Fund Fact Sheet
Parnassus Workplace Fund
Ticker: PARWX
As of March 31, 2013, the NAV of the Parnassus Workplace Fund was $24.01, so the total return for the quarter was 8.30%.
This compares to 10.61% for the S&P 500 Index ("S&P 500") and 10.30% for the Lipper Large-Cap Core Average, which
represents the average large-cap core fund followed by Lipper ("Lipper average"). Normally, I would be very pleased with an
8% return in a quarter, but the market took off, and we weren't able to keep up with the surging indices. Weakness in some of
our technology issues and freight-forwarders held us back.
Below is a table comparing the Parnassus Workplace Fund with the S&P 500 and the Lipper average for the past one-, threeand
five-year periods and for the period since inception. Despite our relatively weak first quarter, we are still ahead of both
our benchmarks for the one-year period. For the three-year period, we are ahead of the Lipper average, but slightly behind the
S&P 500. We remain well ahead of both our benchmarks for the five-year period and the period since inception.
Performance data quoted represent past performance and are no guarantee of future returns.
Current performance may be lower or higher than the performance data quoted. Current
performance information to the most recent month-end is available on the Parnassus website
(www.parnassus.com). Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original principal cost.
Returns shown in the table do not reflect the deduction of taxes a shareholder may pay on fund
distributions or redemption of shares. The S&P 500 Index is an unmanaged index of common
stocks, and it is not possible to invest directly in an index. Index figures do not take any
expenses, fees or taxes into account, but mutual fund returns do.
Before investing, an investor should carefully consider the investment objectives, risks, charges
and expenses of the Fund and should carefully read the prospectus or summary prospectus,
which contain this and other information. The prospectus or summary prospectus can be
obtained on the Parnassus website, or by calling (800) 999-3505. As described in the Fund's
current prospectus dated May 1, 2013, Parnassus Investments has contractually agreed to limit
the total operating expenses to 1.20% of net assets, exclusive of acquired fund fees, until
May 1, 2014. This limitation may be continued indefinitely by the Adviser on a year-to-year
basis.
Company Analysis
Two stocks each cut 12¢ or more off the value of
each fund share, while four stocks each added 13¢
or more to the NAV. The one that hurt us the most
was Riverbed Technology, which sliced 20¢ off
each fund share as its stock dropped 24.4%, from
$19.72 to $14.91. The company makes software
for use in optimizing wide-area networks (WANs),
which speed the flow of information within an
organization from site-to-remote-site. The stock
dropped after management reduced its earnings
outlook for the upcoming quarter, citing sluggish
public sector demand for its core WAN product
and higher integration costs from its recent
acquisition of OPNET Technologies. We expect
demand for Riverbed's core WAN optimization
software will rebound, as trends toward mobile
computing and virtualized workplaces drive
greater data traffic across wide-area networks. New
product releases and merger synergies should also
boost profits next year.
Expeditors International subtracted 12¢ per share
from the Workplace Fund, as its stock dropped
9.7% from $39.55 to $35.71. The company is a
freight-forwarder, which is like a travel agent for
shipping goods around the world, managing the
complex process of finding air or ocean cargo
space and ensuring that local customs regulations
are followed, so the freight arrives on time. We
bought our first shares at the end of 2012, after a
decrease in demand for air freight allowed us to
invest in the company at an attractive valuation.
Unfortunately, demand continued to decrease,
and the stock has moved even lower since we
bought it. We have added to our position: there's
no way we can identify the point where a stock
hits bottom, so we try to average into our
positions, buying a moderate amount of shares,
then adding more if the stock goes lower. We still
feel that Expeditors International is an attractive investment. With earnings at a cyclical low, valuation at bargain levels and cash reserves equal to almost 20% of market
capitalization, we believe that further downside for the stock is limited, while the upside will be significant when demand for
air freight increases.
The stock making the biggest contribution to the Workplace Fund was Gilead Sciences, a biotech company specializing in
medicines to treat HIV and liver disease. Gilead contributed 24¢ to the NAV, as its stock rose 33.2% from $36.73 to $48.93.
Because of the price increase, we sold a lot of our shares during the quarter. Stribild, the company's new once-a-day HIV pill
that produces higher viral suppression with fewer side effects, doubled in total prescriptions from year-end 2012 to mid-
March of 2013. Gilead also continued to have success developing Sofosbuvir (previously called GS-7977), producing more
clinical trial data demonstrating the drug's effectiveness in curing hepatitis C across different and often difficult-to-cure patient
populations. Like Stribild, Sofosbuvir is a more effective treatment and better tolerated than its competition.
Applied Materials added 20¢ to each fund share, as its stock climbed 17.8% from $11.44 to $13.48. The company is the
biggest maker of semiconductor manufacturing equipment, selling to large chipmakers such as Intel and Taiwan
Semiconductor Manufacturing. Customers are increasing capacity to build chips for the growing markets for smartphones and
tablets.
Shares of Charles Schwab, the San Francisco-based bank and brokerage firm, jumped 23.2% from $14.36 to $17.69 while
adding 20¢ to each fund share. Although earnings increased modestly in the first quarter, the driving force was not net
income, but rather an expected increase in interest rates. Interest rates, of course, are still very low, but as the economy
improves, investors anticipate higher rates, and this was enough to move Schwab's stock higher. There are three ways that
Schwab will make more money with rising rates. First, it will increase the interest earned on margin loans. Second, it will
increase the interest earned on loans made by the Schwab Bank. Third, it will enable Schwab to earn a full fee on managing its
money market funds. Because of low interest rates, Schwab had to waive most of its fees on these funds, which last year
amounted to $587 million.
Autodesk, a leading software-provider for architects, engineers and
designers, added 13¢ to the NAV, as its stock climbed 16.7% from
$35.35 to $41.24. The company posted better-than-expected revenues
for its December-quarter, led by a surge in large deals valued at greater
than $1 million. There was also a big increase in adoption of its
integrated design suites by construction and manufacturing customers.
Yours truly,
Jerome L. Dodson
Portfolio Manager
The information above represents the Letter from Parnassus Investments, management's
discussion and analysis of fund performance, and Responsible Investing Notes as
excerpted from the Report. Please click on the "Full Report" link above to
view the Report in its entirety.