Parnassus Core Equity Fund (PRBLX) N-CSRSCertified semi-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.

raised its guidance for net-new recurring revenue for the full fiscal year. Investor sentiment improved further after the company released new information about its generative artificial intelligence product, Firefly. In light of Adobe’s scale and distribution advantages, we believe the company is well positioned to capitalize on artificial intelligence opportunities within digital creation and create meaningful value for shareholders.

Insurance data provider Verisk Analytics was also a top contributor. The company’s stock returned 18.0% and contributed 0.4% to the Fund’s return in the quarter. Verisk reported strong earnings and provided guidance that exceeded investor expectations. The company’s organic growth rate accelerated beyond its long-term growth target, fueling positive investor sentiment.

The three largest relative detractors in the quarter were Target, Gilead and John Deere. Target’s stock returned negative 19.8% in the quarter, detracting 0.5% from the Fund’s return. Despite reporting modestly better-than-expected first-quarter results, Target encountered challenges in the second quarter, encountering a backlash over some of its Pride Month merchandise. This ultimately affected foot traffic in the short term, which weighed on investors. Despite this setback, we believe that the stock is trading at an attractive valuation relative to the recovery potential in sales and profit margin.

Gilead’s stock returned negative 6.2% in the quarter, detracting 0.2% from the Fund’s return. Gilead reported higher than expected costs driven by increased investments in its late-stage clinical programs as well as its commercial infrastructure. We believe Gilead’s HIV business remains well-positioned and will see accelerating growth as Biktarvy continues take share and their longer lasting lenacapavir drug launches in the prophylaxis market. In the meantime, Gilead continues to not get the full credit for their best-in-class cell therapy franchise that continues to gain scale. The next largest detractor was agriculture-equipment provider John Deere. The company’s stock returned a negative 1.6%, detracting 0.1% from the Fund’s return. Although the company reported strong earnings results, investor sentiment was weighed down by growing channel inventories, weaker pricing and concerns around the equipment cycle turning negative. This was partially offset by drought concerns, which boosted crop prices exiting the quarter. We expect the company to manage through the cycle well.

Portfolio characteristics and holdings are subject to change periodically.

Outlook and Strategy

Investors remain concerned about tightening monetary policy and a potential recession. However, we exited the second quarter with CPI¹ continuing to moderate, employment remaining robust and economic growth surprising to the upside. On top of this, the emergence of generative artificial intelligence (AI) applications fueled optimism about a potential wave of technological innovation and productivity gains. These factors, in part, contributed to a market rally led by large incumbent technology companies. As of the end of the quarter, the S&P 500 is now up nearly 25% from its most recent October low and nearly 17% year to date, mostly due to increased valuation measures, such as price-to-earnings multiples. Since the end of last year, estimates for this year’s real economic growth, inflation and employment have all moved higher, while the U.S. 10-Year Treasury yield has remained relatively flat. There has been a rise in optimism that we will experience a “soft landing,” in which inflation will continue to fall and the economy will not enter a major recession. This optimism, coupled with the expectation of eventual lower interest rates, has created a constructive environment for stocks.

Over the past few years, investors have likely overestimated the sensitivity of the economy to interest rates and underappreciated the impact of falling personal savings rates. This has led to more durable household spending and better-than-expected growth.

Linde, Sherwin-Williams and Nutrien. We believe that this collection of high-quality businesses offers a compelling balance of defensive and offensive characteristics. We slightly increased our overweight positioning by adding to Nutrien, where we believe that longer-term opportunity is attractive. We remain overweight Consumer Staples through excellent brands and retailers such as Costco, Procter & Gamble and Target.

Our largest underweight position continues to be Consumer Discretionary, where we prefer more resilient companies like AutoZone to those with more exposure to discretionary spending in areas such as travel and entertainment. We also remain underweight in Energy and, to a lesser extent, Communication Services, where our position became more underweight after we sold wireless carrier T-Mobile. Given the deterioration of its industry structure and fundamentals, we no longer felt the stock was attractively priced. We also continue to be underweight in Health Care, Utilities and Real Estate, as we believe we are finding better opportunities to own rate-sensitive or defensive stocks in Financials and Consumer Staples.

