Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
9
|
Statement of Operations
|
10
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
23
|
Proxy Voting Policy and Proxy Voting Records
|
25
|
Availability of Quarterly Portfolio Schedule
|
25
|
Federal Tax Distribution Information
|
25
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Cornerstone Growth Fund –
|
||||
Investor Class (HFCGX)
|
-22.30%
|
-22.05%
|
-3.32%
|
4.43%
|
Hennessy Cornerstone Growth Fund –
|
||||
Institutional Class (HICGX)
|
-22.19%
|
-21.79%
|
-3.02%
|
4.76%
|
Russell 2000® Index
|
-15.47%
|
-16.39%
|
2.88%
|
7.69%
|
S&P 500® Index
|
-3.16%
|
0.86%
|
9.12%
|
11.69%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Sportsman’s Warehouse Holdings, Inc.
|
3.16%
|
Leidos Holdings, Inc.
|
2.74%
|
Sony Corp. – ADR
|
2.51%
|
Crown Holdings, Inc.
|
2.49%
|
Target Corp.
|
2.48%
|
Carvana Co.
|
2.42%
|
Teekay Tankers Ltd.
|
2.41%
|
Brookfield Asset Management, Inc., Class A
|
2.38%
|
Best Buy Co., Inc.
|
2.36%
|
Universal Forest Products, Inc.
|
2.34%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 97.88%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Consumer Discretionary – 33.02%
|
||||||||||||
America’s Car-Mart, Inc. (a)
|
25,196
|
$
|
1,661,676
|
1.69
|
%
|
|||||||
Best Buy Co., Inc.
|
30,300
|
2,324,919
|
2.36
|
%
|
||||||||
Carvana Co. (a)
|
29,800
|
2,387,278
|
2.42
|
%
|
||||||||
Dick’s Sporting Goods, Inc.
|
56,100
|
1,648,779
|
1.67
|
%
|
||||||||
Installed Building Products, Inc. (a)
|
38,700
|
1,908,297
|
1.94
|
%
|
||||||||
KB Home
|
78,300
|
2,054,592
|
2.08
|
%
|
||||||||
M/I Homes, Inc. (a)
|
63,400
|
1,614,164
|
1.64
|
%
|
||||||||
Rent-A-Center, Inc.
|
92,800
|
1,847,184
|
1.87
|
%
|
||||||||
Skechers U.S.A., Inc. (a)
|
65,300
|
1,840,154
|
1.87
|
%
|
||||||||
Skyline Champion Corp. (a)
|
79,400
|
1,564,974
|
1.59
|
%
|
||||||||
Sony Corp. – ADR (a)(b)
|
38,500
|
2,473,625
|
2.51
|
%
|
||||||||
Sportsman’s Warehouse Holdings, Inc. (a)
|
434,800
|
3,113,168
|
3.16
|
%
|
||||||||
Target Corp.
|
22,300
|
2,447,202
|
2.48
|
%
|
||||||||
The Buckle, Inc.
|
106,300
|
1,627,453
|
1.65
|
%
|
||||||||
Williams-Sonoma, Inc.
|
36,600
|
2,263,344
|
2.30
|
%
|
||||||||
Zumiez, Inc. (a)
|
83,600
|
1,767,304
|
1.79
|
%
|
||||||||
|
32,544,113
|
33.02
|
%
|
|||||||||
Energy – 5.69%
|
||||||||||||
Cosan Ltd. – Class A (a)(b)
|
120,600
|
1,608,804
|
1.63
|
%
|
||||||||
Teekay Tankers Ltd. (a)(b)
|
117,100
|
2,378,301
|
2.41
|
%
|
||||||||
World Fuel Services Corp.
|
64,800
|
1,620,000
|
1.65
|
%
|
||||||||
|
5,607,105
|
5.69
|
%
|
|||||||||
Financials – 10.16%
|
||||||||||||
Brookfield Asset Management, Inc., Class A (b)
|
69,400
|
2,347,108
|
2.38
|
%
|
||||||||
Equitable Holdings, Inc.
|
105,700
|
1,936,424
|
1.96
|
%
|
||||||||
LPL Financial Holdings, Inc.
|
28,000
|
1,686,160
|
1.71
|
%
|
||||||||
The Carlyle Group, Inc.
|
87,300
|
2,046,312
|
2.08
|
%
|
||||||||
Voya Financial, Inc.
|
44,300
|
2,001,031
|
2.03
|
%
|
||||||||
|
10,017,035
|
10.16
|
%
|
|||||||||
Health Care – 4.03%
|
||||||||||||
R1 RCM, Inc. (a)
|
199,500
|
2,058,840
|
2.09
|
%
|
||||||||
RadNet, Inc. (a)
|
135,400
|
1,911,848
|
1.94
|
%
|
||||||||
|
3,970,688
|
4.03
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Industrials – 19.12%
|
||||||||||||
Alamo Group, Inc.
|
22,100
|
$
|
2,175,524
|
2.21
|
%
|
|||||||
American Woodmark Corp. (a)
|
25,400
|
1,305,814
|
1.32
|
%
|
||||||||
Arcosa, Inc.
|
60,200
|
2,243,654
|
2.28
|
%
|
||||||||
Atkore International Group, Inc. (a)
|
66,100
|
1,608,874
|
1.63
|
%
|
||||||||
BMC Stock Holdings, Inc. (a)
|
91,700
|
1,948,625
|
1.98
|
%
|
||||||||
Builders FirstSource, Inc. (a)
|
103,100
|
1,891,885
|
1.92
|
%
|
||||||||
Colfax Corp. (a)
|
73,200
|
1,887,828
|
1.91
|
%
|
||||||||
Howmet Aerospace, Inc.
|
94,100
|
1,229,887
|
1.25
|
%
|
||||||||
JELD-WEN Holding, Inc. (a)
|
111,000
|
1,409,700
|
1.43
|
%
|
||||||||
Triumph Group, Inc.
|
119,400
|
840,576
|
0.85
|
%
|
||||||||
Universal Forest Products, Inc.
|
56,000
|
2,302,720
|
2.34
|
%
|
||||||||
|
18,845,087
|
19.12
|
%
|
|||||||||
Information Technology – 19.89%
|
||||||||||||
Benchmark Electronics, Inc.
|
77,400
|
1,599,084
|
1.62
|
%
|
||||||||
CDW Corp.
|
19,300
|
2,138,440
|
2.17
|
%
|
||||||||
Insight Enterprises, Inc. (a)
|
38,500
|
2,090,165
|
2.12
|
%
|
||||||||
Itron, Inc. (a)
|
32,400
|
2,262,168
|
2.30
|
%
|
||||||||
Jabil, Inc.
|
64,400
|
1,831,536
|
1.86
|
%
|
||||||||
JinkoSolar Holding Company Ltd. – ADR (a)(b)
|
119,600
|
1,892,072
|
1.92
|
%
|
||||||||
Leidos Holdings, Inc.
|
27,300
|
2,697,513
|
2.74
|
%
|
||||||||
Methode Electronics, Inc.
|
70,600
|
2,119,412
|
2.15
|
%
|
||||||||
Synnex Corp.
|
18,400
|
1,611,104
|
1.63
|
%
|
||||||||
Xerox Holdings Corp.
|
74,500
|
1,362,605
|
1.38
|
%
|
||||||||
|
19,604,099
|
19.89
|
%
|
|||||||||
Materials – 3.99%
|
||||||||||||
Arconic Corp. (a)
|
22,800
|
198,816
|
0.20
|
%
|
||||||||
Crown Holdings, Inc. (a)
|
38,100
|
2,454,021
|
2.49
|
%
|
||||||||
Koppers Holdings, Inc. (a)
|
81,400
|
1,282,864
|
1.30
|
%
|
||||||||
|
3,935,701
|
3.99
|
%
|
|||||||||
Real Estate – 1.98%
|
||||||||||||
CBRE Group, Inc. (a)
|
45,500
|
1,953,315
|
1.98
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $131,272,201)
|
96,477,143
|
97.88
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS – 2.31%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 2.31%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (c)
|
2,274,895
|
$
|
2,274,895
|
2.31
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $2,274,895)
|
2,274,895
|
2.31
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $133,547,096) – 100.19%
|
98,752,038
|
100.19
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.19)%
|
(185,257
|
)
|
(0.19
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
98,566,781
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
U.S.-traded security of a foreign corporation.
|
(c)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Consumer Discretionary
|
$
|
32,544,113
|
$
|
—
|
$
|
—
|
$
|
32,544,113
|
||||||||
Energy
|
5,607,105
|
—
|
—
|
5,607,105
|
||||||||||||
Financials
|
10,017,035
|
—
|
—
|
10,017,035
|
||||||||||||
Health Care
|
3,970,688
|
—
|
—
|
3,970,688
|
||||||||||||
Industrials
|
18,845,087
|
—
|
—
|
18,845,087
|
||||||||||||
Information Technology
|
19,604,099
|
—
|
—
|
19,604,099
|
||||||||||||
Materials
|
3,935,701
|
—
|
—
|
3,935,701
|
||||||||||||
Real Estate
|
1,953,315
|
—
|
—
|
1,953,315
|
||||||||||||
Total Common Stocks
|
$
|
96,477,143
|
$
|
—
|
$
|
—
|
$
|
96,477,143
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
2,274,895
|
$
|
—
|
$
|
—
|
$
|
2,274,895
|
||||||||
Total Short-Term Investments
|
$
|
2,274,895
|
$
|
—
|
$
|
—
|
$
|
2,274,895
|
||||||||
Total Investments
|
$
|
98,752,038
|
$
|
—
|
$
|
—
|
$
|
98,752,038
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $133,547,096)
|
$
|
98,752,038
|
||
Dividends and interest receivable
|
26,083
|
|||
Receivable for fund shares sold
|
4,440
|
|||
Prepaid expenses and other assets
|
18,823
|
|||
Total assets
|
98,801,384
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
27,722
|
|||
Payable to advisor
|
54,047
|
|||
Payable to administrator
|
16,944
|
|||
Payable to auditor
|
11,372
|
|||
Accrued distribution fees
|
84,893
|
|||
Accrued service fees
|
6,584
|
|||
Accrued trustees fees
|
5,581
|
|||
Accrued expenses and other payables
|
27,460
|
|||
Total liabilities
|
234,603
|
|||
NET ASSETS
|
$
|
98,566,781
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
134,817,851
|
||
Accumulated deficit
|
(36,251,070
|
)
|
||
Total net assets
|
$
|
98,566,781
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
88,878,741
|
||
Shares issued and outstanding
|
5,972,420
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
14.88
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
9,688,040
|
||
Shares issued and outstanding
|
627,805
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
15.43
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
589,963
|
||
Interest income
|
16,198
|
|||
Total investment income
|
606,161
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
468,599
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
91,203
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
6,358
|
|||
Distribution fees – Investor Class (See Note 5)
|
85,388
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
69,537
|
|||
Service fees – Investor Class (See Note 5)
|
56,925
|
|||
Federal and state registration fees
|
18,485
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,375
|
|||
Reports to shareholders
|
9,197
|
|||
Trustees’ fees and expenses
|
8,921
|
|||
Legal fees
|
731
|
|||
Other expenses
|
9,380
|
|||
Total expenses
|
849,561
|
|||
NET INVESTMENT LOSS
|
$
|
(243,400
|
)
|
|
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
11,594,725
|
||
Net change in unrealized appreciation/depreciation on investments
|
(40,617,711
|
)
|
||
Net loss on investments
|
(29,022,986
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(29,266,386
|
)
|
(1)
|
Net of foreign taxes withheld of $2,691.
|
HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment loss
|
$
|
(243,400
|
)
|
$
|
(45,248
|
)
|
||
Net realized gain (loss) on investments
|
11,594,725
|
(12,686,776
|
)
|
|||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(40,617,711
|
)
|
3,138,849
|
|||||
Net decrease in net assets resulting from operations
|
(29,266,386
|
)
|
(9,593,175
|
)
|
||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
—
|
(12,717,829
|
)
|
|||||
Distributable earnings – Institutional Class
|
—
|
(1,655,292
|
)
|
|||||
Total distributions
|
—
|
(14,373,121
|
)
|
|||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
601,667
|
2,338,416
|
||||||
Proceeds from shares subscribed – Institutional Class
|
259,737
|
643,045
|
||||||
Dividends reinvested – Investor Class
|
—
|
12,312,126
|
||||||
Dividends reinvested – Institutional Class
|
—
|
1,582,859
|
||||||
Cost of shares redeemed – Investor Class
|
(10,405,549
|
)
|
(27,329,933
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(2,346,814
|
)
|
(5,351,383
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(11,890,959
|
)
|
(15,804,870
|
)
|
||||
TOTAL DECREASE IN NET ASSETS
|
(41,157,345
|
)
|
(39,771,166
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
139,724,126
|
179,495,292
|
||||||
End of period
|
$
|
98,566,781
|
$
|
139,724,126
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
36,651
|
125,244
|
||||||
Shares sold – Institutional Class
|
14,738
|
32,446
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
—
|
661,942
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
—
|
82,441
|
||||||
Shares redeemed – Investor Class
|
(597,965
|
)
|
(1,423,630
|
)
|
||||
Shares redeemed – Institutional Class
|
(124,359
|
)
|
(274,093
|
)
|
||||
Net decrease in shares outstanding
|
(670,935
|
)
|
(795,650
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
19.15
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
(0.04
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(4.23
|
)
|
||
Total from investment operations
|
(4.27
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
—
|
|||
Net asset value, end of period
|
$
|
14.88
|
||
TOTAL RETURN
|
-22.30
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
88.88
|
||
Ratio of expenses to average net assets
|
1.37
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
(0.42
|
)%(3)
|
||
Portfolio turnover rate(4)
|
96
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
22.17
|
$
|
24.16
|
$
|
18.98
|
$
|
20.00
|
$
|
18.68
|
|||||||||
(0.01
|
)(1)
|
(0.17
|
)
|
(0.09
|
)
|
(0.02
|
)
|
0.06
|
||||||||||
(1.19
|
)
|
(1.82
|
)
|
5.27
|
(0.98
|
)
|
1.26
|
|||||||||||
(1.20
|
)
|
(1.99
|
)
|
5.18
|
(1.00
|
)
|
1.32
|
|||||||||||
—
|
—
|
—
|
(0.02
|
)
|
—
|
|||||||||||||
(1.82
|
)
|
—
|
—
|
—
|
—
|
|||||||||||||
(1.82
|
)
|
—
|
—
|
(0.02
|
)
|
—
|
||||||||||||
$
|
19.15
|
$
|
22.17
|
$
|
24.16
|
$
|
18.98
|
$
|
20.00
|
|||||||||
-5.19
|
%
|
-8.24
|
%
|
27.29
|
%
|
-5.00
|
%
|
7.07
|
%
|
|||||||||
$
|
125.10
|
$
|
158.98
|
$
|
197.22
|
$
|
184.61
|
$
|
248.74
|
|||||||||
1.34
|
%
|
1.30
|
%
|
1.30
|
%
|
1.32
|
%
|
1.15
|
%
|
|||||||||
(0.07
|
)%
|
(0.56
|
)%
|
(0.33
|
)%
|
(0.18
|
)%
|
0.30
|
%
|
|||||||||
95
|
%
|
133
|
%
|
98
|
%
|
97
|
%
|
102
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
19.83
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
(0.01
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(4.39
|
)
|
||
Total from investment operations
|
(4.40
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
—
|
|||
Net asset value, end of period
|
$
|
15.43
|
||
TOTAL RETURN
|
-22.19
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
9.69
|
||
Ratio of expenses to average net assets
|
1.06
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
(0.10
|
)%(3)
|
||
Portfolio turnover rate(4)
|
96
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
22.88
|
$
|
24.85
|
$
|
19.46
|
$
|
20.47
|
$
|
19.08
|
|||||||||
0.05
|
(1)
|
0.11
|
0.01
|
0.17
|
0.03
|
|||||||||||||
(1.22
|
)
|
(2.08
|
)
|
5.38
|
(1.13
|
)
|
1.36
|
|||||||||||
(1.17
|
)
|
(1.97
|
)
|
5.39
|
(0.96
|
)
|
1.39
|
|||||||||||
—
|
—
|
—
|
(0.05
|
)
|
—
|
|||||||||||||
(1.88
|
)
|
—
|
—
|
—
|
—
|
|||||||||||||
(1.88
|
)
|
—
|
—
|
(0.05
|
)
|
—
|
||||||||||||
$
|
19.83
|
$
|
22.88
|
$
|
24.85
|
$
|
19.46
|
$
|
20.47
|
|||||||||
-4.86
|
%
|
-7.93
|
%
|
27.70
|
%
|
-4.69
|
%
|
7.29
|
%
|
|||||||||
$
|
14.62
|
$
|
20.52
|
$
|
31.65
|
$
|
25.74
|
$
|
38.96
|
|||||||||
1.01
|
%
|
0.96
|
%
|
0.97
|
%
|
0.98
|
%
|
0.99
|
%
|
|||||||||
0.27
|
%
|
(0.23
|
)%
|
(0.00
|
)%
|
0.14
|
%
|
0.51
|
%
|
|||||||||
95
|
%
|
133
|
%
|
98
|
%
|
97
|
%
|
102
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute substantially all of
its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment income/loss and realized gains/losses for federal
income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the result of the treatment of partnership income and wash sales for tax
reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense. Distributions from net realized gains for book purposes may include short-term
capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders
on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns of the Fund for the
prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability resulting from unrecognized tax benefits
relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and accretion of discount,
is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly attributable to its portfolio, such as
advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on investments are allocated to each class of shares based on
such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital gains, if any, are declared and
paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original cost of the
security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including
estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed for trading. The offering and redemption
price per share for the Fund is equal to the Fund’s NAV per share.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar instruments, and
model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs are
unavailable.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end mutual funds, partnerships,
rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as reported by the primary exchange on which the
securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales price reported. Securities traded on a securities exchange for
which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified in
Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at the same time the Fund calculates its NAV because most foreign markets close well before such time. The earlier close of most foreign
markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim. In certain circumstances, it may be determined that a foreign security needs to be fair valued because it appears
that the value of the security might have been materially affected by events occurring after the close of the market in which the security is principally traded, but before the time the Fund calculates its NAV, such as by a development that
affects an entire market or region (e.g., a weather-related event) or a potentially global development (e.g., a terrorist attack that may be expected to have an effect on investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the ending NAV
provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and U.S. government
agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing service may consider recently
executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the model may incorporate observable market data,
such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These securities are generally classified in Level 2 of the fair value
hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments with an original
term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as of the 61st day prior to maturity
are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as described below. Short-term securities are generally
classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
134,392,059
|
||
Gross tax unrealized appreciation
|
$
|
15,584,822
|
||
Gross tax unrealized depreciation
|
(10,055,455
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
5,529,367
|
||
Undistributed ordinary income
|
$
|
—
|
||
Undistributed long-term capital gains
|
—
|
|||
Total distributable earnings
|
$
|
—
|
||
Other accumulated gain/(loss)
|
$
|
(12,514,051
|
)
|
|
Total accumulated gain/(loss)
|
$
|
(6,984,684
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
$12,514,051
|
Unlimited Short-Term
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
—
|
$
|
—
|
|||||
Long-term capital gain
|
—
|
14,373,121
|
|||||||
$
|
—
|
$
|
14,373,121
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS/EXPENSE EXAMPLE
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 777.00
|
$6.05
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.05
|
$6.87
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 778.10
|
$4.69
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.59
|
$5.32
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.37% for Investor Class shares or 1.06% for Institutional Class shares, as applicable, multiplied by the average account value over the period,
multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been provided to help the Board assess
each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
|
(1)
|
The nature and quality of the advisory services provided by the Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(4)
|
The costs and profitability of the Fund to the Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and noted that their
overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the nature and extent of the services
provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers, as
feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios, evaluates insurance providers for fidelity bond,
D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports provided by service providers, and maintains books and records.
|
||
(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services to the
Fund.
|
||
(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The Advisor participates
in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee. The Advisor compensates, in part, a
number of these third-party providers of NTF programs out of its own revenues.
|
||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight
personnel, as well as management executives.
|
||
(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and education.
|
(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the Fund to various
indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated investment objective and style. The Trustees concluded that the
performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As part of the
discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials considered at the meeting.
The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded that they are reasonable and warranted
continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over the prior year.
In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets of the Fund increase. For
example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts, the Advisor’s significant marketing efforts
to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
circumstances. The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the future as
circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues that the Advisor has put
into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines set forth in relevant court cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and its shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary benefits from, by way of example,
its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund. The Trustees determined that any such products and services have
been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any additional benefits realized by the Advisor from its relationship with the Fund were
reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical, and other information and services provided by brokers are merely supplemental to the Advisor’s own efforts in the
performance of its duties under the advisory agreement.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
9
|
Statement of Operations
|
10
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
24
|
Proxy Voting Policy and Proxy Voting Records
|
26
|
Availability of Quarterly Portfolio Schedule
|
26
|
Federal Tax Distribution Information
|
26
|
Important Notice Regarding Delivery of Shareholder Documents
|
26
|
Electronic Delivery
|
26
|
Board Approval of Investment Advisory Agreements
|
27
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Focus Fund –
|
||||
Investor Class (HFCSX)
|
-17.53%
|
-10.23%
|
4.01%
|
9.77%
|
Hennessy Focus Fund –
|
||||
Institutional Class (HFCIX)
|
-17.40%
|
-9.94%
|
4.39%
|
10.12%
|
Russell 3000® Index
|
-4.33%
|
-1.04%
|
8.33%
|
11.29%
|
Russell Midcap® Growth Index
|
-1.78%
|
0.23%
|
8.88%
|
12.19%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Brookfield Asset Management, Inc., Class A
|
10.32%
|
CarMax, Inc.
|
10.19%
|
O’Reilly Automotive, Inc.
|
9.85%
|
American Tower Corp., Class A
|
9.37%
|
Markel Corp.
|
8.67%
|
Aon PLC
|
7.92%
|
Encore Capital Group, Inc.
|
7.07%
|
American Woodmark Corp.
|
6.05%
|
NVR, Inc.
|
5.77%
|
Ashtead Group PLC
|
5.58%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 89.09%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Consumer Discretionary – 27.14%
|
||||||||||||
CarMax, Inc. (a)
|
1,559,717
|
$
|
114,873,157
|
10.19
|
%
|
|||||||
NVR, Inc. (a)
|
20,984
|
65,050,400
|
5.77
|
%
|
||||||||
O’Reilly Automotive, Inc. (a)
|
287,218
|
110,963,802
|
9.85
|
%
|
||||||||
Restoration Hardware Holdings, Inc. (a)
|
104,116
|
14,969,799
|
1.33
|
%
|
||||||||
|
305,857,158
|
27.14
|
%
|
|||||||||
Financials – 38.86%
|
||||||||||||
Aon PLC (b)
|
516,581
|
89,198,041
|
7.92
|
%
|
||||||||
Brookfield Asset Management, Inc., Class A (b)
|
3,439,047
|
116,308,586
|
10.32
|
%
|
||||||||
Encore Capital Group, Inc. (a)(d)
|
3,067,416
|
79,691,468
|
7.07
|
%
|
||||||||
Markel Corp. (a)
|
112,831
|
97,693,593
|
8.67
|
%
|
||||||||
Marlin Business Services Corp. (d)
|
1,010,273
|
10,749,305
|
0.95
|
%
|
||||||||
The Charles Schwab Corp.
|
1,175,168
|
44,327,337
|
3.93
|
%
|
||||||||
|
437,968,330
|
38.86
|
%
|
|||||||||
Industrials – 17.87%
|
||||||||||||
American Woodmark Corp. (a)(d)
|
1,325,021
|
68,119,330
|
6.05
|
%
|
||||||||
Ametek, Inc.
|
316,322
|
26,529,926
|
2.35
|
%
|
||||||||
Ashtead Group PLC (b)
|
2,293,317
|
62,823,085
|
5.58
|
%
|
||||||||
Hexcel Corp.
|
1,134,608
|
39,246,091
|
3.48
|
%
|
||||||||
Mistras Group, Inc. (a)
|
971,558
|
4,614,900
|
0.41
|
%
|
||||||||
|
201,333,332
|
17.87
|
%
|
|||||||||
Information Technology – 5.22%
|
||||||||||||
SS&C Technologies Holdings, Inc.
|
1,067,191
|
58,866,255
|
5.22
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $595,132,355)
|
1,004,025,075
|
89.09
|
%
|
|||||||||
|
||||||||||||
REITS – 9.37%
|
||||||||||||
Financials – 9.37%
|
||||||||||||
American Tower Corp., Class A
|
443,706
|
105,602,028
|
9.37
|
%
|
||||||||
|
||||||||||||
Total REITS
|
||||||||||||
(Cost $871,527)
|
105,602,028
|
9.37
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 1.72%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.72%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (c)
|
19,440,273
|
$
|
19,440,273
|
1.72
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $19,440,273)
|
19,440,273
|
1.72
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $615,444,155) – 100.18%
|
1,129,067,376
|
100.18
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.18)%
|
(2,058,696
|
)
|
(0.18
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
1,127,008,680
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
U.S.-traded security of a foreign corporation.
|
(c)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
(d)
|
Investment in affiliated security. Investment represents five percent or more of the outstanding voting securities of the issuer, making the issuer an affiliate of the Fund, as defined in the Investment Company
Act of 1940, as amended, for the six months ended April 30, 2020. Details of transactions with affiliated companies for the six months ended April 30, 2020, are as follows:
|
Common Stocks
|
|||||||||||||||||
American
|
Encore
|
Marlin
|
|||||||||||||||
Woodmark
|
Capital
|
Business
|
|||||||||||||||
Corp.
|
Group, Inc.
|
Services Corp.
|
Total
|
||||||||||||||
Beginning Cost – November 1, 2019
|
$
|
63,553,435
|
$
|
104,853,067
|
$
|
15,865,289
|
$
|
184,271,791
|
|||||||||
Purchase Cost
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||
Sales Cost
|
$
|
(2,365,758
|
)
|
$
|
(733,287
|
)
|
$
|
—
|
$
|
(3,099,045
|
)
|
||||||
Ending Cost – April 30, 2020
|
$
|
61,187,677
|
$
|
104,119,780
|
$
|
15,865,289
|
$
|
181,172,746
|
|||||||||
Dividend Income
|
$
|
—
|
$
|
—
|
$
|
282,876
|
$
|
282,876
|
|||||||||
Net Change in Unrealized
|
|||||||||||||||||
Appreciation/Depreciation
|
$
|
(63,726,485
|
)
|
$
|
(21,880,632
|
)
|
$
|
(13,234,576
|
)
|
$
|
(98,841,693
|
)
|
|||||
Realized Gain/Loss
|
$
|
750,628
|
$
|
(182,630
|
)
|
$
|
—
|
$
|
567,998
|
||||||||
Shares
|
1,325,021
|
3,067,416
|
1,010,273
|
5,402,710
|
|||||||||||||
Market Value – April 30, 2020
|
$
|
68,119,330
|
$
|
79,691,468
|
$
|
10,749,305
|
$
|
158,560,103
|
HENNESSY FUNDS
|
1-800-966-4354
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Consumer Discretionary
|
$
|
305,857,158
|
$
|
—
|
$
|
—
|
$
|
305,857,158
|
||||||||
Financials
|
437,968,330
|
—
|
—
|
437,968,330
|
||||||||||||
Industrials
|
201,333,332
|
—
|
—
|
201,333,332
|
||||||||||||
Information Technology
|
58,866,255
|
—
|
—
|
58,866,255
|
||||||||||||
Total Common Stocks
|
$
|
1,004,025,075
|
$
|
—
|
$
|
—
|
$
|
1,004,025,075
|
||||||||
REITS
|
||||||||||||||||
Financials
|
$
|
105,602,028
|
$
|
—
|
$
|
—
|
$
|
105,602,028
|
||||||||
Total REITS
|
$
|
105,602,028
|
$
|
—
|
$
|
—
|
$
|
105,602,028
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
19,440,273
|
$
|
—
|
$
|
—
|
$
|
19,440,273
|
||||||||
Total Short-Term Investments
|
$
|
19,440,273
|
$
|
—
|
$
|
—
|
$
|
19,440,273
|
||||||||
Total Investments
|
$
|
1,129,067,376
|
$
|
—
|
$
|
—
|
$
|
1,129,067,376
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in unaffiliated securities, at value (cost $434,271,409)
|
$
|
970,507,273
|
||
Investments in affiliated securities, at value (cost $181,172,746)
|
158,560,103
|
|||
Total investments in securities, at value (cost $615,444,155)
|
1,129,067,376
|
|||
Dividends and interest receivable
|
230,604
|
|||
Receivable for fund shares sold
|
771,727
|
|||
Receivable for securities sold
|
1,376,981
|
|||
Prepaid expenses and other assets
|
52,645
|
|||
Total assets
|
1,131,499,333
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
3,077,192
|
|||
Payable to advisor
|
811,578
|
|||
Payable to administrator
|
191,372
|
|||
Payable to auditor
|
11,373
|
|||
Accrued distribution fees
|
110,426
|
|||
Accrued service fees
|
58,014
|
|||
Accrued expenses and other payables
|
230,698
|
|||
Total liabilities
|
4,490,653
|
|||
NET ASSETS
|
$
|
1,127,008,680
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
355,862,305
|
||
Total distributable earnings
|
771,146,375
|
|||
Total net assets
|
$
|
1,127,008,680
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
717,212,003
|
||
Shares issued and outstanding
|
11,308,379
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
63.42
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
409,796,677
|
||
Shares issued and outstanding
|
6,251,196
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
65.55
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income from unaffiliated securities(1)
|
$
|
4,303,415
|
||
Dividend income from affiliated securities
|
282,876
|
|||
Interest income
|
216,294
|
|||
Total investment income
|
4,802,585
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
7,126,066
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
1,093,264
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
309,559
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
802,719
|
|||
Distribution fees – Investor Class (See Note 5)
|
777,946
|
|||
Service fees – Investor Class (See Note 5)
|
518,630
|
|||
Reports to shareholders
|
48,453
|
|||
Federal and state registration fees
|
36,493
|
|||
Trustees’ fees and expenses
|
17,872
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,375
|
|||
Legal fees
|
8,964
|
|||
Interest expense (See Note 7)
|
4,172
|
|||
Other expenses
|
90,112
|
|||
Total expenses
|
10,859,087
|
|||
NET INVESTMENT LOSS
|
$
|
(6,056,502
|
)
|
|
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments:
|
||||
Unaffiliated investments
|
$
|
271,791,120
|
||
Affiliated investments
|
567,998
|
|||
Net change in unrealized appreciation/depreciation on investments:
|
||||
Unaffiliated investments
|
(449,646,491
|
)
|
||
Affiliated investments
|
(98,841,693
|
)
|
||
Net loss on investments
|
(276,129,066
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(282,185,568
|
)
|
(1)
|
Net of foreign taxes withheld of $152,136.
