N-Q 1 v027447_nq.htm

THE PARNASSUS FUNDS


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-04044

The Parnassus Funds
(Exact name of registrant as specified in charter)

One Market—Steuart Tower #1600, San Francisco, California 94105
(Address of principal executive offices) (Zip code)

Debra A. Early
The Parnassus Funds
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: September 30, 2005
 
 
ITEM 1. SCHEDULE OF INVESTMENTS.
 
THE PARNASSUS FUND
 
PORTFOLIO OF INVESTMENTS BY INDUSTRY CLASSIFICATION, SEPTEMBER 30, 2005 - UNAUDITED

   
Percent of
      
Shares
Common Stocks
Net Assets
  
Market Value
  
 
APPAREL
        
550,000
Ross Stores Inc.
4.5%
$
13,035,000
  
           
 
BIOTECHNOLOGY
        
175,000
Amgen Inc. 1
4.8%
$
13,942,250
  
           
 
COMPUTER PERIPHERALS
        
100,000
Adaptec Inc. 1, 2
0.1%
$
383,000
  
           
 
COMPUTERS
        
50,000
International Business Machines Corp.
  
$
4,011,000
  
100,000
Lexmark International Inc. 1
    
6,105,000
  
500,000
Radisys Corp. 1, 2
    
9,700,000
  
   
6.9%
$
19,816,000
  
           
 
CONSUMER PRODUCTS
        
175,000
Avon Products Inc.
1.6%
$
4,725,000
  
           
 
ELECTRONIC INSTRUMENTS
        
675,000
Agere Systems Inc. 1, 2
  
$
7,026,750
  
600,000
Vishay Intertechnology Inc. 1
    
7,170,000
  
   
4.9%
$
14,196,750
  
           
 
FINANCIAL SERVICES
        
225,000
Automatic Data Processing
  
$
9,684,000
  
950,000
Charles Schwab Corp.
    
13,708,500
  
10,000
E*Trade Financial Corp. 1
    
176,000
  
   
8.2%
$
23,568,500
  
           
 
HEALTH CARE SERVICES
        
5,000
Health Management Associates Inc.
0.0%
$
117,350
  
           
 
INDUSTRIAL
        
200,000
3M Co.
5.1%
$
14,672,000
  
           
 
INSURANCE
        
100,000
AFLAC Inc.
  
$
4,530,000
  
10,000
WR Berkley Corp. 2
    
394,800
  
   
1.7%
$
4,924,800
  
           
 
INSURANCE BROKER
        
250,000
Arthur J. Gallagher & Co. 2
2.5%
$
7,202,500
  
           
 
INTERNET
        
1,000
eBay Inc. 1
0.0%
$
41,200
  
           
 
MEDICAL EQUIPMENT
        
500,000
Boston Scientific Corp. 1
4.1%
$
11,685,000
  
           
 
MICROELECTRONICS
        
10,000
Applied Materials Inc.
  
$
169,600
  
300,000
Credence Systems Corp. 1, 2
    
2,394,000
  
5,000
Cymer Inc. 1, 2
    
156,600
  
180,000
Electro Scientific Industries Inc. 1, 2
    
4,024,800
  
10,000
Teradyne Inc. 1, 2
    
165,000
  
   
2.4%
$
6,910,000
  
           
 
PACKAGED FOODS
        
125,000
Hain Celestial Group Inc. 1, 2
0.8%
$
2,425,000
  
           
 
PHARMACEUTICALS
        
300,000
Connetics Corp. 1, 2
  
$
5,073,000
  
600,000
Pfizer Inc.
    
14,982,000
  
   
7.0%
$
20,055,000
  
           
 
PUBLISHING
        
125,000
Gannett Co.
  
$
8,603,750
  
250,000
Knight-Ridder Inc. 2
    
14,670,000
  
   
8.1%
$
23,273,750
  
           
 
RETAIL
        
1,000
Costco Wholesale Corp.
  