In terms of other notable sector allocation changes, the biggest change was our move to an overweight position in Information Technology. We added to our holdings in Adobe and Apple and initiated a new position in semiconductor company Intel. Despite Intel’s technology and execution challenges, we believe that the stock presents an attractive opportunity. The company is positioned for a cyclical recovery in personal computer and server chips in the coming quarters. Longer term, we anticipate that Intel will likely continue to play a crucial role in deploying

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.

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 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.

financial results and forward guidance. This, coupled with optimism for a rebound in semiconductor demand driven by artificial intelligence, drove the stock’s strong performance in the quarter.

Our biggest relative detractor in this quarter was Thermo Fisher Scientific, a life science tools provider. Thermo Fisher’s stock declined 9.4%, detracting 0.3% from the Fund’s return. This year is a reset for the life science tools companies as their pharmaceutical and biotechnology customers work through stockpiled inventory from the pandemic and rationalized research and development “R&D” spending. We are still confident in the long-term trends supporting increased drug discovery, technology and innovation in the life science sector, which should support Thermo Fisher’s long-term growth.

Planet Fitness, a nationwide gym franchise, returned negative 13.2%, subtracting 0.3% from the Fund’s return. Planet Fitness trailed this quarter after management guided to the bottom of their new store expectations for the year. We underestimated the near-term headwinds around new gym construction due to tighter financing conditions and a worsening HVAC supply chain. We believe Planet Fitness is now attractively priced despite these headwinds, and we believe its growth will continue to be supported by a strong brand awareness, consumer focus on wellness, and favorable demographics and unit expansion.

Finally, NVIDIA, a semiconductor chip manufacturer, gained 52.3% this quarter and added 1.2% to the Fund’s return on an absolute basis. NVIDIA was a relative detractor in this quarter due to our Fund’s underweight position. While we appreciate the company’s dominant competitive position and increasing relevancy, we believe its stock’s valuation reflects significant optimism.

Portfolio characteristics and holdings are subject to change periodically.

Outlook and Strategy

Investors remain concerned about tightening monetary policy and a potential recession. However, we exited the second quarter with CPI¹ continuing to moderate, employment remaining robust and economic growth surprising to the upside. On top of this, the emergence of generative artificial intelligence (AI) applications fueled optimism about a potential wave of technological innovation and productivity gains. These factors, in part, contributed to a market rally led by large incumbent technology companies. As of the end of the quarter, the Russell 1000 Growth is now up nearly 33% from its most recent October low and 29% year to date, mostly due to increased valuation measures, such as price-to-earnings multiples. Since the end of last year, estimates for this year’s real economic growth, inflation and employment have all moved higher, while the U.S. 10-Year Treasury yield has remained relatively flat. There has been a rise in optimism that we will experience a “soft landing,” in which inflation will continue to fall and the economy will not enter a major recession. This optimism, coupled with the expectation of eventual lower interest rates, has created a constructive environment for stocks.

Over the past few years, investors have likely overestimated the sensitivity of the economy to interest rates and underappreciated the impact of falling personal savings rates. This has led to more durable household spending and better-than-expected growth. Despite the robust economy, financial markets continue to expect the Federal Reserve to cut interest

our largest underweight, driven by our underweight in Apple.

Next, we also repositioned within the Consumer Discretionary and Consumer Staples sectors to take advantage of more compelling opportunities. We bought Yum! Brands, owner of Taco Bell, KFC and Pizza Hut brands, and Ulta Beauty, a beauty specialty retailer. We believe both companies have defensive growth characteristics and can benefit from trade down if U.S. consumer spending weakens. To fund these purchases, we sold Nike and Colgate. While we still admire the brand, expectations for Nike were high coming into their fiscal year 2024 with increasing uncertainty around U.S. and Chinese consumer demand, inventory levels and the company’s expanding relationship with wholesale partners. We sold Colgate, because we felt we had more attractive defensive consumer exposure with our collective positions in Yum! Brands, Costco and Hershey Company.

