Parnassus Funds N-CSRCertified annual shareholder report (management investment company)

Parnassus Core Equity Fund

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, and 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 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 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.

The estimated impact of individual stocks on the Fund’s performance is provided by FactSet.

As described in the Fund’s current prospectus dated May 1, 2023, Parnassus Investments, LLC has contractually agreed to reduce its investment advisory fee to the extent necessary to limit total annual fund operating expenses to 0.82% of net assets for the Parnassus Core Equity Fund – Investor Shares and to 0.61% of net assets for the Parnassus Core Equity Fund – Institutional Shares. This agreement will not be terminated prior to May 1, 2024, and may be continued indefinitely by the investment adviser on a year-to-year basis.

preference for enterprise software and semiconductor stocks mitigated the impact.

Turning to Fund performance, the Parnassus Core Equity Fund – Investor Shares experienced a gain of 24.93% for 2023, trailing the 26.29% return for the S&P 500. Our stock selection was positive, although it was offset by negative sector allocation. The Fund’s strongest stock selection was in the Information Technology sector, headlined by Salesforce and Adobe. The Financials and Consumer Staples sectors were also notable contributors. From a sector allocation perspective, our underweight positioning in Consumer Discretionary was the leading detractor, largely due to our lack of exposure to Amazon and Tesla. Our overweight positions in Materials and Financials were also notable detractors.

Our top three relative contributors in 2023 were Salesforce, Adobe and Intel. Salesforce, the leading customer relationship management (CRM) software provider, rose 98.5% and added 1.7%* to the Fund’s relative return in 2023. The company consistently delivered better-than-expected sales and margin throughout the year. The management team is committed to spending more efficiently, and the cost discipline is having a positive effect on profit margins. The incumbent position and access to proprietary data also position the company well to take advantage of the AI opportunity in the CRM market.

Adobe, the leading provider of design software, returned 77.3% and added 1.0% to the Fund’s relative return. Adobe’s execution benefitted the company significantly from a sentiment shift surrounding the monetization prospect of generative AI features across its product suite. Its forward PE multiple expanded more than 60% from trough to peak in 2023.

Lastly, Intel returned 84.7% and contributed 0.8% to the Fund’s relative return. The stock continued to appreciate throughout the year, as investor concerns with both the cyclical and secular components of the company lessened.

Our top three relative detractors in 2023 were John Deere, Charles Schwab and Apple. John Deere returned -5.5% and impacted the Fund’s relative return

Parnassus Core Equity Fund

As of December 31, 2023

(percentage of net assets)

* For purposes of categorizing securities for diversification requirements under the Investment Company Act, the Fund uses industry classifications that are more specific than those used for the chart.

Portfolio characteristics and holdings are subject to change periodically.

with an elevated chance of a U.S. recession by the second quarter. This would help ease inflation, especially in areas such as housing rent, which represents about a third of CPI² and which is already showing price softness. Thus, it is likely that we are leaving a regime of higher rates and tight financial conditions and entering one with lower rates and loose financial conditions. However, rates are unlikely to fall to the extremely low levels we witnessed in the previous decade due to factors such as higher structural deficits, relative deglobalization and resource scarcity.

Regardless of the macroeconomic backdrop, we continue to focus on long-term outperformance through the ownership of high-quality businesses that are available at attractive prices due to near-term uncertainty. During the fourth quarter, we added one stock and sold another while making some notable sector allocation changes. We bought shares of Equifax, a consumer credit reporting agency. We expect the company to benefit from a rebound in mortgage volumes. Further, we believe that the long-term potential of Equifax’s Work Number (a digital employment and income verification service) and proprietary data platform is underappreciated. We sold shares of Becton Dickinson in favor of more attractive opportunities in Health Care.

From a sector allocation perspective, the two most notable changes were shifting from an overweight to a slightly underweight positioning in Consumer Staples and increasing our underweight in Health Care. We reduced our Consumer Staples exposure across the board, while our exit of Becton Dickinson contributed to the reduction in Health Care exposure. Next, we increased our overweight in Financials by adding to our position in Intercontinental Exchange and Bank of America.

