-----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, Gtn9LLDc9DSOgHMRO96TVbttDSk6cwTv8XGA1XpjM4ZkNvvl9kUFG87VXwQYquIG Cp1QZuzz+dvWCaL7SPHDpg== 0001144204-08-032370.txt : 20080528 0001144204-08-032370.hdr.sgml : 20080528 20080528140350 ACCESSION NUMBER: 0001144204-08-032370 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20080331 FILED AS OF DATE: 20080528 DATE AS OF CHANGE: 20080528 EFFECTIVENESS DATE: 20080528 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARNASSUS INCOME FUNDS CENTRAL INDEX KEY: 0000866256 IRS NUMBER: 946633178 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-06673 FILM NUMBER: 08863107 BUSINESS ADDRESS: STREET 1: ONE MARKET STEUART TOWER STREET 2: SUITE 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: PARNASSUS INCOME FUND DATE OF NAME CHANGE: 19920703 0000866256 S000000856 PARNASSUS EQUITY INCOME FUND C000002471 PARNASSUS EQUITY INCOME FUND 0000866256 S000000857 PARNASSUS FIXED-INCOME FUND C000002472 PARNASSUS FIXED-INCOME FUND N-Q 1 v115677_n-q.htm
 

 PARNASSUS INCOME 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: 811-06673

Parnassus Income 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 Income 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 EQUITY INCOME FUND
       
Portfolio of Investments as of March 31, 2008 - UNAUDITED

Shares
 
Equities
Percent of
Net Assets
  
 Market Value
  
               
   
Biotechnology
          
65,000
 
Genzyme Corp. 1
    
$
4,845,100
 
195,000
 
Sigma-Aldrich Corp. 
      
11,631,750
 
   
 
1.8%
  
$
16,476,850
 
           
 
  
   
Chemicals
      
 
  
350,000
 
Rohm & Haas Co. 2
2.0%
  
$
18,928,000
 
           
 
  
   
Computers
      
 
  
165,000
 
International Business Machines Corp.
2.0%
  
$
18,998,100
 
 
          
 
  
 
 
Consulting Services
      
 
  
300,000
 
Accenture Ltd. 
    
$
10,551,000
 
265,000
 
Cognizant Technology Solutions Corp. 1
      
7,639,950
 
 
    
2.0%
  
$
18,190,950
 
 
 
        
 
  
   
Cosmetics & Personal Care
      
 
  
415,000
 
Procter & Gamble Co. 
3.1%
  
$
29,079,050
 
           
 
  
   
Data Processing
      
 
  
125,000
 
Automatic Data Processing Inc. 
    
$
5,298,750
 
270,000
 
Fiserv Inc. 1
      
12,984,300
 
     
2.0%
  
$
18,283,050
 
           
 
  
   
Financial Services
      
 
  
200,000
 
JPMorgan Chase & Co. 
    
$
8,590,000
 
270,000
 
Paychex Inc. 2
      
9,250,200
 
250,000
 
Wells Fargo & Co. 
      
7,275,000
 
     
2.7%
  
$
25,115,200
 
           
 
  
   
Food Products
      
 
  
400,000
 
McCormick & Co. 
    
$
14,788,000
 
475,000
 
Sysco Corp. 
      
13,784,500
 
     
3.1%
  
$
28,572,500
 
           
 
  
   
Healthcare Products
      
 
  
695,000
 
Johnson & Johnson 
4.9%
  
$
45,084,650
 
           
 
  
   
Healthcare Services
      
 
  
480,000
 
Chemed Corp. 2
    
$
20,256,000
 
200,000
 
IMS Health Inc. 
      
4,202,000
 
120,000
 
Laboratory Corp. 1, 2
      
8,841,600
 
215,000
 
Quest Diagnostics Inc. 2
      
9,733,050
 
     
4.6%
  
$
43,032,650
 
           
 
  
   
Home Products
      
 
  
245,000
 
WD-40 Co. 2
0.9%
  
$
8,146,250
 
           
 
  
   
Industrial Manufacturing
      
 
  
165,000
 
3M Co. 
    
$
13,059,750
 
415,000
 
Danaher Corp. 2
      
31,552,450
 
600,000
 
Teleflex Inc. 
      
28,626,000
 
     
7.9%
  
$
73,238,200
 
           
 
  
   
Insurance
      
 
  
340,000
 
AFLAC Inc. 
    
$
22,083,000
 
370,000
 
Tower Group Inc. 2
      
9,312,900
 
600,000
 
WR Berkley Corp. 
      