$
43,090
  
350,000
Ethan Allen Interiors Inc. 2
    
10,972,500
  
450,000
Family Dollar Stores
    
8,941,500
  
450,000
The Gap Inc.
    
7,843,500
  
25,000
Home Depot Inc.
    
953,500
  
225,000
Mattel Inc.
    
3,753,000
  
250,000
Petco Animal Supplies Inc. 1, 2
    
5,290,000
  
370,000
Pier 1 Imports Inc. 2
    
4,169,900
  
260,000
Restoration Hardware Inc. 1, 2
    
1,643,200
  
500,000
TJX Companies Inc.
    
10,240,000
  
   
18.8%
$
53,850,190
  
           
 
SEMICONDUCTORS
        
10,000
Altera Corporation 1
  
$
191,100
  
750,000
Integrated Device Technology Inc. 1, 2
    
8,055,000
  
360,000
Lattice Semiconductor Corp. 1
    
1,540,800
  
5,000
Sigmatel Inc. 1, 2
    
101,200
  
15,000
Xilinx Inc.
    
417,750
  
   
3.6%
$
10,305,850
  
           
 
SERVICES
        
20,000
Alliance Data Systems Corp. 1
  
$
783,000
  
1,000
CDW Corp.
    
58,920
  
   
0.3%
$
841,920
  
           
 
SOFTWARE
        
180,000
Electronics For Imaging 1, 2
  
$
4,129,200
  
20,000
Hyperion Solutions Corp. 1, 2
    
973,000
  
1,600,000
Mentor Graphics Corp. 1, 2
    
13,760,000
  
   
6.5%
$
18,862,200
  
           
 
TELECOM EQUIPMENT
        
600,000
Cisco Systems Inc. 1
  
$
10,758,000
  
25,000
Leap Wireless International Inc. 1, 2
    
880,000
  
   
4.0%
$
11,638,000
  
           
 
Total investement in common stocks
 
 
 
  
 
(cost $286,934,148)
95.9%
$
276,471,260 
  

Principal
  
Percent of
      
Amount
Short-Term Investments
Net Assets
  
Market Value
  
 
Certificates of Deposit 3
        
$     100,000
 Albina Community Capital Bank
       
 
 2.160%, matures 01/24/06
 
$
98,733
  
100,000
 Community Bank of the Bay
       
 
 3.730%, matures 09/06/06
   
96,274
  
100,000
 Community Capital Bank
       
 
 2.750%, matures 02/05/06
   
98,608
  
100,000
 Louisville Community Development Bank
       
 
 2.500%, matures 05/10/06
   
97,578
  
100,000
 Opportunity Credit Union
       
 
 2.600%, matures 04/25/06
   
97,743
  
100,000
 Self Help Credit Union
       
 
 1.500%, matures 01/14/06
   
98,881
  
100,528
 South Shore Bank Cleveland
       
 
 2.200%, matures 11/02/05
   
99,712
  
100,000
 Wainwright Bank & Trust Co.
       
 
 1.930%, matures 11/04/05
   
99,628
  
   
0.3%
$
787,157
  
           
 
Registered Investment Companies -
        
 
Money Market Funds
        
1,001,446
 Evergreen U.S. Government Fund
        
 
 variable rate 3.460%
  
$
1,001,446
  
14,076
 Goldman Sachs FS Government Fund
       
 
 variable rate 3.550%
   
14,076
  
52,689
 Scudder Government Fund
       
 
 variable rate 3.560%
   
52,689
  
1,057,689
 SSGA U.S. Government Fund
       
 
 variable rate 3.320%
   
1,057,689
  
   
0.7%
$
2,125,900
  
           
 
Community Development Loans 3
        
100,000
 Boston Community Loan Fund
        
 
 2.000%, matures 06/30/06
 
$
95,529
  
100,000
 Boston Community Loan Fund
        
 
 2.000%, matures 06/30/06
   
95,529
  
100,000
 Vermont Community Loan Fund
        
 
 2.000%, matures 12/07/05
   
98,899
  
   
0.1%
$
289,957
  
           
 
