N-Q 1 v115676_n-q.htm
 

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

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

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

Marc C. Mahon
Parnassus Funds
One Market - Steuart Tower Suite 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: March 31, 2008
 
 
THE PARNASSUS FUND

Portfolio of Investments as of March 31, 2008 - UNAUDITED

Shares
  
Equities
Percent of
Net Assets
    
Market Value
  
               
   
Childcare Services
          
135,000
  
Bright Horizons Family Solutions Inc. 1, 2
2.3%
  
$
5,810,400
  
         
 
    
   
Communications Equipment
    
 
    
150,000
  
QUALCOMM Inc.
2.4%
  
$
6,150,000
  
         
 
    
   
Computer Peripherals
    
 
    
50,000
  
Seagate Technology
0.4%
  
$
1,047,000
  
         
 
    
   
Consulting Services
    
 
    
44,000
  
Cognizant Technology Solutions Corp. 1, 2
0.5%
  
$
1,268,520
  
         
 
    
   
Data Storage
    
 
    
240,000
  
NetApp Inc. 1
1.9%
  
$
4,812,000
  
               
   
Electronics
          
50,000
  
Plantronics Inc.
0.4%
  
$
965,500
  
               
   
Financial Services
          
75,000
  
American Express Co.
    
$
3,279,000
  
290,000
  
First Horizon National Corp.
    
 
4,062,900
  
165,000
  
Freddie Mac
    
 
4,177,800
  
7,000
  
Goldman Sachs Group Inc.
    
 
1,157,730
  
10,000
  
JPMorgan Chase & Co.
    
 
429,500
  
10,000
  
Paychex Inc.
      
342,600
  
200,000
  
SLM Corp. 1
    
 
3,070,000
  
80,000
  
Wells Fargo & Co.
    
 
2,328,000
  
     
7.4%
  
$
18,847,530
  
         
 
    
   
Food Products
    
 
    
45,000
  
Sysco Corp.
0.5%
  
$
1,305,900
  
         
 
    
   
Healthcare Products
    
 
    
40,000
  
Johnson & Johnson
1.0%
  
$
2,594,800
  
         
 
    
   
Healthcare Services
    
 
    
135,000
  
Chemed Corp. 2
2.2%
  
$
5,697,000
  
         
 
    
   
Home Builders
    
 
    
350,000
  
DR Horton Inc. 2
    
$
5,512,500
  
450,000
  
Pulte Homes Inc. 2
    
 
6,547,500
  
100,000
  
Toll Brothers Inc. 1, 2
    
 
2,348,000
  
     
5.6%
  
$
14,408,000
  
         
 
    
   
Home Products
    
 
    
30,000
  
WD-40 Co. 2
0.4%
  
$
997,500
  
         
 
    
   
Industrial Manufacturing
    
 
    
10,000
  
Illinois Tool Works Inc.
    
$
482,300
  
160,000
  
Teleflex Inc.
    
 
7,633,600
  
     
3.2%
  
$
8,115,900
  
         
 
    
   
Insurance
    
 
    
290,000
  
Tower Group Inc. 2
2.8%
  
$
7,299,300
  
         
 
    
   
Internet
    
 
    
60,000
  
eBay Inc. 1
    
$
1,790,400
  
15,000
  
Google Inc. 1
    
 
6,607,050
  
     
3.3%
  
$
8,397,450
  
         
 
    
   
Machinery
    
 
    
65,000
  
Graco Inc. 2
0.9%
  
$
2,356,900
  
         
 
    
   
Networking Products
    
 
    
325,000
  
Cisco Systems Inc. 1
3.1%
  
$
7,829,250
  
         
 
    
   
Oil & Gas
    
 
    
30,000
  
Ultra Petroleum Corp. 1
    
$
2,325,000
  
120,000
  
Valero Energy Corp.
    
 
5,893,200
  
200,000
  
W&T Offshore Inc. 2
    
 
6,822,000
  
     
5.9%
  
$
15,040,200
  
         
 
    
   
Pharmaceuticals
    
 
    
75,000
  
Barr Pharmaceuticals Inc. 1
    
$
3,623,250
  
110,000
  
Cardinal Health Inc.
    