16,614,000
 
     
5.2%
  
$
48,009,900
 
           
 
  
   
Internet
      
 
  
75,000
 
Google Inc. 1
3.6%
  
$
33,035,250
 
           
 
  
   
Medical Equipment
      
 
  
140,000
 
Gen-Probe Inc. 1
0.7%
  
$
6,748,000
 
           
 
  
   
Natural Gas
      
 
  
250,000
 
Energen Corp. 
    
$
15,575,000
 
850,000
 
MDU Resources Group Inc. 
      
20,867,500
 
547,100
 
Southern Union Co. 
      
12,731,017
 
400,000
 
XTO Energy Inc. 
      
24,744,000
 
     
8.0%
  
$
73,917,517
 
           
 
  
   
Networking Products
      
 
  
790,000
 
Cisco Systems Inc. 1
2.1%
  
$
19,031,100
 
           
 
  
   
Oil & Gas
      
 
  
255,000
 
Apache Corp. 
    
$
30,809,100
 
200,000
 
Smith International Inc. 2
      
12,846,000
 
375,000
 
Valero Energy Corp. 
      
18,416,250
 
600,000
 
W&T Offshore Inc. 2
      
20,466,000
 
     
9.0%
  
$
82,537,350
 
           
 
  
   
Pharmaceuticals
      
 
  
200,000
 
Barr Pharmaceuticals Inc. 1
    
$
9,662,000
 
270,000
 
Novartis AG (ADR) 
      
13,832,100
 
325,000
 
Teva Pharmaceutical Industries Ltd. (ADR)
      
15,011,750
 
700,000
 
Valeant Pharmaceuticals International 1, 2
      
8,981,000
 
     
5.1%
  
$
47,486,850
 
           
 
  
   
Real Estate Investment Trusts
      
 
  
335,000
 
AMB Property Corp. 
    
$
18,230,700
 
390,000
 
ProLogis 
      
22,955,400
 
     
4.4%
    
41,186,100
 
           
 
  
   
Semiconductors
      
 
  
350,000
 
Intel Corp. 
    
$
7,413,000
 
550,000
 
Linear Technology Corp. 2
      
16,879,500
 
200,000
 
Microchip Technology Inc. 2
      
6,546,000
 
     
3.3%
  
$
30,838,500
 
           
 
  
   
Services
      
 
  
300,000
 
Ecolab Inc. 
1.4%
  
$
13,029,000
 
           
 
  
   
Software
      
 
  
605,000
 
Intuit Inc. 1
    
$
16,341,050
 
1,600,000
 
Microsoft Corp. 
      
45,408,000
 
75,000
 
SAP AG (ADR) 2
      
3,717,750
 
     
7.1%
  
$
65,466,800
 
           
 
  
   
Utilities
      
 
  
500,000
 
Black Hills Corp. 2
    
$
17,890,000
 
110,000
 
Northwest Natural Gas Co. 2
      
4,778,400
 
135,000
 
Ormat Technologies Inc. 2
      
5,806,350
 
135,000
 
Otter Tail Corp. 2
      
4,777,650
 
550,000
 
Pepco Holdings Inc. 
      
13,596,000
 
     
5.1%
  
$
46,848,400
 
           
 
  
   
Waste Management
      
 
  
765,000
 
Waste Management Inc. 
2.8%
  
$
25,673,400
 
           
 
  
   
Total investment in equities
      
 
  
   
(cost $834,540,967)
94.8%
  
$
876,953,617
 
 
Principal
Amount $
  
Community Loans
Percent of
Net Assets
    
Market Value
  
           
 
  
   
Community Development Loans 3
          
1,000,000
 
MicroVest I, LP Note
          
   
5.875%, due 10/15/2009
    
$
921,266
 
500,000
 
MicroVest I, LP Note
      
 
  
   
5.875%, due 03/15/2010
      
441,397
 
     
0.1%
  
$
1,362,663
 
               
   
Total investment in community loans
      
 
  
   
(cost $1,362,663)
0.1%
  
$
1,362,663
 
               
               
   
Total investments in long-term securities
          
   
(cost $835,903,630)
94.9%
  
$
878,316,280
 
 
Principal
Amount $
  
Short-Term Securities
Percent of
Net Assets
    
Market Value
  
               
   
Certificates of Deposit 3
          
100,000
 
Community Bank of the Bay
          
   
4.40%, matures 08/24/2008
0.0%
  
$
98,415
 
           
 
  
   
Registered Investment Companies -
     
 
  
   
Money Market Funds
      
 
  
1,121,466
 
Evergreen U.S. Government Fund
      
 
  