Securities Purchased with Cash
        
 
Collateral from Securities Lending
        
           
 
Registered Investment Companies
        
57,870,826
State Street Navigator
        
 
Securities Lending
       
 
Prime Portfolio
        
 
variable rate 3.770%
20.0%
$
57,870,826
  
           
 
Total investment in short-term securities
        
 
(cost $61,073,840)
21.1%
$
61,073,840
  
           
 
Total securities
        
 
(cost $348,007,988)
117.0%
$
337,545,100
  
           
 
Payable upon return of securities loaned
-20.0%
$
(57,870,826
)
           
 
Other assets and liabilities - net
3.0%
  
8,724,938
  
 
Total net assets
100.0%
$
288,399,212
  


(1) These securities are non-income producing.
         
(2) This security or partial position of this security was on loan at September 30, 2005
The total value of the securities on loan at September 30, 2005 was $56,297,679.
         
(3) Market value adjustments have been applied to these securities to reflect early withdrawl/call penalties.
 
        
The portfolio of investments as of September 30, 2005 has not been audited. This report is provided for the general information of the fund's shareholders. For more information regarding the fund, portfolio holdings and other significant accounting policies, please see the fund's most recent prospectus and annual report.
 
Income Taxes:
      
At September 30, 2005, the net unrealized appreciation (depreciation) based on the
      
cost of investments for income tax purposes was as follows:
      
   
Parnassus
 
   
Fund
 
       
Cost of investments
  
$
348,035,972
  
Unrealized appreciation
  
$
15,486,211
  
Unrealized depreciation
    
(25,977,083
)
         
Net unrealized appreciation (depreciation)
  
$
(10,490,872
)

Fund holdings will vary over time.
 
Fund shares are not FDIC insured.
 
 
 
THE PARNASSUS WORKPLACE FUND
 
PORTFOLIO OF INVESTMENTS BY INDUSTRY CLASSIFICATION, SEPTEMBER 30, 2005 - UNAUDITED
 
Shares
Common Stocks
Percent of
Net Assets
  
Market Value
  
           
 
BANKING
        
100
First Horizon National Corp.
0.4%
$
3,635
  
           
 
BIOTECHNOLOGY
        
200
Amgen Inc. 1
1.8%
$
15,934
  
           
 
COMPUTERS
        
100
International Business Machines Corp.
0.9%
$
8,022
  
           
 
CONSUMER PRODUCTS
        
1,500
Avon Products Inc.
4.7%
$
40,500
  
           
 
FINANCIAL SERVICES
        
200
SEI Investments Co.
0.9%
$
7,516
  
           
 
INDUSTRIAL
        
600
3M Co.
  
$
44,016
  
1,000
Baldor Electric
    
25,350
  
300
Wd-40 Co.
    
7,953
  
   
8.9%
$
77,319
  
           
 
INSURANCE
        
100
AFLAC Inc.
0.5%
$
4,530
  
           
 
INTERNET
        
100
eBay Inc. 1
0.5%
$
4,120
  
           
 
LODGING
        
100
Four Seasons Hotels Inc.
0.7%
$
5,740
  
           
 
PACKAGED FOODS
        
100
JM Smucker Co.
0.6%
$
4,854
  
           
 
PHARMACEUTICALS
        
1,000
Pfizer Inc.
2.9%
$
24,970
  
           
 
RETAIL
        
100
Costco Wholesale Corp.
  
$
4,309
  
2,200
The Gap Inc.
    