|
HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment loss
|
$
|
(6,056,502
|
)
|
$
|
(10,051,840
|
)
|
||
Net realized gain on investments
|
272,359,118
|
247,439,832
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(548,488,184
|
)
|
152,257,794
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(282,185,568
|
)
|
389,645,786
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(124,333,581
|
)
|
(222,108,992
|
)
|
||||
Distributable earnings – Institutional Class
|
(60,331,162
|
)
|
(129,337,592
|
)
|
||||
Total distributions
|
(184,664,743
|
)
|
(351,446,584
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
71,800,907
|
68,175,822
|
||||||
Proceeds from shares subscribed – Institutional Class
|
74,823,478
|
106,498,153
|
||||||
Dividends reinvested – Investor Class
|
122,154,479
|
218,459,005
|
||||||
Dividends reinvested – Institutional Class
|
53,173,071
|
112,851,020
|
||||||
Cost of shares redeemed – Investor Class
|
(387,949,323
|
)
|
(449,379,880
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(139,590,290
|
)
|
(446,765,359
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(205,587,678
|
)
|
(390,161,239
|
)
|
||||
TOTAL DECREASE IN NET ASSETS
|
(672,437,989
|
)
|
(351,962,037
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
1,799,446,669
|
2,151,408,706
|
||||||
End of period
|
$
|
1,127,008,680
|
$
|
1,799,446,669
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
888,118
|
874,775
|
||||||
Shares sold – Institutional Class
|
967,498
|
1,347,453
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
1,522,553
|
3,226,392
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
642,032
|
1,620,026
|
||||||
Shares redeemed – Investor Class
|
(5,356,609
|
)
|
(5,945,263
|
)
|
||||
Shares redeemed – Institutional Class
|
(2,033,339
|
)
|
(5,770,900
|
)
|
||||
Net decrease in shares outstanding
|
(3,369,747
|
)
|
(4,647,517
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
85.11
|
||
Income from investment operations:
|
||||
Net investment loss
|
(0.34
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(12.79
|
)
|
||
Total from investment operations
|
(13.13
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
(8.56
|
)
|
||
Total distributions
|
(8.56
|
)
|
||
Net asset value, end of period
|
$
|
63.42
|
||
TOTAL RETURN
|
-17.53
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
717.21
|
||
Ratio of expenses to average net assets
|
1.49
|
%(3)
|
||
Ratio of net investment loss to average net assets
|
(0.88
|
)%(3)
|
||
Portfolio turnover rate(4)
|
2
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
83.20
|
$
|
84.92
|
$
|
70.63
|
$
|
71.94
|
$
|
69.46
|
|||||||||
(0.52
|
)(1)
|
(0.86
|
)
|
(0.51
|
)
|
(0.45
|
)
|
(0.33
|
)
|
|||||||||
16.90
|
(0.85
|
)
|
14.80
|
(0.72
|
)
|
8.07
|
||||||||||||
16.38
|
(1.71
|
)
|
14.29
|
(1.17
|
)
|
7.74
|
||||||||||||
—
|
—
|
—
|
—
|
(0.02
|
)
|
|||||||||||||
(14.47
|
)
|
(0.01
|
)
|
—
|
(0.14
|
)
|
(5.24
|
)
|
||||||||||
(14.47
|
)
|
(0.01
|
)
|
—
|
(0.14
|
)
|
(5.26
|
)
|
||||||||||
$
|
85.11
|
$
|
83.20
|
$
|
84.92
|
$
|
70.63
|
$
|
71.94
|
|||||||||
24.16
|
%
|
-2.02
|
%
|
20.23
|
%
|
-1.63
|
%
|
11.83
|
%
|
|||||||||
$
|
1,213.20
|
$
|
1,339.45
|
$
|
1,675.00
|
$
|
1,626.71
|
$
|
1,615.36
|
|||||||||
1.47
|
%
|
1.47
|
%
|
1.48
|
%
|
1.47
|
%
|
1.46
|
%
|
|||||||||
(0.67
|
)%
|
(0.72
|
)%
|
(0.51
|
)%
|
(0.65
|
)%
|
(0.55
|
)%
|
|||||||||
2
|
%
|
13
|
%
|
5
|
%
|
2
|
%
|
4
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
87.83
|
||
Income from investment operations:
|
||||
Net investment loss
|
(0.21
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(13.23
|
)
|
||
Total from investment operations
|
(13.44
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
(8.84
|
)
|
||
Total distributions
|
(8.84
|
)
|
||
Net asset value, end of period
|
$
|
65.55
|
||
TOTAL RETURN
|
-17.40
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
409.80
|
||
Ratio of expenses to average net assets
|
1.14
|
%(3)
|
||
Ratio of net investment loss to average net assets
|
(0.54
|
)%(3)
|
||
Portfolio turnover rate(4)
|
2
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
85.66
|
$
|
87.10
|
$
|
72.17
|
$
|
73.24
|
$
|
70.50
|
|||||||||
(0.25
|
)(1)
|
(0.28
|
)
|
(0.11
|
)
|
(0.14
|
)
|
(0.08
|
)
|
|||||||||
17.41
|
(1.15
|
)
|
15.04
|
(0.79
|
)
|
8.19
|
||||||||||||
17.16
|
(1.43
|
)
|
14.93
|
(0.93
|
)
|
8.11
|
||||||||||||
—
|
—
|
—
|
—
|
(0.05
|
)
|
|||||||||||||
(14.99
|
)
|
(0.01
|
)
|
—
|
(0.14
|
)
|
(5.32
|
)
|
||||||||||
(14.99
|
)
|
(0.01
|
)
|
—
|
(0.14
|
)
|
(5.37
|
)
|
||||||||||
$
|
87.83
|
$
|
85.66
|
$
|
87.10
|
$
|
72.17
|
$
|
73.24
|
|||||||||
24.59
|
%
|
-1.65
|
%
|
20.69
|
%
|
-1.27
|
%
|
12.23
|
%
|
|||||||||
$
|
586.25
|
$
|
811.96
|
$
|
1,057.32
|
$
|
765.82
|
$
|
520.06
|
|||||||||
1.12
|
%
|
1.09
|
%
|
1.10
|
%
|
1.10
|
%
|
1.11
|
%
|
|||||||||
(0.32
|
)%
|
(0.34
|
)%
|
(0.13
|
)%
|
(0.28
|
)%
|
(0.19
|
)%
|
|||||||||
2
|
%
|
13
|
%
|
5
|
%
|
2
|
%
|
4
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes –No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute substantially all of
its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment income/loss and realized gains/losses for federal
income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the result of the treatment of wash sales for tax reporting purposes.
The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense. Distributions from net realized gains for book purposes may include short-term capital gains, which
are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of
shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns of the Fund for
the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability resulting from unrecognized tax
benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and accretion of
discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly attributable to its portfolio,
such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on investments are allocated to each class of shares
based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital gains, if any, are declared and
paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original cost of the
security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including
estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed for trading. The offering and
redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
i).
|
Foreign Currency – Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales of investments and
income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The Fund does not isolate the portion of the results of operations resulting from fluctuations in
foreign exchange rates on investments from fluctuations resulting from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain/loss on investments. Foreign investments
present additional risks due to currency fluctuations, economic and political factors, lower liquidity, government regulations, differences in accounting standards, and other factors.
|
j).
|
REIT Equity Securities – The Fund may invest in the equity securities of real estate investment trusts (“REITs”). Distributions received from REITs may be classified as dividends, capital gains, or return of
capital. Investments in REITs may require the Fund to accrue and distribute income not yet received. To generate sufficient cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio (including
when it is not advantageous to do so) that it otherwise would have continued to hold. At other times, investments in a REIT may result in the Fund’s receipt of cash in excess of the REIT’s earnings. If the Fund distributes these amounts,
these distributions could constitute a return of capital to Fund
|
HENNESSY FUNDS
|
1-800-966-4354
|
shareholders for U.S. federal income tax purposes. Dividends received by the Fund from a REIT generally will not constitute qualified dividend income and will not qualify for the dividends-received deduction.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar instruments, and
model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs are
unavailable.
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end mutual funds,
partnerships, rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as reported by the primary exchange
on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales price reported. Securities traded on a
securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these securities are actively traded and valuation adjustments are not
applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at the same time the Fund calculates its NAV because most foreign markets close well before such time. The
earlier close of most foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim. In certain circumstances, it may be determined that a foreign security needs to be
fair valued because it appears that the value of the security might have been materially affected by events occurring after the close of the market in which the security is principally traded, but before the time the Fund calculates its
NAV, such as by a development that affects an entire market or region (e.g., a weather-related event) or a potentially global development (e.g., a terrorist attack that may be expected to have an effect on investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the ending NAV
provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and U.S. government
agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing service may consider recently
executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the model may incorporate observable market data,
such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These securities are generally classified in Level 2 of the fair value
hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments with an original
term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as of the 61st day prior to maturity
are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as described below. Short-term securities are
generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
736,862,699
|
|||
Gross tax unrealized appreciation
|
$
|
1,085,596,555
|
|||
Gross tax unrealized depreciation
|
(23,485,150
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
1,062,111,405
|
|||
Undistributed ordinary income
|
$
|
—
|
|||
Undistributed long-term capital gains
|
184,664,689
|
||||
Total distributable earnings
|
$
|
184,664,689
|
|||
Other accumulated gain/(loss)
|
$
|
(8,779,408
|
)
|
||
Total accumulated gain/(loss)
|
$
|
1,237,996,686
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
—
|
$
|
—
|
|||||
Long-term capital gain
|
184,664,743
|
351,446,584
|
|||||||
$
|
184,664,743
|
$
|
351,446,584
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 824.70
|
$6.76
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.45
|
$7.47
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 826.00
|
$5.18
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.19
|
$5.72
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.49% for Investor Class shares or 1.14% for Institutional Class shares, as applicable, multiplied by the average account value over the period,
multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory and sub-advisory agreements and the relevant factors for
consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory and sub-advisory agreements and also referenced the documents that had been provided to
help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor and the Sub-Advisor and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
Summaries of the key terms of the advisory and sub-advisory agreements;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(9)
|
A completed questionnaire from the Sub-Advisor;
|
|
(10)
|
A summary of the Sub-Advisor’s questionnaire and relevant information from the Sub-Advisor’s Form ADV Parts I and II;
|
|
(11)
|
The Sub-Advisor’s Code of Ethics; and
|
|
(12)
|
Financial information of the Sub-Advisor.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
The nature and quality of the advisory services provided by the Advisor and the Sub-Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
|
(4)
|
The costs and profitability of the Fund to the Advisor and the Sub-Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor and the Sub-Advisor from serving as an investment advisor to the Fund (other than the advisory and sub-advisory fees).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and noted that their
overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the nature and extent of the
services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor oversees the Sub-Advisor for the Fund, and the Sub-Advisor acts as the portfolio manager for the Fund.
|
||
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Sub-Advisor and the Fund’s
other service providers, as feasible, conducts on-site visits to the Sub-Advisor and the Fund’s other service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios,
evaluates insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports provided by
service providers, and maintains books and records.
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(f)
|
The Advisor oversees the selection and continued employment of the Sub-Advisor, reviews the Fund’s investment performance, and monitors the Sub-Advisor’s adherence to the Fund’s investment objectives, policies,
and restrictions.
|
||
(g)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services to
the Fund.
|
||
(h)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(i)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
||
(j)
|
For each annual report of the Fund, the Advisor reviews the written summary prepared by the Sub-Advisor of the Fund’s performance during the most recent 12-month period.
|
||
(k)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The Advisor participates
in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee. The Advisor compensates, in part, a
number of these third-party providers of NTF programs out of its own revenues.
|
||
(l)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight
personnel, as well as management executives.
|
||
(m)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(n)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and education.
|
(2)
|
The Trustees considered the services identified below that are provided by the Sub-Advisor:
|
(a)
|
The Sub-Advisor acts as the portfolio manager for the Fund. In this capacity, the Sub-Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Sub-Advisor ensures that its compliance program includes policies and procedures relevant to the Fund and the Sub-Advisor’s duties as a portfolio manager to the Fund.
|
||
(c)
|
For each annual report of the Fund, the Sub-Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(d)
|
The Sub-Advisor provides a quarterly compliance certification to the Board regarding trading and allocation practices, supervisory matters, the Sub-Advisor’s compliance program (including its code of ethics),
compliance with the Fund’s policies, and general firm updates.
|
(3)
|
The Trustees considered the distinction between the services performed by the Advisor and the Sub-Advisor. The Trustees noted that the management of the Fund, including the oversight of the Sub-Advisor, involves
more comprehensive and substantive duties than the duties of the Sub-Advisor. Specifically, the Trustees considered the lists of services identified above and concluded that the services performed by the Advisor for the Fund require a
higher level of service and oversight than the services performed by the Sub-Advisor. Based on this determination, the Trustees concluded that the differential in advisory fees between the Advisor and the Sub-Advisor is reasonable.
|
|
(4)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the Fund to various
indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor and the Sub-Advisor manage the Fund in a manner materially consistent with its stated investment objective and style. The Trustees
concluded that the performance of the Fund over various periods warranted continuation of the advisory and sub-advisory agreements.
|
|
(5)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As part of the
discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials considered at the meeting.
The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded that they are reasonable and warranted
continuation of the advisory and sub-advisory agreements.
|
|
(6)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over the prior year.
In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets of the Fund increase. For
example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts, the Advisor’s significant marketing
efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain circumstances. The Trustees determined that it did not appear that
the Advisor was realizing significant economies of scale and concluded that it would continue to monitor economies of scale in the future as circumstances changed.
|
|
(7)
|
The Trustees considered the profitability of the Advisor and the Sub-Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues that
the Advisor has put into
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor and the Sub-Advisor are reasonable and not excessive when compared to profitability guidelines set forth in relevant
court cases.
|
||
(8)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and its shareholders.
|
|
(9)
|
The Trustees considered any benefits to the Advisor and the Sub-Advisor from serving as an advisor to the Fund (other than the advisory and sub-advisory fees). The Trustees noted that the Advisor and the
Sub-Advisor may derive ancillary benefits from, by way of example, their association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the
Fund. The Trustees determined that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any additional
benefits realized by the Advisor and the Sub-Advisor from their relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ findings that (i) the research, analytical, statistical, and other information
and services provided by brokers are merely supplemental to the Advisor’s and the Sub-Advisor’s own efforts in the performance of their duties under the advisory and sub-advisory agreements and (ii) although the Sub-Advisor could derive
benefits from the conversion of Fund shareholders into separate account clients, the Fund also could benefit from potential institutional shareholders who might choose to invest in the Fund.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
9
|
Statement of Operations
|
10
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
23
|
Proxy Voting Policy and Proxy Voting Records
|
25
|
Availability of Quarterly Portfolio Schedule
|
25
|
Federal Tax Distribution Information
|
25
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Cornerstone
|
||||
Mid Cap 30 Fund –
|
||||
Investor Class (HFMDX)
|
-20.57%
|
-23.80%
|
-4.01%
|
5.75%
|
Hennessy Cornerstone
|
||||
Mid Cap 30 Fund –
|
||||
Institutional Class (HIMDX)
|
-20.47%
|
-23.53%
|
-3.68%
|
6.11%
|
Russell Midcap® Index
|
-11.63%
|
-10.00%
|
4.81%
|
9.83%
|
S&P 500® Index
|
-3.16%
|
0.86%
|
9.12%
|
11.69%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020
(Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Synaptics, Inc.
|
6.66%
|
Syneos Health, Inc.
|
4.34%
|
Crown Holdings, Inc.
|
4.06%
|
AECOM Technology Corp.
|
3.93%
|
Itron, Inc.
|
3.87%
|
Packaging Corp. of America
|
3.73%
|
Landstar System, Inc.
|
3.71%
|
Williams-Sonoma, Inc.
|
3.65%
|
Lithia Motors, Inc., Class A
|
3.42%
|
Restoration Hardware Holdings, Inc.
|
3.38%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 97.04%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 2.84%
|
||||||||||||
News Corp.
|
697,300
|
$
|
6,910,243
|
2.84
|
%
|
|||||||
|
||||||||||||
Consumer Discretionary – 29.70%
|
||||||||||||
KB Home
|
286,800
|
7,525,632
|
3.09
|
%
|
||||||||
Lithia Motors, Inc., Class A
|
75,300
|
8,325,168
|
3.42
|
%
|
||||||||
Meritage Homes Corp. (a)
|
136,800
|
7,190,208
|
2.95
|
%
|
||||||||
Restoration Hardware Holdings, Inc. (a)
|
57,300
|
8,238,594
|
3.38
|
%
|
||||||||
Scientific Games Corp. (a)
|
499,100
|
6,293,651
|
2.59
|
%
|
||||||||
Skechers U.S.A., Inc. (a)
|
268,100
|
7,555,058
|
3.10
|
%
|
||||||||
Taylor Morrison Home Corp. (a)
|
377,400
|
5,491,170
|
2.26
|
%
|
||||||||
Toll Brothers, Inc.
|
239,900
|
5,762,398
|
2.37
|
%
|
||||||||
Whirlpool Corp.
|
62,900
|
7,028,446
|
2.89
|
%
|
||||||||
Williams-Sonoma, Inc.
|
143,600
|
8,880,224
|
3.65
|
%
|
||||||||
|
72,290,549
|
29.70
|
%
|
|||||||||
Financials – 17.20%
|
||||||||||||
American Financial Group, Inc.
|
92,000
|
6,094,080
|
2.50
|
%
|
||||||||
Brighthouse Financial, Inc. (a)
|
255,400
|
6,566,334
|
2.70
|
%
|
||||||||
First American Financial Corp.
|
164,700
|
7,595,964
|
3.12
|
%
|
||||||||
Hanover Insurance Group, Inc.
|
72,400
|
7,267,512
|
2.99
|
%
|
||||||||
LPL Financial Holdings, Inc.
|
128,100
|
7,714,182
|
3.17
|
%
|
||||||||
Old Republic International Corp.
|
415,400
|
6,625,630
|
2.72
|
%
|
||||||||
|
41,863,702
|
17.20
|
%
|
|||||||||
Health Care – 4.34%
|
||||||||||||
Syneos Health, Inc. (a)
|
189,400
|
10,566,626
|
4.34
|
%
|
||||||||
Industrials – 12.71%
|
||||||||||||
AECOM Technology Corp. (a)
|
264,000
|
9,572,640
|
3.93
|
%
|
||||||||
Landstar System, Inc.
|
87,300
|
9,018,963
|
3.71
|
%
|
||||||||
MasTec, Inc. (a)
|
152,200
|
5,463,980
|
2.24
|
%
|
||||||||
Owens Corning
|
158,700
|
6,881,232
|
2.83
|
%
|
||||||||
|
30,936,815
|
12.71
|
%
|
|||||||||
Information Technology – 22.46%
|
||||||||||||
Itron, Inc. (a)
|
134,700
|
9,404,754
|
3.87
|
%
|
||||||||
Jabil, Inc.
|
275,700
|
7,840,908
|
3.22
|
%
|
||||||||
NCR Corp. (a)
|
323,800
|
6,644,376
|
2.73
|
%
|
||||||||
SunPower Corp. (a)
|
935,600
|
6,876,660
|
2.83
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Information Technology (Continued)
|
||||||||||||
Synaptics, Inc. (a)
|
247,900
|
$
|
16,210,181
|
6.66
|
%
|
|||||||
Synnex Corp.
|
87,600
|
7,670,256
|
3.15
|
%
|
||||||||
|
54,647,135
|
22.46
|
%
|
|||||||||
Materials – 7.79%
|
||||||||||||
Crown Holdings, Inc. (a)
|
153,500
|
9,886,935
|
4.06
|
%
|
||||||||
Packaging Corp. of America
|
93,800
|
9,065,770
|
3.73
|
%
|
||||||||
|
18,952,705
|
7.79
|
%
|
|||||||||
Total Common Stocks
|
||||||||||||
(Cost $290,576,420)
|
236,167,775
|
97.04
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 0.52%
|
||||||||||||
Money Market Funds – 0.52%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (b)
|
1,261,916
|
1,261,916
|
0.52
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $1,261,916)
|
1,261,916
|
0.52
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $291,838,336) – 97.56%
|
237,429,691
|
97.56
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 2.44%
|
5,944,730
|
2.44
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
243,374,421
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
6,910,243
|
$
|
—
|
$
|
—
|
$
|
6,910,243
|
||||||||
Consumer Discretionary
|
72,290,549
|
—
|
—
|
72,290,549
|
||||||||||||
Financials
|
41,863,702
|
—
|
—
|
41,863,702
|
||||||||||||
Health Care
|
10,566,626
|
—
|
—
|
10,566,626
|
||||||||||||
Industrials
|
30,936,815
|
—
|
—
|
30,936,815
|
||||||||||||
Information Technology
|
54,647,135
|
—
|
—
|
54,647,135
|
||||||||||||
Materials
|
18,952,705
|
—
|
—
|
18,952,705
|
||||||||||||
Total Common Stocks
|
$
|
236,167,775
|
$
|
—
|
$
|
—
|
$
|
236,167,775
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
1,261,916
|
$
|
—
|
$
|
—
|
$
|
1,261,916
|
||||||||
Total Short-Term Investments
|
$
|
1,261,916
|
$
|
—
|
$
|
—
|
$
|
1,261,916
|
||||||||
Total Investments
|
$
|
237,429,691
|
$
|
—
|
$
|
—
|
$
|
237,429,691
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $291,838,336)
|
$
|
237,429,691
|
||
Dividends and interest receivable
|
71,468
|
|||
Receivable for fund shares sold
|
48,732
|
|||
Receivable for securities sold
|
6,308,772
|
|||
Prepaid expenses and other assets
|
28,012
|
|||
Total assets
|
243,886,675
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
229,926
|
|||
Payable to advisor
|
132,390
|
|||
Payable to administrator
|
34,919
|
|||
Payable to auditor
|
11,379
|
|||
Accrued distribution fees
|
13,620
|
|||
Accrued service fees
|
10,024
|
|||
Accrued trustees fees
|
3,538
|
|||
Accrued expenses and other payables
|
76,458
|
|||
Total liabilities
|
512,254
|
|||
NET ASSETS
|
$
|
243,374,421
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
388,546,990
|
||
Accumulated deficit
|
(145,172,569
|
)
|
||
Total net assets
|
$
|
243,374,421
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
136,417,034
|
||
Shares issued and outstanding
|
14,303,676
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
9.54
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
106,957,387
|
||
Shares issued and outstanding
|
10,797,183
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
9.91
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income
|
$
|
1,946,949
|
||
Interest income
|
35,920
|
|||
Total investment income
|
1,982,869
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
1,197,031
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
184,847
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
79,548
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
170,507
|
|||
Distribution fees – Investor Class (See Note 5)
|
135,062
|
|||
Service fees – Investor Class (See Note 5)
|
90,042
|
|||
Federal and state registration fees
|
25,104
|
|||
Reports to shareholders
|
22,857
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,375
|
|||
Trustees’ fees and expenses
|
10,279
|
|||
Legal fees
|
2,285
|
|||
Interest expense (See Note 7)
|
221
|
|||
Other expenses
|
24,234
|
|||
Total expenses
|
1,966,854
|
|||
NET INVESTMENT INCOME
|
$
|
16,015
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized loss on investments
|
$
|
(2,425,383
|
)
|
|
Net change in unrealized appreciation/depreciation on investments
|
(63,834,710
|
)
|
||
Net loss on investments
|
(66,260,093
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(66,244,078
|
)
|
HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
16,015
|
$
|
66,757
|
||||
Net realized loss on investments
|
(2,425,383
|
)
|
(81,390,911
|
)
|
||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(63,834,710
|
)
|
70,748,582
|
|||||
Net decrease in net assets resulting from operations
|
(66,244,078
|
)
|
(10,575,572
|
)
|
||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
—
|
(84,472,220
|
)
|
|||||
Distributable earnings – Institutional Class
|
—
|
(78,382,312
|
)
|
|||||
Total distributions
|
—
|
(162,854,532
|
)
|
|||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
4,939,861
|
5,388,708
|
||||||
Proceeds from shares subscribed – Institutional Class
|
2,476,446
|
13,304,783
|
||||||
Dividends reinvested – Investor Class
|
—
|
83,056,407
|
||||||
Dividends reinvested – Institutional Class
|
—
|
76,949,798
|
||||||
Cost of shares redeemed – Investor Class
|
(37,339,663
|
)
|
(130,835,008
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(35,351,769
|
)
|
(167,228,188
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(65,275,125
|
)
|
(119,363,500
|
)
|
||||
TOTAL DECREASE IN NET ASSETS
|
(131,519,203
|
)
|
(292,793,604
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
374,893,624
|
667,687,228
|
||||||
End of period
|
$
|
243,374,421
|
$
|
374,893,624
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
509,844
|
436,901
|
||||||
Shares sold – Institutional Class
|
218,322
|
981,434
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
—
|
7,160,035
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
—
|
6,417,832
|
||||||
Shares redeemed – Investor Class
|
(3,363,637
|
)
|
(10,498,154
|
)
|
||||
Shares redeemed – Institutional Class
|
(2,971,669
|
)
|
(12,799,172
|
)
|
||||
Net decrease in shares outstanding
|
(5,607,140
|
)
|
(8,301,124
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
12.01
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
(0.01
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.46
|
)
|
||
Total from investment operations
|
(2.47
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
—
|
|||
Net asset value, end of period
|
$
|
9.54
|
||
TOTAL RETURN
|
-20.57
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
136.42
|
||
Ratio of expenses to average net assets
|
1.37
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
(0.15
|
)%(3)
|
||
Portfolio turnover rate(4)
|
0
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
16.87
|
$
|
22.46
|
$
|
18.37
|
$
|
20.12
|
$
|
19.00
|
|||||||||
(0.02
|
)(1)
|
(0.06
|
)
|
(0.15
|
)
|
(0.07
|
)
|
0.10
|
||||||||||
(0.34
|
)
|
(1.87
|
)
|
4.36
|
(1.51
|
)
|
2.16
|
|||||||||||
(0.36
|
)
|
(1.93
|
)
|
4.21
|
(1.58
|
)
|
2.26
|
|||||||||||
—
|
—
|
—
|
(0.03
|
)
|
—
|
|||||||||||||
(4.50
|
)
|
(3.66
|
)
|
(0.12
|
)
|
(0.14
|
)
|
(1.14
|
)
|
|||||||||
(4.50
|
)
|
(3.66
|
)
|
(0.12
|
)
|
(0.17
|
)
|
(1.14
|
)
|
|||||||||
$
|
12.01
|
$
|
16.87
|
$
|
22.46
|
$
|
18.37
|
$
|
20.12
|
|||||||||
-1.22
|
%
|
-10.54
|
%
|
23.02
|
%
|
-7.89
|
%
|
12.35
|
%
|
|||||||||
$
|
206.11
|
$
|
338.39
|
$
|
351.16
|
$
|
485.15
|
$
|
765.90
|
|||||||||
1.36
|
%
|
1.31
|
%
|
1.34
|
%
|
1.35
|
%
|
1.17
|
%
|
|||||||||
(0.15
|
)%
|
(0.47
|
)%
|
(0.33
|
)%
|
(0.24
|
)%
|
0.27
|
%
|
|||||||||
70
|
%
|
181
|
%
|
106
|
%
|
108
|
%
|
5
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
12.46
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.01
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.56
|
)
|
||
Total from investment operations
|
(2.55
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
—
|
|||
Net asset value, end of period
|
$
|
9.91
|
||
TOTAL RETURN
|
-20.47
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
106.96
|
||
Ratio of expenses to average net assets:
|
1.02
|
%(4)
|
||
Ratio of net investment income (loss) to average net assets:
|
0.20
|
%(4)
|
||
Portfolio turnover rate(5)
|
0
|
%(3)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Amount is between $(0.005) and 0.005.
|
(3)
|
Not annualized.
|
(4)
|
Annualized.
|
(5)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
17.38
|
$
|
23.07
|
$
|
18.80
|
$
|
20.55
|
$
|
19.36
|
|||||||||
0.03
|
(1)
|
(0.00
|
)(2)
|
0.02
|
0.00
|
(2)
|
(0.03
|
)
|
||||||||||
(0.36
|
)
|
(1.92
|
)
|
4.38
|
(1.54
|
)
|
2.38
|
|||||||||||
(0.33
|
)
|
(1.92
|
)
|
4.40
|
(1.54
|
)
|
2.35
|
|||||||||||
—
|
—
|
—
|
(0.06
|
)
|
—
|
|||||||||||||
(4.59
|
)
|
(3.77
|
)
|
(0.13
|
)
|
(0.15
|
)
|
(1.16
|
)
|
|||||||||
(4.59
|
)
|
(3.77
|
)
|
(0.13
|
)
|
(0.21
|
)
|
(1.16
|
)
|
|||||||||
$
|
12.46
|
$
|
17.38
|
$
|
23.07
|
$
|
18.80
|
$
|
20.55
|
|||||||||
-0.84
|
%
|
-10.22
|
%
|
23.47
|
%
|
-7.53
|
%
|
12.62
|
%
|
|||||||||
$
|
168.79
|
$
|
329.30
|
$
|
620.38
|
$
|
754.97
|
$
|
306.04
|
|||||||||
1.00
|
%
|
0.95
|
%
|
0.97
|
%
|
0.97
|
%
|
0.96
|
%
|
|||||||||
0.20
|
%
|
(0.12
|
)%
|
0.04
|
%
|
0.07
|
%
|
0.41
|
%
|
|||||||||
70
|
%
|
181
|
%
|
106
|
%
|
108
|
%
|
5
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute substantially all
of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment income/loss and realized gains/losses for
federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the result of the treatment of wash sales for tax reporting
purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense. Distributions from net realized gains for book purposes may include short-term capital
gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on
redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns of the Fund for
the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability resulting from unrecognized tax
benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and accretion of
discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly attributable to its portfolio,
such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on investments are allocated to each class of shares
based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital gains, if any, are declared
and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original cost of the
security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all liabilities (including
estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed for trading. The offering and
redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar instruments, and
model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs are
unavailable.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Equity Securities – Equity securities, including common stocks, preferred stocks, exchange-traded funds, closed-end mutual funds, partnerships, rights, and real estate
investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as reported by the primary exchange on which the securities are listed.
Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales price reported. Securities traded on a securities exchange for which a last-quoted
sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified in Level 1 of the
fair value hierarchy.
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the ending NAV
provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and U.S. government
agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing service may consider recently
executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the model may incorporate observable market data,
such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These securities are generally classified in Level 2 of the fair value
hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments with an
original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as of the 61st day prior
to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as described below. Short-term
securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
366,713,711
|
|||
Gross tax unrealized appreciation
|
$
|
15,338,127
|
|||
Gross tax unrealized depreciation
|
(6,545,308
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
8,792,819
|
|||
Undistributed ordinary income
|
$
|
—
|
|||
Undistributed long-term capital gains
|
—
|
||||
Total distributable earnings
|
$
|
—
|
|||
Other accumulated gain/(loss)
|
$
|
(87,721,310
|
)
|
||
Total accumulated gain/(loss)
|
$
|
(78,928,491
|
)
|
$44,528,232
|
Unlimited Long-Term
|
|
$40,746,684
|
Unlimited Short-Term
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
—
|
$
|
5,427,863
|
|||||
Long-term capital gain
|
—
|
157,426,669
|
|||||||
$
|
—
|
$
|
162,854,532
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS/EXPENSE EXAMPLE
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 794.30
|
$6.11
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.05
|
$6.87
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 795.30
|
$4.55
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.79
|
$5.12
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.37% for Investor Class shares or 1.02% for Institutional Class shares, as applicable, multiplied by the average account value over the period,
multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been provided to help the Board
assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
|
(1)
|
The nature and quality of the advisory services provided by the Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(4)
|
The costs and profitability of the Fund to the Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and noted that
their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the nature and extent of the
services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers, as
feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios, evaluates insurance providers for fidelity bond,
D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports provided by service providers, and maintains books and
records.
|
||
(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services to
the Fund.
|
||
(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The Advisor
participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee. The Advisor
compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight
personnel, as well as management executives.
|
||
(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and education.
|
(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the Fund to various
indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated investment objective and style. The Trustees concluded that
the performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As part of the
discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials considered at the
meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded that they are reasonable and
warranted continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over the prior
year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets of the Fund increase.