 
  
variable rate, 2.24%
    
$
1,121,466
 
26,751,649
 
Janus Government Fund
          
   
variable rate, 2.49%
      
26,751,649
 
29,279,254
 
SSGA U.S. Government Fund
      
 
  
   
variable rate, 1.98%
      
29,279,254
 
     
6.2%
  
$
57,152,369
 
           
 
  
   
Community Development Loans 3
      
 
  
100,000
 
Boston Community Loan Fund
      
 
  
   
3.00%, matures 06/30/2008
    
$
98,524
 
200,000
 
Root Capital Loan Fund
      
 
  
   
2.00%, matures 01/25/2009
      
190,197
 
100,000
 
Vermont Community Loan Fund
      
 
  
   
3.00%, matures 04/16/2008
      
99,753
 
     
0.0%
  
$
388,474
 
           
 
  
   
Certificate of Deposit Account Registry Service (CDARS) 3
    
 
  
500,000
 
CDARS agreement with Community Bank of the Bay,
   
 
  
   
dated 10/24/2007, matures 10/23/2008, 4.40%
    
 
  
   
Participating depository institutions:
      
 
  
   
AMCORE Bank, NA, par 94,000;
      
 
  
   
City National Bank of New Jersey, par 25,645;
    
 
  
   
First Federal Bank of the Midwest, par 94,000;
    
 
  
   
First National Bank of Arizona, par 94,000;
      
 
  
   
Harris, NA, par 94,000;
      
 
  
   
Johnson Bank, par 94,000;
      
 
  
   
Orion Bank, par 4,355;
      
 
  
   
(cost $488,737)
    
$
488,737
 
           
 
  
500,000
 
CDARS agreement with Community Bank of the Bay,
   
 
  
   
dated 12/12/2007, matures 12/11/2008, 4.40%
    
 
  
   
Participating depository institutions:
      
 
  
   
Burke & Herbert Bank & Trust Co., par 94,000;
    
 
  
   
Cross Keys Bank, par 94,000;
      
 
  
   
Greater Buffalo Savings Bank, par 94,000;
      
 
  
   
INSOUTH Bank, par 94,000;
      
 
  
   
Landmark National Bank, par 6,856;
      
 
  
   
ShoreBank, par 94,000;
      
 
  
   
Union National Community Bank, par 23,144;
    
 
  
   
(cost $486,044)
      
486,044
 
               
500,000
 
CDARS agreement with Community Bank of the Bay,
       
   
dated 01/30/2008, matures 01/29/2009, 3.40%
        
   
Participating depository institutions:
          
   
First National Bank of Nevada, par 94,000;
          
   
Union Bank & Trust Company, par 62,869;
         
   
BankFirst Financial Services, par 61,131;
          
   
Enterprise National Bank of Palm Beach, par 94,000;
        
   
First Community Bank, par 94,000;
          
   
The Bank of River Oaks, par 94,000;
          
   
(cost $483,352)
      
483,352
 
               
500,000
 
CDARS agreement with Community Bank of the Bay,
       
   
dated 02/13/2008, matures 02/12/2009, 3.11%
        
   
Participating depository institutions:
          
   
Liberty Savings Bank, FSB, par 94,500;
          
   
The PrivateBank and Trust Company, par 94,500;
        
   
The Buckhead Community Bank, NA, par 94,500;
        
   
SpiritBank, par 79,687;
          
   
Community West Bank, NA, par 42,313;
          
   
Graystone Bank, par 94,500;
          
   
(cost $482,583)
      
482,583
 
     
0.2%
  
$
1,940,716
 
               
   
Securities Purchased with Cash
      
 
  
   
Collateral from Securities Lending
          
               
   
Registered Investment Companies
          
143,095,663
 
State Street Navigator
          
   
Securities Lending
         
   
Prime Portfolio
          
   
variable rate, 3.18%
15.4%
  
$
143,095,663
 
               
               
   
Total short-term securities
          
   
(cost $202,675,637)
21.8%
  
$
202,675,637
 
               
   
Total securities
          
   
(cost $1,038,579,267)
116.7%
  
$
1,080,991,917
 
               
   
Payable upon return of securities loaned
-15.4%
  
$
(143,095,663
 )
               
   
Other assets and liabilities - net
-1.3%
  
$
(11,104,333
 )
               
   
Total net assets
100.0%
  
$
926,791,921
 

(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 $141,133,950.