With these changes, the Fund ended the year most overweight in Financials followed by Materials. Our holdings in the Financials sector represent a diverse collection of businesses that offer unique exposure to credit, consumption and the capital markets at attractive valuations. Our Materials exposure features high-quality businesses like Sherwin-Williams and Linde, along with companies poised for a cyclical

We thank you for your investment in the Parnassus Core Equity Fund.

Sincerely,

Todd C. Ahlsten

Lead Portfolio Manager

Benjamin E. Allen

Portfolio Manager

Andrew S. Choi

Portfolio Manager

Parnassus Growth Equity Fund

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 an investor’s shares, when redeemed, may be worth more or less than their original principal cost. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived.

Returns shown in the table do not reflect the deduction of taxes a shareholder may pay on fund distributions or redemption of shares. The Russell 1000 Growth 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.

The estimated impact of individual stocks on the Fund’s performance is provided by FactSet.

* Since Inception, December 28, 2022 (commencement of operations) through December 31, 2023.

As described in the Fund’s current prospectus dated May 1, 2023, Parnassus Investments, LLC has contractually agreed to reduce its investment advisory fee to the extent necessary to limit total annual fund operating expenses to 0.84% of net assets for the Parnassus Growth Equity Fund – Investor Shares and to 0.63% of net assets for the Parnassus Growth Equity Fund – Institutional Shares. This agreement will not be terminated prior to May 1, 2024, and may be continued indefinitely by the investment adviser on a year-to-year basis.

preference for enterprise software and semiconductor stocks mitigated the impact.

Turning to performance, the Parnassus Growth Equity Fund – Investor Shares returned 44.82% for 2023, which beat the Russell 1000 Growth’s return of 42.68%, driven primarily by our stock selection. From a sector allocation perspective, our largest detractors were cash, our overweight positioning in Health Care and underweight positioning in Information Technology. From a stock selection perspective, Information Technology and Financials were our two largest contributors.

Our top three relative contributors for the year were Adobe, Adyen and Salesforce. Adobe, the leading provider of design software, was the Fund’s best performer, with the stock returning 72.6% and contributing 2.0%* to the Fund’s relative return this year. When we initiated our position in Adobe, the company was trading at historically low valuation due to regulatory concerns around the acquisition of design competitor, Figma, and AI disruption. These overhangs have now been removed with the termination of the Figma deal and greater market appreciation for Firefly and Adobe’s AI opportunity.

Adyen, a payment company, returned 79.0% and added 1.7% to the Fund’s relative return. Like Adobe, we were able to buy Adyen after a significant share price and valuation decline due to concerns with competitive pressures and pricing. We remain confident in the underlying business quality, profitability and premium positioning of the company.

Finally, Salesforce gained 98.5%, adding 1.1% to the Fund’s relative return. Salesforce, the leading provider of customer relationship management software (CRM), executed well on its strategy of increased productivity and profitability. We continue to believe the company has underappreciated opportunities to grow profitably and reward shareholders.

Our biggest three relative detractors for the year were Thermo Fisher Scientific, Planet Fitness and SBA Communications. Thermo Fisher, a life science tools provider, returned -3.4% and contributed -1.3% to the Fund’s relative return. Life science tools companies had a difficult year, as their pharma and biotech customers

Parnassus Growth Equity Fund

As of December 31, 2023

(percentage of net assets)

* For purposes of categorizing securities for diversification requirements under the Investment Company Act, the Fund uses industry classifications that are more specific than those used for the chart.

Portfolio characteristics and holdings are subject to change periodically.

outcomes. The economy is likely to cyclically soften, with an elevated chance of a U.S. recession by the second quarter. This would help ease inflation, especially in areas such as housing rent, which represents about a third of CPI² and which is already showing price softness. Thus, it is likely that we are leaving a regime of higher rates and tight financial conditions and entering one with lower rates and loose financial conditions. However, rates are unlikely to fall to the extremely low levels in the previous decade due to factors such as higher structural deficits, relative deglobalization and resource scarcity.