For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts, the Advisor’s significant marketing
efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
circumstances. The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the future
as circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues that the Advisor has put
into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines set forth in relevant court cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and its
shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary benefits from, by way of
example, its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund. The Trustees determined that any such products and
services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any additional benefits realized by the Advisor from its relationship with
the Fund were reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical, and other information and services provided by brokers are merely supplemental to the Advisor’s own
efforts in the performance of its duties under the advisory agreement.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
9
|
Statement of Operations
|
10
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
23
|
Proxy Voting Policy and Proxy Voting Records
|
25
|
Availability of Quarterly Portfolio Schedule
|
25
|
Federal Tax Distribution Information
|
25
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Cornerstone
|
||||
Large Growth Fund –
|
||||
Investor Class (HFLGX)
|
-13.00%
|
-10.88%
|
2.82%
|
8.46%
|
Hennessy Cornerstone
|
||||
Large Growth Fund –
|
||||
Institutional Class (HILGX)
|
-12.84%
|
-10.66%
|
3.08%
|
8.73%
|
Russell 1000® Index
|
-3.56%
|
0.09%
|
8.74%
|
11.57%
|
S&P 500® Index
|
-3.16%
|
0.86%
|
9.12%
|
11.69%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020
(Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Amgen, Inc.
|
2.56%
|
General Mills, Inc.
|
2.56%
|
eBay, Inc.
|
2.45%
|
Tractor Supply Co.
|
2.45%
|
Electronic Arts, Inc.
|
2.43%
|
Walmart, Inc.
|
2.39%
|
Oracle Corp.
|
2.34%
|
3M Co.
|
2.33%
|
Cummins, Inc.
|
2.29%
|
United Parcel Service, Inc., Class B
|
2.27%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 98.35%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 5.69%
|
||||||||||||
Electronic Arts, Inc. (a)
|
22,700
|
$
|
2,593,702
|
2.43
|
%
|
|||||||
Omnicom Group, Inc.
|
32,300
|
1,842,069
|
1.73
|
%
|
||||||||
ViacomCBS, Inc.
|
94,388
|
1,629,137
|
1.53
|
%
|
||||||||
|
6,064,908
|
5.69
|
%
|
|||||||||
Consumer Discretionary – 19.96%
|
||||||||||||
Advance Auto Parts, Inc.
|
17,400
|
2,103,834
|
1.98
|
%
|
||||||||
AutoZone, Inc. (a)
|
2,300
|
2,346,736
|
2.20
|
%
|
||||||||
Best Buy Co., Inc.
|
29,200
|
2,240,516
|
2.10
|
%
|
||||||||
Darden Restaurants, Inc.
|
21,400
|
1,579,106
|
1.48
|
%
|
||||||||
DR Horton, Inc.
|
41,200
|
1,945,464
|
1.83
|
%
|
||||||||
eBay, Inc.
|
65,600
|
2,612,848
|
2.45
|
%
|
||||||||
Las Vegas Sands Corp.
|
39,800
|
1,911,196
|
1.79
|
%
|
||||||||
PulteGroup, Inc.
|
55,200
|
1,560,504
|
1.47
|
%
|
||||||||
Target Corp.
|
21,400
|
2,348,436
|
2.21
|
%
|
||||||||
Tractor Supply Co.
|
25,700
|
2,606,751
|
2.45
|
%
|
||||||||
|
21,255,391
|
19.96
|
%
|
|||||||||
Consumer Staples – 6.66%
|
||||||||||||
General Mills, Inc.
|
45,600
|
2,730,984
|
2.56
|
%
|
||||||||
Sysco Corp.
|
32,300
|
1,817,521
|
1.71
|
%
|
||||||||
Walmart, Inc.
|
20,900
|
2,540,395
|
2.39
|
%
|
||||||||
|
7,088,900
|
6.66
|
%
|
|||||||||
Energy – 4.90%
|
||||||||||||
ConocoPhillips
|
44,500
|
1,873,450
|
1.76
|
%
|
||||||||
EOG Resources, Inc.
|
35,700
|
1,696,107
|
1.59
|
%
|
||||||||
Pioneer Natural Resources Co.
|
18,400
|
1,643,304
|
1.55
|
%
|
||||||||
|
5,212,861
|
4.90
|
%
|
|||||||||
Financials – 4.22%
|
||||||||||||
T. Rowe Price Group, Inc.
|
18,900
|
2,185,407
|
2.05
|
%
|
||||||||
The Progressive Corp.
|
29,900
|
2,311,270
|
2.17
|
%
|
||||||||
|
4,496,677
|
4.22
|
%
|
|||||||||
Health Care – 10.64%
|
||||||||||||
Amgen, Inc.
|
11,400
|
2,727,108
|
2.56
|
%
|
||||||||
Biogen, Inc. (a)
|
7,400
|
2,196,542
|
2.06
|
%
|
||||||||
HCA Healthcare, Inc.
|
18,000
|
1,977,840
|
1.86
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Health Care (Continued)
|
||||||||||||
Henry Schein, Inc. (a)
|
37,900
|
$
|
2,067,824
|
1.94
|
%
|
|||||||
Merck & Co., Inc.
|
29,800
|
2,364,332
|
2.22
|
%
|
||||||||
|
11,333,646
|
10.64
|
%
|
|||||||||
Industrials – 31.65%
|
||||||||||||
3M Co.
|
16,300
|
2,476,296
|
2.33
|
%
|
||||||||
American Airlines Group, Inc.
|
103,500
|
1,243,035
|
1.17
|
%
|
||||||||
Caterpillar, Inc.
|
18,600
|
2,164,668
|
2.03
|
%
|
||||||||
CSX Corp.
|
31,700
|
2,099,491
|
1.97
|
%
|
||||||||
Cummins, Inc.
|
14,900
|
2,436,150
|
2.29
|
%
|
||||||||
Deere & Co.
|
14,400
|
2,088,864
|
1.96
|
%
|
||||||||
Delta Air Lines, Inc.
|
47,000
|
1,217,770
|
1.14
|
%
|
||||||||
Emerson Electric Co.
|
35,900
|
2,047,377
|
1.92
|
%
|
||||||||
General Dynamics Corp.
|
13,800
|
1,802,556
|
1.69
|
%
|
||||||||
Masco Corp.
|
54,000
|
2,216,160
|
2.08
|
%
|
||||||||
Norfolk Southern Corp.
|
12,300
|
2,104,530
|
1.98
|
%
|
||||||||
PACCAR, Inc.
|
34,200
|
2,367,666
|
2.22
|
%
|
||||||||
Southwest Airlines Co.
|
48,200
|
1,506,250
|
1.41
|
%
|
||||||||
Union Pacific Corp.
|
14,000
|
2,237,060
|
2.10
|
%
|
||||||||
United Airlines Holdings, Inc. (a)
|
33,900
|
1,002,762
|
0.94
|
%
|
||||||||
United Parcel Service, Inc., Class B
|
25,500
|
2,413,830
|
2.27
|
%
|
||||||||
United Rentals, Inc. (a)
|
17,800
|
2,287,300
|
2.15
|
%
|
||||||||
|
33,711,765
|
31.65
|
%
|
|||||||||
Information Technology – 14.63%
|
||||||||||||
Cisco Systems, Inc.
|
56,000
|
2,373,280
|
2.23
|
%
|
||||||||
Cognizant Technology Solutions Corp., Class A
|
37,100
|
2,152,542
|
2.02
|
%
|
||||||||
Intel Corp.
|
40,050
|
2,402,199
|
2.26
|
%
|
||||||||
International Business Machines Corp.
|
16,900
|
2,121,964
|
1.99
|
%
|
||||||||
NetApp, Inc.
|
49,000
|
2,144,730
|
2.01
|
%
|
||||||||
Oracle Corp.
|
47,000
|
2,489,590
|
2.34
|
%
|
||||||||
The Western Union Co.
|
99,500
|
1,897,465
|
1.78
|
%
|
||||||||
|
15,581,770
|
14.63
|
%
|
|||||||||
Total Common Stocks
|
||||||||||||
(Cost $114,262,337)
|
104,745,918
|
98.35
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS – 1.82%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.82%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (b)
|
1,940,247
|
$
|
1,940,247
|
1.82
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $1,940,247)
|
1,940,247
|
1.82
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $116,202,584) – 100.17%
|
106,686,165
|
100.17
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.17)%
|
(178,796
|
)
|
(0.17
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
106,507,369
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
6,064,908
|
$
|
—
|
$
|
—
|
$
|
6,064,908
|
||||||||
Consumer Discretionary
|
21,255,391
|
—
|
—
|
21,255,391
|
||||||||||||
Consumer Staples
|
7,088,900
|
—
|
—
|
7,088,900
|
||||||||||||
Energy
|
5,212,861
|
—
|
—
|
5,212,861
|
||||||||||||
Financials
|
4,496,677
|
—
|
—
|
4,496,677
|
||||||||||||
Health Care
|
11,333,646
|
—
|
—
|
11,333,646
|
||||||||||||
Industrials
|
33,711,765
|
—
|
—
|
33,711,765
|
||||||||||||
Information Technology
|
15,581,770
|
—
|
—
|
15,581,770
|
||||||||||||
Total Common Stocks
|
$
|
104,745,918
|
$
|
—
|
$
|
—
|
$
|
104,745,918
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
1,940,247
|
$
|
—
|
$
|
—
|
$
|
1,940,247
|
||||||||
Total Short-Term Investments
|
$
|
1,940,247
|
$
|
—
|
$
|
—
|
$
|
1,940,247
|
||||||||
Total Investments
|
$
|
106,686,165
|
$
|
—
|
$
|
—
|
$
|
106,686,165
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $116,202,584)
|
$
|
106,686,165
|
||
Dividends and interest receivable
|
75,668
|
|||
Receivable for fund shares sold
|
151,044
|
|||
Prepaid expenses and other assets
|
18,084
|
|||
Total assets
|
106,930,961
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
113,727
|
|||
Payable to advisor
|
60,813
|
|||
Payable to administrator
|
18,891
|
|||
Payable to auditor
|
11,373
|
|||
Accrued distribution fees
|
186,996
|
|||
Accrued service fees
|
7,307
|
|||
Accrued trustees fees
|
5,587
|
|||
Accrued expenses and other payables
|
18,898
|
|||
Total liabilities
|
423,592
|
|||
NET ASSETS
|
$
|
106,507,369
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
108,785,790
|
||
Accumulated deficit
|
(2,278,421
|
)
|
||
Total net assets
|
$
|
106,507,369
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
94,659,502
|
||
Shares issued and outstanding
|
10,579,575
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
8.95
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
11,847,867
|
||
Shares issued and outstanding
|
1,311,145
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
9.04
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income
|
$
|
1,549,700
|
||
Interest income
|
17,984
|
|||
Total investment income
|
1,567,684
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
459,636
|
|||
Distribution fees – Investor Class (See Note 5)
|
82,827
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
68,037
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
55,374
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
3,814
|
|||
Service fees – Investor Class (See Note 5)
|
55,218
|
|||
Federal and state registration fees
|
18,641
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,375
|
|||
Trustees’ fees and expenses
|
8,829
|
|||
Reports to shareholders
|
7,282
|
|||
Legal fees
|
642
|
|||
Interest expense (See Note 7)
|
465
|
|||
Other expenses
|
8,846
|
|||
Total expenses before recoupment and reimbursement by advisor
|
794,448
|
|||
Expense recoupment by advisor – Investor Class (See Note 5)
|
1,621
|
|||
Expense reimbursement by advisor – Institutional Class (See Note 5)
|
(162
|
)
|
||
Net expenses
|
795,907
|
|||
NET INVESTMENT INCOME
|
$
|
771,777
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
6,648,556
|
||
Net change in unrealized appreciation/depreciation on investments
|
(23,638,322
|
)
|
||
Net loss on investments
|
(16,989,766
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(16,217,989
|
)
|
HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
771,777
|
$
|
1,763,273
|
||||
Net realized gain on investments
|
6,648,556
|
2,328,575
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(23,638,322
|
)
|
5,977,384
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(16,217,989
|
)
|
10,069,232
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(2,977,504
|
)
|
(24,244,915
|
)
|
||||
Distributable earnings – Institutional Class
|
(399,991
|
)
|
(3,824,749
|
)
|
||||
Total distributions
|
(3,377,495
|
)
|
(28,069,664
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
912,868
|
1,986,421
|
||||||
Proceeds from shares subscribed – Institutional Class
|
1,391,062
|
4,246,408
|
||||||
Dividends reinvested – Investor Class
|
2,817,178
|
22,928,508
|
||||||
Dividends reinvested – Institutional Class
|
392,293
|
3,735,099
|
||||||
Cost of shares redeemed – Investor Class
|
(9,168,541
|
)
|
(17,643,309
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(6,276,955
|
)
|
(6,379,370
|
)
|
||||
Net increase (decrease) in net assets derived
|
||||||||
from capital share transactions
|
(9,932,095
|
)
|
8,873,757
|
|||||
TOTAL DECREASE IN NET ASSETS
|
(29,527,579
|
)
|
(9,126,675
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
136,034,948
|
145,161,623
|
||||||
End of period
|
$
|
106,507,369
|
$
|
136,034,948
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
98,992
|
191,986
|
||||||
Shares sold – Institutional Class
|
159,560
|
412,298
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
255,707
|
2,404,367
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
35,229
|
387,740
|
||||||
Shares redeemed – Investor Class
|
(937,239
|
)
|
(1,718,603
|
)
|
||||
Shares redeemed – Institutional Class
|
(613,053
|
)
|
(625,689
|
)
|
||||
Net increase (decrease) in shares outstanding
|
(1,000,804
|
)
|
1,052,099
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
10.54
|
||
Income from investment operations:
|
||||
Net investment income
|
0.06
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(1.38
|
)
|
||
Total from investment operations
|
(1.32
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.14
|
)
|
||
Dividends from net realized gains
|
(0.13
|
)
|
||
Total distributions
|
(0.27
|
)
|
||
Net asset value, end of period
|
$
|
8.95
|
||
TOTAL RETURN
|
-13.00
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
94.66
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement/recoupment
|
1.31
|
%(3)
|
||
After expense reimbursement/recoupment
|
1.31
|
%(3)
|
||
Ratio of net investment income to average net assets:
|
||||
Before expense reimbursement/recoupment
|
1.21
|
%(3)
|
||
After expense reimbursement/recoupment
|
1.21
|
%(3)
|
||
Portfolio turnover rate(4)
|
61
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
12.24
|
$
|
11.75
|
$
|
10.27
|
$
|
12.99
|
$
|
15.16
|
|||||||||
0.13
|
(1)
|
0.06
|
0.11
|
0.09
|
0.17
|
|||||||||||||
0.56
|
0.94
|
1.49
|
0.08
|
0.04
|
||||||||||||||
0.69
|
1.00
|
1.60
|
0.17
|
0.21
|
||||||||||||||
(0.09
|
)
|
(0.08
|
)
|
(0.12
|
)
|
(0.16
|
)
|
(0.14
|
)
|
|||||||||
(2.30
|
)
|
(0.43
|
)
|
—
|
(2.73
|
)
|
(2.24
|
)
|
||||||||||
(2.39
|
)
|
(0.51
|
)
|
(0.12
|
)
|
(2.89
|
)
|
(2.38
|
)
|
|||||||||
$
|
10.54
|
$
|
12.24
|
$
|
11.75
|
$
|
10.27
|
$
|
12.99
|
|||||||||
7.84
|
%
|
8.53
|
%
|
15.70
|
%
|
2.63
|
%
|
1.11
|
%
|
|||||||||
$
|
117.62
|
$
|
125.91
|
$
|
91.74
|
$
|
87.73
|
$
|
98.64
|
|||||||||
1.31
|
%
|
1.24
|
%
|
1.25
|
%
|
1.25
|
%
|
1.09
|
%
|
|||||||||
1.29
|
%
|
1.24
|
%
|
1.25
|
%
|
1.25
|
%
|
1.09
|
%
|
|||||||||
1.24
|
%
|
0.81
|
%
|
0.95
|
%
|
1.22
|
%
|
1.37
|
%
|
|||||||||
1.26
|
%
|
0.81
|
%
|
0.95
|
%
|
1.22
|
%
|
1.37
|
%
|
|||||||||
57
|
%
|
70
|
%
|
65
|
%
|
53
|
%
|
79
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
10.65
|
||
Income from investment operations:
|
||||
Net investment income
|
0.08
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(1.39
|
)
|
||
Total from investment operations
|
(1.31
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.17
|
)
|
||
Dividends from net realized gains
|
(0.13
|
)
|
||
Total distributions
|
(0.30
|
)
|
||
Net asset value, end of period
|
$
|
9.04
|
||
TOTAL RETURN
|
-12.84
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
11.85
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
1.01
|
%(3)
|
||
After expense reimbursement
|
1.01
|
%(3)
|
||
Ratio of net investment income to average net assets:
|
||||
Before expense reimbursement
|
1.50
|
%(3)
|
||
After expense reimbursement
|
1.50
|
%(3)
|
||
Portfolio turnover rate(4)
|
61
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
12.38
|
$
|
11.87
|
$
|
10.37
|
$
|
13.10
|
$
|
15.30
|
|||||||||
0.16
|
(1)
|
0.14
|
0.13
|
0.13
|
0.20
|
|||||||||||||
0.56
|
0.90
|
1.52
|
0.07
|
0.02
|
||||||||||||||
0.72
|
1.04
|
1.65
|
0.20
|
0.22
|
||||||||||||||
(0.12
|
)
|
(0.10
|
)
|
(0.15
|
)
|
(0.17
|
)
|
(0.16
|
)
|
|||||||||
(2.33
|
)
|
(0.43
|
)
|
—
|
(2.76
|
)
|
(2.26
|
)
|
||||||||||
(2.45
|
)
|
(0.53
|
)
|
(0.15
|
)
|
(2.93
|
)
|
(2.42
|
)
|
|||||||||
$
|
10.65
|
$
|
12.38
|
$
|
11.87
|
$
|
10.37
|
$
|
13.10
|
|||||||||
8.12
|
%
|
8.82
|
%
|
16.00
|
%
|
2.92
|
%
|
1.19
|
%
|
|||||||||
$
|
18.42
|
$
|
19.25
|
$
|
12.17
|
$
|
12.24
|
$
|
13.82
|
|||||||||
1.00
|
%
|
0.96
|
%
|
1.00
|
%
|
1.01
|
%
|
0.99
|
%
|
|||||||||
0.98
|
%
|
0.96
|
%
|
1.00
|
%
|
1.01
|
%
|
0.99
|
%
|
|||||||||
1.56
|
%
|
1.08
|
%
|
1.20
|
%
|
1.47
|
%
|
1.47
|
%
|
|||||||||
1.58
|
%
|
1.08
|
%
|
1.20
|
%
|
1.47
|
%
|
1.47
|
%
|
|||||||||
57
|
%
|
70
|
%
|
65
|
%
|
53
|
%
|
79
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute substantially all
of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment income/loss and realized gains/losses for
federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the result of the treatment of wash sales for tax reporting
purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense. Distributions from net realized gains for book purposes may include short-term capital
gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on
redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns of the Fund
for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability resulting from unrecognized
tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and accretion of
discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly attributable to its
portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on investments are allocated to each
class of shares based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital gains, if any, are declared
and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original cost of the
security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all liabilities
(including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed for trading. The
offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar instruments,
and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs
are unavailable.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Equity Securities – Equity securities, including common stocks, preferred stocks, exchange-traded funds, closed-end mutual funds, partnerships, rights, and real estate
investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as reported by the primary exchange on which the securities are
listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales price reported. Securities traded on a securities exchange for which a
last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified in
Level 1 of the fair value hierarchy.
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the ending NAV
provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and U.S. government
agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing service may consider recently
executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the model may incorporate observable market
data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These securities are generally classified in Level 2 of the
fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments with an
original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as of the 61st day prior
to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as described below. Short-term
securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Fiscal Year
|
Fiscal Year
|
||||||||||||
2022
|
2023
|
Total
|
|||||||||||
Investor Class
|
$
|
20,122
|
$
|
—
|
$
|
20,122
|
|||||||
Institutional Class
|
$
|
2,872
|
$
|
162
|
$
|
3,034
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
122,265,671
|
|||
Gross tax unrealized appreciation
|
$
|
23,118,894
|
|||
Gross tax unrealized depreciation
|
(9,179,228
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
13,939,666
|
|||
Undistributed ordinary income
|
$
|
3,097,822
|
|||
Undistributed long-term capital gains
|
279,575
|
||||
Total distributable earnings
|
$
|
3,377,397
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
17,317,063
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
3,097,827
|
$
|
1,289,774
|
|||||
Long-term capital gain
|
279,668
|
26,779,890
|
|||||||
$
|
3,377,495
|
$
|
28,069,664
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS/EXPENSE EXAMPLE
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 870.00
|
$6.09
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.35
|
$6.57
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 871.60
|
$4.70
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.84
|
$5.07
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.31% for Investor Class shares or 1.01% for Institutional Class shares, as applicable, multiplied by the average account value over the period,
multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been provided to help the Board
assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
|
(1)
|
The nature and quality of the advisory services provided by the Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(4)
|
The costs and profitability of the Fund to the Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and noted that
their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the nature and extent of
the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers,
as feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios, evaluates insurance providers for fidelity bond,
D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports provided by service providers, and maintains books and
records.
|
||
(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services
to the Fund.
|
||
(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The Advisor
participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee. The Advisor
compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight
personnel, as well as management executives.
|
||
(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and education.
|
(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the Fund to
various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated investment objective and style. The Trustees
concluded that the performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As part of the
discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials considered at the
meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded that they are reasonable and
warranted continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over the prior
year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets of the Fund increase.
For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts, the Advisor’s significant
marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
circumstances. The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the
future as circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues that the Advisor has
put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines set forth in relevant court cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and its
shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary benefits from, by way of
example, its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund. The Trustees determined that any such products and
services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any additional benefits realized by the Advisor from its relationship
with the Fund were reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical, and other information and services provided by brokers are merely supplemental to the Advisor’s own
efforts in the performance of its duties under the advisory agreement.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
9
|
Statement of Operations
|
10
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
23
|
Proxy Voting Policy and Proxy Voting Records
|
25
|
Availability of Quarterly Portfolio Schedule
|
25
|
Federal Tax Distribution Information
|
25
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Cornerstone Value Fund –
|
||||
Investor Class (HFCVX)
|
-16.89%
|
-16.46%
|
1.80%
|
6.90%
|
Hennessy Cornerstone Value Fund –
|
||||
Institutional Class (HICVX)
|
-16.80%
|
-16.37%
|
2.01%
|
7.14%
|
Russell 1000® Value Index
|
-13.66%
|
-11.01%
|
3.90%
|
8.54%
|
S&P 500® Index
|
-3.16%
|
0.86%
|
9.12%
|
11.69%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020
(Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Gilead Sciences, Inc.
|
2.96%
|
The Kraft Heinz Co.
|
2.73%
|
General Mills, Inc.
|
2.72%
|
Amgen, Inc.
|
2.63%
|
Pfizer, Inc.
|
2.63%
|
Verizon Communications, Inc.
|
2.42%
|
GlaxoSmithKline PLC – ADR
|
2.39%
|
3M Co.
|
2.37%
|
Merck & Co., Inc.
|
2.36%
|
Bristol-Myers Squibb Co.
|
2.27%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 98.29%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 4.36%
|
||||||||||||
AT&T, Inc.
|
129,060
|
$
|
3,932,458
|
1.94
|
%
|
|||||||
Verizon Communications, Inc.
|
85,500
|
4,911,975
|
2.42
|
%
|
||||||||
|
8,844,433
|
4.36
|
%
|
|||||||||
Consumer Discretionary – 5.89%
|
||||||||||||
Carnival Corp. (a)
|
119,400
|
1,898,460
|
0.93
|
%
|
||||||||
Ford Motor Co.
|
630,745
|
3,210,492
|
1.58
|
%
|
||||||||
General Motors Co.
|
143,600
|
3,200,844
|
1.58
|
%
|
||||||||
Las Vegas Sands Corp.
|
75,900
|
3,644,718
|
1.80
|
%
|
||||||||
|
11,954,514
|
5.89
|
%
|
|||||||||
Consumer Staples – 19.94%
|
||||||||||||
Altria Group, Inc.
|
108,400
|
4,254,700
|
2.10
|
%
|
||||||||
Archer Daniels Midland Co.
|
113,400
|
4,211,676
|
2.07
|
%
|
||||||||
General Mills, Inc.
|
92,300
|
5,527,847
|
2.72
|
%
|
||||||||
PepsiCo, Inc.
|
34,100
|
4,511,089
|
2.22
|
%
|
||||||||
Philip Morris International, Inc.
|
55,500
|
4,140,300
|
2.04
|
%
|
||||||||
The Coca-Cola Co.
|
82,800
|
3,799,692
|
1.87
|
%
|
||||||||
The Kraft Heinz Co.
|
182,600
|
5,538,258
|
2.73
|
%
|
||||||||
Unilever PLC – ADR (a)
|
83,400
|
4,325,958
|
2.13
|
%
|
||||||||
Walgreens Boots Alliance, Inc.
|
96,700
|
4,186,143
|
2.06
|
%
|
||||||||
|
40,495,663
|
19.94
|
%
|
|||||||||
Energy – 15.96%
|
||||||||||||
BP PLC – ADR (a)
|
140,700
|
3,348,660
|
1.65
|
%
|
||||||||
Canadian Natural Resources Ltd. (a)
|
165,400
|
2,772,104
|
1.37
|
%
|
||||||||
Chevron Corp.
|
45,675
|
4,202,100
|
2.07
|
%
|
||||||||
ConocoPhillips
|
85,200
|
3,586,920
|
1.77
|
%
|
||||||||
Exxon Mobil Corp.
|
84,110
|
3,908,592
|
1.92
|
%
|
||||||||
Marathon Petroleum Corp.
|
84,200
|
2,701,136
|
1.33
|
%
|
||||||||
Occidental Petroleum Corp.
|
118,160
|
1,961,456
|
0.97
|
%
|
||||||||
Royal Dutch Shell PLC – ADR (a)
|
101,200
|
3,352,756
|
1.65
|
%
|
||||||||
Suncor Energy, Inc. (a)
|
163,700
|
2,922,045
|
1.44
|
%
|
||||||||
Total S.A. – ADR (a)
|
103,700
|
3,645,055
|
1.79
|
%
|
||||||||
|
32,400,824
|
15.96
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials – 12.15%
|
||||||||||||
Citigroup, Inc.
|
65,100
|
$
|
3,161,256
|
1.56
|
%
|
|||||||
JPMorgan Chase & Co.
|
36,600
|
3,504,816
|
1.73
|
%
|
||||||||
MetLife, Inc.
|
97,100
|
3,503,368
|
1.72
|
%
|
||||||||
Royal Bank of Canada (a)
|
60,200
|
3,707,718
|
1.83
|
%
|
||||||||
The Bank of New York Mellon Corp.
|
110,500
|
4,148,170
|
2.04
|
%
|
||||||||
Toronto-Dominion Bank (a)
|
86,800
|
3,625,636
|
1.78
|
%
|
||||||||
Wells Fargo & Co.
|
104,300
|
3,029,915
|
1.49
|
%
|
||||||||
|
24,680,879
|
12.15
|
%
|
|||||||||
Health Care – 19.47%
|
||||||||||||
AbbVie, Inc.
|
52,400
|
4,307,280
|
2.12
|
%
|
||||||||
Amgen, Inc.
|
22,300
|
5,334,606
|
2.63
|
%
|
||||||||
Bristol-Myers Squibb Co.
|
75,800
|
4,609,398
|
2.27
|
%
|
||||||||
CVS Health Corp.
|
69,600
|
4,283,880
|
2.11
|
%
|
||||||||
Gilead Sciences, Inc.
|
71,400
|
5,997,600
|
2.96
|
%
|
||||||||
GlaxoSmithKline PLC – ADR (a)
|
115,500
|
4,859,085
|
2.39
|
%
|
||||||||
Merck & Co., Inc.
|
60,400
|
4,792,136
|
2.36
|
%
|
||||||||
Pfizer, Inc.
|
139,300
|
5,343,548
|
2.63
|
%
|
||||||||
|
39,527,533
|
19.47
|
%
|
|||||||||
Industrials – 9.74%
|
||||||||||||
3M Co.
|
31,700
|
4,815,864
|
2.37
|
%
|
||||||||
Caterpillar, Inc.
|
36,300
|
4,224,594
|
2.08
|
%
|
||||||||
Delta Air Lines, Inc.
|
86,000
|
2,228,260
|
1.10
|
%
|
||||||||
Emerson Electric Co.
|
69,000
|
3,935,070
|
1.94
|
%
|
||||||||
United Parcel Service, Inc., Class B
|
48,300
|
4,572,078
|
2.25
|
%
|
||||||||
|
19,775,866
|
9.74
|
%
|
|||||||||
Information Technology – 8.72%
|
||||||||||||
Cisco Systems, Inc.
|
107,500
|
4,555,850
|
2.24
|
%
|
||||||||
International Business Machines Corp.
|
33,200
|
4,168,592
|
2.05
|
%
|
||||||||
Qualcomm, Inc.
|
57,200
|
4,499,924
|
2.22
|
%
|
||||||||
Texas Instruments, Inc.
|
38,700
|
4,491,909
|
2.21
|
%
|
||||||||
|
17,716,275
|
8.72
|
%
|
|||||||||
Materials – 2.06%
|
||||||||||||
Nutrien Ltd. (a)
|
116,900
|
4,174,499
|
2.06
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $242,660,643)
|
199,570,486
|
98.29
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS – 1.79%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.79%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (b)
|
3,634,203
|
$
|
3,634,203
|
1.79
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $3,634,203)
|
3,634,203
|
1.79
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $246,294,846) – 100.08%
|
203,204,689
|
100.08
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.08)%
|
(170,732
|
)
|
(0.08
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
203,033,957
|
100.00
|
%
|
(a)
|
U.S.-traded security of a foreign corporation.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
8,844,433
|
$
|
—
|
$
|
—
|
$
|
8,844,433
|
||||||||
Consumer Discretionary
|
11,954,514
|
—
|
—
|
11,954,514
|
||||||||||||
Consumer Staples
|
40,495,663
|
—
|
—
|
40,495,663
|
||||||||||||
Energy
|
32,400,824
|
—
|
—
|
32,400,824
|
||||||||||||
Financials
|
24,680,879
|
—
|
—
|
24,680,879
|
||||||||||||
Health Care
|
39,527,533
|
—
|
—
|
39,527,533
|
||||||||||||
Industrials
|
19,775,866
|
—
|
—
|
19,775,866
|
||||||||||||
Information Technology
|
17,716,275
|
—
|
—
|
17,716,275
|
||||||||||||
Materials
|
4,174,499
|
—
|
—
|
4,174,499
|
||||||||||||
Total Common Stocks
|
$
|
199,570,486
|
$
|
—
|
$
|
—
|
$
|
199,570,486
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
3,634,203
|
$
|
—
|
$
|
—
|
$
|
3,634,203
|
||||||||
Total Short-Term Investments
|
$
|
3,634,203
|
$
|
—
|
$
|
—
|
$
|
3,634,203
|
||||||||
Total Investments
|
$
|
203,204,689
|
$
|
—
|
$
|
—
|
$
|
203,204,689
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $246,294,846)
|
$
|
203,204,689
|
||
Cash
|
41,845
|
|||
Dividends and interest receivable
|
410,755
|
|||
Receivable for fund shares sold
|
3,045
|
|||
Prepaid expenses and other assets
|
20,565
|
|||
Total assets
|
203,680,899
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
59,581
|
|||
Payable to advisor
|
118,050
|
|||
Payable to administrator
|
34,104
|
|||
Payable to auditor
|
11,373
|
|||
Accrued distribution fees
|
374,889
|
|||
Accrued service fees
|
15,569
|
|||
Accrued trustees fees
|
4,536
|
|||
Accrued expenses and other payables
|
28,840
|
|||
Total liabilities
|
646,942
|
|||
NET ASSETS
|
$
|
203,033,957
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
243,018,967
|
||
Accumulated deficit
|
(39,985,010
|
)
|
||
Total net assets
|
$
|
203,033,957
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
198,085,733
|
||
Shares issued and outstanding
|
14,581,676
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
13.58
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
4,948,224
|
||
Shares issued and outstanding
|
364,053
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
13.59
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
4,777,568
|
||
Interest income
|
37,945
|
|||
Total investment income
|
4,815,513
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
888,672
|
|||
Distribution fees – Investor Class (See Note 5)
|
175,662
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
126,377
|
|||
Service fees – Investor Class (See Note 5)
|
117,108
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
89,308
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
3,177
|
|||
Federal and state registration fees
|
19,945
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,375
|
|||
Reports to shareholders
|
11,016
|
|||
Trustees’ fees and expenses
|
9,553
|
|||
Legal fees
|
1,281
|
|||
Other expenses
|
14,930
|
|||
Total expenses
|
1,481,866
|
|||
NET INVESTMENT INCOME
|
$
|
3,333,647
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
1,313,644
|
||
Net change in unrealized appreciation/depreciation on investments
|
(46,914,128
|
)
|
||
Net loss on investments
|
(45,600,484
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(42,266,837
|
)
|
(1)
|
Net of foreign taxes withheld and issuance fees of $104,704.