(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:
  
     
   
Equity Income
Fund
 
       
Cost of long-term investments
  
$
837,070,540
  
Unrealized appreciation
  
$
73,383,820
  
Unrealized depreciation
    
(29,804,260
)
         
Net unrealized appreciation (depreciation)
  
$
43,579,560
  

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 Equity Income 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
  
$
1,077,201,649
  
$
-
  
Level 2
    
-
   
-
 
Level 3
    
3,790,268
   
-
 
Total
  
$
1,080,991,917
  
$
-
  
               
 
* 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
  
$
3,361,162
  
$
-
  
Accrued discounts/premiums amortization
    
(70,894
)
  
-
 
Realized gain(loss)
    
-
   
-
 
Change in unrealized appreciation/depreciation
    
-
   
-
 
Net purchases(sales)
    
500,000
   
-
 
Transfers in and/or out of Level 3
    
-
   
-
 
Balance as of 3/31/08
  
$
3,790,268
  
$
-
  
 
* Other financial instruments include futures and forwards, if applicable.
 
 
THE PARNASSUS FIXED-INCOME FUND
       
Portfolio of Investments as of March 31, 2008 - UNAUDITED

Shares
 
Common Stocks
Percent of
Net Assets
    
Market Value
  
               
   
Natural Gas
          
30,000
 
ONEOK Inc. 
1.5%
  
$
1,338,900
 
               
   
Total investment in common stocks
          
   
(cost $759,304)
1.5%
  
$
1,338,900
 
 
Principal
Amount $
  
Convertible Bonds
Percent of
Net Assets
    
Market Value
  
               
   
Computer Peripherals
          
1,500,000
 
Maxtor Corp. 2
          
   
Notes, 6.800%, due 04/30/2010
1.8%
  
$
1,603,125
 
               
   
Real Estate Investment Trusts
          
1,500,000
 
Prologis
          
   
Notes, 1.875%, due 11/15/2037
1.6%
  
$
1,350,000
 
               
   
Semiconductors
          
1,000,000
 
Intel Corp. 2
          
   
Notes, 2.950%, due 12/15/2035
1.1%
  
$
981,250
 
               
   
Total investments in convertible bonds
          
   
(cost $3,961,082)
4.5%
  
$
3,934,375
 
 
Principal
Amount $
 
Corporate Bonds
Percent of
Net Assets
    
Market Value
  
               
   
Biotechnology
          
3,000,000
 
Genentech Inc.
          
   
Notes, 4.750%, due 07/15/2015
3.5%
  
$
3,013,659
 
               
   
Financial Services
          
2,000,000
 
American Express Co. 2
          
   
Notes, 5.500%, due 09/12/2016
    
$
1,931,538
 
500,000
 
Bank One Corp.
          
   
Notes, 6.000%, due 02/17/2009
      
507,782
 
500,000
 
Goldman Sachs Inc.
          
   
Notes, 6.650%, due 05/15/2009
      
513,165
 
1,500,000
 
Goldman Sachs Inc. 2
          
   
Notes, 5.750%, due 10/01/2016
      
1,495,004
 
1,000,000
 
Goldman Sachs Inc.
          
   
Notes, 5.625%, due 01/15/2017
      
959,325
 
2,000,000
 
Merrill Lynch & Co., Inc. 2
          
   
Notes, 6.500%, due 07/15/2018
      
1,938,646
 
2,000,000
 
Wells Fargo & Co.
          
   
Notes, 5.125%, due 09/15/2016
      
1,978,624
 
500,000
 
Wells Fargo Financial Inc.
          
 
  
Notes, 6.850%, due 07/15/2009
      
518,304
 
     
11.4%
  
$
9,842,388
 
               
   
Networking Products
          
2,800,000
 
Cisco Systems Inc.
          
   
Notes, 5.500%, due 02/22/2016
3.3%
  
$
2,896,900
 
               
   
Retail
          
400,000
 
Target Corp.
          
   
Notes, 7.500%, due 08/15/2010
0.5%
  
$
434,020
 
               
   
Telecom Services
          
1,000,000
 
Verizon Communications Inc.
          
   
Notes, 5.550%, due 02/15/2016
1.1%
  
$
994,896
 
               
   
