(PUB) Investing 2016

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23 Morningstar FundInvestor August 2016
Data through July 31, 2016 FINRA members: For internal or institutional use only.
Parnassus Ticker
PARNX
Yield
3.7%
Total Assets
$755 mil
Mstar Category
Large Growth
Benchmark 1: Russell 1000 Growth TR USD
Benchmark 2: S&P 500 TR USD
Morningstar Analyst Rating 08-01-16
´
Morningstar Pillars
Process ∞ Positive
Performance ∞ Positive
People ∞ Positive
Parent ∞ Positive
Price ∞ Positive
Morningstar Analyst Rating
Morningstar evaluates mutual funds based on five key pillars, which its
analysts believe lead to funds that are more likely to outperform over the
long term on a risk-adjusted basis.
Analyst Rating Spectrum
Œ „ ´ ‰ Á
Pillar Spectrum
∞ Positive § Negative ¶ Neutral
10.0
15.0
20.0
25.0
Historical Profile
Return
Risk
Rating
High
High
QQQQ
Above Avg
4 7 7 7 8 7 4 4 Investment Style
Equity
Growth of $10,000
Investment Values of
Fund
Investment Values of
Benchmark 1
& ) & & * ( & * & ) ( Performance Quartile
(within Category)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 07-16 History
36.23 36.66 23.59 34.82 40.49 35.23 40.62 45.86 48.09 40.46 41.57 NAV
14.36 5.43 -34.13 47.93 16.70 -5.01 26.06 34.21 14.67 0.27 2.72 Total Return %
5.29 -6.38 4.31 10.73 -0.01 -7.65 10.80 0.73 1.62 -5.40 -3.42 +/- Bmark 1
-1.43 -0.06 2.87 21.47 1.64 -7.12 10.06 1.82 0.98 -1.12 -4.94 +/- Bmark 2
0.00 0.02 0.47 0.34 0.42 0.33 2.43 5.45 3.74 4.23 0.00 Income Return %
14.36 5.42 -34.59 47.60 16.28 -5.34 23.63 28.76 10.93 -3.96 2.72 Capital Return %
6 86 8 10 37 74 2 45 6 79 54 Total Rtn % Rank Cat
0.00 0.01 0.17 0.08 0.15 0.12 0.80 1.94 1.62 1.78 0.00 Income $
0.00 1.59 0.31 0.00 0.00 3.02 2.73 6.41 2.84 6.16 0.00 Capital Gains $
1.01 1.00 1.01 1.00 0.97 0.94 0.90 0.86 0.84 0.84 . Expense Ratio %
-0.13 -0.01 0.51 0.30 0.42 0.33 0.70 0.54 0.47 0.64 . Income Ratio %
142 89 98 53 52 74 53 65 60 69 . Turnover Rate %
338 280 174 351 444 355 469 572 679 709 699 Net Assets $mil
Performance 07-31-16
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2012 17.55 -4.91 8.67 3.78 26.06
2013 5.79 6.59 9.27 8.93 34.21
2014 3.14 4.81 -1.74 7.97 14.67
2015 2.79 0.47 -6.32 3.65 0.27
2016 -1.14 -0.51 — — —
Trailing Total
Return%
+/- Bmark
1
+/- Bmark
2
%Rank
Cat
Growth of
$10,000
3 Mo 5.71 -0.62 -0.12 51 10,571
6 Mo 14.01 1.59 0.73 6 11,401
1 Yr -2.27 -6.62 -7.88 73 9,773
3 Yr Avg 9.67 -3.19 -1.49 65 13,189
5 Yr Avg 14.25 0.63 0.87 4 19,462
10 Yr Avg 10.26 0.76 2.52 6 26,565
15 Yr Avg 6.06 0.05 4.18 33 24,160
Tax Analysis Tax Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated) 6.06 75 3.29 85
5 Yr (estimated) 11.40 21 2.49 88
10 Yr (estimated) 8.75 15 1.37 85
Potential Capital Gain Exposure: 5% of assets
Rating and Risk
Time
Period
Load-Adj
Return %
Morningstar
Rtn vs Cat
Morningstar
Risk vs Cat
Morningstar
Risk-Adj Rating
1 Yr -2.27
3 Yr 9.67 Avg +Avg QQQ
5 Yr 14.25 High High QQQQ
10 Yr 10.26 High High QQQQ
Incept 9.91
Other Measures Standard Index Best Fit Index
Alpha -2.2 -1.5
Beta 1.11 1.08
R-Squared 80 88
Standard Deviation 13.73
Mean 9.67
Sharpe Ratio 0.74
Portfolio Analysis 06-30-16
Total Stocks: 37
Share change since 05-31-16 Sector YTD Ret % % Assets
International Business Ma Technology 18.67 4.92
Ciena Corp Technology -7.25 4.66
Micron Technology Inc Technology -2.97 4.37
TMotorola Solutions Inc Technology 2.56 3.64
TAllergan PLC Hlth Care -19.06 3.25
YCharles Schwab Corp Finan Svcs -13.30 3.14
TPraxair Inc Basic Mat 15.27 3.10
TCVS Health Corp Hlth Care -3.86 3.09
Pentair PLC Industrl 30.87 3.07
TGilead Sciences Inc Hlth Care -20.58 3.05
Intel Corp Technology 2.70 3.03
YMondelez International In Cnsmr Def -1.16 3.01
Patterson Companies Inc Hlth Care 10.73 2.91
YApplied Materials Inc Technology 41.89 2.65