|
HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
3,333,647
|
$
|
7,177,446
|
||||
Net realized gain on investments
|
1,313,644
|
11,149,160
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(46,914,128
|
)
|
(5,555,727
|
)
|
||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(42,266,837
|
)
|
12,770,879
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(16,696,863
|
)
|
(36,817,937
|
)
|
||||
Distributable earnings – Institutional Class
|
(434,493
|
)
|
(980,722
|
)
|
||||
Total distributions
|
(17,131,356
|
)
|
(37,798,659
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
998,842
|
2,177,066
|
||||||
Proceeds from shares subscribed – Institutional Class
|
555,343
|
1,522,914
|
||||||
Dividends reinvested – Investor Class
|
15,770,353
|
34,854,971
|
||||||
Dividends reinvested – Institutional Class
|
399,784
|
893,462
|
||||||
Cost of shares redeemed – Investor Class
|
(14,752,516
|
)
|
(25,540,967
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(929,266
|
)
|
(2,463,013
|
)
|
||||
Net increase in net assets derived
|
||||||||
from capital share transactions
|
2,042,540
|
11,444,433
|
||||||
TOTAL DECREASE IN NET ASSETS
|
(57,355,653
|
)
|
(13,583,347
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
260,389,610
|
273,972,957
|
||||||
End of period
|
$
|
203,033,957
|
$
|
260,389,610
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
62,799
|
128,721
|
||||||
Shares sold – Institutional Class
|
34,336
|
90,985
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
906,647
|
2,133,897
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
22,969
|
54,603
|
||||||
Shares redeemed – Investor Class
|
(959,893
|
)
|
(1,518,570
|
)
|
||||
Shares redeemed – Institutional Class
|
(62,175
|
)
|
(150,029
|
)
|
||||
Net increase in shares outstanding
|
4,683
|
739,607
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
17.43
|
||
Income from investment operations:
|
||||
Net investment income
|
0.22
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.93
|
)
|
||
Total from investment operations
|
(2.71
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.47
|
)
|
||
Dividends from net realized gains
|
(0.67
|
)
|
||
Total distributions
|
(1.14
|
)
|
||
Net asset value, end of period
|
$
|
13.58
|
||
TOTAL RETURN
|
-16.89
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
198.09
|
||
Ratio of expenses to average net assets
|
1.24
|
%(3)
|
||
Ratio of net investment income to average net assets
|
2.77
|
%(3)
|
||
Portfolio turnover rate(4)
|
30
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
19.29
|
$
|
21.48
|
$
|
18.36
|
$
|
17.69
|
$
|
18.41
|
|||||||||
0.47
|
(1)
|
0.41
|
0.45
|
0.43
|
0.44
|
|||||||||||||
0.30
|
0.35
|
3.10
|
0.67
|
(0.75
|
)
|
|||||||||||||
0.77
|
0.76
|
3.55
|
1.10
|
(0.31
|
)
|
|||||||||||||
(0.41
|
)
|
(0.42
|
)
|
(0.43
|
)
|
(0.43
|
)
|
(0.41
|
)
|
|||||||||
(2.22
|
)
|
(2.53
|
)
|
—
|
—
|
—
|
||||||||||||
(2.63
|
)
|
(2.95
|
)
|
(0.43
|
)
|
(0.43
|
)
|
(0.41
|
)
|
|||||||||
$
|
17.43
|
$
|
19.29
|
$
|
21.48
|
$
|
18.36
|
$
|
17.69
|
|||||||||
5.22
|
%
|
3.64
|
%
|
19.63
|
%
|
6.41
|
%
|
-1.77
|
%
|
|||||||||
$
|
253.95
|
$
|
266.76
|
$
|
281.07
|
$
|
126.53
|
$
|
129.86
|
|||||||||
1.23
|
%
|
1.21
|
%
|
1.22
|
%
|
1.25
|
%
|
1.10
|
%
|
|||||||||
2.75
|
%
|
2.21
|
%
|
2.36
|
%
|
2.33
|
%
|
2.32
|
%
|
|||||||||
27
|
%
|
41
|
%
|
72
|
%
|
36
|
%
|
46
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
17.45
|
||
Income from investment operations:
|
||||
Net investment income
|
0.24
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.93
|
)
|
||
Total from investment operations
|
(2.69
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.49
|
)
|
||
Dividends from net realized gains
|
(0.68
|
)
|
||
Total distributions
|
(1.17
|
)
|
||
Net asset value, end of period
|
$
|
13.59
|
||
TOTAL RETURN
|
-16.80
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
4.95
|
||
Ratio of expenses to average net assets:
|
1.02
|
%(3)
|
||
Ratio of net investment income to average net assets:
|
2.99
|
%(3)
|
||
Portfolio turnover rate(4)
|
30
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
19.33
|
$
|
21.52
|
$
|
18.40
|
$
|
17.67
|
$
|
18.41
|
|||||||||
0.50
|
(1)
|
0.45
|
0.43
|
0.48
|
0.53
|
|||||||||||||
0.29
|
0.35
|
3.18
|
0.67
|
(0.83
|
)
|
|||||||||||||
0.79
|
0.80
|
3.61
|
1.15
|
(0.30
|
)
|
|||||||||||||
(0.45
|
)
|
(0.46
|
)
|
(0.49
|
)
|
(0.42
|
)
|
(0.44
|
)
|
|||||||||
(2.22
|
)
|
(2.53
|
)
|
—
|
—
|
—
|
||||||||||||
(2.67
|
)
|
(2.99
|
)
|
(0.49
|
)
|
(0.42
|
)
|
(0.44
|
)
|
|||||||||
$
|
17.45
|
$
|
19.33
|
$
|
21.52
|
$
|
18.40
|
$
|
17.67
|
|||||||||
5.37
|
%
|
3.88
|
%
|
19.95
|
%
|
6.72
|
%
|
-1.72
|
%
|
|||||||||
$
|
6.44
|
$
|
7.22
|
$
|
7.40
|
$
|
1.88
|
$
|
1.75
|
|||||||||
1.08
|
%
|
0.98
|
%
|
0.97
|
%
|
0.95
|
%
|
1.00
|
%
|
|||||||||
2.92
|
%
|
2.43
|
%
|
2.60
|
%
|
2.63
|
%
|
2.43
|
%
|
|||||||||
27
|
%
|
41
|
%
|
72
|
%
|
36
|
%
|
46
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute substantially
all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment income/loss and realized
gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the result of the treatment of wash sales
for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains
distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns of the Fund
for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability resulting from unrecognized
tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and accretion of
discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly attributable to its
portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on investments are allocated to each
class of shares based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital gains, if any, are
declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original cost of the
security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all liabilities
(including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed for trading. The
offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar instruments,
and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs
are unavailable.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end mutual funds,
partnerships, rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as reported by the primary
exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales price reported. Securities traded
on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these securities are actively traded and valuation adjustments
are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at the same time the Fund calculates its NAV because most foreign markets close well before
such time. The earlier close of most foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim. In certain circumstances, it may be determined that a foreign
security needs to be fair valued because it appears that the value of the security might have been materially affected by events occurring after the close of the market in which the security is principally traded, but before the time
the Fund calculates its NAV, such as by a development that affects an entire market or region (e.g., a weather-related event) or a potentially global development (e.g., a terrorist attack that may be expected to have an effect on
investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the ending
NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and U.S.
government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing service may
consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the model may incorporate
observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These securities are generally classified
in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments with an
original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as of the 61st day
prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as described below.
Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
256,839,158
|
|||
Gross tax unrealized appreciation
|
$
|
30,378,700
|
|||
Gross tax unrealized depreciation
|
(26,875,325
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
3,503,375
|
|||
Undistributed ordinary income
|
$
|
5,925,833
|
|||
Undistributed long-term capital gains
|
9,983,975
|
||||
Total distributable earnings
|
$
|
15,909,808
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
19,413,183
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
7,147,330
|
$
|
21,936,197
|
|||||
Long-term capital gain
|
9,984,026
|
15,862,462
|
|||||||
$
|
17,131,356
|
$
|
37,798,659
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS/EXPENSE EXAMPLE
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 831.10
|
$5.65
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.70
|
$6.22
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 832.00
|
$4.65
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.79
|
$5.12
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.24% for Investor Class shares or 1.02% for Institutional Class shares, as applicable, multiplied by the average account value over the period,
multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been provided to help the Board
assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
|
(1)
|
The nature and quality of the advisory services provided by the Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(4)
|
The costs and profitability of the Fund to the Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and noted that
their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the nature and extent of
the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers,
as feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios, evaluates insurance providers for fidelity bond,
D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports provided by service providers, and maintains books and
records.
|
||
(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services
to the Fund.
|
||
(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The Advisor
participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee. The Advisor
compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight
personnel, as well as management executives.
|
||
(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and education.
|
(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the Fund to
various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated investment objective and style. The Trustees
concluded that the performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As part of the
discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials considered at the
meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded that they are reasonable and
warranted continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over the prior
year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets of the Fund
increase. For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts, the Advisor’s
significant marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
circumstances. The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the
future as circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues that the Advisor has
put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines set forth in relevant court cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and its
shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary benefits from, by way of
example, its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund. The Trustees determined that any such products
and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any additional benefits realized by the Advisor from its
relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical, and other information and services provided by brokers are merely supplemental to
the Advisor’s own efforts in the performance of its duties under the advisory agreement.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
9
|
Statement of Operations
|
10
|
Statements of Changes in Net Assets
|
11
|
Statement of Cash Flows
|
12
|
Financial Highlights
|
14
|
Notes to the Financial Statements
|
16
|
Expense Example
|
24
|
Proxy Voting Policy and Proxy Voting Records
|
25
|
Availability of Quarterly Portfolio Schedule
|
25
|
Federal Tax Distribution Information
|
25
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Total Return
|
||||
Fund (HDOGX)
|
-8.65%
|
-7.58%
|
4.52%
|
7.47%
|
75/25 Blended DJIA/Treasury Index
|
-6.12%
|
-3.66%
|
7.27%
|
8.52%
|
Dow Jones Industrial Average
|
-8.87%
|
-6.16%
|
9.06%
|
11.01%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
U.S. Treasury Bill, 0.280%, 07/16/2020
|
36.42%
|
U.S. Treasury Bill, 0.080%, 05/14/2020
|
20.80%
|
U.S. Treasury Bill, 0.115%, 06/18/2020
|
10.41%
|
Pfizer, Inc.
|
8.20%
|
Verizon Communications, Inc.
|
7.99%
|
International Business Machines Corp.
|
7.41%
|
Chevron Corp.
|
7.18%
|
3M Co.
|
7.14%
|
Cisco Systems, Inc.
|
6.49%
|
Walgreens Boots Alliance, Inc.
|
6.41%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 72.01%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 7.99%
|
||||||||||||
Verizon Communications, Inc.
|
80,200
|
$
|
4,607,490
|
7.99
|
%
|
|||||||
|
||||||||||||
Consumer Staples – 12.79%
|
||||||||||||
The Coca-Cola Co.
|
80,200
|
3,680,378
|
6.38
|
%
|
||||||||
Walgreens Boots Alliance, Inc.
|
85,300
|
3,692,637
|
6.41
|
%
|
||||||||
|
7,373,015
|
12.79
|
%
|
|||||||||
Energy – 13.56%
|
||||||||||||
Chevron Corp.
|
45,000
|
4,140,000
|
7.18
|
%
|
||||||||
Exxon Mobil Corp.
|
79,200
|
3,680,424
|
6.38
|
%
|
||||||||
|
7,820,424
|
13.56
|
%
|
|||||||||
Health Care – 9.32%
|
||||||||||||
Johnson & Johnson
|
4,300
|
645,172
|
1.12
|
%
|
||||||||
Pfizer, Inc.
|
123,300
|
4,729,788
|
8.20
|
%
|
||||||||
|
5,374,960
|
9.32
|
%
|
|||||||||
Industrials – 8.11%
|
||||||||||||
3M Co.
|
27,100
|
4,117,032
|
7.14
|
%
|
||||||||
Caterpillar, Inc.
|
4,800
|
558,624
|
0.97
|
%
|
||||||||
|
4,675,656
|
8.11
|
%
|
|||||||||
Information Technology – 13.90%
|
||||||||||||
Cisco Systems, Inc.
|
88,300
|
3,742,154
|
6.49
|
%
|
||||||||
International Business Machines Corp.
|
34,000
|
4,269,040
|
7.41
|
%
|
||||||||
|
8,011,194
|
13.90
|
%
|
|||||||||
Materials – 6.34%
|
||||||||||||
Dow, Inc.
|
99,600
|
3,654,324
|
6.34
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $43,417,214)
|
41,517,063
|
72.01
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 68.74%
|
Number of Shares/
|
% of
|
||||||||||
|
Par Amount
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.11%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (a)
|
641,482
|
$
|
641,482
|
1.11
|
%
|
|||||||
|
||||||||||||
U.S. Treasury Bills – 67.63%
|
||||||||||||
0.080%, 05/14/2020 (b)(c)
|
12,000,000
|
11,993,392
|
20.80
|
%
|
||||||||
0.115%, 06/18/2020 (b)(c)
|
6,000,000
|
6,000,000
|
10.41
|
%
|
||||||||
0.280%, 07/16/2020 (b)(c)
|
21,000,000
|
20,996,176
|
36.42
|
%
|
||||||||
|
38,989,568
|
67.63
|
%
|
|||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $39,629,554)
|
39,631,050
|
68.74
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $83,046,768) – 140.75%
|
81,148,113
|
140.75
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (40.75)%
|
(23,494,553
|
)
|
(40.75
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
57,653,560
|
100.00
|
%
|
(a)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
(b)
|
The rate listed is the discount rate at issue.
|
(c)
|
All or a portion of this security is pledged as collateral for securities sold subject to repurchase. The aggregate fair value of the collateral is $25,993,044.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
4,607,490
|
$
|
—
|
$
|
—
|
$
|
4,607,490
|
||||||||
Consumer Staples
|
7,373,015
|
—
|
—
|
7,373,015
|
||||||||||||
Energy
|
7,820,424
|
—
|
—
|
7,820,424
|
||||||||||||
Health Care
|
5,374,960
|
—
|
—
|
5,374,960
|
||||||||||||
Industrials
|
4,675,656
|
—
|
—
|
4,675,656
|
||||||||||||
Information Technology
|
8,011,194
|
—
|
—
|
8,011,194
|
||||||||||||
Materials
|
3,654,324
|
—
|
—
|
3,654,324
|
||||||||||||
Total Common Stocks
|
$
|
41,517,063
|
$
|
—
|
$
|
—
|
$
|
41,517,063
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
641,482
|
$
|
—
|
$
|
—
|
$
|
641,482
|
||||||||
U.S. Treasury Bills
|
—
|
38,989,568
|
—
|
38,989,568
|
||||||||||||
Total Short-Term Investments
|
$
|
641,482
|
$
|
38,989,568
|
$
|
—
|
$
|
39,631,050
|
||||||||
Total Investments
|
$
|
42,158,545
|
$
|
38,989,568
|
$
|
—
|
$
|
81,148,113
|
HENNESSY FUNDS
|
1-800-966-4354
|
Principal
|
Maturity
|
Maturity
|
|||||||||
Face Value
|
Counterparty
|
Rate
|
Trade Date
|
Date
|
Amount
|
||||||
$
|
7,196,000
|
Jefferies LLC
|
1.80%
|
02/13/20
|
05/14/20
|
$
|
7,228,382
|
||||
3,598,000
|
Jefferies LLC
|
0.70%
|
03/19/20
|
06/18/20
|
3,604,297
|
||||||
12,593,000
|
Jefferies LLC
|
0.35%
|
04/16/20
|
07/16/20
|
12,604,019
|
||||||
$
|
23,387,000
|
$
|
23,436,698
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $83,046,768)
|
$
|
81,148,113
|
||
Dividends and interest receivable
|
54,562
|
|||
Receivable for fund shares sold
|
151
|
|||
Prepaid expenses and other assets
|
10,583
|
|||
Total assets
|
81,213,409
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
8,766
|
|||
Payable to advisor
|
27,554
|
|||
Payable to administrator
|
11,343
|
|||
Payable to auditor
|
11,373
|
|||
Accrued distribution fees
|
58,605
|
|||
Accrued service fees
|
4,592
|
|||
Reverse repurchase agreements
|
23,387,000
|
|||
Accrued interest payable
|
32,357
|
|||
Accrued trustees fees
|
6,246
|
|||
Accrued expenses and other payables
|
12,013
|
|||
Total liabilities
|
23,559,849
|
|||
NET ASSETS
|
$
|
57,653,560
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
55,362,389
|
||
Total distributable earnings
|
2,291,171
|
|||
Total net assets
|
$
|
57,653,560
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
57,653,560
|
||
Shares issued and outstanding
|
4,569,034
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
12.62
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income
|
$
|
928,826
|
||
Interest income
|
339,383
|
|||
Total investment income
|
1,268,209
|
|||
EXPENSES:
|
||||
Interest expense (See Notes 7 and 9)
|
251,216
|
|||
Investment advisory fees (See Note 5)
|
193,074
|
|||
Distribution fees – Investor Class (See Note 5)
|
48,268
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
38,006
|
|||
Service fees – Investor Class (See Note 5)
|
32,179
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
27,982
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Federal and state registration fees
|
12,817
|
|||
Audit fees
|
11,375
|
|||
Trustees’ fees and expenses
|
8,559
|
|||
Reports to shareholders
|
6,008
|
|||
Legal fees
|
366
|
|||
Other expenses
|
4,371
|
|||
Total expenses
|
647,683
|
|||
NET INVESTMENT INCOME
|
$
|
620,526
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
4,463,183
|
||
Net change in unrealized appreciation/depreciation on investments
|
(10,859,112
|
)
|
||
Net loss on investments
|
(6,395,929
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(5,775,403
|
)
|
HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
620,526
|
$
|
1,326,399
|
||||
Net realized gain (loss) on investments
|
4,463,183
|
(174,948
|
)
|
|||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(10,859,112
|
)
|
4,513,627
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(5,775,403
|
)
|
5,665,078
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(685,864
|
)
|
(3,434,351
|
)
|
||||
Total distributions
|
(685,864
|
)
|
(3,434,351
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
872,039
|
20,299,985
|
||||||
Dividends reinvested – Investor Class
|
649,975
|
3,277,777
|
||||||
Cost of shares redeemed – Investor Class
|
(10,348,466
|
)
|
(24,470,559
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(8,826,452
|
)
|
(892,797
|
)
|
||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(15,287,719
|
)
|
1,337,930
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
72,941,279
|
71,603,349
|
||||||
End of period
|
$
|
57,653,560
|
$
|
72,941,279
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
65,479
|
1,488,984
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
52,678
|
242,975
|
||||||
Shares redeemed – Investor Class
|
(767,367
|
)
|
(1,788,558
|
)
|
||||
Net decrease in shares outstanding
|
(649,210
|
)
|
(56,599
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Cash Flows for the six months ended April 30, 2020 (Unaudited)
|
Cash flows from operating activities:
|
||||
Net decrease in net assets from operations
|
$
|
(5,775,403
|
)
|
|
Adjustments to reconcile net increase in net assets resulting from
|
||||
operations to net cash used in operating activities:
|
||||
Payments to purchase securities
|
(15,370,436
|
)
|
||
Proceeds from sale of securities
|
19,582,452
|
|||
Proceeds from securities litigation
|
295
|
|||
Net sale of short term investments
|
10,508,656
|
|||
Realized gain on investments in securities
|
(4,463,183
|
)
|
||
Net accretion of discount on securities
|
(331,457
|
)
|
||
Change in unrealized appreciation/depreciation
|
||||
on investments in securities
|
10,859,112
|
|||
Decreases in operating assets:
|
||||
Decrease in dividends and interest receivable
|
33,889
|
|||
Decrease in prepaid expenses and other assets
|
5,219
|
|||
Decreases in operating liabilities:
|
||||
Decrease in payable to advisor
|
(9,612
|
)
|
||
Decrease in payable to administrator
|
(3,947
|
)
|
||
Decrease in payable for distribution fees
|
(2,047
|
)
|
||
Decrease in payable for service fees
|
(1,602
|
)
|
||
Decrease in accrued interest payable
|
(45,265
|
)
|
||
Decrease in accrued audit fees
|
(11,175
|
)
|
||
Decrease in accrued trustee fees
|
(356
|
)
|
||
Decrease in other accrued expenses and payables
|
(7,322
|
)
|
||
Net cash provided by operating securities
|
14,967,818
|
|||
Cash flows from financing activities:
|
||||
Decrease in reverse repurchase agreements
|
(5,397,000
|
)
|
||
Proceeds on shares sold
|
872,148
|
|||
Payment on shares redeemed
|
(10,407,077
|
)
|
||
Distributions paid in cash, net of reinvestments
|
(35,889
|
)
|
||
Net cash provided by financing activities
|
(14,967,818
|
)
|
||
Net increase in cash
|
—
|
|||
Cash:
|
||||
Beginning balance
|
—
|
|||
Ending balance
|
$
|
—
|
||
Supplemental information:
|
||||
Non-cash financing activities not included herein, consisting
|
||||
of dividend reinvestment of dividends and distributions
|
$
|
649,975
|
||
Cash paid for interest
|
$
|
296,481
|
HENNESSYFUNDS.COM
|
STATEMENT OF CASH FLOWS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
13.98
|
||
Income from investment operations:
|
||||
Net investment income
|
0.13
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(1.34
|
)
|
||
Total from investment operations
|
(1.21
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.15
|
)
|
||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
(0.15
|
)
|
||
Net asset value, end of period
|
$
|
12.62
|
||
TOTAL RETURN
|
-8.65
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
57.65
|
||
Ratio of expenses, including interest expense, to average net assets
|
2.01
|
%(3)
|
||
Ratio of net investment income to average net assets
|
1.93
|
%(3)
|
||
Portfolio turnover rate
|
34
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
13.57
|
$
|
14.66
|
$
|
13.84
|
$
|
14.19
|
$
|
15.27
|
|||||||||
0.24
|
(1)
|
0.23
|
0.20
|
0.16
|
0.20
|
|||||||||||||
0.81
|
0.43
|
1.48
|
0.88
|
(0.02
|
)
|
|||||||||||||
1.05
|
0.66
|
1.68
|
1.04
|
0.18
|
||||||||||||||
(0.24
|
)
|
(0.23
|
)
|
(0.20
|
)
|
(0.16
|
)
|
(0.20
|
)
|
|||||||||
(0.40
|
)
|
(1.52
|
)
|
(0.66
|
)
|
(1.23
|
)
|
(1.06
|
)
|
|||||||||
(0.64
|
)
|
(1.75
|
)
|
(0.86
|
)
|
(1.39
|
)
|
(1.26
|
)
|
|||||||||
$
|
13.98
|
$
|
13.57
|
$
|
14.66
|
$
|
13.84
|
$
|
14.19
|
|||||||||
7.93
|
%
|
4.92
|
%
|
12.56
|
%
|
8.20
|
%
|
1.22
|
%
|
|||||||||
$
|
72.94
|
$
|
71.60
|
$
|
77.75
|
$
|
83.87
|
$
|
69.42
|
|||||||||
2.31
|
%
|
1.95
|
%
|
1.57
|
%
|
1.44
|
%
|
1.28
|
%
|
|||||||||
1.74
|
%
|
1.67
|
%
|
1.38
|
%
|
1.22
|
%
|
1.40
|
%
|
|||||||||
30
|
%
|
10
|
%
|
36
|
%
|
44
|
%
|
27
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute substantially
all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment income/loss and realized
gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the result of the treatment of wash
sales for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense. Distributions from net realized gains for book purposes
may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized
gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns of the
Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability resulting from
unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and accretion of
discount, is recognized on an accrual basis.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly attributable to its portfolio, such as
advisory, administration, and certain shareholder service fees.
|
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid at the end of each calendar quarter. Distributions of net realized capital gains, if any,
are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original cost of
the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all liabilities
(including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed for trading. The
offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
i).
|
Derivatives – The Fund may invest in derivatives such as options, futures contracts, options on futures contracts, and swaps, for a variety of reasons, including to hedge certain risks, provide a
substitute for purchasing or selling particular securities, or increase potential income gain. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment
that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives may allow the Fund to increase or decrease its level of risk more quickly and
efficiently than transactions in other types of instruments. The main reason for utilizing derivative instruments is for hedging purposes.
|
The Fund follows the financial accounting reporting rules as required by the Derivatives and Hedging Topic of the FASB Accounting
Standards Codification. Under such rules, the Fund is required to include enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivatives
instruments affect an entity’s results of operations and financial position. During the six months ended April 30, 2020, the Fund did not hold any derivative instruments.
|
j).
|
Repurchase and Reverse Repurchase Agreements – The Fund may enter into repurchase agreements and reverse repurchase agreements with member banks or security dealers of the Federal Reserve Board whom the
investment advisor deems creditworthy. Transactions involving repurchase agreements and reverse repurchase agreements are treated as collateralized financing transactions and are recorded at their contracted resell or repurchase
amounts, which approximates fair value. Interest on repurchase agreements and reverse repurchase agreements is included in interest receivable and interest payable, respectively.
|
HENNESSY FUNDS
|
1-800-966-4354
|
In connection with repurchase agreements, securities pledged as collateral are held by the custodian bank until the respective
agreements mature. Provisions of the repurchase agreements ensure that the market value of the collateral, including accrued interest thereon, is sufficient to cover the repurchase amount in the event of default of the counterparty.
If the counterparty defaults and the fair value of the collateral declines, or if the counterparty enters an insolvency proceeding, realization of the collateral by the Fund may be delayed or limited.
|
|
As of April 30, 2020, securities with a fair value of $25,993,044, which are included in investments in securities in the Statement of
Assets and Liabilities, were pledged to collateralize reverse repurchase agreements.
|
k).
|
Offsetting Assets and Liabilities – The Fund follows the financial reporting rules regarding offsetting assets and liabilities and related netting arrangements to enable users of its financial statements
to understand the effect of those arrangements on its financial position. Reverse repurchase transactions are entered into by the Fund under Master Repurchase Agreements (“MRAs”) that permit the Fund, under certain circumstances,
including an event of default (such as bankruptcy or insolvency), to offset payables under the MRA with collateral held with the counterparty and create one single net payment from the Fund. Upon a bankruptcy or insolvency of the
MRA counterparty, the Fund is considered an unsecured creditor with respect to excess collateral and, as such, the return of excess collateral may be delayed. In the event the buyer of securities under an MRA files for bankruptcy or
becomes insolvent, the Fund’s use of the proceeds of the MRA may be restricted while the other party, or its trustee or receiver, determines whether or not to enforce the Fund’s obligation to repurchase the securities. For
additional information regarding the offsetting of assets and liabilities as of April 30, 2020, please refer to the table in Note 9.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar
instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and similar
data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable
inputs are unavailable.
|
Equity Securities – Equity securities, including common stocks, preferred stocks, exchange-traded funds, closed-end mutual funds, partnerships, rights, and real
estate investment trusts, that are traded on a securities exchange for which a last-quoted
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
sales price is readily available will generally be valued at the last sales price as reported by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market
(“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales price reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available
will generally be valued at the mean between the bid and ask prices. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy.
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the ending
NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and U.S.
government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing service may
consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the model may incorporate
observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These securities are generally
classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments with an
original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as of the 61st day
prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as described below.
Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
93,073,817
|
|||
Gross tax unrealized appreciation
|
$
|
10,143,856
|
|||
Gross tax unrealized depreciation
|
(1,284,121
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
8,859,735
|
|||
Undistributed ordinary income
|
$
|
96,178
|
|||
Undistributed long-term capital gains
|
—
|
||||
Total distributable earnings
|
$
|
96,178
|
|||
Other accumulated gain/(loss)
|
$
|
(203,475
|
)
|
||
Total accumulated gain/(loss)
|
$
|
8,752,438
|
$203,475
|
Unlimited Short-Term
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
685,864
|
$
|
1,318,071
|
|||||
Long-term capital gain
|
—
|
2,116,280
|
|||||||
$
|
685,864
|
$
|
3,434,351
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Maturity Date
|
Amount
|
Interest Rate
|
||
May 14, 2020
|
$ 7,196,000
|
1.80%
|
||
June 18, 2020
|
$ 3,598,000
|
0.70%
|
||
July 16, 2020
|
$12,593,000
|
0.35%
|
Gross
|
Net
|
Gross Amounts Not
Offset in the Statement
of Assets and Liabilities
|
|||||||||||||||||||||
Amounts
|
Amounts
|
||||||||||||||||||||||
Offset
|
Presented
|
||||||||||||||||||||||
Gross
|
in the
|
in the
|
|||||||||||||||||||||
Amounts of
|
Statement of
|
Statement of
|
Collateral
|
||||||||||||||||||||
Recognized
|
Assets and
|
Assets and
|
Financial
|
Pledged
|
Net
|
||||||||||||||||||
Liabilities
|
Liabilities
|
Liabilities
|
Instruments
|
(Received)
|
Amount
|
||||||||||||||||||
$
|
23,387,000
|
$
|
—
|
$
|
23,387,000
|
$
|
23,387,000
|
$
|
—
|
$
|
—
|
||||||||||||
$
|
23,387,000
|
$
|
—
|
$
|
23,387,000
|
$
|
23,387,000
|
$
|
—
|
$
|
—
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 913.50
|
$ 9.56
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,014.87
|
$10.07
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 2.01%, multiplied by the average account value over the period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been provided to help the
Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(1)
|
The nature and quality of the advisory services provided by the Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
|
(4)
|
The costs and profitability of the Fund to the Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and noted
that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the nature and
extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service
providers, as feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios, evaluates insurance providers for
fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports provided by service providers, and
maintains books and records.
|
||
(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal
services to the Fund.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
||
(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The Advisor
participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee. The Advisor
compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading
oversight personnel, as well as management executives.
|
||
(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and education.
|
(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the Fund to
various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated investment objective and style. The Trustees
concluded that the performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As part of the
discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials considered at the
meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded that they are reasonable and
warranted continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over the
prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets of the Fund
increase. For example, mutual fund platform
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts, the Advisor’s significant marketing
efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain circumstances. The Trustees noted that it did not appear
that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the future as circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues that the Advisor
has put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines set forth in relevant court cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and its
shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary benefits from, by way of
example, its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund. The Trustees determined that any such products
and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any additional benefits realized by the Advisor from its
relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical, and other information and services provided by brokers are merely supplemental to
the Advisor’s own efforts in the performance of its duties under the advisory agreement.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
16
|
Statement of Operations
|
17
|
Statements of Changes in Net Assets
|
19
|
Financial Highlights
|
20
|
Notes to the Financial Statements
|
24
|
Expense Example
|
32
|
Proxy Voting Policy and Proxy Voting Records
|
34
|
Availability of Quarterly Portfolio Schedule
|
34
|
Federal Tax Distribution Information
|
34
|
Important Notice Regarding Delivery of Shareholder Documents
|
34
|
Electronic Delivery
|
34
|
Board Approval of Investment Advisory Agreements
|
35
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Equity and Income Fund –
|
||||
Investor Class (HEIFX)
|
-5.70%
|
-3.79%
|
3.43%
|
6.83%
|
Hennessy Equity and Income Fund –
|
||||
Institutional Class (HEIIX)
|
-5.52%
|
-3.49%
|
3.83%
|
7.17%
|
Blended Balanced Index
|
0.05%
|
4.38%
|
6.95%
|
8.48%
|
S&P 500® Index
|
-3.16%
|
0.86%
|
9.12%
|
11.69%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020
(Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Apple, Inc.
|
4.84%
|
Berkshire Hathaway, Inc., Class B
|
3.98%
|
Alphabet, Inc., Class C
|
3.29%
|
Visa, Inc., Class A
|
2.70%
|
Nestlé S.A. – ADR
|
2.40%
|
Citrix Systems, Inc.
|
2.32%
|
Home Depot, Inc.
|
2.24%
|
O’Reilly Automotive, Inc.
|
2.10%
|
Norfolk Southern Corp.
|
2.07%
|
Air Products and Chemicals, Inc.
|
1.99%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 56.52%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 6.48%
|
||||||||||||
Alphabet, Inc., Class C (a)
|
2,874
|
$
|
3,876,049
|
3.29
|
%
|
|||||||
Fox Corp.
|
59,859
|
1,548,552
|
1.32
|
%
|
||||||||
Verizon Communications, Inc.
|
38,313
|
2,201,082
|
1.87
|
%
|
||||||||
|
7,625,683
|
6.48
|
%
|
|||||||||
Consumer Discretionary – 8.46%
|
||||||||||||
CarMax, Inc. (a)
|
31,005
|
2,283,518
|
1.94
|
%
|
||||||||
Dollar Tree, Inc. (a)
|
18,669
|
1,487,359
|
1.26
|
%
|
||||||||
Home Depot, Inc.
|
11,985
|
2,634,663
|
2.24
|
%
|
||||||||
Lowe’s Companies, Inc.
|
10,272
|
1,075,992
|
0.92
|
%
|
||||||||
O’Reilly Automotive, Inc. (a)
|
6,391
|
2,469,099
|
2.10
|
%
|
||||||||
|
9,950,631
|
8.46
|
%
|
|||||||||
Consumer Staples – 4.23%
|
||||||||||||
Altria Group, Inc.
|
54,868
|
2,153,569
|
1.83
|
%
|
||||||||
Nestlé S.A. – ADR (a)(b)
|
26,872
|
2,824,247
|
2.40
|
%
|
||||||||
|
4,977,816
|
4.23
|
%
|
|||||||||
Energy – 1.63%
|
||||||||||||
Chevron Corp.
|
18,831
|
1,732,452
|
1.47
|
%
|
||||||||
Enbridge, Inc. (b)
|
1,575
|
48,321
|
0.04
|
%
|
||||||||
Kinder Morgan, Inc.
|
3,300
|
50,259
|
0.04
|
%
|
||||||||
Targa Resources Corp.
|
2,500
|
32,400
|
0.03
|
%
|
||||||||
The Williams Companies, Inc.
|
3,100
|
60,047
|
0.05
|
%
|
||||||||
|
1,923,479
|
1.63
|
%
|
|||||||||
Financials – 10.13%
|
||||||||||||
Berkshire Hathaway, Inc., Class B (a)
|
25,020
|
4,687,747
|
3.98
|
%
|
||||||||
BlackRock, Inc.
|
4,642
|
2,330,470
|
1.98
|
%
|
||||||||
The Charles Schwab Corp.
|
42,288
|
1,595,103
|
1.36
|
%
|
||||||||
The Progressive Corp.
|
27,228
|
2,104,725
|
1.79
|
%
|
||||||||
Wells Fargo & Co.
|
41,424
|
1,203,367
|
1.02
|
%
|
||||||||
|
11,921,412
|
10.13
|
%
|
|||||||||
Health Care – 2.91%
|
||||||||||||
Bristol-Myers Squibb Co.
|
24,123
|
1,466,920
|
1.25
|
%
|
||||||||
Pfizer, Inc.
|
50,982
|
1,955,669
|
1.66
|
%
|
||||||||
|
3,422,589
|
2.91
|
%
|
|||||||||
Industrials – 5.74%
|
||||||||||||
FedEx Corp.
|
14,232
|
1,804,191
|
1.53
|
%
|
||||||||
General Dynamics Corp.
|
10,341
|
1,350,741
|
1.15
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Industrials (Continued)
|
||||||||||||
Norfolk Southern Corp.
|
14,234
|
$
|
2,435,437
|
2.07
|
%
|
|||||||
Southwest Airlines Co.
|
37,328
|
1,166,500
|
0.99
|
%
|
||||||||
|
6,756,869
|
5.74
|
%
|
|||||||||
Information Technology – 11.56%
|
||||||||||||
Apple, Inc.
|
19,392
|
5,697,370
|
4.84
|
%
|
||||||||
Cisco Systems, Inc.
|
47,056
|
1,994,233
|
1.70
|
%
|
||||||||
Citrix Systems, Inc.
|
18,825
|
2,729,813
|
2.32
|
%
|
||||||||
Visa, Inc., Class A
|
17,784
|
3,178,357
|
2.70
|
%
|
||||||||
|
13,599,773
|
11.56
|
%
|
|||||||||
Materials – 5.38%
|
||||||||||||
Air Products and Chemicals, Inc.
|
10,376
|
2,340,618
|
1.99
|
%
|
||||||||
Martin Marietta Materials, Inc.
|
10,427
|
1,983,528
|
1.69
|
%
|
||||||||
NewMarket Corp.
|
4,872
|
2,004,536
|
1.70
|
%
|
||||||||
|
6,328,682
|
5.38
|
%
|
|||||||||
Total Common Stocks
|
||||||||||||
(Cost $54,672,359)
|
66,506,934
|
56.52
|
%
|
|||||||||
|
||||||||||||
PREFERRED STOCKS – 2.74%
|
||||||||||||
Communication Services – 0.07%
|
||||||||||||
AT&T, Inc., 5.625%, 08/01/2067
|
3,090
|
81,607
|
0.07
|
%
|
||||||||
Consumer Staples – 0.12%
|
||||||||||||
CHS, Inc., Series 4, 7.500%, Perpetual
|
5,280
|
138,917
|
0.12
|
%
|
||||||||
Energy – 0.08%
|
||||||||||||
Enbridge, Inc., Series B, 6.375% to 04/15/2023 then
|
||||||||||||
3 Month LIBOR USD + 3.593%, 04/15/2078 (b)(f)
|
4,020
|
94,510
|
0.08
|
%
|
||||||||
Financials – 2.47%
|
||||||||||||
American International Group, Inc., Series A, 5.850%, Perpetual
|
2,995
|
77,571
|
0.07
|
%
|
||||||||
Arch Capital Group Ltd., Series F, 5.450%, Perpetual (b)
|
3,465
|
86,348
|
0.07
|
%
|
||||||||
Axis Capital Holdings Ltd., Series E, 5.500%, Perpetual (b)
|
1,845
|
45,424
|
0.04
|
%
|
||||||||
BancorpSouth Bank, Series A, 5.500%, Perpetual
|
1,155
|
29,129
|
0.02
|
%
|
||||||||
Bank of America Corp.
|
||||||||||||
Series GG, 6.000%, Perpetual
|
2,455
|
66,580
|
0.06
|
%
|
||||||||
Series CC, 6.200%, Perpetual
|
1,645
|
42,935
|
0.04
|
%
|
||||||||
Capital One Financial Corp.
|
||||||||||||
Series J, 4.800%, Perpetual
|
1,830
|
40,461
|
0.04
|
%
|
||||||||
Series I, 5.000%, Perpetual
|
3,650
|
84,680
|
0.07
|
%
|
||||||||
Series H, 6.000%, Perpetual
|
1,595
|
41,741
|
0.04
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
PREFERRED STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials (Continued)
|
||||||||||||
Citigroup, Inc.
|
||||||||||||
Series K, 6.875% to 11/15/2023 then
|
||||||||||||
3 Month LIBOR USD + 4.130%, Perpetual (f)
|
1,645
|
$
|
45,007
|
0.04
|
%
|
|||||||
Series S, 6.300%, Perpetual
|
2,590
|
66,149
|
0.06
|
%
|
||||||||
Citizens Financial Group, Inc., Series D, 6.350% to 04/06/2024
|
||||||||||||
then 3 Month LIBOR USD + 3.642%, Perpetual (f)
|
2,075
|
52,788
|
0.04
|
%
|
||||||||
Equitable Holdings, Inc., Series A, 5.250%, Perpetual
|
2,480
|
59,818
|
0.05
|
%
|
||||||||
Fifth Third Bancorp, Series K, 4.950%, Perpetual
|
3,200
|
77,120
|
0.07
|
%
|
||||||||
First Citizens BancShares, Inc., Series A, 5.375%, Perpetual
|
3,470
|
87,409
|
0.07
|
%
|
||||||||
First Republic Bank, Series G, 5.500%, Perpetual
|
2,510
|
64,582
|
0.05
|
%
|
||||||||
Hartford Financial Services Group, Inc., Series G, 6.000%, Perpetual
|
2,940
|
78,469
|
0.07
|
%
|
||||||||
Huntington Bancshares, Inc., Series D, 6.250%, Perpetual
|
4,335
|
111,366
|
0.09
|
%
|
||||||||
IBERIABANK Corp.
|
||||||||||||
Series D, 6.100% to 05/01/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.859%, Perpetual (f)
|
1,185
|
25,561
|
0.02
|
%
|
||||||||
Series B, 6.625% to 08/01/2025 then
|
||||||||||||
3 Month LIBOR USD + 4.262%, Perpetual (f)
|
1,920
|
46,541
|
0.04
|
%
|
||||||||
JPMorgan Chase & Co., Series GG, 4.750%, Perpetual
|
3,365
|
84,798
|
0.07
|
%
|
||||||||
KeyCorp
|
||||||||||||
Series F, 5.650%, Perpetual
|
1,455
|
37,277
|
0.03
|
%
|
||||||||
Series E, 6.125% to 12/15/2026 then
|
||||||||||||
3 Month LIBOR USD + 3.892%, Perpetual (f)
|
2,995
|
85,118
|
0.07
|
%
|
||||||||
Legg Mason, Inc., 5.450%, 09/15/2056
|
1,570
|
38,575
|
0.03
|
%
|
||||||||
MetLife, Inc., Series E, 5.625%, Perpetual
|
3,165
|
82,923
|
0.07
|
%
|
||||||||
Morgan Stanley, Series I, 6.375% to 10/15/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.708%, Perpetual (f)
|
5,420
|
145,527
|
0.12
|
%
|
||||||||
Northern Trust Corp., Series E, 4.700%, Perpetual
|
985
|
24,684
|
0.02
|
%
|
||||||||
Prudential Financial, Inc., 5.625%, 08/15/2058
|
1,415
|
37,101
|
0.03
|
%
|
||||||||
Regions Financial Corp.
|
||||||||||||
Series C, 5.700% to 08/15/2029 then
|
||||||||||||
3 Month LIBOR USD + 3.148%, Perpetual (f)
|
1,840
|
48,778
|
0.04
|
%
|
||||||||
Series B, 6.375% to 09/15/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.536%, Perpetual (f)
|
3,270
|
88,552
|
0.08
|
%
|
||||||||
State Street Corp., Series D, 5.900% to 03/15/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.108%, Perpetual (f)
|
4,360
|
113,970
|
0.10
|
%
|
||||||||
SVB Financial Group, Series A, 5.250%, Perpetual
|
2,415
|
59,940
|
0.05
|
%
|
||||||||
Synchrony Financial, Series A, 5.625%, Perpetual
|
3,890
|
81,068
|
0.07
|
%
|
||||||||
Synovus Financial Corp.
|
||||||||||||
Series E, 5.875% to 07/01/2024 then
|
||||||||||||
5 Year CMT Rate + 4.127%, Perpetual (f)
|
1,615
|
34,771
|
0.03
|
%
|
||||||||
Series D, 6.300% to 06/21/2023 then
|
||||||||||||
3 Month LIBOR USD + 3.352%, Perpetual (f)
|
1,520
|
34,580
|
0.03
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
PREFERRED STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials (Continued)
|
||||||||||||
TCF Financial Corp., Series C, 5.700%, Perpetual
|
1,510
|
$
|
38,037
|
0.03
|
%
|
|||||||
The Allstate Corp.
|
||||||||||||
Series H, 5.100%, Perpetual
|
2,305
|
59,008
|
0.05
|
%
|
||||||||
Series G, 5.625%, Perpetual
|
3,375
|
91,125
|
0.08
|
%
|
||||||||
The Goldman Sachs Group, Inc.
|
||||||||||||
Series K, 6.375% to 05/10/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.550%, Perpetual (f)
|
1,930
|
49,813
|
0.04
|
%
|
||||||||
Series N, 6.300%, Perpetual
|
2,015
|
53,115
|
0.05
|
%
|
||||||||
Truist Financial Corp., Series F, 5.200%, Perpetual
|
3,215
|
81,018
|
0.07
|
%
|
||||||||
U.S. Bancorp
|
||||||||||||
Series F, 6.500% to 01/15/2022 then
|
||||||||||||
3 Month LIBOR USD + 4.468%, Perpetual (d)(f)
|
2,090
|
56,451
|
0.05
|
%
|
||||||||
Series B, 3.500% to 06/10/2020 then
|
||||||||||||
3 Month LIBOR USD + 0.600%, Perpetual (f)
|
2,980
|
58,944
|
0.05
|
%
|
||||||||
Webster Financial Corp., Series F, 5.250%, Perpetual
|
800
|
19,776
|
0.02
|
%
|
||||||||
Wells Fargo & Co.
|
||||||||||||
Series Z, 4.750%, Perpetual
|
3,490
|
83,341
|
0.07
|
%
|
||||||||
Series X, 5.500%, Perpetual
|
3,265
|
83,747
|
0.07
|
%
|
||||||||
|
2,901,716
|
2.47
|
%
|
|||||||||
Total Preferred Stocks
|
||||||||||||
(Cost $3,217,636)
|
3,216,750
|
2.74
|
%
|
|||||||||
|
||||||||||||
REITS – 1.58%
|
||||||||||||
Financials – 1.58%
|
||||||||||||
Annaly Capital Management, Inc., Series F, 6.950% to 09/30/2022
|
||||||||||||
then 3 Month LIBOR USD + 4.993%, Perpetual (f)
|
2,720
|
61,254
|
0.05
|
%
|
||||||||
Apollo Commercial Real Estate Finance, Inc.
|
4,130
|
33,660
|
0.03
|
%
|
||||||||
Chimera Investment Corp.
|
2,930
|
22,766
|
0.02
|
%
|
||||||||
Chimera Investment Corp.
|
||||||||||||
Series A, 8.000%, Perpetual
|
2,635
|
51,277
|
0.04
|
%
|
||||||||
Series B, 8.000% to 03/30/2024 then
|
||||||||||||
3 Month LIBOR USD + 5.791%, Perpetual (f)
|
1,320
|
23,390
|
0.02
|
%
|
||||||||
Kimco Realty Corp., Series M, 5.250%, Perpetual
|
1,835
|
41,746
|
0.03
|
%
|
||||||||
Monmouth Real Estate Investment Corp., Series C, 6.125%, Perpetual
|
3,195
|
78,086
|
0.07
|
%
|
||||||||
Starwood Property Trust, Inc.
|
2,730
|
35,326
|
0.03
|
%
|
||||||||
STORE Capital Corp.
|
72,725
|
1,459,591
|
1.24
|
%
|
||||||||
Vornado Realty Trust, Series M, 5.250%, Perpetual
|
2,565
|
57,277
|
0.05
|
%
|
||||||||
|
1,864,373
|
1.58
|
%
|
|||||||||
Total REITS
|
||||||||||||
(Cost $2,393,671)
|
1,864,373
|
1.58
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
RIGHTS – 0.00%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials – 0.00%
|
||||||||||||
Golub Capital BDC, Inc. (Expiration: May 6, 2020) (a)
|
800
|
$
|
515
|
0.00
|
%
|
|||||||
|
||||||||||||
Total Rights
|
||||||||||||
(Cost $1,233)
|
515
|
0.00
|
%
|
|||||||||
|
||||||||||||
CORPORATE BONDS – 21.44%
|
||||||||||||
Communication Services – 0.92%
|
||||||||||||
AT&T, Inc., 4.250%, 03/01/2027
|
980,000
|
1,081,869
|
0.92
|
%
|
||||||||
Consumer Discretionary – 1.10%
|
||||||||||||
Alibaba Group Holding Ltd., 3.600%, 11/28/2024 (b)
|
1,000,000
|
1,081,317
|
0.92
|
%
|
||||||||
Starbucks Corp., 4.450%, 08/15/2049
|
175,000
|
210,075
|
0.18
|
%
|
||||||||
|
1,291,392
|
1.10
|
%
|
|||||||||
Energy – 2.59%
|
||||||||||||
Boardwalk Pipelines LP, 4.450%, 07/15/2027
|
1,200,000
|
1,035,650
|
0.88
|
%
|
||||||||
Canadian Natural Resources Ltd., 3.900%, 02/01/2025 (b)
|
1,000,000
|
955,281
|
0.81
|
%
|
||||||||
Husky Energy, Inc., 4.000%, 04/15/2024 (b)
|
750,000
|
692,114
|
0.59
|
%
|
||||||||
Ovintiv, Inc., 3.900%, 11/15/2021
|
400,000
|
363,449
|
0.31
|
%
|
||||||||
|
3,046,494
|
2.59
|
%
|
|||||||||
Financials – 11.47%
|
||||||||||||
Aflac, Inc., 3.600%, 04/01/2030
|
300,000
|
337,870
|
0.29
|
%
|
||||||||
American International Group, Inc., 4.125%, 02/15/2024
|
1,000,000
|
1,083,535
|
0.92
|
%
|
||||||||
Capital One Financial Corp., 4.750%, 07/15/2021
|
500,000
|
516,434
|
0.44
|
%
|
||||||||
Comerica Bank, 2.500%, 07/23/2024
|
700,000
|
712,605
|
0.60
|
%
|
||||||||
Dell International LLC / EMC Corp., 5.450%, 06/15/2023 (e)
|
1,220,000
|
1,292,457
|
1.10
|
%
|
||||||||
Discover Financial Services, 5.200%, 04/27/2022
|
900,000
|
931,641
|
0.79
|
%
|
||||||||
General Motors Financial Co, Inc., 3.700%, 05/09/2023
|
1,075,000
|
1,032,580
|
0.88
|
%
|
||||||||
Huntington Bancshares, Inc.
|
||||||||||||
2.550%, 02/04/2030
|
525,000
|
507,988
|
0.43
|
%
|
||||||||
4.000%, 05/15/2025
|
765,000
|
833,242
|
0.71
|
%
|
||||||||
Morgan Stanley, 5.500%, 07/28/2021
|
400,000
|
419,782
|
0.36
|
%
|
||||||||
Prudential Financial, Inc., 3.878%, 03/27/2028
|
400,000
|
448,025
|
0.38
|
%
|
||||||||
Raymond James Financial, Inc.
|
||||||||||||
3.625%, 09/15/2026
|
1,500,000
|
1,571,830
|
1.33
|
%
|
||||||||
5.625%, 04/01/2024
|
700,000
|
773,355
|
0.66
|
%
|
||||||||
Synchrony Financial
|
||||||||||||
3.750%, 08/15/2021
|
350,000
|
351,264
|
0.30
|
%
|
||||||||
3.950%, 12/01/2027
|
650,000
|
600,043
|
0.51
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
CORPORATE BONDS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials (Continued)
|
||||||||||||
Synovus Financial Corp., 3.125%, 11/01/2022
|
1,300,000
|
$
|
1,299,610
|
1.10
|
%
|
|||||||
Willis North America, Inc., 3.600%, 05/15/2024
|
750,000
|
789,714
|
0.67
|
%
|
||||||||
|
13,501,975
|
11.47
|
%
|
|||||||||
Health Care – 2.25%
|
||||||||||||
Bristol-Myers Squibb Co., 3.625%, 05/15/2024 (e)
|
1,000,000
|
1,101,603
|
0.93
|
%
|
||||||||
Edwards Lifesciences Corp., 4.300%, 06/15/2028
|
700,000
|
797,528
|
0.68
|
%
|
||||||||
Express Scripts Holding Co., 3.500%, 06/15/2024
|
700,000
|
749,350
|
0.64
|
%
|
||||||||
|
2,648,481
|
2.25
|
%
|
|||||||||
Information Technology – 1.59%
|
||||||||||||
Autodesk, Inc., 2.850%, 01/15/2030
|
675,000
|
710,151
|
0.61
|
%
|
||||||||
Corning, Inc., 6.850%, 03/01/2029
|
275,000
|
355,428
|
0.30
|
%
|
||||||||
PayPal Holdings, Inc., 2.850%, 10/01/2029
|
750,000
|
800,677
|
0.68
|
%
|
||||||||
|
1,866,256
|
1.59
|
%
|
|||||||||
Materials – 1.52%
|
||||||||||||
AngloGold Ashanti Holdings PLC, 5.125%, 08/01/2022 (b)
|
1,000,000
|
1,036,094
|
0.88
|
%
|
||||||||
Goldcorp, Inc., 3.625%, 06/09/2021
|
750,000
|
755,220
|
0.64
|
%
|
||||||||
|
1,791,314
|
1.52
|
%
|
|||||||||
Total Corporate Bonds
|
||||||||||||
(Cost $24,651,808)
|
25,227,781
|
21.44
|
%
|
|||||||||
|
||||||||||||
MORTGAGE-BACKED SECURITIES – 7.50%
|
||||||||||||
Fannie Mae Pool
|
||||||||||||
3.000%, 10/01/2043
|
1,930,960
|
2,065,838
|
1.75
|
%
|
||||||||
3.500%, 01/01/2042
|
425,258
|
459,542
|
0.39
|
%
|
||||||||
4.000%, 10/01/2041
|
416,081
|
453,920
|
0.39
|
%
|
||||||||
4.000%, 12/01/2041
|
405,607
|
444,272
|
0.38
|
%
|
||||||||
4.500%, 08/01/2020
|
1,893
|
1,999
|
0.00
|
%
|
||||||||
6.000%, 10/01/2037
|
122,682
|
141,509
|
0.12
|
%
|
||||||||
Fannie Mae REMICS
|
||||||||||||
Series 2013-52, 1.250%, 06/25/2043
|
120,918
|
121,848
|
0.10
|
%
|
||||||||
Series 2012-22, 2.000%, 11/25/2040
|
91,710
|
93,874
|
0.08
|
%
|
||||||||
Series 2012-16, 2.000%, 11/25/2041
|
89,342
|
92,320
|
0.08
|
%
|
||||||||
Series 2010-134, 2.250%, 03/25/2039
|
62,501
|
63,403
|
0.05
|
%
|
||||||||
Freddie Mac Gold Pool
|
||||||||||||
3.000%, 05/01/2042
|
770,463
|
824,036
|
0.70
|
%
|
||||||||
3.000%, 09/01/2042
|
1,450,408
|
1,550,881
|
1.32
|
%
|
||||||||
3.500%, 01/01/2048
|
1,373,266
|
1,468,870
|
1.25
|
%
|
||||||||
5.000%, 05/01/2020
|
54
|
57
|
0.00
|
%
|
||||||||
5.500%, 04/01/2037
|
56,582
|
64,737
|
0.05
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
MORTGAGE-BACKED SECURITIES
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Freddie Mac REMICS
|
||||||||||||
Series 4146, 1.500%, 10/15/2042
|
50,580
|
$
|
50,778
|
0.04
|
%
|
|||||||
Series 4309, 2.000%, 10/15/2043
|
73,252
|
75,341
|
0.07
|
%
|
||||||||
Series 3928, 2.500%, 08/15/2040
|
140,671
|
143,911
|
0.12
|
%
|
||||||||
Series 3870, 2.750%, 01/15/2041
|
52,068
|
54,574
|
0.05
|
%
|
||||||||
Series 4016, 3.000%, 09/15/2039
|
232,923
|
235,885
|
0.20
|
%
|
||||||||
Series 4322, 3.000%, 05/15/2043
|
210,857
|
223,085
|
0.19
|
%
|
||||||||
Government National Mortgage Association,
|
||||||||||||
Series 2013-24, 1.750%, 02/16/2043
|
193,006
|
196,726
|
0.17
|
%
|
||||||||
|
||||||||||||
Total Mortgage-Backed Securities
|
||||||||||||
(Cost $8,322,355)
|
8,827,406
|
7.50
|
%
|
|||||||||
|
||||||||||||
U.S. GOVERNMENT AGENCY ISSUES – 0.43%
|
||||||||||||
U.S. Government Agency Issues – 0.43%
|
||||||||||||
Fannie Mae, 1.500%, 08/10/2021
|
500,000
|
501,569
|
0.43
|
%
|
||||||||
|
||||||||||||
Total U.S. Government Agency Issues
|
||||||||||||
(Cost $500,000)
|
501,569
|
0.43
|
%
|
|||||||||
|
||||||||||||
U.S. TREASURY OBLIGATIONS – 6.66%
|
||||||||||||
U.S. Treasury Notes – 6.66%
|
||||||||||||
U.S. Treasury Notes
|
||||||||||||
1.625%, 11/15/2022
|
500,000
|
517,686
|
0.44
|
%
|
||||||||
1.750%, 05/15/2023
|
1,250,000
|
1,306,787
|
1.11
|
%
|
||||||||
1.875%, 07/31/2026
|
1,775,000
|
1,928,232
|
1.64
|
%
|
||||||||
2.625%, 11/15/2020
|
750,000
|
760,181
|
0.64
|
%
|
||||||||
2.750%, 02/15/2024
|
1,575,000
|
1,720,441
|
1.46
|
%
|
||||||||
3.000%, 10/31/2025
|
450,000
|
513,228
|
0.44
|
%
|
||||||||
3.125%, 11/15/2028
|
900,000
|
1,091,039
|
0.93
|
%
|
||||||||
|
7,837,594
|
6.66
|
%
|
|||||||||
Total U.S. Treasury Obligations
|
||||||||||||
(Cost $7,400,498)
|
7,837,594
|
6.66
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
INVESTMENT COMPANIES (EXCLUDING
|
Number
|
% of
|
||||||||||
MONEY MARKET FUNDS) – 0.75%
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials – 0.46%
|
||||||||||||
Apollo Investment Corp.
|
4,375
|
$
|
38,544
|
0.03
|
%
|
|||||||
Ares Capital Corp.
|
3,345
|
42,950
|
0.04
|
%
|
||||||||
Bain Capital Specialty Finance, Inc.
|
3,380
|
34,341
|
0.03
|
%
|
||||||||
BlackRock TCP Capital Corp.
|
4,790
|
41,529
|
0.04
|
%
|
||||||||
FS Investment Corp.
|
12,055
|
41,469
|
0.03
|
%
|
||||||||
Golub Capital BDC, Inc.
|
3,200
|
32,832
|
0.03
|
%
|
||||||||
Hercules Capital, Inc.
|
4,625
|
47,452
|
0.04
|
%
|
||||||||
Monroe Capital Corp.
|
6,150
|
49,508
|
0.04
|
%
|
||||||||
New Mountain Finance Corp.
|
4,755
|
36,376
|
0.03
|
%
|
||||||||
Oaktree Specialty Lending Corp.
|
11,905
|
47,739
|
0.04
|
%
|
||||||||
TCG BDC, Inc.
|
5,235
|
41,304
|
0.03
|
%
|
||||||||
TPG Specialty Lending, Inc.
|
2,650
|
43,619
|
0.04
|
%
|
||||||||
TriplePoint Venture Growth BDC Corp.
|
5,675
|
45,627
|
0.04
|
%
|
||||||||
|
543,290
|
0.46
|
%
|
|||||||||
Other Investment Companies – 0.29%
|
||||||||||||
Vanguard High-Yield Corporate Fund
|
62,348
|
339,171
|
0.29
|
%
|
||||||||
|
||||||||||||
Total Investment Companies (Excluding
|
||||||||||||
Money Market Funds)
|
||||||||||||
(Cost $1,248,904)
|
882,461
|
0.75
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS – 1.71%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.71%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (c)
|
2,014,732
|
$
|
2,014,732
|
1.71
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $2,014,732)
|
2,014,732
|
1.71
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $104,423,196) – 99.33%
|
116,880,115
|
99.33
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.67%
|
790,643
|
0.67
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
117,670,758
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
U.S.-traded security of a foreign corporation.
|
(c)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
(d)
|
Investment in affiliated security for the period from November 1, 2019, through March 30, 2020. Quasar Distributors, LLC, which serves as the Fund’s distributor, was a subsidiary of U.S. Bancorp Fund
Services, LLC through March 30, 2020. Details of transactions with this affiliated company for the period November 1, 2019, through March 30, 2020, are as follows:
|
Preferred Stocks
|
|||||
U.S. Bancorp
|
|||||
Beginning Cost – November 1, 2019
|
$
|
79,260
|
|||
Purchase Cost
|
$
|
9,634
|
|||
Sales Cost
|
$
|
(28,766
|
)
|
||
Ending Cost – March 30, 2020
|
$
|
60,128
|
|||
Dividend Income
|
$
|
2,110
|
|||
Net Change in Unrealized Appreciation/Depreciation
|
$
|
(1,592
|
)
|
||
Realized Gain/Loss
|
$
|
(3,290
|
)
|
||
Shares
|
2,090
|
||||
Market Value – March 30, 2020
|
$
|
54,653
|
(e)
|
Rule 144A security. Security is exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. Rule 144A securities may be resold in transactions exempt from registration to
qualified institutional investors. As of April 30, 2020, the market value of this security totaled $2,394,060 which represents 2.03% of net assets.
|
(f)
|
Variable rate security; rate disclosed is the rate as of April 30, 2020.