Regardless of the macroeconomic backdrop, we continue to focus on long-term outperformance through the ownership of high-quality businesses that are available at attractive prices due to near-term uncertainty. During the fourth quarter, we added one stock and sold two stocks while making some notable sector allocation changes. We bought shares of Equifax, a consumer credit reporting agency. We expect the company to benefit from a rebound in mortgage volumes. Further, we believe that the long-term potential of the Equifax’s Work Number (a digital employment and income verification service) and proprietary data platform is underappreciated. We sold Ulta, a beauty specialty retailer, due to the increased promotional environment and competitive threats, especially from new entrant TikTok Shop. We also sold Hershey, a confectionary manufacturer, and reallocated the capital to more attractive defensive exposure.

From a sector allocation perspective, our most notable change was shifting from an underweight to an overweight position in Industrials through the addition of Equifax and the increased position in John Deere. Our sales of Ulta and Hershey increased our underweight positioning in Consumer Staples and Consumer Discretionary.

With these changes, the Fund exited the year most overweight in Financials, followed by Health Care and Materials. Our holdings in the Financials sector represent a diverse collection of businesses that offer unique exposure to credit, consumption and the capital markets at attractive valuations. Within Health Care, we own high-quality franchises across pharma,

Parnassus Value Equity Fund

The average annual total return for the Parnassus Value Equity Fund – Institutional Shares from commencement (April 30, 2015) was 12.56%. Performance shown prior to the inception of the Institutional Shares reflects the performance of the Parnassus Value Equity Fund – Investor Shares and includes expenses that are not applicable to and are higher than those of the Institutional Shares. The performance of the Institutional Shares differs from that shown for the Investor Shares to the extent that the classes do not have the same expenses.

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 an investor’s shares, when redeemed, may be worth more or less than their original principal cost. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived.

Returns shown in the table do not reflect the deduction of taxes a shareholder may pay on fund distributions or redemption of shares. The Russell 1000 Value 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.

The estimated impact of individual stocks on the Fund’s performance is provided by FactSet.

As described in the Fund’s current prospectus dated May 1, 2023, Parnassus Investments, LLC has contractually agreed to reduce its investment advisory fee to the extent necessary to limit total annual fund operating expenses to 0.88% of net assets for the Parnassus Vaule Equity Fund – Investor Shares and to 0.65% of net assets for the Parnassus Value Equity Fund – Institutional Shares. This agreement will not be terminated prior to May 1, 2024, and may be continued indefinitely by the investment adviser on a year-to-year basis.

offset macroeconomic headwinds to new orders through sales incentives, price reductions and smaller floorplans. Less expensive input costs and scale advantages also supported the company’s profitability.

Micron’s shares rose 71.9% during the year, contributing 1.0% to the Fund’s relative return. The memory semiconductor market has begun to recover after more than a year of declining prices and excess inventory. Industry-wide supply cuts and new demand from artificial intelligence (AI) applications are rapidly restoring the balance of supply and demand, with a positive impact on per unit pricing. Additionally, existing end markets such as PCs and smartphones have bottomed after one of the worst corrections in over a decade. We are maintaining our position, as we believe we are still in the early stages of this inflection in industry fundamentals.

Microsoft appreciated 58.2% in price, boosting the Fund’s relative return by 0.9%. Positive sentiment around generative AI’s capacity to drive future growth outweighed slower enterprise IT spend, while Microsoft’s cloud computing business, Azure, stabilized in the year’s second half. Microsoft remains the dominant global enterprise software platform—providing our portfolio both offense and defense. This technological leadership and the breadth of its productivity suite enables Microsoft to not only win in secular growth areas like cloud, but also benefit from vendor consolidation as IT budgets contracted.

Signature Bank, our only regional bank stock, was the Fund’s worst relative performer. It sliced 1.5% from the Fund’s relative return after regulators seized the company, effectively rendering it worthless. Higher interest rates set by the Fed to tackle high inflation culminated in a regional bank crisis in March. In the crisis, Silicon Valley Bank, a regional bank focused on start-up companies, failed suddenly after massive losses on its bond portfolio caused a run on the bank. While Signature did not have the same investment losses or industry concentration as Silicon Valley Bank, contagion from the panic spread to Signature and other banks as their customers’ feared losing money in a similar bank run.