 
5,776,100
  
150,000
  
Forest Laboratories Inc. 1
    
 
6,001,500
  
450,000
  
Valeant Pharmaceuticals International 1, 2
    
 
5,773,500
  
360,000
  
ViroPharma Inc. 1, 2
    
 
3,218,400
  
     
9.5%
  
$
24,392,750
  
         
 
    
   
Real Estate Investment Trusts
    
 
    
80,000
  
ProLogis
1.8%
  
$
4,708,800
  
         
 
    
   
Retail
    
 
    
70,000
  
Best Buy Co., Inc. 2
    
$
2,902,200
  
220,000
  
Lowe's Cos., Inc.
    
 
5,046,800
  
40,000
  
Nordstrom Inc. 2
    
 
1,304,000
  
120,000
  
Target Corp.
    
 
6,081,600
  
130,000
  
Walgreen Co.
    
 
4,951,700
  
110,000
  
Whole Foods Market Inc. 2
    
 
3,626,700
  
     
9.3%
  
$
23,913,000
  
         
 
    
   
Semiconductor Capital Equipment
    
 
    
90,000
  
Applied Materials Inc.
    
$
1,755,900
  
120,000
  
Cognex Corp.
    
 
2,619,600
  
68,500
  
Cymer Inc. 1, 2
    
 
1,783,740
  
     
2.4%
  
$
6,159,240
  
         
 
    
   
Semiconductors
    
 
    
310,000
  
Altera Corp.
    
$
5,713,300
  
600,000
  
Intel Corp.
    
 
12,708,000
  
425,000
  
Lattice Semiconductor Corp. 1, 2
    
 
1,207,000
  
190,000
  
Linear Technology Corp. 2
    
 
5,831,100
  
250,000
  
OmniVision Technologies Inc. 1, 2
    
 
4,205,000
  
80,000
  
Texas Instruments Inc.
    
 
2,261,600
  
     
12.5%
  
$
31,926,000
  
         
 
    
   
Software
    
 
    
80,000
  
Adobe Systems Inc. 1
    
$
2,847,200
  
75,000
  
Autodesk Inc. 1
    
 
2,361,000
  
190,000
  
BEA Systems Inc. 1
    
 
3,638,500
  
160,000
  
Cadence Design Systems Inc. 1
    
 
1,708,800
  
80,000
  
Citrix Systems Inc. 1
    
 
2,346,400
  
60,000
  
Intuit Inc. 1
    
 
1,620,600
  
275,000
  
Mentor Graphics Corp. 1, 2
    
 
2,428,250
  
120,000
  
Microsoft Corp.
    
 
3,405,600
  
     
7.9%
  
$
20,356,350
  
         
 
    
   
Telecommunication Equipment
    
 
    
250,000
  
Ciena Corp. 1, 2
    
$
7,707,500
  
190,000
  
Corning Inc.
    
 
4,567,600
  
1,250,000
  
Powerwave Technologies Inc. 1, 2
    
 
3,187,500
  
     
6.0%
  
$
15,462,600
  
         
 
    
   
Telecommunication Services
    
 
    
210,000
  
Amdocs Ltd. 1
2.3%
  
$
5,955,600
  
         
 
    
   
Waste Management
    
 
    
120,000
  
Waste Management Inc.
1.6%
  
$
4,027,200
  
         
 
    
   
Total investment in equities
    
 
    
   
(cost $259,033,379)
97.5%
  
$
249,844,690
  
 
Principal
Amount $
   
Short-Term Securities
Percent of
Net Assets
   
  
Market Value
  
         
 
    
   
Certificates of Deposit 3
          
100,000
  
Albina Community Bank
          
   
3.34%, matures 01/24/2009
    
$
96,743
  
100,000
  
Carver Bank
          
   
3.75%, matures 02/04/2009
      
96,614
  
100,000
  
Community Bank of the Bay
          
   
4.40%, matures 09/06/2008
      
98,273
  
100,000
  
Elk Horn Bank
          
   
4.15%, matures 01/12/2009
      
96,874
  
100,000
  
Latino Community Credit Union
          
   
3.30%, matures 02/20/2009
      
96,448
  
100,000
  
Louisville Community Development Bank
          
   
3.75%, matures 05/10/2008
      
99,574
  
100,000
  
Opportunities Credit Union
          
   
3.00%, matures 04/25/2008
      
99,738
  
100,000
  
Self-Help Credit Union
          
   
3.47%, matures 01/14/2009
      
96,853
  
100,000
  
Wainwright Bank & Trust Co.
          
