Parnassus - Small-Cap Fund

Parnassus Small-Cap Fund

Objective:

Capital appreciation.

Strategy

The Parnassus Small-Cap Fund is a diversified, fundamental, U.S., small-cap, core equity fund. The Fund invests principally in undervalued equity securities of small-capitalization companies under $3 billion at the time of initial purchase. The Fund seeks to invest in smaller companies with good businesses that are still developing. The Fund also takes environmental, social and governance factors into account in making investment decisions.

Risks

The Fund’s share price may change daily based on the value of its security holdings. Stock markets can be volatile, and stock values fluctuate in response to the asset levels of individual companies and in response to general U.S. and international market and economic conditions. Security holdings in the fund can vary significantly from broad market indexes.

The Fund invests in the stocks of smaller companies, which are generally riskier than larger companies, and the Fund’s share price may be more volatile than funds that invest in larger companies.

Ticker	PARSX
CUSIP	701765877
Minimum Investment	$2,000
Gross Expense Ratio	1.22 %
Net Expense Ratio*	1.20 %
Inception Date	4/29/2005
Fund Managers, Since April 2005 Since May 2011	Jerome L. Dodson Ryan S. Wilsey
Fund Strategy	Small-Cap Core
Lipper Category	Small-Cap Core
Distribution Frequency	Annually
Total Net Assets	$732MM

* Expenses based on total net assets, net of reimbursement.

Fund Characteristics as of 3/31/12	Fund	Russell 2000 Index
Avg. Weighted Mkt. Cap ($Bin) Avg. Weighted Mkt. Cap ($Bin) The average capitalization of all stocks in the portfolio, weighted by each holding's size in the portfolio. Capitalization, or market value of an entire company, is calculated by multiplying the number of shares outstanding by the price per share. Info	$1.8	$1.4
P/E Ratio P/E Ratio A ratio of a stock's current price to its per-share earnings over the past 12 months (or "trailing" 12 months). This gives us an idea of how "expensive" a stock may be. For a fund, the price/earnings ratio is the weighted average P/E ratio of the stocks it holds. Info	19.3x	17.4x
P/B Ratio P/B Ratio The ratio of a stock’s latest closing price divided by its book value per share. Info	1.8x	1.8x
Number of Holdings	38	1,941
Portfolio Turnover (2011 Annual)	39.5 %	NA

Fund Statistics (5 Year) as of 3/31/12	Fund	Russell 2000 Index
Alpha Alpha A coefficient measuring risk-adjusted performance, considering the risk due to the specific security, rather than the overall market. A large alpha indicates that the stock or mutual fund has performed better than would be predicted, given its beta. Info	5.51 %	0.00 %
Beta Beta A measurement of a fund's trailing 36-month returns in relation with the market as a whole. A beta of 1 means that the share price moves exactly inline with the market. A beta over 1 suggests that the share price will typically be more volatile than the market, and conversely, a beta below 1 indicates that the share price will typically be less volatile than the market. Info	1.00	1.00
R-Squared R-Squared A measurement of how closely the portfolio's performance correlates with the performance of a benchmark index such as the S&P 500. Info	0.87	1.00
Sharpe Ratio Sharpe Ratio A ratio used to measure risk-adjusted performance. It is calculated by subtracting the risk-free rate from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. Info	0.24	0.04
Standard Deviation Standard Deviation A calculation used to measure variability (risk) of a portfolio's performance. Info	26.37 %	24.68 %
Downside Risk Downside Risk A statistical measurement of a portfolio’s dispersion below the mean return of a benchmark. Info	16.78 %	17.79 %
Tracking Error Tracking Error The standard deviation of the difference between the portfolio return and the desired investment benchmark return. Info	9.37 %	NA

As described in the Fund’s current prospectus dated May 1, 2012, Parnassus Investments has contractually agreed to limit the total operating expenses (exclusive of acquired fund fees and expenses) to 1.20% of the net assets of the Parnassus Small-Cap Fund. This limitation continues until May 1, 2013, and may be continued indefinitely by the Adviser on a year-to-year basis.

The Russell 2000 Index a widely recognized index of common stock prices. An individual cannot invest directly in an index. An index reflects no deductions for fees, expenses or taxes, but mutual fund returns do.

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