Parnassus Value Equity Fund

As of December 31, 2023

(percentage of net assets)

* For purposes of categorizing securities for diversification requirements under the Investment Company Act, the Fund uses industry classifications that are more specific than those used for the chart.

Portfolio characteristics and holdings are subject to change periodically.

Although as managers we did not resolve every dilemma perfectly, we stood by our process to navigate the market’s inevitable uncertainties.

Notably, we strongly outperformed our benchmark in the final months of the year. In the fourth quarter of 2023, the Value Equity Fund – Investor Shares appreciated nearly 12.92%, or 3.4% more than the Russell 1000 Value Index’s gains of 9.50%. Several factors turned in our favor and drove this acceleration. First, oil prices fell due to an unexpected surge in petroleum supplies. This contributed to our relative performance as we avoid investing in fossil fuels. Our carefully selected investments in cyclical stocks ranging from semiconductors and homebuilders to Financials and Consumer Discretionary companies also outperformed, as falling inflation moved the economy onto a more solid footing. Finally, stocks surged as bond yields fell from their mid-October highs. As has long been the case, the Parnassus Value Equity Fund is constructed to capture greater upside when stocks rise, which historically occurs in most years.

Indeed, the 10-year Treasury yields steadily climbed all year, only to fall after breaching 5% in October. The rate, which serves as the cost of capital, has profound implications for the valuation of financial assets and is influenced by the actions and words of Fed officials. Since early 2022, the Fed has focused intently on tackling record-high inflation through the fastest series of rate hikes in recent history. Between October and November, though, the cumulative data in inflation began to look more benign, suggesting the Fed’s long rate-hike cycle was nearing an end. Investors, who were bearishly positioned and fearful of a policy error, suddenly changed their minds and jumped into the market, spurring a furious rally.

Given the Fed’s dominance over financial markets, it is worth pondering what its next move could be. Currently, Fed officials are forecasting three rate cuts in 2024 with markets predicting even more. However, recall the Fed has a dual mandate of price stability and full employment. Once inflation is no longer the economy’s biggest risk, it is logical that the Fed should shift its focus to the labor market. The labor market is healthy, with unemployment ending the year at 3.7%, the lowest reading since 1969. The economy added 2.7 million jobs in 2023, the highest number since 2015. A strong job market is beneficial—except when it contributes to inflation. But, if the Fed can apply the

Thank you for your investment in the Parnassus Value Equity Fund.

Billy J. Hwan

Lead Portfolio Manager

Krishna S. Chintalapalli

Portfolio Manager

Parnassus Mid Cap Fund

The average annual total return for the Parnassus Mid Cap Fund – Institutional Shares from commencement (April 30, 2015) was 7.80%. Performance shown prior to the inception of the Institutional Shares reflects the performance of the Parnassus Mid Cap Fund – Investor Shares and includes expenses that are not applicable to and are higher than those of the Institutional Shares. The performance of the Institutional Shares differs from that shown for the Investor Shares to the extent that the classes do not have the same expenses.

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 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 Russell Midcap 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. Mid cap companies can be more sensitive to changing economic conditions and have fewer financial resources than large cap companies.

The estimated impact of individual stocks on the Fund’s performance is provided by FactSet.

As described in the Fund’s current prospectus dated May 1, 2023, Parnassus Investments, LLC has contractually agreed to reduce its investment advisory fee to the extent necessary to limit total annual fund operating expenses to 0.96% of net assets for the Parnassus Mid Cap Fund – Investor Shares and to 0.75% of net assets for the Parnassus Mid Cap Fund – Institutional Shares. This agreement will not be terminated prior to May 1, 2024, and may be continued indefinitely by the investment adviser on a year-to-year basis.

Care sector hurt the Fund by 70 basis points, and our overweight position to the Consumer Staples sector hurt the Fund by 30 basis points.