   
3.11%, matures 01/31/2009
      
96,667
  
     
0.3%
  
$
877,784
  
               
   
Registered Investment Companies -
          
   
Money Market Funds
          
6,857
  
Evergreen U.S. Government Fund
          
   
variable rate, 2.24%
    
$
6,857
  
3,800,770
  
Janus Government Fund
          
   
variable rate, 2.49%
      
3,800,770
  
7,239
  
SSGA U.S. Government Fund
          
   
variable rate, 1.98%
      
7,239
  
     
1.5%
  
$
3,814,866
  
               
   
Community Development Loans 3
          
100,000
  
Boston Community Loan Fund
          
   
3.00%, matures 06/30/2008
    
$
98,524
  
100,000
  
Boston Community Loan Fund
    
 
    
   
3.00%, matures 06/30/2008
    
 
98,524
  
100,000
  
Root Capital Loan Fund
    
 
    
   
2.00%, matures 03/16/2009
    
 
94,263
  
100,000
  
Vermont Community Loan Fund
    
 
    
   
3.00%, matures 12/15/2008
    
 
95,860
  
     
0.2%
  
$
387,171
  
         
 
    
   
Securities Purchased with Cash
    
 
    
   
Collateral from Securities Lending
    
 
    
         
 
    
   
Registered Investment Companies
    
 
    
67,577,602
  
State Street Navigator
    
 
    
   
Securities Lending
    
 
    
   
Prime Portfolio
    
 
    
   
variable rate, 3.18%
26.3%
  
$
67,577,602
  
         
 
    
         
 
    
   
Total short-term securities
    
 
    
   
(cost $72,657,423)
28.3%
  
$
72,657,423
  
         
 
    
   
Total securities
    
 
    
   
(cost $331,690,802)
125.8%
  
$
322,502,113
  
         
 
    
   
Payable upon return of securities loaned
-26.3%
  
$
(67,577,602
) 
         
 
    
   
Other assets and liabilities - net
0.5%
  
$
1,379,577
  
         
 
    
   
Total net assets
100.0%
  
$
256,304,088
  
         
 
    
         
 
    


(1) These securities are non-income producing.

(2) This security or partial position of this security was on loan at March 31, 2008. The total value of the securities on loan at March 31, 2008 was $65,970,925.

(3) Market value adjustments have been applied to these securities to reflect early withdrawal.

The portfolio of investments as of March 31, 2008 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 March 31, 2008, the net unrealized appreciation (depreciation) based on the   
cost of long-term investments of securities for income tax purposes was as follows:
  
       
   
Parnassus Fund
  
       
Cost of long-term investments
  
$
259,448,311
  
Unrealized appreciation
  
$
16,680,068
  
Unrealized depreciation
    
(26,283,689
)
         
Net unrealized appreciation (depreciation)
  
$
(9,603,621
)

Fund holdings will vary over time.

In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has evaluated the impact the adoption of SFAS 157 will have on the Portfolio’s financial statements and disclosures, and has determined the adoption of SFAS 157 for the year beginning January 1, 2008 will not have a material impact on the financial statements, but additional disclosures will be required. Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in three levels listed below:

Level 1 - Quoted market prices in active markets for identical securities on the measurement date and on an ongoing basis

Level 2 - Other observable inputs (e.g., quoted prices in active markets for similar securities, securities valuations based on commonly quoted benchmark interest rates and yield curves, and/or securities indices)

Level 3 - Significant unobservable inputs (e.g., information about assumptions, including risk, market participants would use in pricing a security)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in in those securities. Following is a summary of the inputs used in valuing the Parnassus Fund investments and other financial instruments which are carried at fair value, as of March 31, 2008: 
 
Valuation level
  
Investments in Securities
  
Other Financial Instruments*
  
Level 1
  
$
321,237,158
  
$
-
  
Level 2
    
-
    
-
  
Level 3
    
1,264,955
    
-
  
Total
  
$
322,502,113
  
$
-
  

* Other financial instruments include futures and forwards, if applicable.

The following is a reconciliation of investments in which significant unobservable inputs
(Level 3) were used in determining fair value:


   
Investments in Securities
  
 Other Financial Instruments*
  
Balance as of 12/31/07
  
$
1,280,065
  
$
-
  
Accrued discounts/premiums amortization
    
(15,110
)
  
-
  
Realized gain(loss)
    
-
    
-
  
Change in unrealized appreciation/depreciation
    
-
    
-
  
Net purchases(sales)
    
-
    
-
  
Transfers in and/or out of Level 3
    
-
    
-
  
Balance as of 3/31/08
  
$
1,264,955
  
$
-
  

 
* Other financial instruments include futures and forwards, if applicable.  