Whole Foods Market Inc Cnsmr Def -7.81 2.54
Trimble Navigation Ltd Technology 23.26 2.52
American Express Co Finan Svcs -6.07 2.51
Thomson Reuters Corp Industrl — 2.51
Deere & Co Industrl 3.46 2.46
Potash Corp of Saskatchew Basic Mat — 2.46
Current Investment Style
Large Mid Small
Value Blend Growth Market Cap %
Giant 28.3
Large 31.8
Mid 26.1
Small 10.9
Micro 3.0
Avg $mil:
23,410
Value Measures Rel Category
Price/Earnings 17.03 0.75
Price/Book 1.92 0.51
Price/Sales 1.47 0.63
Price/Cash Flow 7.13 0.57
Dividend Yield % 2.12 1.55
Growth Measures % Rel Category
Long-Term Erngs 9.07 0.76
Book Value 7.35 0.97
Sales 5.97 0.82
Cash Flow 15.10 1.32
Historical Erngs 6.94 0.58
Profitability %
Return on Equity 19.82
Return on Assets 6.60
Net Margin 14.91
Sector
Weightings
% of
Stocks
Rel
Bmark 1
h Cyclical 31.02 1.07
r BasicMat 7.84 2.52
t CnsmrCyc 2.45 0.13
y FinanSvcs 18.51 3.82
u Real Est 2.22 0.98
j Sensitive 47.15 1.09
i CommSrvs 0.00 0.00
o Energy 0.00 0.00
p Industrl 14.70 1.17
a Technlgy 32.45 1.26
k Defensive 21.82 0.78
s CnsmrDef 5.89 0.59
d Hlthcare 15.93 0.89
f Utilities 0.00 0.00
Composition - Net
Cash 5.7
Stocks 94.3
Bonds 0.0
Other 0.0
Foreign 5.3
(% of Stock)
Morningstar's Take by Wiley Green 08-01-16
An experienced manager; a proven process; a strong
environmental, social, and governance focus; and a
record of excellent stock-picking give this fund an edge.
It has generated a strong long-term record and benefits
from low fees, but succession questions raise a concern.
The fund earns a Morningstar Analyst Rating of Bronze.
Lead manager and firm founder Jerome Dodson has
guided the fund since 1984, and his importance can't be
understated. He has built a robust team at Parnassus and
has a good track record launching funds and developing
managers to run each portfolio. Parnassus Core Equity
PRBLX, with a Silver rating, and Parnassus Mid-Cap
PARMX exemplify this. But Dodson’s retirement is a
possibility, and the additional managers on this fund--Ian
Sexsmith, CFA, and Robert Klaber--are untested. Dodson
has proved he can run concentrated portfolios and is a
top technology analyst, a focus of the fund. Both skills are
tough to replace.
The team narrows its investable universe using a
rigorous ESG research process. Then it invests based on
company fundamentals, valuation, and perceived long-
term competitive advantages. The resulting portfolio has
about 40 stocks, so a few names can have a significant
impact on performance. The fund also carries sector-
specific risk, having traditionally given an overweighting
to technology stocks. But strong stock-picking and a
robust process have offset both risks.
Parnassus has carved out an attractive niche in the
ESG space. In a peer group of socially conscious large-
growth and large-blend funds, the firm’s large-cap
offerings all appear near the top on Morningstar
Sustainability Ratings and near the bottom on fees. All
have top-tier long-term performance. There aren’t
competitors with similar conviction and portfolio
concentration thatcompetewiththe fundsonevery front.
The fees on the Institutional shares of Parnassus are
competitive even with some socially conscious index
funds.
This fund has many positives, but Klaber and
Sexsmith still need to prove they can fill Dodson’s shoes
if he were to retire.
Address: PARNASSUS FUNDS Minimum Purchase: $2000 Add: $50 IRA: $500
San Francisco CA 94105 Min Auto Inv Plan: $2000 Add: $50
800-999-3505 Sales Fees: No-load
Web Address: Management Fee: 0.70% mx./0.60% mn.
Inception: 12-27-84 Actual Fees: Mgt:0.62% Dist:—
Advisor: Parnassus Investments Expense Projections: 3Yr:$268 5Yr:$466 10Yr:$1037
Subadvisor: None Income Distribution: Annually
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