The Fund had positive stock selection in the Information Technology, Consumer Discretionary and Materials sectors but stock selection detracted from performance in the Industrials, Financials and Real Estate sectors. First Republic Bank was the Fund’s weakest performer, with the stock falling a shocking 73.3% from its average price, subtracting 1.6%* from the Fund’s relative return. The California-based regional bank plunged during the March banking crisis, after Silicon Valley Bank’s sudden failure caused contagion. First Republic experienced a bank run, as its concentrated client base of successful businesses and high net-worth individuals in coastal markets took their deposits to bigger and more diversified banks. The loss to the Fund was heavy, but we fortunately sold our shares in First Republic before it failed.

Another of the largest detractors was CNH Industrial NV, a leader in agricultural technology and equipment. The stock fell 22.0%, shaving the Fund’s relative return by 1.3%. The company saw sluggish demand for its agricultural products, especially in South America, where farmers curtailed their spending due to lower commodity prices. Investors lost confidence as management lowered its sales growth forecast from 8%–11% to 3%–6% for 2023. We remain optimistic about CNH’s prospects because cost reduction and efficiency measures should help the company mitigate current challenges and boost profitability.

Hologic Inc., a leading provider of diagnostics and mammography devices, declined 4.5% in 2023, reducing the Fund’s relative return by 1.0%. The company saw solid underlying growth in non-pandemic diagnostics every quarter and offered a favorable outlook for organic revenue growth in 2024. However, investors soured on the stock given tougher comparisons in 2024, slowing growth in China, high chip costs in its breast health products and expected changes in expert guidelines for cervical screening and other tests. Despite these near-term concerns, we remain upbeat about Hologic’s long-term growth prospects given its innovative diagnostics, surgical and breast health devices, international

Parnassus Mid Cap Fund

As of December 31, 2023

(percentage of net assets)

Portfolio characteristics and holdings are subject to change periodically.

Additionally, we are increasingly mindful of our portfolio’s factor exposures, given the increased volatility from fast-shifting investor sentiment and the influence of algorithmic trading.

Mid cap stocks overall are fairly valued relative to historical measures, with the Russell Midcap entering 2024 at a forward price-to-earnings (PE) multiple of 17.1 times. This is slightly higher than the 20-year average of 16.4x and well above the 20-year low of 9.0x. Still, we believe that good deals still are available as we construct and position our concentrated portfolio to beat the 800+ company Russell.

The Fund is underweight relative to the Russell Midcap in Communication Services, Real Estate and Financials. These sectors tend to be vulnerable to negative economic surprises. The Fund is overweight relative to the benchmark in Information Technology, Health Care and Materials. Our holdings in these sectors have the potential to perform relatively well in any market environment and have durable business models, competitive advantages and attractive valuations.

Two areas of the market where we currently see significant opportunities are in select established software stocks and life sciences tools and services companies. Our software investments enjoy highly sustainable revenue growth and wide competitive advantages, while our life sciences investments include quality companies poised to rebound following two years of post-COVID challenges.

During the quarter, we initiated five new positions while exiting three stocks. We invested in two leading technology companies with strong competitive advantages. Fortinet is a leader in network security software and stands to benefit from growing demand for endpoint security and cloud security solutions as cyber threats rise. The stock price fell recently due to weak demand for firewall appliances, but we believe this is a temporary setback and expect the company to gain market share, improve margins and deliver multi-year growth. We also initiated an offensive position in Block, a leading payments company for small and medium-sized businesses. The company’s CashApp is one of the most widely used mobile payments apps that lets users send money, buy stocks and more. We are optimistic about the company’s growth prospects and renewed focus to boost profitability in coming years.

Thank you for your investment in the Parnassus Mid Cap Fund.

Yours truly,

Matthew D. Gershuny

Lead Portfolio Manager

Lori A. Keith

Portfolio Manager

Parnassus Mid Cap Growth Fund

The average annual total return for the Parnassus Mid Cap Growth Fund – Institutional Shares from commencement (April 30, 2015) was 7.88%. Performance shown prior to the inception of the Institutional Shares reflects the performance of the Parnassus Mid Cap Growth Fund – Investor Shares and includes expenses that are not applicable to and are higher than those of the Institutional Shares. The performance of Institutional Shares differs from that shown for the Investor Shares to the extent that the classes do not have the same expenses.