 
THE PARNASSUS MID-CAP FUND

Portfolio of Investments as of March 31, 2008 - UNAUDITED

Shares
  
Equities
Percent of
Net Assets
    
Market Value
             
   
Apparel
        
4,000
  
Liz Claiborne Inc.
1.3%
  
$
72,600
             
   
Computer Peripherals
        
8,000
  
Seagate Technology
3.0%
  
$
167,520
         
 
  
   
Computers
    
 
  
2,250
  
Sun Microsystems Inc. 1
0.6%
  
$
34,943
         
 
  
   
Consulting Services
    
 
  
3,000
  
Cognizant Technology Solutions Corp. 1
1.6%
  
$
86,490
             
   
Data Processing
    
 
  
1,500
  
Fiserv Inc. 1
1.3%
  
$
72,135
         
 
  
   
Data Storage
    
 
  
9,000
  
NetApp Inc. 1
3.2%
  
$
180,450
         
 
  
   
Financial Services
    
 
  
15,000
  
First Horizon National Corp.
    
$
210,150
1,500
  
Paychex Inc.
    
 
51,390
5,000
  
SLM Corp. 1
    
 
76,750
     
6.1%
  
$
338,290
         
 
  
   
Food Products
    
 
  
1,500
  
Sysco Corp.
0.8%
  
$
43,530
         
 
  
   
Healthcare Services
    
 
  
8,000
  
IMS Health Inc.
3.0%
  
$
168,080
         
 
  
   
Home Builders
    
 
  
11,000
  
DR Horton Inc.
    
$
173,250
18,000
  
Pulte Homes Inc.
      
261,900
3,500
  
Toll Brothers Inc. 1
    
 
82,180
     
9.3%
  
$
517,330
         
 
  
   
Industrial Manufacturing
    
 
  
4,000
  
Teleflex Inc.
3.4%
  
$
190,840
         
 
  
   
Insurance
    
 
  
1,500
  
WR Berkley Corp.
0.7%
  
$
41,535
         
 
  
   
Lodging
        
3,500
  
Marriott International Inc.
2.2%
  
$
120,260
         
 
  
   
Medical Equipment
    
 
  
2,000
  
Patterson Cos., Inc. 1
    
$
72,600
2,000
  
Varian Medical Systems Inc. 1
    
 
93,680
     
3.0%
  
$
166,280
         
 
  
   
Natural Gas
    
 
  
2,500
  
MDU Resources Group Inc.
    
$
61,375
5,000
  
Quicksilver Resources Inc. 1
    
 
182,650
     
4.4%
  
$
244,025
         
 
  
   
Oil & Gas
    
 
  
1,500
  
Sunoco Inc.
    
$
78,705
2,000
  
Ultra Petroleum Corp. 1
      
155,000
     
4.2%
  
$
233,705
         
 
  
   
Pharmaceuticals
        
4,500
  
Barr Pharmaceuticals Inc. 1
    
$
217,395
4,000
  
Forest Laboratories Inc. 1
    
 
160,040
     
6.8%
  
$
377,435
         
 
  
   
Real Estate Investment Trusts
    
 
  
2,000
  
ProLogis
2.1%
  
$
117,720
         
 
  
   
Retail
    
 
  
3,000
  
Best Buy Co., Inc.
    
$
124,380
3,500
  
Nordstrom Inc.
    
 
114,100
1,000
  
Whole Foods Market Inc.
    
 
32,970
     
4.9%
  
$
271,450
         
 
  
   
Semiconductors
    
 
  
9,000
  
Altera Corp.
    
$
165,870
5,000
  
Integrated Device Technology Inc. 1
    
 
44,650
9,000
  
Linear Technology Corp.
    
 
276,210
4,000
  
Microchip Technology Inc.
    