Lastly, we initiated a position in Danaher, a life science tools provider, given the volatility in the subsector. We believe this is a unique opportunity to buy the dominant bioprocessing company at a discount ahead of a wave of biopharma innovation. Within Industrials, we sold Verisk Analytics, a provider of insurance data analytics and services. While the stock has done well year to date and continues to have strong fundamentals, its valuation is approaching a five-year high, and we felt the capital could be better deployed in other high-quality compounders like Danaher. Health Care continues to be our largest sector overweight relative to the Russell 1000 Growth. We

Parnassus Value Equity Fund

The average annual total return for the Parnassus Value Equity Fund – Institutional Shares from commencement (April 30, 2015) was 12.22%. 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 waive 0.10% of its management fee for each class, and to reimburse the Fund for expenses 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.

quarter financials, negative sentiment continues to grow as the company guided to a COVID-19-delivery low in the second quarter. Uncertainty around Moderna’s COVID-19 revenues, as well as what the company’s expense profile will look like going into next year, has depressed the stock. We believe there are enough potential offsets to the declining COVID-19 business going into 2024, such as future RSV and flu vaccines. Moderna is also showing promising data in other parts of its large pipeline, such as its combination respiratory vaccines, personalized cancer vaccine and other therapeutic protein indications.

Agilent Technologies’ stock dipped 12.8%, reducing the Fund’s return by 0.3%, after management cut its revenue guidance slightly. The company is not alone in seeing a slowdown in pharma spending, driven by a normalization of analytical instrument demand and a constrained biotech funding environment impacting smaller customers. Nonetheless, we believe Agilent remains a quality compounder now trading at an attractive price, as the company continues to gain market share in an industry with very high switching costs. The Agilent story still has several idiosyncratic drivers that could drive upside to earnings expectations, such as PFAS and lithium-ion battery testing, as well as RNAi oligonucleotide manufacturing. We also believe the company continues to have a long runway of consistent margin expansion as it increases the attach rate of high-margin consumables and services within its large installed base of instruments.

The largest contributor to performance this period was enterprise software company Oracle. Oracle appreciated 28.7% in price, adding 0.8% to the Fund’s total return. The market’s narrative around Oracle has shifted from a safe harbor amid weaker enterprise IT spending to a longer-term growth story. The company has successfully begun to reaccelerate top-line growth by transitioning customers from on-premise to cloud-based services. This growth renaissance should prove more durable than the market believes-driven largely by Oracle’s Cloud Infrastructure business that can keep growing rapidly and take share in the global public cloud market.

D.R. Horton’s stock surged 24.9%, adding 0.7% to the Fund’s total return as the second-largest contributor. The largest home builder in the United States delivered better-than-expected earnings, driven by solid demand and strong pricing for new homes. The company saw

Parnassus Value Equity Fund

As of June 30, 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.

As active managers, we’re focused on assessing whether portfolio companies are prudently planning for a range of economic scenarios, not just a specific one. At the portfolio level, we’ve applied a similar measure of risk management in our positioning. We are overweight select Financials and technology stocks, which should do well if the economy avoids a hard landing, while our overweight positioning in Health Care and telecommunications stocks should hedge capital in the event of a major economic downturn.

In the second quarter, we initiated new positions in Fidelity National Information Services (FIS) and Adobe. FIS is a financial transaction technology provider. The company’s stock took a hit due to concerns about exposure to regional banks and weak performance in its payments processing business. However, the company’s revenue from regional banks is highly recurring and should continue to grow as regional banks invest more in technology to defend market share. FIS is also divesting its payments processing business, which should help strengthen its balance sheet.

Adobe is the world’s largest maker of design software. Concerns about the impact of generative AI on its business provided us the opportunity to buy this quality franchise trading off-price. We believe Adobe should be a leading beneficiary of generative AI adoption due to its strong incumbent position and early investments in AI that should be even more evident in upcoming product releases.

We also reinitiated a position in the semiconductor company Intel. The company slashed its dividend to reduce cash burn as it invests to regain competitiveness, and new management’s turnaround

Parnassus Mid Cap Fund

The average annual total return for the Parnassus Mid Cap Fund – Institutional Shares from commencement (April 30, 2015) was 7.29%. 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.

performance in the past quarter, with good stock picking in the Consumer Discretionary and Materials sectors adding 36 and 30 basis points, respectively, to the Fund’s return. Relatively poor stock picking in the Industrials, Real Estate and Health Care sectors hurt second-quarter performance by 81, 66 and 49 basis points, respectively.