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 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 Russell Mid Cap Growth is an 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.

The estimated impact of individual stocks on the Fund’s performance is provided by FactSet.

Contributions to returns quoted for individual stocks are their returns relative to the Fund’s index.

As described in the Fund’s current prospectus dated May 1, 2023, Parnassus Investments, LLC has contractually agreed to reduce its investment advisory fee to the extent necessary to limit total annual fund operating expenses to 0.80% of net assets for the Parnassus Mid Cap Growth Fund – Investor Shares and to 0.68% of net assets for the Parnassus Mid Cap Growth Fund – Institutional Shares. This agreement will not be terminated prior to May 1, 2024, and may be continued indefinitely by the investment adviser on a year-to-year basis.

price, subtracting 2.2%* from the Fund’s relative return. First Republic plunged during the regional bank crisis in early March, after Silicon Valley Bank’s sudden failure caused contagion. First Republic’s concentrated client base of successful businesses and high net-worth individuals in a select few coastal markets fled in a bank run to larger, more-diversified banks. We exited First Republic before it ultimately failed.

Fertilizer manufacturer Nutrien reduced the Fund’s relative return by 1.1% as its stock returned a -20.2%. Nutrien’s stock price fell along with their earnings as fertilizer prices declined. Lower crop prices reduced fertilizer usage, and supply was less constrained than anticipated as Russian and Belarussian potash exports continued despite economic sanctions. Nutrien is the world’s largest producer of potash, a commodity whose supply is controlled by only a handful of key global producers. We’re holding onto our position because we believe Nutrien will be a major beneficiary when the commodity cycle inevitably recovers.

Call center software provider Five9, Inc. reduced the Fund’s relative return by 0.9% as the stock dropped 24.1% from its average price. The stock declined as investors became concerned that Five9 could be negatively impacted by new artificial intelligence (AI) technology, as Five9 lacks a proprietary AI solution, and the number of call center agents could decline over time if AI-enabled chat bots are widely adopted. We were unable to disprove these concerns, so we exited our position.

Our best performer in 2023 was enterprise software provider Splunk. Splunk’s shares soared 70.6%, adding 2.9% to the Fund’s relative return. Splunk’s shares outperformed as it gained traction from cross-selling its suite of data monitoring software to its loyal base of customers and its management team dramatically improved the company’s profitability. Splunk’s impressive financial performance also caught the eye of technology giant Cisco, which announced it would acquire Splunk for $157 per share.

Insurance software provider Guidewire boosted the Fund’s relative return by 1.9% as its stock rose 74.3%. Guidewire delivered better-than-expected revenue and operating margins and provided an upbeat

Parnassus Mid Cap Growth Fund

As of December 31, 2023

(percentage of net assets)

* For purposes of categorizing securities for diversification requirements under the Investment Company Act, the Fund uses industry classifications that are more specific than those used for the chart.

Portfolio characteristics and holdings are subject to change periodically.

based subscription (Splunk and Guidewire), or a cyclical downturn within a secularly growing market (MercadoLibre). We’ve also learned that we should avoid turn-around situations, disruptive companies that have yet to develop a sustainable financial model and highly levered businesses. We don’t believe that our method of analyzing moat, relevancy, management, environmental, social and governance (ESG) and downside risk lends itself well to these unproven and risky businesses. We believe that doubling down on what we do best, and avoiding our weaknesses, is the best recipe to deliver long-term outperformance.

We feel fortunate to invest in the mid cap growth asset class. Mid cap growth companies are large enough to have proven financial models, seasoned management teams and access to capital. However, they’re small enough that they still have a long runway for growth and new products can result in growth inflections. Mid cap stocks often focus on niche markets, where they can build long-term relationships with their customers as they partner to solve complex problems. Niche markets are typically more defensible than large markets, which invite competition and make partnering with customers difficult. Over the past 10 years, mid cap growth stocks have traded at an average price-to-earnings (PE) multiple that is approximately 10% higher than that of large cap growth stocks due to the durability of mid cap earnings growth rates.