 
130,920
21,000
  
Micron Technology Inc. 1
    
 
125,370
2,500
  
NVIDIA Corp. 1
    
 
49,475
     
14.1%
  
$
792,495
         
 
  
   
Software
    
 
  
1,500
  
Adobe Systems Inc. 1
    
$
53,385
7,000
  
BEA Systems Inc. 1
    
 
134,050
6,000
  
Cadence Design Systems Inc. 1
    
 
64,080
4,000
  
Citrix Systems Inc. 1
    
 
117,320
8,000
  
Intuit Inc. 1
    
 
216,080
6,000
  
Symantec Corp. 1
    
 
99,720
     
12.3%
  
$
684,635
         
 
  
   
Telecommunications Services
    
 
  
6,500
  
Amdocs Ltd. 1
3.3%
  
$
184,340
         
 
  
   
Waste Management
    
 
  
5,500
  
Waste Management Inc.
3.3%
  
$
184,580
         
 
  
   
Total investment in equities
    
 
  
   
(cost $5,694,746)
94.9%
  
$
5,290,668


Principal
Amount $
  
Short-Term Securities
Percent of
Net Assets
  
 
Market
Value
             
   
Registered Investment Companies -
        
   
Money Market Funds
        
70,792
  
Janus Government Fund
        
   
variable rate, 2.49%
    
$
70,792
74,521
  
SSGA U.S. Government Fund
        
   
variable rate, 1.98%
    
 
74,521
     
2.6%
  
$
145,313
         
 
  
   
Total short-term securities
    
 
  
   
(cost $145,313)
2.6%
  
$
145,313
         
 
  
   
Total securities
    
 
  
   
(cost $5,840,059)
97.5%
  
$
5,435,981
         
 
  
         
 
  
   
Other assets and liabilities - net
2.5%
  
$
137,890
         
 
  
   
Total net assets
100.0%
  
$
5,573,871
         
 
  
             

(1) These securities are non-income producing.

The portfolio of investments as of March 31, 2008 has not been audited. This report is provided for the general information of the fund's shareholders. For more information regarding the fund, portfolio holdingsand other significant accounting policies, please see the fund's most recent prospectus and annual report.
 
Income Taxes:

At March 31, 2008, the net unrealized appreciation (depreciation) based on
thecost of long-term investments of securities for income tax purposes was as follows:
  
       
   
Mid-Cap
Fund
  
       
Cost of long-term investments
  
$
5,702,262
  
Unrealized appreciation
  
$
329,231
  
Unrealized depreciation
    
(740,825
)
 
        
Net unrealized appreciation (depreciation)
  
$
(411,594
)
 
Fund holdings will vary over time.
 
 
Level 1 - Quoted market prices in active markets for identical securities on the measurement date and on an ongoing basis

Level 2 - Other observable inputs (e.g., quoted prices in active markets for similar securities, securities valuations based on commonly quoted benchmark interest rates and yield curves, and/or securities indices)

Level 3 - Significant unobservable inputs (e.g., information about assumptions, including risk, market participants would use in pricing a security)
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in in those securities. Following is a summary of the inputs used in valuing the Parnassus Mid-Cap Fund investments and other financial instruments which are carried at fair value, as of March 31, 2008:
 
Valuation level
  
Investments in Securities
  
 Other Financial Instruments*
  
Level 1
  
$
5,435,981
  
$
-
  
Level 2
    
-
    
-
  
Level 3
    
-
    
-
  
Total
  
$
5,435,981
  
$
-
  
               

* Other financial instruments include futures and forwards, if applicable.   

 

THE PARNASSUS SMALL-CAP FUND

Portfolio of Investments as of March 31, 2008 - UNAUDITED
 
Shares
  
Equities
Percent of
Net Assets
    
Market Value
             
   
Childcare Services
        
8,000
  
Bright Horizons Family Solutions Inc. 1
4.9%
  
$
344,320
         
 
  
   
Consumer Products
    
 
  
2,800
  
Lifetime Brands Inc.
0.4%
  
$
25,032
         
 
  
   
Data Storage
    
 
  
9,000
  
NetApp Inc. 1
2.5%
  
$
180,450
         
 
  
   
Electric Motors
    
 
  
4,000
  
Baldor Electric Co.
1.6%
  
$
112,000
         
 
  
   
Electronics
    
 
  
9,200
  
Plantronics Inc.
2.5%
  
$
177,652
         
 
  
   
Footwear
    
 
  
14,000
  
K-Swiss Inc.
3.1%
  
$
221,480
         
 
  
   
Healthcare Products
        
3,000
  
Steris Corp.
1.1%
  
$
80,490
         
 
  
   
Healthcare Services
    
 
  
6,000
  
Chemed Corp.
3.6%
  
$
253,200
             
   
Home Builders
        
3,000
  
Pulte Homes Inc.
    