Total investments in corporate bonds
          
   
(cost $17,029,950)
19.8%
  
$
17,181,863
 
 
 Principal
Amount $
  
U.S. Government Agency Bonds
Percent of
Net Assets
    
Market Value
  
               
8,000,000
 
Fannie Mae
          
   
4.350%, due 01/25/2010
    
$
8,279,904
 
3,000,000
 
Fannie Mae
          
   
5.125%, due 04/22/2013
      
3,004,869
 
2,000,000
 
Fannie Mae
          
   
5.250%, due 01/15/2009
      
2,045,874
 
3,000,000
 
Federal Farm Credit Bank
          
   
5.410%, due 11/07/2016
      
3,188,148
 
2,000,000
 
Federal Home Loan Bank System
          
   
5.500%, due 11/17/2016
      
2,133,658
 
1,500,000
 
Federal Home Loan Bank System
          
   
5.250%, due 09/12/2014
      
1,638,038
 
1,500,000
 
Federal Home Loan Bank System
          
   
5.000%, due 09/14/2012
      
1,613,966
 
1,500,000
 
Federal Home Loan Bank System
          
   
5.125%, due 03/10/2017
      
1,594,790
 
1,500,000
 
Federal Home Loan Bank System
          
   
5.250%, due 06/12/2009
      
1,552,304
 
2,000,000
 
Freddie Mac
          
   
6.000%, due 09/19/2016
      
2,030,646
 
               
   
Total investments in U.S. government agency bonds
    
   
(cost $25,979,770)
31.1%
  
$
27,082,197
 
               
               
   
Total investment in long-term securities
         
   
(cost $47,730,106)
56.9%
  
$
49,537,335
 
 
 Principal
Amount $
  
Short-Term Investments
Percent of
Net Assets
    
Market Value
  
               
   
U.S. Government Agency Discount Notes
          
9,000,000
 
FHLB Discount Note
          
   
1.83%, matures 04/22/2008
    
$
8,990,393
 
8,000,000
 
FHLB Discount Note
          
   
1.95%, matures 04/28/2008
      
7,988,300
 
13,000,000
 
FNMA Discount Note
          
   
2.04%, matures 04/14/2008
      
12,990,423
 
     
34.5%
  
$
29,969,116
 
               
   
Registered Investment Companies -
          
   
Money Market Funds
          
1,121,466
 
Evergreen U.S. Government Fund
          
   
variable rate, 2.24%
    
$
1,121,466
 
3,588,348
 
Janus Government Fund
          
   
variable rate, 2.49%
      
3,588,348
 
2,446,437
 
SSGA U.S. Government Fund
          
   
variable rate, 1.98%
      
2,446,437
 
     
8.2%
  
$
7,156,251
 
               
   
Securities Purchased with Cash
          
   
Collateral from Securities Lending
          
2,153,590
 
State Street Navigator
          
   
Securities Lending
         
   
Prime Portfolio
          
   
variable rate, 3.18%
2.5%
  
$
2,153,590
 
               
   
Total short-term securities
          
   
(cost $39,278,957)
45.2%
  
$
39,278,957
 
               
               
   
Total securities
          
   
(cost $87,009,063)
102.1%
  
$
88,816,292
 
               
   
Payable upon return of securities loaned
-2.5%
  
$
(2,153,590
 )
               
   
Other assets and liabilities - net
0.4%
  
$
376,318
 
               
   
Total net assets
100.0%
  
$
87,039,020
 
 
(2) This security, or partial position of this security, was on loan at March 31, 2008.
The total value of the securities on loan on March 31, 2008 was $2,125,468.
 
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, 2008, the net unrealized appreciation (depreciation) based on the
cost of long-term investments of securities for income tax purposes was as follows:
  
     
   
Fixed-Income
Fund
 
       
Cost of long term investments
  
$
47,730,106
  
Unrealized appreciation
  
$
2,137,423
  
Unrealized depreciation
    
(330,194
)
         
Net unrealized appreciation (depreciation)
  
$
1,807,229
  
 
Fund holdings will vary over time.

Fund shares are not FDIC insured.

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 Fixed-Income 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
  
$
40,617,857
  
$
-
  
Level 2
    
48,198,435
   
-
 
Level 3
    
-
   
-
 
Total
  
$
88,816,292
  
$
-
  
 
* 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 Income 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      
  
 
 EX-99.CERT 2 v115677_ex99-cert.htm
Exhibit 99.CERT

Item 3. RULE 30a-2(a) CERTIFICATIONS

I, Jerome L. Dodson, certify that:

1.I have reviewed this report on Form N-Q of the Parnassus Income Funds;

2.Based on my knowledge, this report does not contain any untrue statement of a 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 schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 
   
     
   
 
 		  
 		  
 
May 28, 2008   /s/ Jerome L. Dodson
 
Jerome L. Dodson
Principal Executive Officer
 
 

 


I, Marc C. Mahon, certify that:

1. I have reviewed this report on Form N-Q of the Parnassus Income Funds;

2. Based on my knowledge, this report does not contain any untrue statement of a 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 schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
  
     
   
 
 		  
 		  
 
May 28, 2008   /s/ Marc C. Mahon
 
Marc C. Mahon
Principal Financial Officer
 
 
 
 
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