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
7,625,683
|
$
|
—
|
$
|
—
|
$
|
7,625,683
|
||||||||
Consumer Discretionary
|
9,950,631
|
—
|
—
|
9,950,631
|
||||||||||||
Consumer Staples
|
4,977,816
|
—
|
—
|
4,977,816
|
||||||||||||
Energy
|
1,923,479
|
—
|
—
|
1,923,479
|
||||||||||||
Financials
|
11,921,412
|
—
|
—
|
11,921,412
|
||||||||||||
Health Care
|
3,422,589
|
—
|
—
|
3,422,589
|
||||||||||||
Industrials
|
6,756,869
|
—
|
—
|
6,756,869
|
||||||||||||
Information Technology
|
13,599,773
|
—
|
—
|
13,599,773
|
||||||||||||
Materials
|
6,328,682
|
—
|
—
|
6,328,682
|
||||||||||||
Total Common Stocks
|
$
|
66,506,934
|
$
|
—
|
$
|
—
|
$
|
66,506,934
|
||||||||
Preferred Stocks
|
||||||||||||||||
Communication Services
|
$
|
81,607
|
$
|
—
|
$
|
—
|
$
|
81,607
|
||||||||
Consumer Staples
|
138,917
|
—
|
—
|
138,917
|
||||||||||||
Energy
|
94,510
|
—
|
—
|
94,510
|
||||||||||||
Financials
|
2,901,716
|
—
|
—
|
2,901,716
|
||||||||||||
Total Preferred Stocks
|
$
|
3,216,750
|
$
|
—
|
$
|
—
|
$
|
3,216,750
|
||||||||
REITS
|
||||||||||||||||
Financials
|
$
|
1,864,373
|
$
|
—
|
$
|
—
|
$
|
1,864,373
|
||||||||
Total REITS
|
$
|
1,864,373
|
$
|
—
|
$
|
—
|
$
|
1,864,373
|
||||||||
Rights
|
||||||||||||||||
Financials
|
$
|
515
|
$
|
—
|
$
|
—
|
$
|
515
|
||||||||
Total Rights
|
$
|
515
|
$
|
—
|
$
|
—
|
$
|
515
|
||||||||
Corporate Bonds
|
||||||||||||||||
Communication Services
|
$
|
—
|
$
|
1,081,869
|
$
|
—
|
$
|
1,081,869
|
||||||||
Consumer Discretionary
|
—
|
1,291,392
|
—
|
1,291,392
|
||||||||||||
Energy
|
—
|
3,046,494
|
—
|
3,046,494
|
||||||||||||
Financials
|
—
|
13,501,975
|
—
|
13,501,975
|
||||||||||||
Health Care
|
—
|
2,648,481
|
—
|
2,648,481
|
||||||||||||
Information Technology
|
—
|
1,866,256
|
—
|
1,866,256
|
||||||||||||
Materials
|
—
|
1,791,314
|
—
|
1,791,314
|
||||||||||||
Total Corporate Bonds
|
$
|
—
|
$
|
25,227,781
|
$
|
—
|
$
|
25,227,781
|
||||||||
Mortgage-Backed Securities
|
$
|
—
|
$
|
8,827,406
|
$
|
—
|
$
|
8,827,406
|
||||||||
U.S. Government Agency Issues
|
$
|
—
|
$
|
501,569
|
$
|
—
|
$
|
501,569
|
||||||||
U.S. Treasury Obligations
|
||||||||||||||||
U.S. Treasury Notes
|
$
|
—
|
$
|
7,837,594
|
$
|
—
|
$
|
7,837,594
|
||||||||
Total U.S. Treasury Obligations
|
$
|
—
|
$
|
7,837,594
|
$
|
—
|
$
|
7,837,594
|
||||||||
Investment Companies (Excluding
|
||||||||||||||||
Money Market Funds)
|
||||||||||||||||
Financials
|
$
|
543,290
|
$
|
—
|
$
|
—
|
$
|
543,290
|
||||||||
Other Investment Companies
|
339,171
|
—
|
—
|
339,171
|
||||||||||||
Total Investment Companies (Excluding
|
||||||||||||||||
Money Market Funds)
|
$
|
882,461
|
$
|
—
|
$
|
—
|
$
|
882,461
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
2,014,732
|
$
|
—
|
$
|
—
|
$
|
2,014,732
|
||||||||
Total Short-Term Investments
|
$
|
2,014,732
|
$
|
—
|
$
|
—
|
$
|
2,014,732
|
||||||||
Total Investments
|
$
|
74,485,765
|
$
|
42,394,350
|
$
|
—
|
$
|
116,880,115
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $104,423,196)
|
$
|
116,880,115
|
||
Dividends and interest receivable
|
515,459
|
|||
Receivable for fund shares sold
|
20,732
|
|||
Receivable for securities sold
|
575,426
|
|||
Prepaid expenses and other assets
|
23,498
|
|||
Total assets
|
118,015,230
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
180,182
|
|||
Payable to advisor
|
75,373
|
|||
Payable to administrator
|
20,517
|
|||
Payable to auditor
|
11,372
|
|||
Accrued distribution fees
|
7,901
|
|||
Accrued service fees
|
4,565
|
|||
Accrued trustees fees
|
5,333
|
|||
Accrued expenses and other payables
|
39,229
|
|||
Total liabilities
|
344,472
|
|||
NET ASSETS
|
$
|
117,670,758
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
99,351,527
|
||
Total distributable earnings
|
18,319,231
|
|||
Total net assets
|
$
|
117,670,758
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
56,214,817
|
||
Shares issued and outstanding
|
4,071,181
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
13.81
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
61,455,941
|
||
Shares issued and outstanding
|
4,731,738
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
12.99
|
HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income from unaffiliated securities(1)
|
$
|
1,182,491
|
||
Dividend income from affiliated securities
|
2,110
|
|||
Interest income
|
792,354
|
|||
Total investment income
|
1,976,955
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
567,340
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
80,215
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
38,855
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
77,261
|
|||
Distribution fees – Investor Class (See Note 5)
|
52,441
|
|||
Service fees – Investor Class (See Note 5)
|
34,961
|
|||
Federal and state registration fees
|
20,371
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,375
|
|||
Trustees’ fees and expenses
|
9,012
|
|||
Reports to shareholders
|
9,009
|
|||
Legal fees
|
912
|
|||
Interest expense (See Note 7)
|
80
|
|||
Other expenses
|
9,373
|
|||
Total expenses
|
924,667
|
|||
NET INVESTMENT INCOME
|
$
|
1,052,288
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain (loss) on investments:
|
||||
Unaffiliated investments
|
$
|
5,747,135
|
||
Affiliated investments
|
(3,290
|
)
|
||
Net change in unrealized appreciation/depreciation on investments:
|
||||
Unaffiliated investments
|
(13,993,847
|
)
|
||
Affiliated investments
|
(1,592
|
)
|
||
Net loss on investments
|
(8,251,594
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(7,199,306
|
)
|
(1)
|
Net of foreign taxes withheld of $11,436.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
1,052,288
|
$
|
2,527,023
|
||||
Net realized gain on investments
|
5,743,845
|
12,163,724
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(13,995,439
|
)
|
257,624
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(7,199,306
|
)
|
14,948,371
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(5,528,505
|
)
|
(9,623,337
|
)
|
||||
Distributable earnings – Institutional Class
|
(5,606,651
|
)
|
(8,312,271
|
)
|
||||
Total distributions
|
(11,135,156
|
)
|
(17,935,608
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
829,381
|
4,045,914
|
||||||
Proceeds from shares subscribed – Institutional Class
|
3,387,927
|
9,963,578
|
||||||
Dividends reinvested – Investor Class
|
5,335,026
|
9,369,182
|
||||||
Dividends reinvested – Institutional Class
|
4,420,347
|
6,581,032
|
||||||
Cost of shares redeemed – Investor Class
|
(34,620,159
|
)
|
(39,659,654
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(17,257,552
|
)
|
(32,586,017
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(37,905,030
|
)
|
(42,285,965
|
)
|
||||
TOTAL DECREASE IN NET ASSETS
|
(56,239,492
|
)
|
(45,273,202
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
173,910,250
|
219,183,452
|
||||||
End of period
|
$
|
117,670,758
|
$
|
173,910,250
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
56,336
|
268,813
|
||||||
Shares sold – Institutional Class
|
247,057
|
702,865
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
357,711
|
647,946
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
315,489
|
481,833
|
||||||
Shares redeemed – Investor Class
|
(2,290,121
|
)
|
(2,637,769
|
)
|
||||
Shares redeemed – Institutional Class
|
(1,261,871
|
)
|
(2,309,628
|
)
|
||||
Net decrease in shares outstanding
|
(2,575,399
|
)
|
(2,845,940
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
15.72
|
||
Income from investment operations:
|
||||
Net investment income
|
0.10
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(0.92
|
)
|
||
Total from investment operations
|
(0.82
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.09
|
)
|
||
Dividends from net realized gains
|
(1.00
|
)
|
||
Total distributions
|
(1.09
|
)
|
||
Net asset value, end of period
|
$
|
13.81
|
||
TOTAL RETURN
|
-5.70
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
56.21
|
||
Ratio of expenses to average net assets
|
1.49
|
%(3)
|
||
Ratio of net investment income to average net assets
|
1.29
|
%(3)
|
||
Portfolio turnover rate(4)
|
13
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
15.82
|
$
|
16.24
|
$
|
15.61
|
$
|
16.15
|
$
|
16.68
|
|||||||||
0.18
|
(1)
|
0.16
|
0.14
|
0.14
|
0.13
|
|||||||||||||
1.02
|
0.40
|
1.95
|
(0.16
|
)
|
0.11
|
|||||||||||||
1.20
|
0.56
|
2.09
|
(0.02
|
)
|
0.24
|
|||||||||||||
(0.17
|
)
|
(0.14
|
)
|
(0.12
|
)
|
(0.13
|
)
|
(0.13
|
)
|
|||||||||
(1.13
|
)
|
(0.84
|
)
|
(1.34
|
)
|
(0.39
|
)
|
(0.64
|
)
|
|||||||||
(1.30
|
)
|
(0.98
|
)
|
(1.46
|
)
|
(0.52
|
)
|
(0.77
|
)
|
|||||||||
$
|
15.72
|
$
|
15.82
|
$
|
16.24
|
$
|
15.61
|
$
|
16.15
|
|||||||||
8.39
|
%
|
3.44
|
%
|
14.16
|
%
|
-0.12
|
%
|
1.43
|
%
|
|||||||||
$
|
93.51
|
$
|
121.32
|
$
|
155.33
|
$
|
202.04
|
$
|
292.84
|
|||||||||
1.46
|
%
|
1.42
|
%
|
1.43
|
%
|
1.43
|
%
|
1.38
|
%
|
|||||||||
1.16
|
%
|
0.89
|
%
|
0.78
|
%
|
0.84
|
%
|
0.83
|
%
|
|||||||||
16
|
%
|
18
|
%
|
15
|
%
|
24
|
%
|
39
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
14.80
|
||
Income from investment operations:
|
||||
Net investment income
|
0.12
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(0.87
|
)
|
||
Total from investment operations
|
(0.75
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.12
|
)
|
||
Dividends from net realized gains
|
(0.94
|
)
|
||
Total distributions
|
(1.06
|
)
|
||
Net asset value, end of period
|
$
|
12.99
|
||
TOTAL RETURN
|
-5.52
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
61.46
|
||
Ratio of expenses to average net assets
|
1.12
|
%(3)
|
||
Ratio of net investment income to average net assets
|
1.67
|
%(3)
|
||
Portfolio turnover rate(4)
|
13
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
14.93
|
$
|
15.34
|
$
|
14.76
|
$
|
15.28
|
$
|
15.80
|
|||||||||
0.22
|
(1)
|
0.19
|
0.16
|
0.18
|
0.19
|
|||||||||||||
0.96
|
0.39
|
1.87
|
(0.13
|
)
|
0.09
|
|||||||||||||
1.18
|
0.58
|
2.03
|
0.05
|
0.28
|
||||||||||||||
(0.24
|
)
|
(0.20
|
)
|
(0.18
|
)
|
(0.20
|
)
|
(0.19
|
)
|
|||||||||
(1.07
|
)
|
(0.79
|
)
|
(1.27
|
)
|
(0.37
|
)
|
(0.61
|
)
|
|||||||||
(1.31
|
)
|
(0.99
|
)
|
(1.45
|
)
|
(0.57
|
)
|
(0.80
|
)
|
|||||||||
$
|
14.80
|
$
|
14.93
|
$
|
15.34
|
$
|
14.76
|
$
|
15.28
|
|||||||||
8.76
|
%
|
3.86
|
%
|
14.60
|
%
|
0.30
|
%
|
1.75
|
%
|
|||||||||
$
|
80.40
|
$
|
97.86
|
$
|
110.74
|
$
|
129.91
|
$
|
168.84
|
|||||||||
1.09
|
%
|
1.02
|
%
|
1.05
|
%
|
1.03
|
%
|
1.04
|
%
|
|||||||||
1.53
|
%
|
1.28
|
%
|
1.16
|
%
|
1.23
|
%
|
1.18
|
%
|
|||||||||
16
|
%
|
18
|
%
|
15
|
%
|
24
|
%
|
39
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute
substantially all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment income/loss and
realized gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the result of the treatment
of wash sales for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense. Distributions from net realized gains for book
purposes may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax purposes and designate earnings and profits, including net
realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns of the
Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability resulting from
unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and accretion
of discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly attributable to its
portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on investments are allocated to
each class of shares based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid at the end of each calendar quarter. Distributions of net realized capital gains, if any,
are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original cost of
the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all liabilities
(including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed for trading. The
offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
i).
|
REIT Equity Securities – The Fund may invest in the equity securities of real estate investment trusts (“REITs”). Distributions received from REITs may be classified as dividends, capital gains, or
return of capital. Investments in REITs may require the Fund to accrue and distribute income not yet received. To generate sufficient cash to make the requisite distributions, the Fund may be required to sell securities in its
portfolio (including when it is not advantageous to do so) that it otherwise would have continued to hold. At other times, investments in a REIT may result in the Fund’s receipt of cash in excess of the REIT’s earnings. If the
Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Dividends received by the Fund from a REIT generally will not constitute qualified
dividend income and will not qualify for the dividends-received deduction.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar
instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and similar
data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable
inputs are unavailable.
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end mutual funds,
partnerships, rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as reported by the primary
exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales price reported. Securities
traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these securities are actively traded and valuation
adjustments are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at the same time the Fund calculates its NAV because most foreign markets
close well before such time. The earlier close of most foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim. In certain circumstances, it may be
determined that a foreign security needs to be fair valued because it appears that the value of the security might have been materially affected by events occurring after the close of the market in which the security is
principally traded, but before the time the Fund calculates its NAV, such as by a development that affects an entire market or region (e.g., a weather-related event) or a potentially global development (e.g., a terrorist attack
that may be expected to have an effect on investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the
ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and U.S.
government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing service may
consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the model may
incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These securities are
generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments with an
original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as of the 61st day
prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as described below.
Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
146,980,836
|
|||
Gross tax unrealized appreciation
|
$
|
30,352,943
|
|||
Gross tax unrealized depreciation
|
(3,914,105
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
26,438,838
|
|||
Undistributed ordinary income
|
$
|
85,038
|
|||
Undistributed long-term capital gains
|
10,129,817
|
||||
Total distributable earnings
|
$
|
10,214,855
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
36,653,693
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
1,005,295
|
$
|
2,694,614
|
|||||
Long-term capital gain
|
10,129,861
|
15,240,994
|
|||||||
$
|
11,135,156
|
$
|
17,935,608
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 943.00
|
$7.20
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.45
|
$7.47
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 944.80
|
$5.42
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.29
|
$5.62
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.49% for Investor Class shares or 1.12% for Institutional Class shares, as applicable, multiplied by the average account value over the
period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory and sub-advisory agreements and the relevant factors
for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory and sub-advisory agreements and also referenced the documents that had been
provided to help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor and the Sub-Advisors and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
Summaries of the key terms of the advisory and sub-advisory agreements;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(9)
|
A completed questionnaire from each Sub-Advisor;
|
|
(10)
|
Summaries of each Sub-Advisor’s questionnaire and relevant information from such Sub-Advisor’s Form ADV Parts I and II;
|
|
(11)
|
Each Sub-Advisor’s Code of Ethics; and
|
|
(12)
|
Financial information for the holding company of each Sub-Advisor.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
The nature and quality of the advisory services provided by the Advisor and the Sub-Advisors;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
|
(4)
|
The costs and profitability of the Fund to the Advisor and the Sub-Advisors;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor and the Sub-Advisors from serving as an investment advisor to the Fund (other than the advisory and sub-advisory fees).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and noted
that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the nature and
extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor oversees the Sub-Advisors for the Fund, and the Sub-Advisors act as the portfolio managers for the Fund.
|
||
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Sub-Advisors and the
Fund’s other service providers, as feasible, conducts on-site visits to the Sub-Advisors and the Fund’s other service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed
expense ratios, evaluates insurance providers for fidelity bond, D&O/E&O
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports provided by service providers, and
maintains books and records.
|
|||
(f)
|
The Advisor oversees the selection and continued employment of each Sub-Advisor, reviews the Fund’s investment performance, and monitors each Sub-Advisor’s adherence to the Fund’s investment objectives,
policies, and restrictions.
|
||
(g)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal
services to the Fund.
|
||
(h)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(i)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
||
(j)
|
For each annual report of the Fund, the Advisor reviews the written summaries prepared by the Sub-Advisors of the Fund’s performance during the most recent 12-month period.
|
||
(k)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The Advisor
participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee. The Advisor
compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(l)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading
oversight personnel, as well as management executives.
|
||
(m)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(n)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and education.
|
(2)
|
The Trustees considered the services identified below that are provided by each Sub-Advisor:
|
(a)
|
Each Sub-Advisor acts as the portfolio manager for the Fund. In this capacity, each Sub-Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and
restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(b)
|
Each Sub-Advisor ensures that its compliance program includes policies and procedures relevant to the Fund and the Sub-Advisor’s duties as a portfolio manager to the Fund.
|
||
(c)
|
For each annual report of the Fund, each Sub-Advisor prepares a written summary of the Fund’s performance (with respect to the equity allocation or the fixed income allocation, as applicable) during the
most recent 12-month period.
|
||
(d)
|
Each Sub-Advisor provides a quarterly compliance certification to the Board regarding trading and allocation practices, supervisory matters, the Sub-Advisor’s compliance program (including its code of
ethics), compliance with the Fund’s policies, and general firm updates.
|
(3)
|
The Trustees considered the distinction between the services performed by the Advisor and the Sub-Advisors. The Trustees noted that the management of the Fund, including the oversight of the
Sub-Advisors, involves more comprehensive and substantive duties than the duties of the Sub-Advisors. Specifically, the Trustees considered the lists of services identified above and concluded that the services performed by the
Advisor for the Fund require a higher level of service and oversight than the services performed by the Sub-Advisors. Based on this determination, the Trustees concluded that the differential in advisory fees between the Advisor
and the Sub-Advisors is reasonable.
|
|
(4)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the Fund to
various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor and the Sub-Advisors manage the Fund in a manner materially consistent with its stated investment objective and
style. The Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory and sub-advisory agreements.
|
|
(5)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As part of
the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials considered at
the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded that they are
reasonable and warranted continuation of the advisory and sub-advisory agreements.
|
|
(6)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over the
prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets of the
Fund increase. For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts, the
Advisor’s significant marketing efforts to promote the
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain circumstances. The Trustees noted that it did not
appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the future as circumstances changed.
|
||
(7)
|
The Trustees considered the profitability of the Advisor and the Sub-Advisors, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and
revenues that the Advisor has put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor and the Sub-Advisors are reasonable and not excessive when compared to profitability guidelines
set forth in relevant court cases.
|
|
(8)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and its
shareholders.
|
|
(9)
|
The Trustees considered any benefits to the Advisor and the Sub-Advisors from serving as an advisor to the Fund (other than the advisory and sub-advisory fees). The Trustees noted that the Advisor and
the Sub-Advisors may derive ancillary benefits from, by way of example, their association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio
trades for the Fund. The Trustees determined that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded
that any additional benefits realized by the Advisor and the Sub-Advisors from their relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ findings that (i) the research, analytical,
statistical, and other information and services provided by brokers are merely supplemental to the Advisor’s and the Sub-Advisors’ own efforts in the performance of their duties under the advisory and sub-advisory agreements and
(ii) although the Sub-Advisors could derive benefits from the conversion of Fund shareholders into separate account clients, the Fund also could benefit from potential institutional shareholders who might choose to invest in the
Fund.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
8
|
Statement of Operations
|
9
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
14
|
Expense Example
|
20
|
Proxy Voting Policy and Proxy Voting Records
|
21
|
Availability of Quarterly Portfolio Schedule
|
21
|
Federal Tax Distribution Information
|
21
|
Important Notice Regarding Delivery of Shareholder Documents
|
21
|
Electronic Delivery
|
21
|
Board Approval of Investment Advisory Agreement
|
22
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Balanced Fund (HBFBX)
|
-6.03%
|
-5.39%
|
3.31%
|
4.89%
|
50/50 Blended DJIA/Treasury Index
|
-3.03%
|
-0.68%
|
5.56%
|
6.13%
|
Dow Jones Industrial Average
|
-8.87%
|
-6.16%
|
9.06%
|
11.01%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
U.S. Treasury Bill, 0.165%, 01/28/2021
|
21.63%
|
U.S. Treasury Bill, 1.525%, 12/03/2020
|
8.65%
|
U.S. Treasury Bill, 0.130%, 11/05/2020
|
6.06%
|
U.S. Treasury Bill, 0.095%, 05/21/2020
|
6.05%
|
U.S. Treasury Bill, 0.115%, 06/18/2020
|
6.05%
|
Verizon Communications, Inc.
|
5.22%
|
Pfizer, Inc.
|
5.21%
|
International Business Machines Corp.
|
4.67%
|
3M Co.
|
4.47%
|
The Coca-Cola Co.
|
4.41%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 44.37%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 5.22%
|
||||||||||||
Verizon Communications, Inc.
|
10,500
|
$
|
603,225
|
5.22
|
%
|
|||||||
Consumer Staples – 8.66%
|
||||||||||||
The Coca-Cola Co.
|
11,100
|
509,379
|
4.41
|
%
|
||||||||
Walgreens Boots Alliance, Inc.
|
11,350
|
491,341
|
4.25
|
%
|
||||||||
|
1,000,720
|
8.66
|
%
|
|||||||||
Energy – 7.44%
|
||||||||||||
Chevron Corp.
|
5,150
|
473,800
|
4.10
|
%
|
||||||||
Exxon Mobil Corp.
|
8,300
|
385,701
|
3.34
|
%
|
||||||||
|
859,501
|
7.44
|
%
|
|||||||||
Financials – 0.58%
|
||||||||||||
JPMorgan Chase & Co.
|
700
|
67,032
|
0.58
|
%
|
||||||||
Health Care – 5.90%
|
||||||||||||
Merck & Co., Inc.
|
1,000
|
79,340
|
0.69
|
%
|
||||||||
Pfizer, Inc.
|
15,700
|
602,252
|
5.21
|
%
|
||||||||
|
681,592
|
5.90
|
%
|
|||||||||
Industrials – 7.50%
|
||||||||||||
3M Co.
|
3,400
|
516,528
|
4.47
|
%
|
||||||||
Caterpillar, Inc.
|
3,000
|
349,140
|
3.03
|
%
|
||||||||
|
865,668
|
7.50
|
%
|
|||||||||
Information Technology – 5.83%
|
||||||||||||
Cisco Systems, Inc.
|
3,150
|
133,497
|
1.16
|
%
|
||||||||
International Business Machines Corp.
|
4,300
|
539,908
|
4.67
|
%
|
||||||||
|
673,405
|
5.83
|
%
|
|||||||||
Materials – 3.24%
|
||||||||||||
Dow, Inc.
|
9,350
|
343,052
|
2.97
|
%
|
||||||||
DuPont de Nemours, Inc.
|
650
|
30,563
|
0.27
|
%
|
||||||||
|
373,615
|
3.24
|
%
|
|||||||||
Total Common Stocks
|
||||||||||||
(Cost $5,568,859)
|
5,124,758
|
44.37
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 55.83%
|
Number of Shares/
|
% of
|
||||||||||
|
Par Amount
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 3.93%
|
||||||||||||
First American Government Obligations
|
||||||||||||
Fund, Institutional Class, 0.25% (a)
|
453,516
|
$
|
453,516
|
3.93
|
%
|
|||||||
U.S. Treasury Bills – 51.90%
|
||||||||||||
0.095%, 05/21/2020 (b)
|
700,000
|
699,125
|
6.05
|
%
|
||||||||
0.115%, 06/18/2020 (b)
|
700,000
|
698,278
|
6.05
|
%
|
||||||||
0.280%, 07/16/2020 (b)
|
400,000
|
399,927
|
3.46
|
%
|
||||||||
0.130%, 11/05/2020 (b)
|
700,000
|
699,607
|
6.06
|
%
|
||||||||
1.525%, 12/03/2020 (b)
|
1,000,000
|
999,378
|
8.65
|
%
|
||||||||
0.165%, 01/28/2021 (b)
|
2,500,000
|
2,497,403
|
21.63
|
%
|
||||||||
|
5,993,718
|
51.90
|
%
|
|||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $6,407,510)
|
6,447,234
|
55.83
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $11,976,369) – 100.20%
|
11,571,992
|
100.20
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.20)%
|
(22,870
|
)
|
(0.20
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
11,549,122
|
100.00
|
%
|
(a)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
(b)
|
The rate listed is the discount rate at issue.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
603,225
|
$
|
—
|
$
|
—
|
$
|
603,225
|
||||||||
Consumer Staples
|
1,000,720
|
—
|
—
|
1,000,720
|
||||||||||||
Energy
|
859,501
|
—
|
—
|
859,501
|
||||||||||||
Financials
|
67,032
|
—
|
—
|
67,032
|
||||||||||||
Health Care
|
681,592
|
—
|
—
|
681,592
|
||||||||||||
Industrials
|
865,668
|
—
|
—
|
865,668
|
||||||||||||
Information Technology
|
673,405
|
—
|
—
|
673,405
|
||||||||||||
Materials
|
373,615
|
—
|
—
|
373,615
|
||||||||||||
Total Common Stocks
|
$
|
5,124,758
|
$
|
—
|
$
|
—
|
$
|
5,124,758
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
453,516
|
$
|
—
|
$
|
—
|
$
|
453,516
|
||||||||
U.S. Treasury Bills
|
—
|
5,993,718
|
—
|
5,993,718
|
||||||||||||
Total Short-Term Investments
|
$
|
453,516
|
$
|
5,993,718
|
$
|
—
|
$
|
6,447,234
|
||||||||
Total Investments
|
$
|
5,578,274
|
$
|
5,993,718
|
$
|
—
|
$
|
11,571,992
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $11,976,369)
|
$
|
11,571,992
|
||
Dividends and interest receivable
|
9,659
|
|||
Prepaid expenses and other assets
|
15,054
|
|||
Total assets
|
11,596,705
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
3,554
|
|||
Payable to advisor
|
5,583
|
|||
Payable to administrator
|
4,244
|
|||
Payable to auditor
|
11,459
|
|||
Accrued distribution fees
|
11,714
|
|||
Accrued service fees
|
931
|
|||
Accrued trustees fees
|
6,741
|
|||
Accrued expenses and other payables
|
3,357
|
|||
Total liabilities
|
47,583
|
|||
NET ASSETS
|
$
|
11,549,122
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
11,730,265
|
||
Accumulated deficit
|
(181,143
|
)
|
||
Total net assets
|
$
|
11,549,122
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
11,549,122
|
||
Shares issued and outstanding
|
1,039,406
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
11.11
|
HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income
|
$
|
117,898
|
||
Interest income
|
59,279
|
|||
Total investment income
|
177,177
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
35,872
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
11,642
|
|||
Audit fees
|
11,463
|
|||
Federal and state registration fees
|
10,725
|
|||
Distribution fees – Investor Class (See Note 5)
|
8,968
|
|||
Trustees’ fees and expenses
|
8,197
|
|||
Service fees – Investor Class (See Note 5)
|
5,979
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
3,851
|
|||
Reports to shareholders
|
3,003
|
|||
Other expenses
|
1,913
|
|||
Total expenses
|
115,075
|
|||
NET INVESTMENT INCOME
|
$
|
62,102
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
231,547
|
||
Net change in unrealized appreciation/depreciation on investments
|
(1,026,260
|
)
|
||
Net loss on investments
|
(794,713
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(732,611
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
62,102
|
$
|
130,489
|
||||
Net realized gain on investments
|
231,547
|
507,439
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(1,026,260
|
)
|
107,778
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(732,611
|
)
|
745,706
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(559,075
|
)
|
(681,988
|
)
|
||||
Total distributions
|
(559,075
|
)
|
(681,988
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
587,634
|
2,194,903
|
||||||
Dividends reinvested – Investor Class
|
550,366
|
673,592
|
||||||
Cost of shares redeemed – Investor Class
|
(600,726
|
)
|
(2,249,250
|
)
|
||||
Net increase in net assets derived
|
||||||||
from capital share transactions
|
537,274
|
619,245
|
||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(754,412
|
)
|
682,963
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
12,303,534
|
11,620,571
|
||||||
End of period
|
$
|
11,549,122
|
$
|
12,303,534
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
50,929
|
179,722
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
45,906
|
56,316
|
||||||
Shares redeemed – Investor Class
|
(51,505
|
)
|
(183,674
|
)
|
||||
Net increase in shares outstanding
|
45,330
|
52,364
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
12.38
|
||
Income from investment operations:
|
||||
Net investment income
|
0.06
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(0.77
|
)
|
||
Total from investment operations
|
(0.71
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.06
|
)
|
||
Dividends from net realized gains
|
(0.50
|
)
|
||
Total distributions
|
(0.56
|
)
|
||
Net asset value, end of period
|
$
|
11.11
|
||
TOTAL RETURN
|
-6.03
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
11.55
|
||
Ratio of expenses to average net assets
|
1.92
|
%(3)
|
||
Ratio of net investment income to average net assets
|
1.04
|
%(3)
|
||
Portfolio turnover rate
|
13
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
12.34
|
$
|
12.88
|
$
|
12.68
|
$
|
12.37
|
$
|
12.98
|
|||||||||
0.13
|
(1)
|
0.09
|
0.06
|
0.04
|
0.03
|
|||||||||||||
0.59
|
0.33
|
1.09
|
0.58
|
(0.01
|
)
|
|||||||||||||
0.72
|
0.42
|
1.15
|
0.62
|
0.02
|
||||||||||||||
(0.13
|
)
|
(0.08
|
)
|
(0.05
|
)
|
(0.04
|
)
|
(0.03
|
)
|
|||||||||
(0.55
|
)
|
(0.88
|
)
|
(0.90
|
)
|
(0.27
|
)
|
(0.60
|
)
|
|||||||||
(0.68
|
)
|
(0.96
|
)
|
(0.95
|
)
|
(0.31
|
)
|
(0.63
|
)
|
|||||||||
$
|
12.38
|
$
|
12.34
|
$
|
12.88
|
$
|
12.68
|
$
|
12.37
|
|||||||||
6.05
|
%
|
3.46
|
%
|
9.56
|
%
|
5.20
|
%
|
0.11
|
%
|
|||||||||
$
|
12.30
|
$
|
11.62
|
$
|
12.24
|
$
|
12.08
|
$
|
11.63
|
|||||||||
1.88
|
%
|
1.84
|
%
|
1.82
|
%
|
1.68
|
%
|
1.68
|
%
|
|||||||||
1.04
|
%
|
0.70
|
%
|
0.45
|
%
|
0.33
|
%
|
0.20
|
%
|
|||||||||
52
|
%
|
21
|
%
|
31
|
%
|
51
|
%
|
34
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute
substantially all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment income/loss and
realized gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the result of the
treatment of wash sales for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense. Distributions from net realized
gains for book purposes may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax purposes and designate earnings and
profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns of
the Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability resulting
from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and accretion
of discount, is recognized on an accrual basis.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly attributable to its portfolio, such as
advisory, administration, and certain shareholder service fees.
|
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid at the end of each calendar quarter. Distributions of net realized capital gains, if
any, are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original cost
of the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all liabilities
(including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed for trading.
The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar
instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and similar
data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable
inputs are unavailable.
|
Equity Securities – Equity securities, including common stocks, preferred stocks, exchange-traded funds, closed-end mutual funds, partnerships, rights, and real
estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as
|
HENNESSY FUNDS
|
1-800-966-4354
|
reported by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may
differ from the last sales price reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the
extent these securities are actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy.