$
43,650
5,000
  
Toll Brothers Inc. 1
    
 
117,400
     
2.3%
  
$
161,050
         
 
  
   
Home Products
    
 
  
2,500
  
WD-40 Co.
1.2%
  
$
83,125
         
 
  
   
Industrial Automation
    
 
  
5,000
  
Nordson Corp.
3.8%
  
$
269,250
         
 
  
   
Industrial Manufacturing
    
 
  
6,500
  
Teleflex Inc.
4.4%
  
$
310,115
         
 
  
   
Insurance
    
 
  
12,000
  
Tower Group Inc.
4.3%
  
$
302,040
         
 
  
   
Machinery
    
 
  
6,000
  
Graco Inc.
3.1%
  
$
217,560
         
 
  
   
Medical Equipment
    
 
  
8,000
  
LifeCell Corp. 1
4.8%
  
$
336,240
         
 
  
   
Networking Products
    
 
  
50,000
  
Zhone Technologies Inc. 1
0.7%
  
$
49,000
         
 
  
   
Oil & Gas
    
 
  
10,000
  
Mitcham Industries Inc. 1
    
$
178,200
9,000
  
W&T Offshore Inc.
    
 
306,990
     
6.9%
  
$
485,190
         
 
  
   
Pharmaceuticals
    
 
  
25,000
  
Valeant Pharmaceuticals International 1
    
$
320,750
35,000
  
ViroPharma Inc. 1
    
 
312,900
     
9.0%
  
$
633,650
         
 
  
   
Retail
    
 
  
18,000
  
Build-A-Bear Workshop Inc. 1
2.3%
  
$
163,620
         
 
  
   
Semiconductor Capital Equipment
    
 
  
15,000
  
Cognex Corp.
    
$
327,450
9,000
  
Cymer Inc. 1
    
 
234,360
     
7.8%
  
$
561,810
         
 
  
   
Semiconductors
    
 
  
20,000
  
Integrated Device Technology Inc. 1
    
$
178,600
100,000
  
Lattice Semiconductor Corp. 1
    
 
284,000
15,000
  
O2Micro International Ltd. (ADR) 1
    
 
115,950
10,000
  
OmniVision Technologies Inc. 1
    
 
168,200
     
10.5%
  
$
746,750
         
 
  
   
Software
    
 
  
9,000
  
Cadence Design Systems Inc. 1
    
$
96,120
5,000
  
Computer Programs & Systems Inc.
    
 
104,500
33,000
  
Mentor Graphics Corp. 1
    
 
291,390
5,000
  
Websense Inc. 1
    
 
93,750
     
8.2%
  
$
585,760
         
 
  
   
Telecommunications Equipment
    
 
  
7,000
  
Ciena Corp. 1
    
$
215,810
2,000
  
Harmonic Inc. 1
    
 
15,200
90,000
  
Powerwave Technologies Inc. 1
    
 
229,500
     
6.5%
  
$
460,510
         
 
  
   
Total investment in equities
    
 
  
   
(cost $7,349,723)
95.5%
  
$
6,760,294
 
Principal
Amount $
  
Short-Term Securities
Percent of
Net Assets
  
 
Market Value
             
   
Registered Investment Companies -
    
 
  
   
Money Market Funds
    
 
  
125,779
  
Janus Government Fund
    
 
  
   
variable rate, 2.49%
    
$
125,779
126,807
  
SSGA U.S. Government Fund
    
 
  
   
variable rate, 1.98%
    
 
126,807
     
3.6%
  
$
252,586
         
 
  
   
Total short-term securities
    
 
  
   
(cost $252,586)
3.6%
  
$
252,586
         
 
  
   
Total securities
    
 
  
   
(cost $7,602,309)
99.1%
  
$
7,012,880
         
 
  
         
 
  
   
Other assets and liabilities - net
0.9%
  
$
64,677
         
 
  
   
Total net assets
100.0%
  
$
7,077,557
         
 
  
 
(1) These securities are non-income producing.
 
The portfolio of investments as of March 31, 2008 has not been audited. This report is provided for the general information of the fund's shareholders. For more information regarding the fund, portfolio holdingsand other significant accounting policies, please see the fund's most recent prospectus and annual report.
 
Income Taxes:

At March 31, 2008, the net unrealized appreciation (depreciation) based on the
cost of long-term investments of securities for income tax purposes was as follows:
  
     
   
Small-Cap
Fund
 
       
Cost of long-term investments
  
$
7,356,474
  
Unrealized appreciation
  
$
508,627
  
Unrealized depreciation
    
(1,104,807
)
         
Net unrealized appreciation (depreciation)
  
$
(596,180
)
 
Fund holdings will vary over time.
 