38,346
  
   
4.9%
$
42,655
  
           
 
SEMICONDUCTORS
        
100
Xilinx Inc.
0.3%
$
2,785
  
           
 
SOFTWARE
        
100
Hyperion Solutions Corp. 1
  
$
4,865
  
3,500
Mentor Graphics Corp. 1
    
30,100
  
100
Symantec Corp. 1
    
2,266
  
   
4.3%
$
37,231
  
           
 
TELECOM EQUIPMENT
        
2,100
Cisco Systems Inc. 1
4.3%
$
37,653
  
           
 
Total investment in common stocks
        
 
(cost $318,050)
36.6%
$
317,464
  
 
Principal
  
Percent of
      
Amount $
Short-Term Investments
Net Assets
  
Market Value
  
 
Registered Investment Companies-
        
 
Money Market Funds
        
           
40,163
Janus Government Fund
        
 
variable rate 3.720%
  
$
40,163
  
           
40,152
SSGA U.S. Government Money Market Fund
        
 
variable rate 3.320%
    
40,152
  
           
 
Total short-term securities
        
 
(cost $80,315)
9.2%
$
80,315
  
           
 
Total securities
        
 
(cost $398,365)
45.8%
$
397,779
  
           
 
Other assets and liabilities - net
54.2%
$
469,793
  
 
Total net assets
100.0%
$
867,572
  
 

1 These securities are non-income producing.
       
The portfolio of investments as of September 30, 2005 has not been audited. This report is provided for the general information of the fund's shareholders. For more information regarding the fund, portfolio holdings and other significant accounting policies, please see the fund's most recent prospectus and annual report.
 
      
 
Income Taxes:
      
At September 30, 2005, the net unrealized appreciation (depreciation) based on the
      
cost of investments for income tax purposes was as follows:
      
   
Workplace
 
   
Fund
 
       
Cost of investments
  
$
398,365
  
Unrealized appreciation
  
$
10,169
  
Unrealized depreciation
    
(10,755
)
         
Net unrealized appreciation (depreciation)
  
$
(586
)

Fund holdings will vary over time.
 
Fund shares are not FDIC insured.
 
 
 
THE PARNASSUS SMALL-CAP FUND
 
PORTFOLIO OF INVESTMENTS BY INDUSTRY CLASSIFICATION, SEPTEMBER 30, 2005 - UNAUDITED
 

   
Percent of
      
Shares
Common Stocks
Net Assets
  
Market Value
  
 
BIOTECHNOLOGY
        
100
Abgenix Inc. 1
0.2%
$
1,268
  
           
 
COMPUTER PERIPHERALS
        
1,000
Adaptec Inc. 1
0.5%
$
3,830
  
           
 
COMPUTERS
        
1,200
Radisys Corp. 1
3.3%
$
23,280
  
           
 
ELECTRONIC INSTRUMENTS
        
300
Actel Corp. 1
  
$
4,338
  
3,200
Agere Systems Inc. 1
    
33,312
  
300
Plantronics Inc.
    
9,243
  
3,000
Vishay Intertechnology Inc. 1
    
35,850
  
   
11.7%
$
82,743
  
           
 
INDUSTRIAL
        
600
WD-40 Co.
2.2%
$
15,906
  
           
 
INSURANCE BROKER
        
600
Arthur J. Gallagher & Co.
2.4%
$
17,286
  
           
 
MICROELECTRONICS
        
2,500
Credence Systems Corp. 1
  
$
19,950
  
1,200
Electro Scientific Industries Inc. 1
    
26,832
  
   
6.7%
$
46,782
  
           
 
PACKAGED FOODS
        
300
Hain Celestial Group Inc. 1
0.8%
$
5,820
  
           
 
PHARMACEUTICALS
        
1,400
Connetics Corp. 1
3.3%
$
23,674
  
           
 
RETAIL
        
500
Ethan Allen Interiors Inc.
  
$
15,675
  
1,400
Petco Animal Supplies Inc. 1
    
29,624
  
2,000
Pier 1 Imports Inc.
    
