Exhibit 99-4
Fidelity Bond Allocation Agreement
ALLOCATION AGREEMENT
AGREEMENT by and between Parnassus Funds and Parnassus Income Funds (the
"Funds"), management investment companies registered under the Investment
Company Act of 1940, as amended (the "1940 Act), and Parnassus Investments (the
"Advisor") (collectively with the Funds, the "Insureds").
WITNESSETH:
WHEREAS, pursuant to the requirements of Rule 17g-1 under the 1940 Act, the
Funds are required to maintain a fidelity bond against larceny and embezzlement
covering certain of its officers and employees; and
WHEREAS, Rule 17g-1 provides that when two or more investment companies are
managed and/or distributed by the same person or persons, such investment
companies may obtain a joint insured bond covering themselves and such person or
persons and their affiliates; and
WHEREAS, the Funds are managed by Parnassus Investments; and
WHEREAS, the Insureds have entered into a joint Investment Company Bond (the
"Bond"); and
WHEREAS, the Insureds desire to provide for: (1) the method by which the amount
of coverage provided under the Bond will be determined from time to time and (2)
an equitable and proportionate allocation of any proceeds received under the
Bond in the event that two or more of the Insureds suffer loss and consequently
are entitled to recover under the Bond;
NOW THEREFORE, it is hereby agreed among the parties hereto as follows:
1. Amount of Coverage Maintained The amount of the fidelity coverage under the
Bond shall at all times be at least equal in the amount to the sum of (i) the
total amount of coverage which the Funds would have been required to provide and
maintain individually pursuant to the schedule set forth in paragraph (d) of
Rule 17g-I under the 1940 Act had the Funds not been a named Insured under the
Bond, and (ii) the amount of each bond which each Insured other than the Funds
would have been required to provide and maintain pursuant to federal statutes or
regulations had it not been a named insured under the Bond. The amount of
fidelity coverage under the Bond shall be approved at least annually by the
Boards of Trustees of the Funds, including a majority of those Trustees who are
not "interested persons" of the Funds as defined by Section 2(a)(19) of the 1940
Act.
2. Allocation of Recovery In the event an actual pecuniary loss is suffered by
any two or more of the Insureds under circumstances covered by the terms of the
Bond, any recovery under the Bond shall be allocated among such Insureds as
follows:
(a) If the total amount of coverage provided under the Bond exceeds or is equal
to the amount of the combined total amount of loss suffered by the Insureds
suffering loss, then each such Insured shall be entitled to recover the amount
of its actual loss.
(b) If the amount of loss suffered by each Insured suffering loss exceeds its
minimum coverage requirements as set forth in Section 1 hereof and the amount of
such Insureds' combined actual losses exceeds the total amount of coverage
provided under the Bond, then each such Insured shall be entitled to recover (i)
its minimum coverage requirement (ii) to the extent there exists any excess
coverage, the proportion of such excess coverage which its minimum coverage
requirement bears to the amount of the combined minimum coverage requirements of
the Insureds suffering actual loss; provided, however, that if the actual loss
of any of such Insureds is less than the sum of (i) and (ii) above, then such
difference shall be recoverable by the other Insured or Insureds in proportion
to their relative minimum coverage requirements.
(c) If (i) the amount of actual loss suffered by any Insured is less than or
equal to its minimum coverage requirement, (ii) the amount of actual loss of
another Insured or the other Insureds exceeds its or their minimum coverage
requirement or requirements, and (iii) the amount of the combined actual losses
of the Insureds exceeds the total amount of coverage provided under the Bond,
then any Insured which has suffered an amount of actual loss less than or equal
to its minimum coverage requirement shall be entitled to recover its actual
loss. If only one other Insured has suffered actual loss, it shall be entitled
to recover the remainder of the amount of the coverage under the Bond. If more
than one other Insured has suffered actual loss in excess of the remaining
coverage, then they shall allocate such remaining amount of coverage in
accordance with paragraph (b) of this Section 2.
3. Allocation of Premium No premium shall be paid under the Bond unless the
Board of Trustees of the Funds, including a majority of those Trustees who are
not "interested persons" of the Funds as defined by Section 2(a)(19) of the 1940
Act, shall approve the portion of the premium to be paid by the Funds. The
premium payable on the Bond shall be allocated between the Funds and the other
Insured as determined by the Boards of Trustees of the Funds.
4. Amendment This Agreement may not be amended or modified in any manner except
by a written agreement executed by the parties.
5. Filing with the Commission A copy of this Agreement and any amendment thereto
shall be filed with the Securities and Exchange Commission within 10 days after
the execution thereof to the extent required by Regulation 270.17g-1(g) under
the 1940 Act.
6. Applicable Law This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the California.
7. Limitation of Liability of Trustees and Shareholders A copy of the
organizational documents each of the Funds is on file with the Secretary of
State of the state of such Funds' organization, and it is hereby agreed that
this Agreement is executed on behalf of the Trustees of the Funds as Trustees
and not individually and that the obligations of this Agreement are not binding
upon any of the Trustees, officers and shareholders of the Funds individually
but are binding only upon the assets and property of the Funds.
PARNASSUS INVESTMENTS
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Chairman and President
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Date: May 14, 2010
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PARNASSUS FUNDS
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
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Title: Treasurer
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Date: May 14, 2010
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By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
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Title: Secretary
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Date: May 14, 2010
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