63,045,945) Increase (decrease) in net assets resulting from operations $ 44,336,639 $ (120,719,169) Dividends to shareholders From net investment income 0 0 From realized capital gains 0 (9,666,015) Increase in net assets from capital share transactions 2,417,686 28,056,290 Increase (decrease) in net assets $ 46,754,325 $ (102,328,894) Net assets Beginning of period 303,207,033 405,535,927 End of period (including undistributed net investment income of $823,864 in 2003 and $1,021,964 in 2002) $ 349,961,359 $ 303,207,033
Page 14 of 18 THE PARNASSUS FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES The Parnassus Fund (the Fund) is an open-end, diversified management investment company (mutual fund), registered under the Investment Company Act of 1940 as amended. The following is a summary of significant accounting policies of the Fund. SECURITIES VALUATIONS: Investment securities are stated at market value based on recorded closing sales on a national securities exchange or on the Nasdaq's National Market System, or in the absence of a recorded sale, and for over-the-counter securities, at the mean between the last recorded bid and asked prices. Securities without an active market are priced at their fair value, in accordance with procedures established by the Trustees. Short-term securities are money market instruments and are valued at amortized cost, which approximates market value. Certain other investments are valued each business day using independent pricing services ("Services") approved by the Board of Trustees. Investments are valued at the mean between the "bid" and "ask" prices where such quotes are readily available and are representative of the actual market for such securities. Other investments are carried at fair value as deter-mined using the Services based on methods which include consideration of (1) yields or prices of securities of comparable quality, coupon, maturity and type (2) indications as to values from dealers and (3) general market conditions. FEDERAL INCOME TAXES: It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. SECURITIES TRANSACTIONS: Securities transactions are recorded on the date the securities are purchased or sold (trade date). Realized gains and losses on security transactions are determined on the basis of first-in, first-out for both financial statement and federal income tax purposes. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS: Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Discounts and premiums on securities purchased are amortized over the lives of the respective securities using the constant yield method which approximates the interest method. Expenses are recorded on an accrual basis. Distributions to shareholders are recorded on the record date. SECURITIES LENDING: The Fund lends its securities to approved financial institutions to earn additional income and receives cash and/or securities as collateral to secure the loans. Collateral is maintained at not less than 102% of the value of loaned securities. Although the risk of lending is mitigated by the collateral, the Fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return them. Income from securities lending is included in interest income on the Statement of Operations. REPURCHASE AGREEMENTS: Securities purchased with cash collateral held from securities lending may include investments in repurchase agreements secured by U.S. government obligations or other securities. Securities pledged as collateral for repurchase agreements are held by the Funds' custodian bank until maturity of the repurchase agreements. Provisions of the agreements ensure that the market value of the collateral is sufficient in the event of default; however, in the event of default or bankruptcy by the other party to the agreements, realization and/or retention of the collateral may be subject to legal proceedings. USE OF ESTIMATES: The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. TAX MATTERS AND DISTRIBUTIONS Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatments of income and gains on various investment securities held by the Fund, timing differences and differing characterization of distributions made by the Fund. Permanent book-tax differences, if any, are not included in ending undistributed net investment income (loss) for the purposes of calculating net investment income (loss) per share in the financial highlights. Page 15 of 18 THE PARNASSUS FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. CAPITAL STOCK As of June 30, 2003 there were an unlimited number of authorized shares of capital stock, no par value. Paid-in capital aggregated $403,500,558. Transactions in capital stock (shares) were as follows:
SIX MONTHS ENDED YEAR ENDED JUNE 30, 2003 DECEMBER 31, 2002 - ---------------------------------------------------------------------------------------------------------------- Shares Amount Shares Amount - ---------------------------------------------------------------------------------------------------------------- Shares sold 1,166,909 $ 23,162,268 2,083,533 $ 67,142,688 Shares issued through dividend reinvestment -- -- 344,300 9,025,045 Shares repurchased (1,118,946) (20,744,582) (1,636,340) (48,111,443) - ---------------------------------------------------------------------------------------------------------------- Net increase 47,963 $ 2,417,686 791,493 $ 28,056,290 - ----------------------------------------------------------------------------------------------------------------
4. PURCHASES AND SALES OF SECURITIES Purchases of securities were $48,394,237 and the proceeds from securities sold was $319,937,940, for the six months ending June 30, 2003. For federal income tax purposes, the aggregate cost of securities and unrealized appreciation at June 30, 2003, are $330,828,069 and $13,954,512, respectively. Of the $13,954,512 of net unrealized appreciation at June 30, 2003, $13,954,512 is related to appreciation of securities and $0 is related to depreciation of securities. 5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Under terms of an agreement which provides for furnishing investment management and advice to the Fund, Parnassus Investments received fees payable monthly, based on the Fund's average daily net assets for the month, at an annualized rate of 1% of the first $10,000,000, 0.75% of the next $20,000,000, 0.70% of the next $70,000,000, 0.65% of the next $100,000,000, and 0.60% of the remaining balance. Fees paid by the Fund to Parnassus Investments under the agreement totaled $1,054,146 for the six months ending June 30, 2003. Under terms of a separate agreement which provides for furnishing transfer agent and fund administration services to the Fund, Parnassus Investments received fees paid by the Fund totaling $289,735 for the six months ending June 30, 2003. The transfer agent fee was $2.50 per month per account (for an aggregate amount of $249,735 for the six months ending June 30, 2003), and the fund administration fee was $6,667 per month (for an aggregate amount of $40,000 for the six months ending June 30, 2003). Parnassus Investments may also arrange for third parties to provide certain services, including account maintenance, recordkeeping and other personal services to their clients who invest in the Fund. For these services, the Fund may pay Parnassus Investments an aggregate service fee at a rate not to exceed 0.25% per annum of the Fund's average daily net assets. Parnassus Investments will not keep any of this fee for itself, but will instead use the fee to pay the third party service providers. Service provider fees paid by the Fund totaled $97,899 for the six months ending June 30, 2003 (this was 0.06% per annum of the Fund's average daily net assets). In its capacity as underwriter and general distributor of the shares of the Fund, Parnassus Investments received commissions on sales of the Fund's shares for the six months ending June 30, 2003 totaling $127,081, of which $32,203 was paid to other dealers. Commissions are deducted from the gross proceeds received from the sale of the shares of the Fund and, as such, are not expenses of the Fund. Included in the statement of operations under the caption "Custody fees" are expenses totaling $14,922 for the six months ending June 30, 2003. Included in the statement of operations under the caption "Reports to shareholders" are expenses totaling $4,808 for the six months ending June 30, 2003. Included in the statement of operations under the caption "Professional fees" are expenses totaling $2,572 for the six months ending June 30, 2003. Included in the statement of operations under the caption "Other expenses" are expenses totaling $1,903 for the six months ending June 30, 2003. These amounts, in aggregate, are $24,205 and were paid by a third-party broker-dealer on behalf of the Fund. Jerome L. Dodson is the President of the Fund and is the President and majority shareholder of Parnassus Investments. Page 16 of 18 6. FINANCIAL HIGHLIGHTS Selected data for each share of capital stock outstanding, total return and ratios/supplemental data for the six months ended June 30, 2003, and for each of the five years ended December 31 are as follows:
June 30, 2003 (unaudited) 2002 2001 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of year $ 25.79 $ 36.99 $ 39.22 $ 50.67 $ 36.24 $ 35.74 Income (loss) from investment operations: Net investment income (loss) (0.02) 0.14 0.68 0.07 (0.21) (0.06) Net realized and unrealized gain (loss) on securities 3.88 (10.51) 2.39 0.68 17.29 0.56 Total income (loss) from investment operations 3.86 (10.37) 3.07 0.75 17.08 0.50 Distributions: Dividends from net investment income -- -- (0.56) (0.08) -- -- Distributions from net realized gain on securities -- (0.83) (4.74) (12.12) (2.65) -- - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions -- (0.83) (5.30) (12.20) (2.65) -- - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value at end of period $ 29.65 $ 25.79 $ 36.99 $ 39.22 $ 50.67 $ 36.24 Total overall return* 14.97% (28.05%) 7.84% 1.98% 47.74% 1.40% Ratios/supplemental data: Ratio of expenses to average net assets 1.03% 1.00% 1.00% 0.92% 1.07% 1.10% Decrease reflected in the above expense ratios due to fees paid indirectly 0.01% 0.06% -- -- -- -- Ratio of net investment income (loss) to average net assets (0.12%) 0.45% 1.73% 0.12% (0.50%) (0.09%) Portfolio turnover rate 23.80% 142.04% 127.43% 120.58% 65.70% 99.20% Net assets, end of period (000's) $ 349,961 $ 303,207 $ 405,536 $ 360,809 $ 363,817 $ 302,762
* Total overall return figures do not adjust for the sales charge. Page 17 of 18 INVESTMENT ADVISER Parnassus Investments One Market-Steuart Tower #1600 San Francisco, California 94105 LEGAL COUNSEL Foley & Lardner 777 E. Wisconsin Avenue Milwaukee, WI 53202 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 THE PARNASSUS FUND One Market-Steuart Tower Suite1600 San Francisco, California 94105 415-778-0200 800-999-3505 www.parnassus.com This report must be preceded or accompanied by a current prospectus. Page 18 of 18 Item 2: Code of Ethics - Not applicable to this semi-annual report. Item 3: Audit Committee Financial Expert - Not applicable to this semi-annual report. Item 4: Principal Accountant Fees and Services - Not applicable to this semi-annual report. Item 5: Not applicable. Item 6: Reserved. Item 7: Not applicable. Item 8: Reserved. Item 9: Controls and Procedures. (a) Based on the evaluation of the Parnassus Fund's disclosure controls and procedures as of August 7, 2003, these controls and procedures are effective in providing reasonable assurance, that the information required to be disclosed on Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission. (b) There were no significant deficiencies or material weaknesses in the Parnassus Fund's (the Fund) internal controls subsequent to the date of evaluation. However, the Fund is in the midst of an accounting software change. As a result, internal controls are being evaluated and changed as necessary, on an ongoing basis as the system evolves. Item 10: Exhibits attached hereto. Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) The Parnassus Fund By: /s/ Jerome L. Dodson ---------------------------------- Jerome L. Dodson President Date: August 18, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Jerome L. Dodson -------------------------------- Jerome L. Dodson President Date: August 18, 2003 By: /s/ Bryant Cherry -------------------------------- Bryant Cherry Vice President Date: August 18, 2003 EX-99.CERT 3 f92617exv99wcert.txt SECTION 302 CERTIFICATIONS EXHIBIT 99. CERT I, Jerome Dodson, certify that: 1. I have reviewed this report on Form N-CSRS of the Parnassus Fund; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a)designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b)evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c)presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of trustees: a)all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. August 18, 2003 Jerome L. Dodson President EXHIBIT 99. CERT I, Bryant Cherry, certify that: 1. I have reviewed this report on Form N-CSRS of the Parnassus Fund; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a)designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b)evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c)presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of trustees: a)all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. August 18, 2003 Bryant Cherry Vice President EX-99.906CERT 4 f92617exv99w906cert.txt SECTION 906 CERTIFICATIONS EXHIBIT 99.906 CERT Certification Pursuant to Section 906 of the Sarbanes-Oxley Act Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of The Parnassus Fund, hereby certifies, to such officer's knowledge, that the report on Form N-CSRS of The Parnassus Fund for the period ended June 30, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form N-CSRS fairly presents, in all material respects, the financial condition and results of operations of The Parnassus Fund. Jerome L. Dodson Chief Executive Officer, The Parnassus Fund August 18, 2003 Bryant Cherry Chief Financial Officer, The Parnassus Fund August 18, 2003 A signed original of this written statement required by Section 906 has been provided to The Parnassus Fund and will be retained by The Parnassus Fund and furnished to the SEC or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----