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the
ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and U.S.
government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing service may
consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the model may
incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These securities are
generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments with
an original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as of the
61st day prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as described
below. Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
11,736,170
|
|||
Gross tax unrealized appreciation
|
$
|
755,819
|
|||
Gross tax unrealized depreciation
|
(143,056
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
612,763
|
|||
Undistributed ordinary income
|
$
|
28,357
|
|||
Undistributed long-term capital gains
|
469,423
|
||||
Total distributable earnings
|
$
|
497,780
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
1,110,543
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
89,643
|
$
|
133,769
|
|||||
Long-term capital gain
|
469,432
|
548,219
|
|||||||
$
|
559,075
|
$
|
681,988
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 939.70
|
$9.26
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,015.32
|
$9.62
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.92%, multiplied by the average account value over the period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been provided to help the
Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(1)
|
The nature and quality of the advisory services provided by the Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
|
(4)
|
The costs and profitability of the Fund to the Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and
noted that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the
nature and extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and
restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service
providers, as feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios, evaluates insurance providers
for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports provided by service providers,
and maintains books and records.
|
||
(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal
services to the Fund.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
||
(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The Advisor
participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee. The Advisor
compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading
oversight personnel, as well as management executives.
|
||
(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and
education.
|
(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the Fund
to various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated investment objective and style. The
Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As part of
the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials considered
at the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded that they are
reasonable and warranted continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over the
prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets of the
Fund increase. For example, mutual fund platform
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts, the Advisor’s significant
marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain circumstances. The Trustees noted that it did
not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the future as circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues that the
Advisor has put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines set forth in relevant court cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and its
shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary benefits from, by way
of example, its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund. The Trustees determined that any such
products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any additional benefits realized by the Advisor
from its relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical, and other information and services provided by brokers are merely
supplemental to the Advisor’s own efforts in the performance of its duties under the advisory agreement.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
9
|
Statement of Operations
|
10
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
24
|
Proxy Voting Policy and Proxy Voting Records
|
26
|
Availability of Quarterly Portfolio Schedule
|
26
|
Important Notice Regarding Delivery of Shareholder Documents
|
26
|
Electronic Delivery
|
26
|
Board Approval of Investment Advisory Agreements
|
27
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Since Inception
|
|
Months(1)
|
Year
|
Years
|
(12/31/13)
|
|
Hennessy BP Energy Fund –
|
||||
Investor Class (HNRGX)
|
-36.72%
|
-48.44%
|
-16.61%
|
-11.62%
|
Hennessy BP Energy Fund –
|
||||
Institutional Class (HNRIX)
|
-36.68%
|
-48.31%
|
-16.37%
|
-11.41%
|
S&P 500® Energy Index
|
-30.58%
|
-38.29%
|
-10.78%
|
-9.28%
|
S&P 500® Index
|
-3.16%
|
0.86%
|
9.12%
|
9.66%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30,
2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% TOTAL ASSETS
|
Cabot Oil & Gas Corp.
|
7.14%
|
Pioneer Natural Resources Co.
|
6.93%
|
EOG Resources, Inc.
|
6.88%
|
Marathon Petroleum Corp.
|
6.19%
|
Energy Transfer LP
|
6.05%
|
PDC Energy, Inc.
|
5.95%
|
Concho Resources, Inc.
|
5.56%
|
WPX Energy, Inc.
|
5.27%
|
Enterprise Products Partners LP
|
5.12%
|
MPLX LP
|
4.76%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 77.10%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Downstream – 10.57%
|
||||||||||||
Marathon Petroleum Corp.
|
29,500
|
$
|
946,360
|
6.32
|
%
|
|||||||
Valero Energy Corp.
|
10,050
|
636,668
|
4.25
|
%
|
||||||||
|
1,583,028
|
10.57
|
%
|
|||||||||
Exploration & Production – 44.93%
|
||||||||||||
Cabot Oil & Gas Corp.
|
50,500
|
1,091,810
|
7.29
|
%
|
||||||||
Concho Resources, Inc.
|
14,980
|
849,666
|
5.67
|
%
|
||||||||
Diamondback Energy, Inc.
|
14,030
|
610,866
|
4.08
|
%
|
||||||||
EOG Resources, Inc.
|
22,160
|
1,052,822
|
7.03
|
%
|
||||||||
Parsley Energy, Inc., – Class A
|
37,030
|
349,933
|
2.34
|
%
|
||||||||
PDC Energy, Inc. (a)
|
70,000
|
909,300
|
6.07
|
%
|
||||||||
Pioneer Natural Resources Co.
|
11,860
|
1,059,217
|
7.07
|
%
|
||||||||
WPX Energy, Inc. (a)
|
131,450
|
805,788
|
5.38
|
%
|
||||||||
|
6,729,402
|
44.93
|
%
|
|||||||||
Midstream – 9.98%
|
||||||||||||
Cheniere Energy, Inc. (a)
|
12,350
|
576,621
|
3.85
|
%
|
||||||||
ONEOK, Inc.
|
15,430
|
461,820
|
3.08
|
%
|
||||||||
The Williams Companies, Inc.
|
23,540
|
455,970
|
3.05
|
%
|
||||||||
|
1,494,411
|
9.98
|
%
|
|||||||||
Oil Services – 3.47%
|
||||||||||||
Schlumberger Ltd. (b)
|
30,860
|
519,065
|
3.47
|
%
|
||||||||
Renewable – 5.60%
|
||||||||||||
First Solar, Inc. (a)
|
9,880
|
434,819
|
2.90
|
%
|
||||||||
TPI Composites, Inc. (a)
|
23,050
|
404,066
|
2.70
|
%
|
||||||||
|
838,885
|
5.60
|
%
|
|||||||||
Utility – 2.55%
|
||||||||||||
NextEra Energy, Inc.
|
1,650
|
381,348
|
2.55
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $17,265,028)
|
11,546,139
|
77.10
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
PARTNERSHIPS & TRUSTS – 21.02%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Midstream – 21.02%
|
||||||||||||
Energy Transfer LP
|
110,136
|
$
|
925,142
|
6.18
|
%
|
|||||||
Enterprise Products Partners LP
|
44,629
|
783,685
|
5.23
|
%
|
||||||||
MPLX LP
|
40,194
|
727,511
|
4.86
|
%
|
||||||||
Plains All American Pipeline LP
|
80,620
|
711,875
|
4.75
|
%
|
||||||||
|
3,148,213
|
21.02
|
%
|
|||||||||
Total Partnerships & Trusts
|
||||||||||||
(Cost $5,535,041)
|
3,148,213
|
21.02
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 0.01%
|
||||||||||||
Money Market Funds – 0.01%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (c)
|
969
|
969
|
0.01
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $969)
|
969
|
0.01
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $22,801,038) – 98.13%
|
14,695,321
|
98.13
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 1.87%
|
280,786
|
1.87
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
14,976,107
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
U.S.-traded security of a foreign corporation.
|
(c)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Downstream
|
$
|
1,583,028
|
$
|
—
|
$
|
—
|
$
|
1,583,028
|
||||||||
Exploration & Production
|
6,729,402
|
—
|
—
|
6,729,402
|
||||||||||||
Midstream
|
1,494,411
|
—
|
—
|
1,494,411
|
||||||||||||
Oil Services
|
519,065
|
—
|
—
|
519,065
|
||||||||||||
Renewable
|
838,885
|
—
|
—
|
838,885
|
||||||||||||
Utility
|
381,348
|
—
|
—
|
381,348
|
||||||||||||
Total Common Stocks
|
$
|
11,546,139
|
$
|
—
|
$
|
—
|
$
|
11,546,139
|
||||||||
Partnerships & Trusts
|
||||||||||||||||
Midstream
|
$
|
3,148,213
|
$
|
—
|
$
|
—
|
$
|
3,148,213
|
||||||||
Total Partnerships & Trusts
|
$
|
3,148,213
|
$
|
—
|
$
|
—
|
$
|
3,148,213
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
969
|
$
|
—
|
$
|
—
|
$
|
969
|
||||||||
Total Short-Term Investments
|
$
|
969
|
$
|
—
|
$
|
—
|
$
|
969
|
||||||||
Total Investments
|
$
|
14,695,321
|
$
|
—
|
$
|
—
|
$
|
14,695,321
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $22,801,038)
|
$
|
14,695,321
|
||
Dividends and interest receivable
|
6,061
|
|||
Receivable for fund shares sold
|
529,000
|
|||
Return of capital receivable
|
42,739
|
|||
Prepaid expenses and other assets
|
19,710
|
|||
Total assets
|
15,292,831
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
207,823
|
|||
Payable to advisor
|
5,022
|
|||
Payable to administrator
|
4,122
|
|||
Payable to auditor
|
11,373
|
|||
Accrued distribution fees
|
1,521
|
|||
Accrued service fees
|
243
|
|||
Loans payable
|
75,000
|
|||
Accrued trustees fees
|
6,452
|
|||
Accrued expenses and other payables
|
5,168
|
|||
Total liabilities
|
316,724
|
|||
NET ASSETS
|
$
|
14,976,107
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
60,031,017
|
||
Accumulated deficit
|
(45,054,910
|
)
|
||
Total net assets
|
$
|
14,976,107
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
4,104,220
|
||
Shares issued and outstanding
|
460,679
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
8.91
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
10,871,887
|
||
Shares issued and outstanding
|
1,207,625
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
9.00
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Distributions received from master limited partnerships
|
$
|
294,873
|
||
Return of capital on distributions received
|
(294,873
|
)
|
||
Dividend income from common stock(1)
|
548,704
|
|||
Interest income
|
6,053
|
|||
Total investment income
|
554,757
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
213,331
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
23,534
|
|||
Federal and state registration fees
|
16,827
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,375
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
3,031
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
7,759
|
|||
Trustees’ fees and expenses
|
8,469
|
|||
Reports to shareholders
|
5,647
|
|||
Distribution fees – Investor Class (See Note 5)
|
3,978
|
|||
Interest expense (See Note 7)
|
3,118
|
|||
Service fees – Investor Class (See Note 5)
|
2,652
|
|||
Legal fees
|
904
|
|||
Other expenses
|
3,535
|
|||
Total expenses before reimbursement by advisor
|
317,622
|
|||
Expense reimbursement by advisor – Investor Class (See Note 5)
|
(3,874
|
)
|
||
Expense reimbursement by advisor – Institutional Class (See Note 5)
|
(5,336
|
)
|
||
Net expenses
|
308,412
|
|||
NET INVESTMENT INCOME
|
$
|
246,345
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized loss on investments
|
$
|
(14,462,499
|
)
|
|
Net change in unrealized appreciation/depreciation on investments
|
(1,614,081
|
)
|
||
Net loss on investments
|
(16,076,580
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(15,830,235
|
)
|
(1)
|
Net of foreign taxes withheld and issuance fees of $4,578.
|
HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income (loss)
|
$
|
246,345
|
$
|
(122,873
|
)
|
|||
Net realized loss on investments
|
(14,462,499
|
)
|
(21,032,537
|
)
|
||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(1,614,081
|
)
|
1,070,019
|
|||||
Net decrease in net assets resulting from operations
|
(15,830,235
|
)
|
(20,085,391
|
)
|
||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Institutional Class
|
(79,003
|
)
|
—
|
|||||
Total distributions
|
(79,003
|
)
|
—
|
|||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
1,226,789
|
1,329,654
|
||||||
Proceeds from shares subscribed – Institutional Class
|
1,683,142
|
21,431,696
|
||||||
Dividends reinvested – Institutional Class
|
77,299
|
—
|
||||||
Cost of shares redeemed – Investor Class
|
(1,750,609
|
)
|
(9,317,247
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(21,551,990
|
)
|
(39,120,012
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(20,315,369
|
)
|
(25,675,909
|
)
|
||||
TOTAL DECREASE IN NET ASSETS
|
(36,224,607
|
)
|
(45,761,300
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
51,200,714
|
96,962,014
|
||||||
End of period
|
$
|
14,976,107
|
$
|
51,200,714
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
143,860
|
83,075
|
||||||
Shares sold – Institutional Class
|
174,370
|
1,375,469
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
5,019
|
—
|
||||||
Shares redeemed – Investor Class
|
(168,111
|
)
|
(588,930
|
)
|
||||
Shares redeemed – Institutional Class
|
(2,083,457
|
)
|
(2,524,419
|
)
|
||||
Net decrease in shares outstanding
|
(1,928,319
|
)
|
(1,654,805
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
14.08
|
||
Income from investment operations:
|
||||
Net investment income (loss)(3)
|
0.09
|
|||
Net realized and unrealized gains (losses) on investments
|
(5.26
|
)
|
||
Total from investment operations
|
(5.17
|
)
|
||
Less distributions:
|
||||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
—
|
|||
Net asset value, end of period
|
$
|
8.91
|
||
TOTAL RETURN
|
-36.72
|
%(4)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
4.10
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
2.18
|
%(5)
|
||
After expense reimbursement
|
2.03
|
%(5)
|
||
Ratio of net investment income (loss) to average net assets:
|
||||
Before expense reimbursement
|
1.34
|
%(5)
|
||
After expense reimbursement
|
1.49
|
%(5)
|
||
Portfolio turnover rate(6)
|
41
|
%(4)
|
(1)
|
The period ended October 31, 2018, consists of 11 months due to the Fund’s fiscal year end change from November 30 to October 31, effective October 26, 2018.
|
(2)
|
Fund commenced operations on December 31, 2013.
|
(3)
|
Calculated using the average shares outstanding method.
|
(4)
|
Not annualized.
|
(5)
|
Annualized.
|
(6)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended
|
Period Ended
|
Period Ended
|
||||||||||||||||||||
October 31,
|
October 31,
|
Year Ended November 30,
|
November 30,
|
|||||||||||||||||||
2019
|
2018(1)
|
2017
|
2016
|
2015
|
2014(2)
|
|||||||||||||||||
$
|
18.32
|
$
|
19.47
|
$
|
20.54
|
$
|
16.41
|
$
|
20.45
|
$
|
20.00
|
|||||||||||
(0.07
|
)
|
(0.20
|
)
|
(0.23
|
)
|
(0.15
|
)
|
(0.10
|
)
|
(0.11
|
)
|
|||||||||||
(4.17
|
)
|
(0.95
|
)
|
(0.84
|
)
|
4.28
|
(3.46
|
)
|
0.56
|
|||||||||||||
(4.24
|
)
|
(1.15
|
)
|
(1.07
|
)
|
4.13
|
(3.56
|
)
|
0.45
|
|||||||||||||
—
|
—
|
—
|
—
|
(0.48
|
)
|
—
|
||||||||||||||||
—
|
—
|
—
|
—
|
(0.48
|
)
|
—
|
||||||||||||||||
$
|
14.08
|
$
|
18.32
|
$
|
19.47
|
$
|
20.54
|
$
|
16.41
|
$
|
20.45
|
|||||||||||
-23.14
|
%
|
-5.91
|
%(4)
|
-5.21
|
%
|
25.17
|
%
|
-17.57
|
%
|
2.25
|
%(4)
|
|||||||||||
$
|
6.83
|
$
|
18.16
|
$
|
22.66
|
$
|
19.64
|
$
|
18.72
|
$
|
15.14
|
|||||||||||
1.97
|
%
|
1.82
|
%(5)
|
1.87
|
%
|
1.89
|
%
|
1.87
|
%
|
1.98
|
%(5)
|
|||||||||||
1.97
|
%
|
1.82
|
%(5)
|
1.87
|
%
|
1.89
|
%
|
1.87
|
%
|
1.98
|
%(5)
|
|||||||||||
(0.46
|
)%
|
(1.05
|
)%(5)
|
(1.21
|
)%
|
(0.92
|
)%
|
(0.51
|
)%
|
(0.53
|
)%(5)
|
|||||||||||
(0.46
|
)%
|
(1.05
|
)%(5)
|
(1.21
|
)%
|
(0.92
|
)%
|
(0.51
|
)%
|
(0.53
|
)%(5)
|
|||||||||||
87
|
%
|
72
|
%(4)
|
84
|
%
|
83
|
%
|
79
|
%
|
72
|
%(4)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
14.26
|
||
Income from investment operations:
|
||||
Net investment income (loss)(3)
|
0.09
|
|||
Net realized and unrealized gains (losses) on investments
|
(5.32
|
)
|
||
Total from investment operations
|
(5.23
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.03
|
)
|
||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
(0.03
|
)
|
||
Net asset value, end of period
|
$
|
9.00
|
||
TOTAL RETURN
|
-36.68
|
%(4)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
10.87
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
1.80
|
%(5)
|
||
After expense reimbursement
|
1.77
|
%(5)
|
||
Ratio of net investment income (loss) to average net assets:
|
||||
Before expense reimbursement
|
1.40
|
%(5)
|
||
After expense reimbursement
|
1.43
|
%(5)
|
||
Portfolio turnover rate(6)
|
41
|
%(4)
|
(1)
|
The period ended October 31, 2018, consists of 11 months due to the Fund’s fiscal year end change from November 30 to October 31, effective October 26, 2018.
|
(2)
|
Fund commenced operations on December 31, 2013.
|
(3)
|
Calculated using the average shares outstanding method.
|
(4)
|
Not annualized.
|
(5)
|
Annualized.
|
(6)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended
|
Period Ended
|
Period Ended
|
||||||||||||||||||||
October 31,
|
October 31,
|
Year Ended November 30,
|
November 30,
|
|||||||||||||||||||
2019
|
2018(1)
|
2017
|
2016
|
2015
|
2014(2)
|
|||||||||||||||||
$
|
18.50
|
$
|
19.61
|
$
|
20.64
|
$
|
16.46
|
$
|
20.45
|
$
|
20.00
|
|||||||||||
(0.02
|
)
|
(0.15
|
)
|
(0.19
|
)
|
(0.11
|
)
|
(0.04
|
)
|
(0.06
|
)
|
|||||||||||
(4.22
|
)
|
(0.96
|
)
|
(0.84
|
)
|
4.32
|
(3.47
|
)
|
0.51
|
|||||||||||||
(4.24
|
)
|
(1.11
|
)
|
(1.03
|
)
|
4.21
|
(3.51
|
)
|
0.45
|
|||||||||||||
—
|
—
|
—
|
(0.03
|
)
|
—
|
—
|
||||||||||||||||
—
|
—
|
—
|
—
|
(0.48
|
)
|
—
|
||||||||||||||||
—
|
—
|
—
|
(0.03
|
)
|
(0.48
|
)
|
—
|
|||||||||||||||
$
|
14.26
|
$
|
18.50
|
$
|
19.61
|
$
|
20.64
|
$
|
16.46
|
$
|
20.45
|
|||||||||||
-22.92
|
%
|
-5.66
|
%(4)
|
-4.99
|
%
|
25.61
|
%
|
-17.32
|
%
|
2.25
|
%(4)
|
|||||||||||
$
|
44.37
|
$
|
78.81
|
$
|
122.45
|
$
|
126.92
|
$
|
100.05
|
$
|
68.31
|
|||||||||||
1.66
|
%
|
1.57
|
%(5)
|
1.62
|
%
|
1.60
|
%
|
1.54
|
%
|
1.73
|
%(5)
|
|||||||||||
1.66
|
%
|
1.57
|
%(5)
|
1.62
|
%
|
1.60
|
%
|
1.54
|
%
|
1.73
|
%(5)
|
|||||||||||
(0.12
|
)%
|
(0.79
|
)%(5)
|
(0.98
|
)%
|
(0.65
|
)%
|
(0.20
|
)%
|
(0.28
|
)%(5)
|
|||||||||||
(0.12
|
)%
|
(0.79
|
)%(5)
|
(0.98
|
)%
|
(0.65
|
)%
|
(0.20
|
)%
|
(0.28
|
)%(5)
|
|||||||||||
87
|
%
|
72
|
%(4)
|
84
|
%
|
83
|
%
|
79
|
%
|
72
|
%(4)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute
substantially all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment income/loss
and realized gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the result of the
treatment of wash sales for tax reporting purposes and investments in companies organized as partnerships for tax purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of
Operations as an income tax expense. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize
equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns of
the Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal
and Delaware.
|
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and
accretion of discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly
attributable to its portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on
investments are allocated to each class of shares based on such class’s net assets. Distributions received from the Fund’s investments in master limited partnerships (“MLPs”) generally consist of ordinary income, capital
gains, and return of capital. The Fund records investment income on the ex-date of the distributions. For financial statement purposes, the Fund uses return of capital and income estimates to allocate the dividend income
received. Such estimates are based on historical information available from the MLPs and other industry sources. These estimates may subsequently be revised based on information received from the MLPs after their tax reporting
periods are concluded, as the actual character of these distributions is not known until after the fiscal year end of the Fund.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital gains, if any,
are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original
cost of the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all liabilities
(including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed for trading.
The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
i).
|
Partnership Accounting Policy – To the extent the Fund receives distributions from underlying partnerships in which it invests, the Fund records its pro rata share of income/loss and capital
gains/losses and accordingly adjusts the cost basis of the underlying partnerships for return of capital.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar
instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and
similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable
inputs are unavailable.
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end mutual
funds, partnerships, rights, MLPs, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as
reported by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales
price reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these securities are
actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at the same time the Fund calculates its
NAV because most foreign markets close well before such time. The earlier close of most foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim. In
certain circumstances, it may be determined that a foreign security needs to be fair valued because it appears that the value of the security might have been materially affected by events occurring after the close of the
market in which the security is principally traded, but before the time the Fund calculates its NAV, such as by a development that affects an entire market or region (e.g., a weather-related event) or a potentially global
development (e.g., a terrorist attack that may be expected to have an effect on investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the
ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and U.S.
government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing service
may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
addition, the model may incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued
primarily using dealer quotations. These securities are generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments
with an original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as of
the 61st day prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as
described below. Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
58,501,243
|
|||
Gross tax unrealized appreciation
|
$
|
1,872,760
|
|||
Gross tax unrealized depreciation
|
(9,141,728
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
(7,268,968
|
)
|
||
Undistributed ordinary income
|
$
|
79,002
|
|||
Undistributed long-term capital gains
|
—
|
||||
Total distributable earnings
|
$
|
79,002
|
|||
Other accumulated gain/(loss)
|
$
|
(21,955,706
|
)
|
||
Total accumulated gain/(loss)
|
$
|
(29,145,672
|
)
|
$ 9,883,167
|
Unlimited Long-Term
|
|
12,072,539
|
Unlimited Short-Term
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
79,003
|
$
|
—
|
|||||
Long-term capital gain
|
—
|
—
|
|||||||
$
|
79,003
|
$
|
—
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 632.80
|
$ 8.24
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,014.77
|
$10.17
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 633.20
|
$ 7.19
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,016.06
|
$ 8.87
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 2.03% for Investor Class shares or 1.77% for Institutional Class shares, as applicable, multiplied by the average account value over the
period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory and sub-advisory agreements and the relevant
factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory and sub-advisory agreements and also referenced the documents that had been
provided to help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor and the Sub-Advisor and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
Summaries of the key terms of the advisory and sub-advisory agreements;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(9)
|
A completed questionnaire from the Sub-Advisor;
|
|
(10)
|
A summary of the Sub-Advisor’s questionnaire and relevant information from the Sub-Advisor’s Form ADV Parts I and II;
|
|
(11)
|
The Sub-Advisor’s Code of Ethics; and
|
|
(12)
|
Financial information of the Sub-Advisor.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
The nature and quality of the advisory services provided by the Advisor and the Sub-Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
|
(4)
|
The costs and profitability of the Fund to the Advisor and the Sub-Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor and the Sub-Advisor from serving as an investment advisor to the Fund (other than the advisory and sub-advisory fees).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and
noted that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the
nature and extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor oversees the Sub-Advisor for the Fund, and the Sub-Advisor acts as the portfolio manager for the Fund.
|
||
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Sub-Advisor and
the Fund’s other service providers, as feasible, conducts on-site visits to the Sub-Advisor and the Fund’s other service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and
fixed expense ratios, evaluates insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance
training, reviews reports provided by service providers, and maintains books and records.
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(f)
|
The Advisor oversees the selection and continued employment of the Sub-Advisor, reviews the Fund’s investment performance, and monitors the Sub-Advisor’s adherence to the Fund’s investment
objectives, policies, and restrictions.
|
||
(g)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal
services to the Fund.
|
||
(h)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(i)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
||
(j)
|
For each annual report of the Fund, the Advisor reviews the written summary prepared by the Sub-Advisor of the Fund’s performance during the most recent 12-month period.
|
||
(k)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The
Advisor participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee.
The Advisor compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(l)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading
oversight personnel, as well as management executives.
|
||
(m)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(n)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and
education.
|
(2)
|
The Trustees considered the services identified below that are provided by the Sub-Advisor:
|
(a)
|
The Sub-Advisor acts as the portfolio manager for the Fund. In this capacity, the Sub-Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and
restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Sub-Advisor ensures that its compliance program includes policies and procedures relevant to the Fund and the Sub-Advisor’s duties as a portfolio manager to the Fund.
|
||
(c)
|
For each annual report of the Fund, the Sub-Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(d)
|
The Sub-Advisor provides a quarterly compliance certification to the Board regarding trading and allocation practices, supervisory matters, the Sub-Advisor’s compliance program (including its code of
ethics), compliance with the Fund’s policies, and general firm updates.
|
(3)
|
The Trustees considered the distinction between the services performed by the Advisor and the Sub-Advisor. The Trustees noted that the management of the Fund, including the oversight of the
Sub-Advisor, involves more comprehensive and substantive duties than the duties of the Sub-Advisor. Specifically, the Trustees considered the lists of services identified above and concluded that the services performed by the
Advisor for the Fund require a higher level of service and oversight than the services performed by the Sub-Advisor. Based on this determination, the Trustees concluded that the differential in advisory fees between the
Advisor and the Sub-Advisor is reasonable.
|
|
(4)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the
Fund to various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor and the Sub-Advisor manage the Fund in a manner materially consistent with its stated investment
objective and style. The Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory and sub-advisory agreements.
|
|
(5)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As part
of the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials
considered at the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded that
they are reasonable and warranted continuation of the advisory and sub-advisory agreements.
|
|
(6)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over
the prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets
of the Fund increase. For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts,
the Advisor’s significant marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain circumstances. The
Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the future as circumstances changed.
|
|
(7)
|
The Trustees considered the profitability of the Advisor and the Sub-Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and
revenues that the Advisor has put into
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor and the Sub-Advisor are reasonable and not excessive when compared to profitability guidelines set
forth in relevant court cases.
|
||
(8)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and its
shareholders.
|
|
(9)
|
The Trustees considered any benefits to the Advisor and the Sub-Advisor from serving as an advisor to the Fund (other than the advisory and sub-advisory fees). The Trustees noted that the Advisor and
the Sub-Advisor may derive ancillary benefits from, by way of example, their association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute
portfolio trades for the Fund. The Trustees determined that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The
Trustees concluded that any additional benefits realized by the Advisor and the Sub-Advisor from their relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ findings that (i) the
research, analytical, statistical, and other information and services provided by brokers are merely supplemental to the Advisor’s and the Sub-Advisor’s own efforts in the performance of their duties under the advisory and
sub-advisory agreements and (ii) although the Sub-Advisor could derive benefits from the conversion of Fund shareholders into separate account clients, the Fund also could benefit from potential institutional shareholders who
might choose to invest in the Fund.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
8
|
Statement of Operations
|
9
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
26
|
Proxy Voting Policy and Proxy Voting Records
|
28
|
Availability of Quarterly Portfolio Schedule
|
28
|
Federal Tax Distribution Information
|
28
|
Important Notice Regarding Delivery of Shareholder Documents
|
28
|
Electronic Delivery
|
28
|
Board Approval of Investment Advisory Agreements
|
29
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Since Inception
|
|
Months(1)
|
Year
|
Years
|
(12/31/13)
|
|
Hennessy BP Midstream Fund –
|
||||
Investor Class (HMSFX)
|
-31.87%
|
-38.37%
|
-14.32%
|
-9.52%
|
Hennessy BP Midstream Fund –
|
||||
Institutional Class (HMSIX)
|
-31.77%
|
-38.23%
|
-14.10%
|
-9.29%
|
Alerian MLP Index
|
-34.48%
|
-40.79%
|
-15.03%
|
-11.33%
|
S&P 500® Index
|
-3.16%
|
0.86%
|
9.12%
|
9.66%
|
Expense ratios: |
Gross 1.89%, Net 1.76%(2) (Investor Class);
|
|
Gross 1.56%, Net 1.51%(2) (Institutional Class)
|
(1)
|
Periods of less than one year are not annualized.
|
(2)
|
The Fund’s investment advisor has contractually agreed to limit expenses until February 28, 2021.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30,
2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% TOTAL ASSETS
|
Energy Transfer LP
|
15.22%
|
The Williams Companies, Inc.
|
12.41%
|
Enterprise Products Partners LP
|
12.13%
|
MPLX LP
|
11.16%
|
Phillips 66 Partners LP
|
7.96%
|
Kinder Morgan, Inc.
|
7.70%
|
Magellan Midstream Partners LP
|
7.19%
|
Shell Midstream Partners LP
|
7.16%
|
Plains All American Pipeline LP
|
5.46%
|
ONEOK, Inc.
|
4.61%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 27.36%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Gathering & Processing – 2.58%
|
||||||||||||
Targa Resources Corp.
|
60,100
|
$
|
778,896
|
2.58
|
%
|
|||||||
Natural Gas/NGL Transportation – 24.78%
|
||||||||||||
Kinder Morgan, Inc.
|
153,090
|
2,331,561
|
7.72
|
%
|
||||||||
ONEOK, Inc.
|
46,626
|
1,395,516
|
4.62
|
%
|
||||||||
The Williams Companies, Inc.