22,540
  
1,000
Restoration Hardware Inc. 1
    
6,320
  
   
10.5%
$
74,159
  
           
 
SEMICONDUCTORS
        
4,600
Integrated Device Technology Inc. 1
  
$
49,404
  
2,700
Lattice Semiconductor Corp. 1
    
11,556
  
200
Sigmatel Inc. 1
    
4,048
  
   
9.3%
$
65,008
  
           
 
SERVICES
        
800
Convergys Corp. 1
1.6%
$
11,496
  
           
 
SOFTWARE
        
100
Hyperion Solutions Corp. 1
  
$
4,865
  
4,000
Mentor Graphics Corp. 1
    
34,400
  
   
5.5%
$
39,265
  
           
 
TELECOM EQUIPMENT
        
3,000
JDS Uniphase Corp. 1
  
$
6,660
  
300
Leap Wireless International Inc. 1
    
10,560
  
   
2.4%
$
17,220
  
 
Total investement in common stocks
        
 
(cost of $425,613)
60.4%
$
427,737
  
 
Principal
  
Percent of
      
Amount
Short-Term Investments
Net Assets
  
MarketValue
  
 
Registered Investment Companies -
       
 
Money Market Funds
        
           
$       30,780
Janus Government Fund
        
 
variable rate 3.720%
  
$
30,780
  
           
30,001
SSGA U.S. Government Money Market Fund
        
 
variable rate 3.320%
    
30,001
  
           
           
 
Total short-term securities
        
 
(cost $60,781)
8.5%
$
60,781
  
           
 
Total securities
        
 
(cost $486,394)
68.9%
$
488,518
  
           
 
Other assets and liabilities - net
31.1%
$
220,007
  
 
Total net assets
100.0%
$
708,525
  
 
(1) These securities are non-income producing.
 
The portfolio of investments as of September 30, 2005 has not been audited. This report is provided for the general information of the fund's shareholders. For more information regarding the fund, portfolio holdings and other significant accounting policies, please see the fund's most recent prospectus and annual report.
 
 
Income Taxes:
      
At September 30, 2005, the net unrealized appreciation (depreciation) based on the
      
cost of investments for income tax purposes was as follows:
      
   
Small-Cap
 
   
Fund
 
       
Cost of investments
  
$
486,408
  
Unrealized appreciation
  
$
19,276
  
Unrealized depreciation
    
(17,166
)
         
Net unrealized appreciation (depreciation)
  
$
2,110
  

Fund holdings will vary over time.
 
Fund shares are not FDIC insured.
 
 
THE PARNASSUS MID-CAP FUND
 
PORTFOLIO OF INVESTMENTS BY INDUSTRY CLASSIFICATION, SEPTEMBER 30, 2005 - UNAUDITED
 

Shares
Common Stocks
Percent of Net Assets
  
Market Value
  
           
 
APPAREL
        
900
Limited Brands Inc.
  
$
18,387
  
100
Liz Claiborne, Inc.
    
3,932
  
1,100
Ross Stores Inc.
    
26,070
  
   
8.8%
  
48,389
  
           
 
COMPUTERS
        
500
Lexmark International Inc. 1
5.5%
$
30,525
  
           
 
COMPUTER PERIPHERALS
        
100
Solectron Corp. 1
0.1%
$
391
  
           
 
ELECTRONIC INSTRUMENTS
        
100
Diebold, Inc.
0.6%
$
3,446
  
           
 
FINANCIAL SERVICES
        
100
Charles Schwab Corp.
  
$
1,443
  
100
SEI Investments Co.
    
3,758
  
   
0.9%
$
5,201
  
           
 
HEALTH CARE PRODUCTS
        
300
Kinetic Concepts Inc. 1
3.1%
$
17,040
  
           
 
HOME PRODUCTS
        
400
Masco Corp.
2.2%
$
12,272
  
           
 
INSURANCE
        
100
Jefferson-Pilot Corp.
  
$
5,117
  
200
WR Berkley Corp.
    
7,896
  
   
2.4%
$
13,013
  
           
 