However, mid cap growth stocks are currently trading at parity to large cap growth, as the “Magnificent Seven”¹ have captured the imagination of investors due to their seemingly infinite growth opportunities. At some point, however, the law of large numbers may apply. For a $1 trillion market cap company to generate a 15% annual shareholder return, it must generate $150 billion in value—that’s more than the entire market value of any of our holdings! We believe that the valuation of mid cap growth stocks should return to its historical premium to large cap growth, especially if inflation continues to decelerate and the Federal Reserve reduces interest rates to limit the pressure it’s putting on the economy.

We’ve observed that equity markets have become more volatile. Volatility creates opportunity, and we look for opportunities that present themselves for long-term investors when a stock’s price diverges from its

popular among small- and medium-sized businesses. Block’s Founder and CEO Jack Dorsey has stepped in to run the Square business and is focused on increasing the company’s profitability and accelerating market share gains. We believe investors are underestimating the long-term earnings power of both innovative businesses.

Last but not least, we invested in Mettler-Toledo, a leading manufacturer of instruments such as scales and pipettes. Mettler-Toledo is famous for its instruments’ precision and its customer service, and the company is positioned as the #1 or #2 player in most of its fragmented markets. We had the opportunity to buy Mettler-Toledo at a cyclical low, as demand from China and from pharmaceutical companies was weak. We expect demand to eventually recover, and Mettler-Toledo to lead its markets higher.

We sold three software businesses to make room for our new additions. We exited the remainder of our Splunk position, after the company announced it was being acquired by Cisco. We exited communications software provider Twilio, as we believe that Procore and Datadog have more defensible businesses and higher growth potential. We also sold life sciences software provider Veeva Systems, as the upcoming

Parnassus Fixed Income Fund

The average annual total return for the Parnassus Fixed Income Fund – Institutional Shares from commencement (April 30, 2015) was 1.33%. Performance shown prior to the inception of the Institutional Shares reflects the performance of the Parnassus Fixed Income Fund – Investor Shares and includes expenses that are not applicable to and are higher than those of the Institutional Shares. The performance of the Institutional Shares differs from that shown for the Investor Shares to the extent that the classes do not have the same expenses.

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 an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived.

Returns shown in the table do not reflect the deduction of taxes a shareholder would pay in fund distributions or redemption of shares. The Bloomberg U.S. Aggregate Bond Index (formerly known as the Barclays U.S. Aggregate Bond Index) is an unmanaged index of bonds, 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.

The estimated impact of individual stocks on the Fund’s performance is provided by FactSet.

As described in the Fund’s current prospectus dated May 1, 2023, Parnassus Investments, LLC has contractually agreed to waive 0.10% of its management fee for each class, and to reimburse the Fund for expenses to the extent necessary to limit total operating expenses to 0.58% of net assets for the Parnassus Fixed Income Fund – Investor Shares and to 0.39% of net assets for the Parnassus Fixed Income Fund – Institutional Shares. This agreement will not be terminated prior to May 1, 2024, and may be continued indefinitely by the Adviser on a year-to-year basis.

earnings growth. The preferred stock was in the bargain bin and so Morgan Stanley became a top-five corporate position for the Fund during most of the year.

Similarly, preferred stock issued by Public Storage also outperformed the market and added 17 basis points to the Fund’s total return. While the company has struggled with higher leverage and concerns about competitive self-storage markets, the preferred stock performed well, as cash flow remained reasonable and the stock was undervalued. We exited the company’s securities into the strength.

From a sector perspective, our strongest outperformance came from consumer cyclical companies, including Macy’s, Hanesbrands and Lowe’s. The Consumer Staples sector remained strong in 2023, far exceeding most economists’ expectations, helping buoy these credits.

Few securities pulled down the total return in a meaningful way outside of First Republic’s preferred stock. Securities issued by the Federal Home Loan Bank System removed 6 basis points from the Fund’s total return. These securities trade in a technical way and were a casualty of the volatile interest rate environment. Similarly, our holdings in the International Finance Corporation (IFC) removed 3 basis points from the Fund’s total return due to timing. We added to this position as we exited expensive corporate bonds. The IFC bonds are green bonds¹, which means the proceeds are used for environmental or social projects.