In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has evaluated the impact the adoption of SFAS 157 will have on the Portfolio’s financial statements and disclosures, and has determined the adoption of SFAS 157 for the year beginning January 1, 2008 will not have a material impact on the financial statements, but additional disclosures will be required. Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in three levels listed below:

Level 1 - Quoted market prices in active markets for identical securities on the measurement date and on an ongoing basis

Level 2 - Other observable inputs (e.g., quoted prices in active markets for similar securities, securities valuations based on commonly quoted benchmark interest rates and yield curves, and/or securities indices)

Level 3 - Significant unobservable inputs (e.g., information about assumptions, including risk, market participants would use in pricing a security)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Following is a summary of the inputs used in valuing the Parnassus Small-Cap Fund investments and other financial instruments which are carried at fair value, as of March 31, 2008:
 
Valuation level
  
Investments in Securities
 
Other Financial Instruments*
 
Level 1
  
$
7,012,880
  
$
-
  
Level 2
    
-
   
-
 
Level 3
    
-
   
-
 
Total
  
$
7,012,880
  
$
-
  
               

* Other financial instruments include futures and forwards, if applicable. 

 

THE PARNASSUS WORKPLACE FUND

Portfolio of Investments as of March 31, 2008 - UNAUDITED
 
Shares
  
Equities
Percent of
Net Assets
    
Market Value
             
   
Building Materials
        
300
  
Simpson Manufacturing Co., Inc.
0.2%
  
$
8,154
         
 
  
   
Childcare Services
    
 
  
4,000
  
Bright Horizons Family Solutions Inc. 1
4.1%
  
$
172,160
         
 
  
   
Communications Equipment
        
4,000
  
QUALCOMM Inc.
3.9%
  
$
164,000
         
 
  
   
Computers
    
 
  
500
  
International Business Machines Corp.
1.4%
  
$
57,570
         
 
  
   
Data Processing
    
 
  
3,000
  
SEI Investments Co.
1.8%
  
$
74,070
         
 
  
   
Data Storage
    
 
  
6,500
  
NetApp Inc. 1
3.1%
  
$
130,325
         
 
  
   
Electric Motors
    
 
  
3,500
  
Baldor Electric Co.
2.3%
  
$
98,000
         
 
  
   
Financial Services
    
 
  
4,500
  
American Express Co.
    
$
196,740
10,000
  
First Horizon National Corp.
    
 
140,100
400
  
Goldman Sachs Group Inc.
      
66,156
2,500
  
Paychex Inc.
    
 
85,650
2,000
  
Wells Fargo & Co.
    
 
58,200
     
13.0%
  
$
546,846
         
 
  
   
Healthcare Products
    
 
  
500
  
Johnson & Johnson
0.8%
  
$
32,435
         
 
  
   
Industrial Automation
    
 
  
2,200
  
Nordson Corp.
2.8%
  
$
118,470
         
 
  
   
Industrial Manufacturing
    
 
  
500
  
3M Co.
0.9%
  
$
39,575
         
 
  
   
Insurance
    
 
  
1,500
  
AFLAC Inc.
2.3%
  
$
97,425
         
 
   
Internet
    
 
  
3,000
  
eBay Inc. 1
    
$
89,520
400
  
Google Inc. 1
    
 
176,188
     
6.3%
  
$
265,708
         
 
  
   
Lodging
    
 
  
2,500
  
Marriott International Inc.
2.0%
  
$
85,900
         
 
  
   
Machinery
    
 
  
3,500
  
Graco Inc.
3.0%
  
$
126,910
         
 
  
   
Networking Products
    
 
  
2,000
  
Cisco Systems Inc. 1
1.1%
  
$
48,180
         
 
  
   
Oil & Gas
    
 
  
3,500
  
Valero Energy Corp.
4.1%
  
$
171,885
         
 
  
   
Pharmaceuticals
    
 
  
1,200
  
Novartis AG (ADR)
1.5%
  
$
61,476
         
 
  
   
Retail
    
 
  
500
  
Costco Wholesale Co.
    
$
32,485
2,000
  
Nordstrom Inc.
    
 
65,200
2,500
  
Target Corp.
    
 
126,700
4,000
  
Walgreen Co.
    
 
152,360
1,000
  
Whole Foods Market Inc.
    