The worst performer this quarter was SBA Communications, which fell 10.9%, detracting 0.4%* from the Fund’s return. The stock dropped after management provided disappointing financial guidance, signaling a slowdown in domestic gross revenue growth for 2023. While leasing of its wireless infrastructure should sustain healthy levels, SBA faces a tough year-over-year comparison due to the early 5G deployment activity that bolstered sales in 2022. Additionally, higher interest rates and anticipated churn from Sprint and international customers present medium-term headwinds. Despite these challenges and considering the stock’s multi-year low valuation, we remain optimistic about SBA’s potential.

Agilent Technologies, a leading life sciences tools and technology provider, dropped 12.8%, reducing the Fund’s return by 0.4%, after management reduced its fiscal 2023 revenue outlook. The company faces weaker-than-expected demand for its analytical instruments, driven by a slowdown in spending among its pharmaceutical customers and a constrained funding environment affecting smaller customers. Despite the recent weakness, we believe Agilent is poised to benefit from additional market share gains, the adoption of its testing products for PFAS and lithium-ion batteries and additional margin expansion through its cost control initiatives.

Nutrien, one of the world’s largest producers of fertilizers, dropped 19.3% in the quarter, reducing the Fund’s total return by 0.3%. The company reported weak first-quarter earnings and issued a disappointing outlook for the remainder of the year. Potash prices continued to fall during the quarter, as supply from Russia and Belarus recovered and as a major potash contract with China was settled at lower price than expected. Sluggish global demand has also been a drag, as farmers deplete existing inventories and cut

Parnassus Mid Cap Fund

As of June 30, 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.

environment favors active management, and we are optimistic about the prospects of our 40-stock portfolio’s focus on owning quality businesses at attractive prices.

During the second quarter, we bought five new stocks and exited three positions. In the consumer sector, we initiated a position in Hilton, a leading hotel and resort owner with a loyalty base of 158 million members. Hilton is poised to gain share as it expands into new markets, capitalizes on customer loyalty and launches new lifestyle brands including Spark and Home2. We also purchased shares in Ross Stores, the second-largest off-price retailer in the United States, which we believe will benefit from a favorable buying environment and increased consumer focus on its bargain-priced apparel and home products. With a pristine balance sheet, a long runway of store-count expansion and an attractive value proposition, we believe Ross is positioned to deliver solid earnings in the coming years.

Conversely, we exited Burlington Stores, the third-largest off-price retailer, due to concerns about its high valuation compared to its peers and elevated debt leverage. We also sold apparel company VF Corporation, due to concerns about its slow turnaround progress and elevated debt leverage, which could constrain its ability to invest behind its brands.

Within the Materials sector, we initiated a position in Nutrien, a Canadian-based company and one of the world’s largest providers of crop inputs. Despite recent pressure from weak commodity pricing, Nutrien is well positioned to benefit from the next upcycle, with significant earnings leverage and spare capacity to meet long-term, growing market demand.

In the Industrials sector, we added credit agency TransUnion and transportation service provider Old Dominion Freight Line. TransUnion’s valuation is close to historical lows due to a gloomy lending outlook and concerns about recent, large acquisitions. We believe these concerns will be short lived and present an idiosyncratic opportunity given the valuation. As stable, wide-moat businesses, credit bureaus have demonstrated resilience throughout economic cycles, and we have confidence management will succeed with maximizing the recent purchases of Neustar and Argus.

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 6.63%. 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.

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.

Call center software provider Five9 reduced the Fund’s return by 0.7%, as the stock dropped 28.8% to our average selling price. The stock dropped 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.

MercadoLibre, the leading online consumer marketplace and payments platform in Latin America, reduced the Fund’s return by 0.5%, as the stock fell 10.1%. The company reported a strong quarter, beating on both the top and bottom lines. Nevertheless, after a big first-quarter rally that sent the stock up more than 50%, investors digested MercadoLibre’s results and considered whether the company’s share gains and increasing profitability can continue. We believe both can, and we think the company will profitably grow the business for a long time.