While the IFC bonds did not fare well, our green bond holdings together outperformed those tracked by Bloomberg. Overall, green bonds gained 7.4% in 2023, while our green bond portfolio returned 7.9%. Green bonds are an important part of our portfolio, comprising 23.7% of the Fund. All of our corporate securities are screened for environmental, social and governance metrics, but the bonds we identify as green are issued in line with the Green Bond Principles from the International Capital Market Association. This means that these bonds follow a transparent and unified reporting process on the use of proceeds and estimated environmental impact. We are proud of our

Parnassus Fixed Income Fund

As of December 31, 2023

(percentage of net assets)

Portfolio characteristics and holdings are subject to change periodically.

Value on December 31, 2023

of $10,000 invested on December 31, 2013

The chart shows the growth in value of a hypothetical $10,000 investment over the last 10 years and does not reflect the deduction of taxes a shareholder would pay on fund distributions or the redemption of fund shares.

should benefit in this environment from healthy yields and a greater ability to gain on rallies.

We will continue to search for undervalued areas of the fixed income market. Thank you for your investment in the Parnassus Fixed Income Fund.

Samantha Palm

Lead Portfolio Manager

Minh Bui

Portfolio Manager

Responsible Investing Notes

In 2023, the Parnassus stewardship team delivered on our mission—to build wealth responsibly for long-term investors—against a backdrop of escalating geopolitical tensions, rapid advances in technology, slowing inflation and soaring global temperatures. The year also saw historic ESG wins in the U.S., such as the new California climate disclosure laws and President Biden’s Executive Orders on Artificial Intelligence (AI) and environmental justice. Unfortunately, the year also saw a flurry of hasty and misguided anti-ESG investing actions at the state and federal levels. We navigated this changing and checkered landscape by refining our focus on materiality and closely hewing our work to Parnassus’s client-centered mission and investment strategies. We improved our internal processes and communication and delivered notable, positive outcomes at portfolio companies.

Year in Review

Climate Targets¹: In January 2023, Parnassus announced a target to have 100% of our assets under management aligned with net-zero greenhouse gas emissions by 2050. In practice, this means that we expect all companies in our Funds to have set science-based targets by 2040. This year, we began to implement our ambition by actively engaging portfolio companies to set science-aligned targets, disclose their emissions and publish assessments of climate-related risks and opportunities. By the end of 2023, 62% of our assets under management were covered by science-based targets, had committed to set such a target and/or had been engaged on climate.

Engagement: In 2023, we connected with nearly every company across all Parnassus Funds via email, virtual meetings or in person to reinforce our sustainable investment philosophy and approach. Our impact engagement program focused primarily on climate risk, environmental justice (EJ), strong workplaces, responsible use of AI, materiality assessments and proxy voting and reached over 75 companies. We saw improvements at engaged companies, including the setting of emissions-reduction targets at Monolithic

In 2024, our goal is to drive demonstrable improvements at portfolio companies, with an emphasis on i) climate risk, ii) responsible development and use of AI, iii) environmental justice and iv) strong workplaces. We will also engage companies on risks and opportunities that we believe are relevant to the value of your investment. We continue to seek opportunities to file and co-file shareholder proposals, as they have proven to be an effective tool to drive change as we aim to build value in our Funds. And we will continue to vote proxies in a manner that we believe is in the best interest of clients and shareholders of the Funds.

I look forward to seeing what 2024 will bring and to sharing more success stories with you as the year goes

Fund Expenses (unaudited)

As a shareholder of the Funds, you incur ongoing costs, which include portfolio management fees, administrative fees, shareholder reports, and other fund expenses. The Funds do not charge transaction fees, so you do not incur transaction costs such as sales charges (loads) on purchase payments, reinvested dividends, or other distributions, redemption fees, and exchange fees. The information on this page is intended to help you understand your ongoing costs of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The following example is based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the period of July 1, 2023, through December 31, 2023.

Actual Expenses

In the example below, the first line for each Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During