 
32,970
     
9.7%
  
$
409,715
         
 
  
   
Semiconductors
    
 
  
7,500
  
Altera Corp.
    
$
138,225
7,500
  
Intel Corp.
    
 
158,850
6,000
  
Linear Technology Corp.
    
 
184,140
2,000
  
Texas Instruments Inc.
    
 
56,540
4,000
  
Xilinx Inc.
    
 
95,000
     
15.0%
  
$
632,755
         
 
  
   
Software
    
 
  
2,500
  
Adobe Systems Inc. 1
    
$
88,975
3,500
  
Autodesk Inc. 1
      
110,180
3,000
  
BEA Systems Inc. 1
    
 
57,450
1,000
  
Cadence Design Systems Inc. 1
      
10,680
2,500
  
Citrix Systems Inc. 1
    
 
73,325
5,000
  
Intuit Inc. 1
      
135,050
2,000
  
Microsoft Corp.
    
 
56,760
1,000
  
Symantec Corp. 1
    
 
16,620
     
13.1%
  
$
549,040
         
 
  
   
Telecommunications Equipment
    
 
  
5,000
  
Corning Inc.
2.9%
  
$
120,200
         
 
  
   
Total investment in equities
    
 
  
   
(cost $4,050,742)
95.3%
  
$
4,010,799
 
Principal
Amount $
  
Short-Term Securities
Percent of
Net Assets
  
 
Market Value
         
 
  
   
Registered Investment Companies -
    
 
  
   
Money Market Funds
    
 
  
73,328
  
Janus Government Fund
    
 
  
   
variable rate, 2.49%
    
$
73,328
114,814
  
SSGA U.S. Government Fund
    
 
  
   
variable rate, 1.98%
      
114,814
     
4.5%
  
$
188,142
         
 
  
   
Total short-term securities
    
 
  
   
(cost $188,142)
4.5%
  
$
188,142
         
 
  
   
Total securities
    
 
  
   
(cost $4,238,884)
99.8%
  
$
4,198,941
         
 
  
         
 
  
   
Other assets and liabilities - net
0.2%
  
$
7,542
         
 
  
   
Total net assets
100.0%
  
$
4,206,483
 
(1) These securities are non-income producing.
 
The portfolio of investments as of March 31, 2008 has not been audited. This report is provided for the general information of the fund's shareholders. For more information regarding the fund, portfolio holdingsand other significant accounting policies, please see the fund's most recent prospectus and annual report.
 
Income Taxes:

At March 31, 2008, the net unrealized appreciation (depreciation) based on the
cost of long-term investments of securities for income tax purposes was as follows:
  
       
   
Workplace
Fund
 
       
Cost of long-term investments
  
$
4,056,203
  
Unrealized appreciation
  
$
206,250
  
Unrealized depreciation
    
(251,654
)
         
Net unrealized appreciation (depreciation)
  
$
(45,404
)

Fund holdings will vary over time.
 
In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has evaluated the impact the adoption of SFAS 157 will have on the Portfolio’s financial statements and disclosures, and has determined the adoption of SFAS 157 for the year beginning January 1, 2008 will not have a material impact on the financial statements, but additional disclosures will be required. Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in three levels listed below:
 
Level 1 - Quoted market prices in active markets for identical securities on the measurement date and on an ongoing basis
 
Level 2 - Other observable inputs (e.g., quoted prices in active markets for similar securities, securities valuations based on commonly quoted benchmark interest rates and yield curves, and/or securities indices)
 
Level 3 - Significant unobservable inputs (e.g., information about assumptions, including risk, market participants would use in pricing a security)
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Following is a summary of the inputs used in valuing the Parnassus Workplace Fund investments and other financial instruments which are carried at fair value, as of March 31, 2008:
           
Valuation level
  
Investments in Securities
 
Other Financial Instruments*
 
Level 1
  
$
4,198,941
  
$
-
  
Level 2
    
-
   
-
 
Level 3
    
-
   
-
 
Total
  
$
4,198,941
  
$
-
  
               

* Other financial instruments include futures and forwards, if applicable. 

 
 
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) Parnassus Funds
 
         
By: /s/ Jerome L. Dodson      
 
Jerome L. Dodson
Principal Executive Officer
    
         
Date: May 28, 2008      
 
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
Principal Executive Officer
    
         
Date: May 28, 2008      
 
 
         
By: /s/  Marc C. Mahon      
 
Marc C. Mahon
Principal Financial Officer
    
         
Date: May 28, 2008