CoStar, a leading operator of online real estate marketplaces and data services, was our Fund’s best performer and added 0.9% to the return, as the stock jumped 29.3%. CoStar’s stock rallied as the company reported accelerating revenue growth and raised its annual earnings guidance. Investors were also excited that traffic to CoStar’s nascent Homes.com platform continues to rise.

The Trade Desk, a leading programmatic advertising platform, boosted the Fund’s return by 0.7%, as the stock rose 26.8% after the company reported quarterly results that were well above investors’ expectations. Later in the quarter, The Trade Desk launched its new platform, Kokai, which features advanced AI to refine ad selection and improve measurement capabilities. We expect Kokai will further entrench The Trade Desk as the advertising platform of the open internet.

KLA Corporation is the leader in process control equipment for semiconductor manufacturing. Its shares contributed 0.5% to the Fund’s return, as the stock returned 21.9%. KLA rallied as investors anticipated that the second quarter will mark the bottom of the business cycle for the semiconductor capital equipment industry, spurred in part by the advent of

Portfolio characteristics and holdings are subject to change periodically.

Outlook and Strategy

Russell Midcap Growth continued its momentum into the second quarter, as the index returned 6.23%. Investors cheered decelerating inflation and healthy economic data. The U.S. consumer is still in good shape financially, with a buoyant jobs market and bank account balances that exceed pre-COVID-19 levels due to prior government stimulus. Resilient consumers have helped the U.S. economy power through higher borrowing costs from the Federal Reserve’s interest-rate-hiking campaign and a reduction in credit availability from regional banks due to rising deposit costs.

However, just because the Federal Reserve’s aggressive rate hikes or banks’ reduced ability to lend haven’t impacted the economy yet, that doesn’t mean they won’t. The economy’s resilience is emboldening the Federal Reserve to continue on its path, and its governors are now estimating two additional rate hikes this year, which could exacerbate the eventual economic impact when it occurs. Meanwhile, the global economy has fared worse, as the anticipated demand boost from China’s economic re-opening after years of COVID-19 lockdowns has failed to materialize, while Russia’s war in Ukraine continues.

Given what we feel is a tenuous economic environment, we are maintaining our focus on high-quality growth compounders-innovative companies that are market share gainers with expanding competitive advantages and clean balance sheets. If the economy remains strong, we expect our best-in-class companies to take full advantage of it. If

We invested in IQVIA, the leading contract research organization and data provider for the life sciences industry. IQVIA’s broad platform should continue to win market share from smaller peers, while the secular trend of outsourcing clinical trials is a tailwind. IQVIA’s mission-critical data and its importance to customers’ research and development should enable the company to perform well in a wide range of economic environments.

Information Technology remains our Fund’s largest sector on an absolute and relative basis. However, we’ve been steadily reducing our weighting in the sector because of its meaningful outperformance this year. Information Technology represented 40% of our portfolio at the end of 2022, but it’s now 34% as of June 30. This year we’ve invested in a number of durable businesses with idiosyncratic upside drivers outside the Information Technology sector that investors have left behind. This list includes IQVIA, as well as our investments made during the first quarter in Ball Corp., Sherwin-Williams and Lululemon.

Our goal is to create a concentrated portfolio of competitively advantaged and secularly growing stocks that can outperform the index over the long term. Our

Parnassus Fixed Income Fund

The average annual total return for the Parnassus Fixed Income Fund – Institutional Shares from commencement (April 30, 2015) was 0.86%. 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.

Treasury bonds continued to be our second-largest asset class, with an average weight of 20.03% during the quarter, which was significantly lower than the 41.10% weight of Treasuries in the Index. Since Treasury bonds were the worst-performing asset class within the Index with a loss of 1.38%, our underweight position contributed to the Fund’s performance for the quarter.