MACHINERY
        
200
The Stanley Works
1.7%
$
9,336
  
           
 
OFFICE EQUIPMENT
        
300
Pitney Bowes Inc.
2.3%
$
12,522
  
           
 
PUBLISHING
        
100
Dow Jones & Co, Inc.
  
$
3,819
  
500
Knight-Ridder Inc.
    
29,340
  
   
6.0%
$
33,159
  
           
 
RETAIL
        
1,500
Family Dollar Stores
  
$
29,805
  
600
Foot Locker Inc.
    
13,164
  
1,000
Mattel, Inc.
    
16,680
  
1,400
TJX Companies Inc.
    
28,672
  
   
16.0%
$
88,321
  
           
 
SEMICONDUCTORS
        
100
Micron Technology Inc. 1
  
$
1,330
  
200
Xilinx Inc.
    
5,570
  
   
1.3%
$
6,900
  
           
 
SERVICES
        
300
Alliance Data Systems Corp. 1
2.1%
$
11,745
  
           
 
TELECOM EQUIPMENT
        
200
Leap Wireless International Inc. 1
  
$
7,040
  
100
Tellabs Inc. 1
    
1,052
  
   
1.5%
$
8,092
  
 
Total investment in common stocks
        
 
(cost of $308,651)
54.5%
$
300,352
  
 
Principal
  
Percent of
      
Amount
Short-Term Investments
Net Assets
  
Market Value
  
 
Registered Investment Companies -
       
 
Money Market Funds
        
           
$        25,113
Janus Government Fund
        
 
variable rate 3.720%
  
$
25,113
  
           
23,329
SSGA U.S. Government Money Market Fund
        
 
variable rate 3.320%
    
23,329
  
           
           
 
Total short-term securities
        
 
(cost $48,442)
8.8%
$
48,442
  
           
 
Total securities
        
 
(cost $357,093)
63.3%
$
348,794
  
           
 
Other assets and liabilities - net
36.7%
$
202,114
  
 
Total net assets
100.0%
$
550,908
  
 

(1) These securities are non-income producing.
 
The portfolio of investments as of September 30, 2005 has not been audited. This report is provided for the general information of the fund's shareholders. For more information regarding the fund, portfolio holdings and other significant accounting policies, please see the fund's most recent prospectus and annual report.

Income Taxes:
      
At September 30, 2005, the net unrealized appreciation (depreciation) based on the
      
cost of investments for income tax purposes was as follows:
      
   
Mid-Cap
 
   
Fund
 
       
Cost of investments
  
$
357,093
  
Unrealized appreciation
  
$
6,841
  
Unrealized depreciation
    
(15,140
)
         
Net unrealized appreciation (depreciation)
  
$
(8,299
)
 
Fund holdings will vary over time.
 
Fund shares are not FDIC insured.
 
 
ITEM 2. CONTROLS AND PROCEDURES.

(a) The Registrant’s Principal Executive Officer and Principal Financial Officer concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))) were effective as of a date within 90 days prior to the filing date of this report (the “Evaluation Date”), based on their evaluation of the effectiveness of the Registrant’s disclosure controls and procedures as of the Evaluation Date.

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d)) that occurred during the Registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

ITEM 3. EXHIBITS.

The certification of Principal Executive Officer and the certification of Principal Financial Officer of the Registrant as required by Rule 30a-2(a) under Act (17 CFR 270.30a-2(a)) is attached hereto as Exhibit 99.CERT.

SIGNATURES

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 Funds
 
         
By: /s/ Jerome L. Dodson      
 
Jerome L. Dodson
President (as Principal Executive Officer)
    
         
Date: November 18, 2005      
 
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 (as Principal Executive Officer)
    
         
Date: November 18, 2005      
 
 
         
By: /s/ Debra A. Early      
 
Debra A. Early
Treasurer (as Principal Financial Officer)
    
         
Date: November 18, 2005