Our third-largest asset class was government-related bonds, with an average weight of 10.15% during the quarter compared to 5.12% for the Index. This category consists primarily of green bonds issued by supranational entities such as the European Investment Bank and the International Bank for Reconstruction and Development. These bonds have minimal credit risks, so their performance was driven predominantly by changes in interest rates. Our government-related bonds were down 0.94% in the quarter subtracting 10 basis points to the Fund’s total return, as our green bonds have a slightly longer duration than the supranational securities in the benchmark. (One basis point is 1/100^th of one percent.)

Lastly, we initiated a small position in the mortgage market through the purchase of the iShares MBS ETF, one of the largest and most liquid mortgage exchange-traded funds. This gives us an efficient way to reduce the Fund’s volatility by adding exposure to a broad range of U.S. mortgage-backed bonds. Securitized bonds constitute 29.22% of the Index and mostly comprise residential mortgages. Yet, our significantly underweight position detracted from the Fund’s performance this quarter.

or not the Federal Reserve shifts to easier monetary policy in 2024, we believe the most aggressive phase of the tightening is nearing the end.

Potential risks of an economic downturn remain as the impact of tighter lending conditions, tight monetary policy and a slowing labor market may finally catch up with consumer spending and corporate earnings. In the medium term, we expect more volatility, and continued our strategy from the previous quarter to position the Fund more defensively. We added more green bonds, reduced volatility from our preferred stocks and convertible bonds and adjusted the duration composition of our Treasury holdings. Our strategy remains to find asymmetric total return opportunities where valuations provide adequate yield to compensate for unexpected volatility.

We purchased two new green bonds during the quarter, which increased our green bonds’ exposure to a new milestone at 22.8% of the Fund. We continue to strategically look for additional green bonds that meet our return and sustainability requirements. We think that green bonds will play an increasingly key role in allowing companies, governments and supranational institutions to finance projects with positive environmental impact.

We added a green bond from Verizon, which was first issued in 2021. The net proceeds from this green bond were allocated to support wind and solar energy projects in the U.S. Since 2019, Verizon has issued five green bonds for a total of $5 billion to support its goal to source renewable energy equivalent to 50% of its annual electricity usage by 2025 and 100% by 2030.

The second green bond we added was issued by the Public Service Company of Oklahoma, a subsidiary of American Electric Power (AEP), a Midwest utility. AEP lags most of its peers in environmental practices due to its coal-dominant power generation. However, the proceeds from this green bond were exclusively supporting the construction of the largest wind farm built at one time in North America. This is helping AEP transition away from coal and increase its energy mix to 50% renewable energy by 2030 through wind and solar power. We think that this type of investment with specific environmental purpose is accelerating the transition to clean energy and supporting companies that we would typically exclude from our investable universe.

Responsible Investing Notes

According to The New York Times, July 3 to 5, 2023 were Earth’s three hottest days ever recorded. In June, there were hundreds of heat-related deaths across India and Mexico, and a BBC Future article on high heat and humidity in Texas mused “Will Texas become too hot for humans?” While hotter temperatures have long been predicted, the unexpectedly sharp rise this summer has unsettled layfolk and veteran climate scientists alike. Unrelenting temperatures and the resultant human and economic costs underscore the need for shared public and private sector action to slow climate change and prevent its most devastating effects.

To join this much-needed global effort, during the first quarter Parnassus announced its intent to reach net zero across all assets under management by 2050. And in the second quarter, we took the significant step to remove our long-held exclusionary screen on companies that derive more than 10% of revenue from nuclear power generation and/or related activities. We did this because we believe that-while renewable energy should lead in the transition-nuclear energy will likely be an important and necessary bridge fuel as the global economy transitions away from fossil fuels. In addition, since 1984, when the screen was adopted, improvements in nuclear safety, emergency response, training and storage have reduced-but not eliminated-the likelihood of catastrophic events. To learn more about our decision to remove this screen and measures we have put in place to vet the performance of affected companies, please see our May press release “Revisiting Nuclear Energy.”

In addition, June 30 marked the end of our 2022 - 2023 stewardship year. During the past year, the ESG stewardship team connected with nearly every company across all six Parnassus Funds either in person, virtually or via email in furtherance of our mission to build wealth responsibly for long-term investors. Our most meaningful impacts were achieved through our thematic impact and proxy engagement program, through which we engaged 60+ companies,

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 January 1, 2023, through June 30, 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