|
193,952
|
3,756,850
|
12.44
|
%
|
||||||||
|
7,483,927
|
24.78
|
%
|
|||||||||
Total Common Stocks
|
||||||||||||
(Cost $10,746,986)
|
8,262,823
|
27.36
|
%
|
|||||||||
|
||||||||||||
PARTNERSHIPS & TRUSTS – 71.73%
|
||||||||||||
Crude Oil & Refined Products – 40.94%
|
||||||||||||
Magellan Midstream Partners LP
|
52,900
|
2,175,777
|
7.20
|
%
|
||||||||
MPLX LP
|
186,749
|
3,380,157
|
11.19
|
%
|
||||||||
Phillips 66 Partners LP
|
56,619
|
2,409,138
|
7.98
|
%
|
||||||||
Plains All American Pipeline LP
|
187,326
|
1,654,089
|
5.48
|
%
|
||||||||
Shell Midstream Partners LP
|
147,564
|
2,167,715
|
7.18
|
%
|
||||||||
TC PipeLines LP
|
17,200
|
576,200
|
1.91
|
%
|
||||||||
|
12,363,076
|
40.94
|
%
|
|||||||||
Gathering & Processing – 1.07%
|
||||||||||||
Crestwood Equity Partners LP
|
29,400
|
321,636
|
1.07
|
%
|
||||||||
Natural Gas/NGL Transportation – 29.72%
|
||||||||||||
Cheniere Energy Partners LP
|
20,600
|
694,838
|
2.30
|
%
|
||||||||
Energy Transfer LP
|
548,700
|
4,609,080
|
15.26
|
%
|
||||||||
Enterprise Products Partners LP
|
209,100
|
3,671,796
|
12.16
|
%
|
||||||||
|
8,975,714
|
29.72
|
%
|
|||||||||
Total Partnerships & Trusts
|
||||||||||||
(Cost $26,528,861)
|
21,660,426
|
71.73
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 0.31%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 0.31%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (a)
|
94,786
|
$
|
94,786
|
0.31
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $94,786)
|
94,786
|
0.31
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $37,370,633) – 99.40%
|
30,018,035
|
99.40
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.60%
|
182,110
|
0.60
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
30,200,145
|
100.00
|
%
|
(a)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Gathering & Processing
|
$
|
778,896
|
$
|
—
|
$
|
—
|
$
|
778,896
|
||||||||
Natural Gas/NGL Transportation
|
7,483,927
|
—
|
—
|
7,483,927
|
||||||||||||
Total Common Stocks
|
$
|
8,262,823
|
$
|
—
|
$
|
—
|
$
|
8,262,823
|
||||||||
Partnerships & Trusts
|
||||||||||||||||
Crude Oil & Refined Products
|
$
|
12,363,076
|
$
|
—
|
$
|
—
|
$
|
12,363,076
|
||||||||
Gathering & Processing
|
321,636
|
—
|
—
|
321,636
|
||||||||||||
Natural Gas/NGL Transportation
|
8,975,714
|
—
|
—
|
8,975,714
|
||||||||||||
Total Partnerships & Trusts
|
$
|
21,660,426
|
$
|
—
|
$
|
—
|
$
|
21,660,426
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
94,786
|
$
|
—
|
$
|
—
|
$
|
94,786
|
||||||||
Total Short-Term Investments
|
$
|
94,786
|
$
|
—
|
$
|
—
|
$
|
94,786
|
||||||||
Total Investments
|
$
|
30,018,035
|
$
|
—
|
$
|
—
|
$
|
30,018,035
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $37,370,633)
|
$
|
30,018,035
|
||
Dividends and interest receivable
|
24,361
|
|||
Receivable for fund shares sold
|
4,163
|
|||
Return of capital receivable
|
212,775
|
|||
Prepaid expenses and other assets
|
19,659
|
|||
Total assets
|
30,278,993
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
9,226
|
|||
Payable to advisor
|
12,188
|
|||
Payable to administrator
|
7,558
|
|||
Payable to auditor
|
20,385
|
|||
Accrued distribution fees
|
1,644
|
|||
Accrued service fees
|
440
|
|||
Accrued trustees fees
|
6,482
|
|||
Accrued expenses and other payables
|
20,925
|
|||
Total liabilities
|
78,848
|
|||
NET ASSETS
|
$
|
30,200,145
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
58,232,910
|
||
Accumulated deficit
|
(28,032,765
|
)
|
||
Total net assets
|
$
|
30,200,145
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
6,434,828
|
||
Shares issued and outstanding
|
912,721
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
7.05
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
23,765,317
|
||
Shares issued and outstanding
|
3,306,513
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
7.19
|
HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Distributions received from master limited partnerships
|
$
|
1,183,453
|
||
Return of capital on distributions received
|
(1,171,451
|
)
|
||
Dividend income
|
178,340
|
|||
Interest income
|
1,036
|
|||
Total investment income
|
191,378
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
185,484
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
22,957
|
|||
Audit fees
|
20,384
|
|||
Federal and state registration fees
|
18,183
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
5,237
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
12,488
|
|||
Compliance expense (See Note 5)
|
13,461
|
|||
Trustees’ fees and expenses
|
8,379
|
|||
Distribution fees – Investor Class (See Note 5)
|
5,768
|
|||
Reports to shareholders
|
4,372
|
|||
Service fees – Investor Class (See Note 5)
|
3,846
|
|||
Interest expense (See Note 7)
|
2,103
|
|||
Legal fees
|
810
|
|||
Other expenses
|
3,169
|
|||
Total expenses before reimbursement by advisor
|
306,641
|
|||
Expense reimbursement by advisor – Investor Class (See Note 5)
|
(10,825
|
)
|
||
Expense reimbursement by advisor – Institutional Class (See Note 5)
|
(31,901
|
)
|
||
Net expenses
|
263,915
|
|||
NET INVESTMENT LOSS
|
$
|
(72,537
|
)
|
|
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized loss on investments
|
$
|
(2,911,545
|
)
|
|
Net change in unrealized appreciation/depreciation on investments
|
(6,518,796
|
)
|
||
Net loss on investments
|
(9,430,341
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(9,502,878
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment loss
|
$
|
(72,537
|
)
|
$
|
(416,883
|
)
|
||
Net realized loss on investments
|
(2,911,545
|
)
|
(7,333,710
|
)
|
||||
Net change in unrealized
|
||||||||
appreciation/deprecation on investments
|
(6,518,796
|
)
|
4,667,798
|
|||||
Net decrease in net assets resulting from operations
|
(9,502,878
|
)
|
(3,082,795
|
)
|
||||
DISTRIBUTIONS TO SHAREHOLDERS FROM:
|
||||||||
Return of capital – Investor Class
|
(419,969
|
)
|
(1,434,045
|
)
|
||||
Return of capital – Institutional Class
|
(1,341,299
|
)
|
(3,424,486
|
)
|
||||
Total distributions
|
(1,761,268
|
)
|
(4,858,531
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
921,441
|
4,058,933
|
||||||
Proceeds from shares subscribed – Institutional Class
|
7,965,785
|
12,131,475
|
||||||
Dividends reinvested – Investor Class
|
409,410
|
1,406,032
|
||||||
Dividends reinvested – Institutional Class
|
1,305,052
|
3,358,312
|
||||||
Cost of shares redeemed – Investor Class
|
(1,129,753
|
)
|
(14,125,321
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(8,984,281
|
)
|
(39,908,798
|
)
|
||||
Net increase (decrease) in net assets derived
|
||||||||
from capital share transactions
|
487,654
|
(33,079,367
|
)
|
|||||
TOTAL DECREASE IN NET ASSETS
|
(10,776,492
|
)
|
(41,020,693
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
40,976,637
|
81,997,330
|
||||||
End of period
|
$
|
30,200,145
|
$
|
40,976,637
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
153,528
|
324,948
|
||||||
Shares sold – Institutional Class
|
1,335,251
|
1,014,731
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
41,838
|
116,121
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
130,871
|
273,922
|
||||||
Shares redeemed – Investor Class
|
(126,119
|
)
|
(1,182,757
|
)
|
||||
Shares redeemed – Institutional Class
|
(1,025,998
|
)
|
(3,247,364
|
)
|
||||
Net increase (decrease) in shares outstanding
|
509,371
|
(2,700,399
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
10.90
|
||
Income from investment operations:
|
||||
Net investment loss(3)(4)
|
(0.03
|
)
|
||
Net realized and unrealized gains (losses) on investments
|
(3.31
|
)
|
||
Total from investment operations
|
(3.34
|
)
|
||
Less distributions:
|
||||
Dividends from return of capital
|
(0.51
|
)
|
||
Total distributions
|
(0.51
|
)
|
||
Net asset value, end of period
|
$
|
7.05
|
||
TOTAL RETURN
|
-31.87
|
%(5)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
6.43
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
2.04
|
%(6)
|
||
After expense reimbursement
|
1.76
|
%(6)
|
||
Ratio of net investment loss to average net assets:
|
||||
Before expense reimbursement(4)
|
(0.88
|
)%(6)
|
||
After expense reimbursement(4)
|
(0.60
|
)%(6)
|
||
Portfolio turnover rate(8)
|
22
|
%(5)
|
(1)
|
The period ended October 31, 2018, consists of 11 months due to the Fund’s fiscal year end change from November 30 to October 31, effective October 26, 2018.
|
(2)
|
Fund commenced operations on December 31, 2013.
|
(3)
|
Calculated using the average shares outstanding method.
|
(4)
|
Includes current and deferred tax benefit/expense from net investment income/loss only.
|
(5)
|
Not annualized.
|
(6)
|
Annualized.
|
(7)
|
Includes an estimated deferred tax expense/benefit of -1.32% for fiscal year 2015 or 3.98% for the period ended November 30, 2014. See Note 2.b in the Notes to the Financial Statements.
|
(8)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended
|
Period Ended
|
Period Ended
|
||||||||||||||||||||
October 31,
|
October 31,
|
Year Ended November 30,
|
November 30,
|
|||||||||||||||||||
2019
|
2018(1)
|
2017
|
2016
|
2015
|
2014(2)
|
|||||||||||||||||
$
|
12.66
|
$
|
14.51
|
$
|
16.54
|
$
|
15.45
|
$
|
22.25
|
$
|
20.00
|
|||||||||||
(0.10
|
)
|
(0.16
|
)
|
(0.22
|
)
|
(0.17
|
)
|
(0.20
|
)
|
(0.20
|
)
|
|||||||||||
(0.63
|
)
|
(0.66
|
)
|
(0.78
|
)
|
2.29
|
(5.60
|
)
|
2.87
|
|||||||||||||
(0.73
|
)
|
(0.82
|
)
|
(1.00
|
)
|
2.12
|
(5.80
|
)
|
2.67
|
|||||||||||||
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.00
|
)
|
(0.42
|
)
|
|||||||||||
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.00
|
)
|
(0.42
|
)
|
|||||||||||
$
|
10.90
|
$
|
12.66
|
$
|
14.51
|
$
|
16.54
|
$
|
15.45
|
$
|
22.25
|
|||||||||||
-6.28
|
%
|
-6.15
|
%(5)
|
-6.49
|
%
|
14.78
|
%
|
-27.17
|
%
|
13.37
|
%(5)
|
|||||||||||
$
|
9.20
|
$
|
20.07
|
$
|
16.86
|
$
|
13.43
|
$
|
8.76
|
$
|
7.17
|
|||||||||||
1.89
|
%
|
1.86
|
%(6)
|
1.91
|
%
|
2.21
|
%
|
1.38
|
%(7)
|
8.02
|
%(6)(7)
|
|||||||||||
1.76
|
%
|
1.78
|
%(6)
|
1.77
|
%
|
1.74
|
%
|
0.42
|
%(7)
|
5.73
|
%(6)(7)
|
|||||||||||
(0.92
|
)%
|
(1.34
|
)%(6)
|
(1.50
|
)%
|
(1.60
|
)%
|
(1.97
|
)%
|
(3.28
|
)%(6)
|
|||||||||||
(0.79
|
)%
|
(1.26
|
)%(6)
|
(1.36
|
)%
|
(1.13
|
)%
|
(1.01
|
)%
|
(0.99
|
)%(6)
|
|||||||||||
41
|
%
|
64
|
%(5)
|
63
|
%
|
139
|
%
|
96
|
%
|
70
|
%(5)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
11.09
|
||
Income from investment operations:
|
||||
Net investment loss(3)(4)
|
(0.02
|
)
|
||
Net realized and unrealized gains (losses) on investments
|
(3.37
|
)
|
||
Total from investment operations
|
(3.39
|
)
|
||
Less distributions:
|
||||
Dividends from return of capital
|
(0.51
|
)
|
||
Total distributions
|
(0.51
|
)
|
||
Net asset value, end of period
|
$
|
7.19
|
||
TOTAL RETURN
|
-31.77
|
%(5)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
23.77
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
1.76
|
%(6)
|
||
After expense reimbursement
|
1.51
|
%(6)
|
||
Ratio of net investment loss to average net assets:
|
||||
Before expense reimbursement(4)
|
(0.63
|
)%(6)
|
||
After expense reimbursement(4)
|
(0.38
|
)%(6)
|
||
Portfolio turnover rate(8)
|
22
|
%(5)
|
(1)
|
The period ended October 31, 2018, consists of 11 months due to the Fund’s fiscal year end change from November 30 to October 31, effective October 26, 2018.
|
(2)
|
Fund commenced operations on December 31, 2013.
|
(3)
|
Calculated using the average shares outstanding method.
|
(4)
|
Includes current and deferred tax benefit/expense from net investment income/loss only.
|
(5)
|
Not annualized.
|
(6)
|
Annualized.
|
(7)
|
Includes an estimated deferred tax expense/benefit of -1.32% for fiscal year 2015 or 3.98% for the period ended November 30, 2014. See Note 2.b in the Notes to the Financial Statements.
|
(8)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended
|
Period Ended
|
Period Ended
|
||||||||||||||||||||
October 31,
|
October 31,
|
Year Ended November 30,
|
November 30,
|
|||||||||||||||||||
2019
|
2018(1)
|
2017
|
2016
|
2015
|
2014(2)
|
|||||||||||||||||
$
|
12.83
|
$
|
14.66
|
$
|
16.66
|
$
|
15.53
|
$
|
22.28
|
$
|
20.00
|
|||||||||||
(0.09
|
)
|
(0.14
|
)
|
(0.18
|
)
|
(0.12
|
)
|
(0.14
|
)
|
(0.15
|
)
|
|||||||||||
(0.62
|
)
|
(0.66
|
)
|
(0.79
|
)
|
2.28
|
(5.61
|
)
|
2.87
|
|||||||||||||
(0.71
|
)
|
(0.80
|
)
|
(0.97
|
)
|
2.16
|
(5.75
|
)
|
2.72
|
|||||||||||||
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.00
|
)
|
(0.44
|
)
|
|||||||||||
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.00
|
)
|
(0.44
|
)
|
|||||||||||
$
|
11.09
|
$
|
12.83
|
$
|
14.66
|
$
|
16.66
|
$
|
15.53
|
$
|
22.28
|
|||||||||||
-6.10
|
%
|
-5.94
|
%(5)
|
-6.25
|
%
|
14.97
|
%
|
-26.90
|
%
|
13.60
|
%(5)
|
|||||||||||
$
|
31.78
|
$
|
61.92
|
$
|
82.59
|
$
|
33.22
|
$
|
15.72
|
$
|
7.79
|
|||||||||||
1.56
|
%
|
1.58
|
%(6)
|
1.66
|
%
|
1.95
|
%
|
1.10
|
%(7)
|
7.77
|
%(6)(7)
|
|||||||||||
1.51
|
%
|
1.52
|
%(6)
|
1.52
|
%
|
1.48
|
%
|
0.18
|
%(7)
|
5.48
|
%(6)(7)
|
|||||||||||
(0.76
|
)%
|
(1.15
|
)%(6)
|
(1.28
|
)%
|
(1.28
|
)%
|
(1.63
|
)%
|
(3.03
|
)%(6)
|
|||||||||||
(0.71
|
)%
|
(1.09
|
)%(6)
|
(1.14
|
)%
|
(0.81
|
)%
|
(0.71
|
)%
|
(0.74
|
)%(6)
|
|||||||||||
41
|
%
|
64
|
%(5)
|
63
|
%
|
139
|
%
|
96
|
%
|
70
|
%(5)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – The Fund is taxed as a corporation and is obligated to pay U.S. federal and state income tax on its taxable income. Currently, the maximum marginal regular federal income tax
rate for a corporation is 21%. The Fund invests a substantial portion of its assets in master limited partnerships (“MLPs”), which are treated as partnerships for federal income tax purposes. As a limited partner in MLPs,
the Fund reports its allocable share of each MLP’s taxable income in computing its own taxable income.
|
In calculating the Fund’s daily net asset value, the Fund will account for its deferred tax asset and liability balances. In
accordance with GAAP, the Fund will accrue a deferred income tax liability balance for its future tax liability associated with the capital appreciation of its investments and the distributions received by the Fund on equity
securities of MLPs considered to be return of capital and for any net operating gains. This accrual will be based on the current effective federal income tax rate plus an estimated state income tax rate.
|
|
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and
liabilities for financial reporting and tax purposes. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that at least some portion of a deferred income tax asset
will not be
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
realized. From time to time as new information becomes available, the Fund will modify its estimates or assumption regarding the deferred tax liabilities or assets. As of April 30, 2020, the Fund
has placed a full valuation allowance on its deferred tax assets.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns
of the Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability
resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund files U.S. federal income tax returns and income tax returns in various states.
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and
accretion of discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly
attributable to its portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on
investments are allocated to each class of shares based on such class’s net assets. Distributions received from the Fund’s investments in MLPs generally consist of ordinary income, capital gains, and return of capital. The
Fund records investment income on the ex-date of the distributions. For financial statement purposes, the Fund uses return of capital and income estimates to allocate the dividend income received. Such estimates are based on
historical information available from the MLPs and other industry sources. These estimates may subsequently be revised based on information received from the MLPs after their tax reporting periods are concluded, as the
actual character of these distributions is not known until after the fiscal year end of the Fund.
|
e).
|
Distributions to Shareholders – The Fund typically makes cash distributions to its shareholders quarterly at the end of the months of February, May, August, and November. Due to the tax treatment
of the Fund’s allocations and distributions from MLPs, a significant portion of the Fund’s distributions to shareholders typically is treated as return of capital to shareholders for U.S. federal income tax purposes
(i.e., as distributions in excess of the Fund’s current and accumulated earnings and profits as described below). However, no assurance can be given in this regard; just as the Fund’s corporate income tax liability can
fluctuate materially from year to year, the extent to which the Fund is able to make return-of-capital distributions also can vary materially from year to year depending on a number of different factors, including the
composition of the Fund’s portfolio, the level of allocations of net income and other tax items for the Fund from its underlying MLP investments during a particular taxable year, the length of time the Fund has owned the MLP
equity securities in its portfolio, and the extent to which the Fund disposes of MLP equity securities during a particular year, including, if necessary, to meet Fund shareholder redemption requests.
|
In general, a distribution will constitute a return of capital to a shareholder rather than a dividend to the extent such
distribution exceeds the Fund’s current and accumulated earnings and profits. The portion of any distribution treated as a return of capital will constitute a tax-free return of capital to the extent of the shareholder’s
basis in its Fund shares and thereafter generally will be taxable to the shareholder as a capital gain. Any such distribution, in turn, will result in a reduction in a shareholder’s basis in the Fund’s shares (but not below
zero) to the extent of the
|
HENNESSY FUNDS
|
1-800-966-4354
|
return of capital and in the shareholder’s recognizing more gain or less loss (that is, increase of a shareholder’s tax liability) when the shareholder later sells shares of the Fund. To maintain a
more stable distribution rate, the Fund may distribute less or more than the entire amount of cash it receives from its investments in a particular period. Any undistributed cash would be available to supplement future
distributions, and until distributed would add to the Fund’s net asset value. Correspondingly, such amounts, once distributed, will be deducted from the Fund’s net asset value. In addition, the Fund may opt not to make
distributions in quarters in which the Fund believes that a distribution could cause adverse tax consequences to shareholders, including when the Fund believes that a distribution may not constitute a tax-free return of
capital as described above.
|
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original
cost of the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all
liabilities (including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is closed
for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
i).
|
Partnership Accounting Policy – To the extent the Fund receives distributions from underlying partnerships in which it invests, the Fund records its pro rata share of income/loss and capital
gains/losses and accordingly adjusts the cost basis of the underlying partnerships for return of capital.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar
instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and
similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when
observable inputs are unavailable.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end mutual
funds, partnerships, rights, MLPs, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as
reported by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales
price reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these securities are
actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at the same time the Fund calculates its
NAV because most foreign markets close well before such time. The earlier close of most foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim.
In certain circumstances, it may be determined that a foreign security needs to be fair valued because it appears that the value of the security might have been materially affected by events occurring after the close of the
market in which the security is principally traded, but before the time the Fund calculates its NAV, such as by a development that affects an entire market or region (e.g., a weather-related event) or a potentially global
development (e.g., a terrorist attack that may be expected to have an effect on investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at the
ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and
U.S. government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing
service may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the
model may incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These
securities are generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments
with an original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as
of the 61st day prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined, as
described below. Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Fiscal Year
|
Fiscal Year
|
||||
2022
|
2023
|
Total
|
|||
Investor Class
|
$22,275
|
$10,825
|
$33,100
|
||
Institutional Class
|
$22,981
|
$31,901
|
$54,882
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
32,325,904
|
|||
Gross tax unrealized appreciation
|
$
|
1,815,318
|
|||
Gross tax unrealized depreciation
|
(4,123,187
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
(2,307,869
|
)
|
Deferred tax assets (liabilities):
|
|||||
Net operating losses
|
$
|
555,357
|
|||
Capital loss
|
5,558,759
|
||||
Unrealized (gain) loss on investments
|
537,837
|
||||
Total deferred tax assets, net
|
6,651,953
|
||||
Valuation allowance
|
(6,651,953
|
)
|
|||
Net
|
$
|
—
|
HENNESSY FUNDS
|
1-800-966-4354
|
Amount
|
Expiration
|
||||
$
|
1,511,860
|
11/30/2020
|
|||
2,137,300
|
11/30/2021
|
||||
6,130,957
|
10/31/2023
|
||||
10,009,278
|
10/31/2024
|
||||
4,295,357
|
10/31/2025
|
Amount
|
Expiration
|
||||
$
|
233,560
|
11/30/2037
|
|||
1,863,618
|
Indefinite
|
Tax expense (benefit) at statutory rates
|
$
|
(1,995,605
|
)
|
||
State income tax expense, net of federal benefit
|
(188,912
|
)
|
|||
Tax expense (benefit) on permanent items(1)
|
(7,933
|
)
|
|||
Tax expense (benefit) due to change in effective state rates
|
—
|
||||
Total current tax expense (benefit)
|
—
|
||||
Change in valuation allowance
|
2,192,450
|
||||
Total tax expense
|
$
|
—
|
(1) Permanent items consist of dividends-received deductions.
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
—
|
$
|
—
|
|||||
Long-term capital gain
|
—
|
—
|
|||||||
Return of capital
|
1,761,268
|
4,858,531
|
|||||||
$
|
1,761,268
|
$
|
4,858,531
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 681.30
|
$7.36
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,016.11
|
$8.82
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 682.30
|
$6.32
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.35
|
$7.57
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.76% for Investor Class shares or 1.51% for Institutional Class shares, as applicable, multiplied by the average account value over the
period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory and sub-advisory agreements and the relevant
factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory and sub-advisory agreements and also referenced the documents that had
been provided to help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor and the Sub-Advisor and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
Summaries of the key terms of the advisory and sub-advisory agreements;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(9)
|
A completed questionnaire from the Sub-Advisor;
|
|
(10)
|
A summary of the Sub-Advisor’s questionnaire and relevant information from the Sub-Advisor’s Form ADV Parts I and II;
|
|
(11)
|
The Sub-Advisor’s Code of Ethics; and
|
|
(12)
|
Financial information of the Sub-Advisor.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
The nature and quality of the advisory services provided by the Advisor and the Sub-Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
|
(4)
|
The costs and profitability of the Fund to the Advisor and the Sub-Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor and the Sub-Advisor from serving as an investment advisor to the Fund (other than the advisory and sub-advisory fees).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund and
noted that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and that the
nature and extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor oversees the Sub-Advisor for the Fund, and the Sub-Advisor acts as the portfolio manager for the Fund.
|
||
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Sub-Advisor and
the Fund’s other service providers, as feasible, conducts on-site visits to the Sub-Advisor and the Fund’s other service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments,
and fixed expense ratios, evaluates insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee
compliance training, reviews reports provided by service providers, and maintains books and records.
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(f)
|
The Advisor oversees the selection and continued employment of the Sub-Advisor, reviews the Fund’s investment performance, and monitors the Sub-Advisor’s adherence to the Fund’s investment
objectives, policies, and restrictions.
|
||
(g)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and
legal services to the Fund.
|
||
(h)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(i)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
||
(j)
|
For each annual report of the Fund, the Advisor reviews the written summary prepared by the Sub-Advisor of the Fund’s performance during the most recent 12-month period.
|
||
(k)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The
Advisor participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction fee.
The Advisor compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(l)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and trading
oversight personnel, as well as management executives.
|
||
(m)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(n)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and
education.
|
(2)
|
The Trustees considered the services identified below that are provided by the Sub-Advisor:
|
(a)
|
The Sub-Advisor acts as the portfolio manager for the Fund. In this capacity, the Sub-Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and
restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Sub-Advisor ensures that its compliance program includes policies and procedures relevant to the Fund and the Sub-Advisor’s duties as a portfolio manager to the Fund.
|
||
(c)
|
For each annual report of the Fund, the Sub-Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(d)
|
The Sub-Advisor provides a quarterly compliance certification to the Board regarding trading and allocation practices, supervisory matters, the Sub-Advisor’s compliance program (including its code
of ethics), compliance with the Fund’s policies, and general firm updates.
|
(3)
|
The Trustees considered the distinction between the services performed by the Advisor and the Sub-Advisor. The Trustees noted that the management of the Fund, including the oversight of the
Sub-Advisor, involves more comprehensive and substantive duties than the duties of the Sub-Advisor. Specifically, the Trustees considered the lists of services identified above and concluded that the services performed by
the Advisor for the Fund require a higher level of service and oversight than the services performed by the Sub-Advisor. Based on this determination, the Trustees concluded that the differential in advisory fees between the
Advisor and the Sub-Advisor is reasonable.
|
|
(4)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the
Fund to various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor and the Sub-Advisor manage the Fund in a manner materially consistent with its stated investment
objective and style. The Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory and sub-advisory agreements.
|
|
(5)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As
part of the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the materials
considered at the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and concluded
that they are reasonable and warranted continuation of the advisory and sub-advisory agreements.
|
|
(6)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined over
the prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets
of the Fund increase. For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts,
the Advisor’s significant marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain circumstances.
The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the future as circumstances changed.
|
|
(7)
|
The Trustees considered the profitability of the Advisor and the Sub-Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and
revenues that the Advisor has put into
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor and the Sub-Advisor are reasonable and not excessive when compared to profitability guidelines set
forth in relevant court cases.
|
||
(8)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and
its shareholders.
|
|
(9)
|
The Trustees considered any benefits to the Advisor and the Sub-Advisor from serving as an advisor to the Fund (other than the advisory and sub-advisory fees). The Trustees noted that the Advisor
and the Sub-Advisor may derive ancillary benefits from, by way of example, their association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute
portfolio trades for the Fund. The Trustees determined that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The
Trustees concluded that any additional benefits realized by the Advisor and the Sub-Advisor from their relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ findings that (i) the
research, analytical, statistical, and other information and services provided by brokers are merely supplemental to the Advisor’s and the Sub-Advisor’s own efforts in the performance of their duties under the advisory and
sub-advisory agreements and (ii) although the Sub-Advisor could derive benefits from the conversion of Fund shareholders into separate account clients, the Fund also could benefit from potential institutional shareholders
who might choose to invest in the Fund.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
9
|
Statement of Operations
|
10
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
23
|
Proxy Voting Policy and Proxy Voting Records
|
25
|
Availability of Quarterly Portfolio Schedule
|
25
|
Federal Tax Distribution Information
|
25
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Gas Utility Fund –
|
||||
Investor Class (GASFX)
|
-12.56%
|
-9.47%
|
1.80%
|
9.13%
|
Hennessy Gas Utility Fund –
|
||||
Institutional Class (HGASX)(2)
|
-12.42%
|
-9.22%
|
2.01%
|
9.24%
|
AGA Stock Index
|
-12.27%
|
-8.44%
|
3.06%
|
10.05%
|
S&P 500® Index
|
-3.16%
|
0.86%
|
9.12%
|
11.69%
|
(1)
|
Periods of less than one year are not annualized.
|
(2)
|
The inception date of Institutional Class shares is March 1, 2017. Performance shown prior to the inception of Institutional Class shares reflects the performance of Investor Class shares and
includes expenses that are not applicable to, and are higher than, those of Institutional Class shares.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April
30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Cheniere Energy, Inc.
|
5.48%
|
Enbridge, Inc.
|
5.24%
|
Kinder Morgan, Inc.
|
5.16%
|
National Grid PLC – ADR
|
5.14%
|
Atmos Energy Corp.
|
4.93%
|
Dominion Energy, Inc.
|
4.91%
|
Sempra Energy
|
4.83%
|
TC Energy Corp.
|
4.81%
|
The Southern Co.
|
4.81%
|
WEC Energy Group, Inc.
|
4.81%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 98.73%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Energy – 20.85%
|
||||||||||||
Cheniere Energy, Inc. (a)
|
751,917
|
$
|
35,107,005
|
5.48
|
%
|
|||||||
Enbridge, Inc. (b)
|
1,094,765
|
33,587,390
|
5.24
|
%
|
||||||||
Kinder Morgan, Inc.
|
2,174,101
|
33,111,558
|
5.16
|
%
|
||||||||
TC Energy Corp. (b)
|
665,353
|
30,845,765
|
4.81
|
%
|
||||||||
Tellurian, Inc. (a)
|
717,690
|
1,019,120
|
0.16
|
%
|
||||||||
|
133,670,838
|
20.85
|
%
|
|||||||||
Financials – 2.68%
|
||||||||||||
Berkshire Hathaway, Inc., Class A (a)
|
61
|
17,183,700
|
2.68
|
%
|
||||||||
Utilities – 75.20%
|
||||||||||||
Algonquin Power & Utilities Corp. (b)
|
215,664
|
2,986,946
|
0.47
|
%
|
||||||||
ALLETE, Inc.
|
775
|
44,609
|
0.01
|
%
|
||||||||
Ameren Corp.
|
85,440
|
6,215,760
|
0.97
|
%
|
||||||||
Atmos Energy Corp.
|
310,086
|
31,619,469
|
4.93
|
%
|
||||||||
Avangrid, Inc.
|
150,900
|
6,488,700
|
1.01
|
%
|
||||||||
Avista Corp.
|
47,772
|
2,056,107
|
0.32
|
%
|
||||||||
Black Hills Corp.
|
120,147
|
7,441,905
|
1.16
|
%
|
||||||||
Centerpoint Energy, Inc.
|
474,828
|
8,086,321
|
1.26
|
%
|
||||||||
Chesapeake Utilities Corp.
|
45,858
|
4,030,001
|
0.63
|
%
|
||||||||
CMS Energy Corp.
|
332,998
|
19,010,856
|
2.97
|
%
|
||||||||
Consolidated Edison, Inc.
|
240,836
|
18,977,877
|
2.96
|
%
|
||||||||
Corning Natural Gas Holding Corp.
|
11,099
|
193,622
|
0.03
|
%
|
||||||||
Dominion Energy, Inc.
|
407,877
|
31,459,553
|
4.91
|
%
|
||||||||
DTE Energy Co.
|
163,904
|
17,003,401
|
2.65
|
%
|
||||||||
Duke Energy Corp.
|
226,687
|
19,191,321
|
2.99
|
%
|
||||||||
Entergy Corp.
|
6,360
|
607,444
|
0.10
|
%
|
||||||||
Eversource Energy
|
85,175
|
6,873,623
|
1.07
|
%
|
||||||||
Exelon Corp.
|
196,831
|
7,298,494
|
1.14
|
%
|
||||||||
Fortis, Inc. (b)
|
269,276
|
10,434,445
|
1.63
|
%
|
||||||||
MDU Resources Group, Inc.
|
315,807
|
7,093,025
|
1.11
|
%
|
||||||||
MGE Energy, Inc.
|
25,929
|
1,676,569
|
0.26
|
%
|
||||||||
National Fuel Gas Co.
|
196,924
|
8,073,884
|
1.26
|
%
|
||||||||
National Grid PLC – ADR (b)
|
562,444
|
32,936,721
|
5.14
|
%
|
||||||||
New Jersey Resources Corp.
|
226,034
|
7,635,429
|
1.19
|
%
|
||||||||
NiSource, Inc.
|
873,181
|
21,925,575
|
3.42
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Utilities (Continued)
|
||||||||||||
Northwest Natural Holding Co.
|
109,503
|
$
|
7,128,645
|
1.11
|
%
|
|||||||
NorthWestern Corp.
|
36,998
|
2,134,415
|
0.33
|
%
|
||||||||
ONE Gas, Inc.
|
191,875
|
15,294,356
|
2.39
|
%
|
||||||||
PG&E Corp. (a)
|
512,449
|
5,452,457
|
0.85
|
%
|
||||||||
PPL Corp.
|
248,319
|
6,312,269
|
0.98
|
%
|
||||||||
Public Service Enterprise Group, Inc.
|
373,690
|
18,949,820
|
2.96
|
%
|
||||||||
RGC Resources, Inc.
|
34,254
|
851,897
|
0.13
|
%
|
||||||||
Sempra Energy
|
250,240
|
30,992,224
|
4.83
|
%
|
||||||||
South Jersey Industries, Inc.
|
296,671
|
8,481,824
|
1.32
|
%
|
||||||||
Southwest Gas Holdings, Inc.
|
160,817
|
12,189,929
|
1.90
|
%
|
||||||||
Spire, Inc.
|
151,491
|
11,052,783
|
1.72
|
%
|
||||||||
The Southern Co.
|
544,200
|
30,872,466
|
4.81
|
%
|
||||||||
UGI Corp.
|
208,352
|
6,288,063
|
0.98
|
%
|
||||||||
Unitil Corp.
|
32,098
|
1,614,850
|
0.25
|
%
|
||||||||
WEC Energy Group, Inc.
|
340,940
|
30,872,117
|
4.81
|
%
|
||||||||
Xcel Energy, Inc.
|
225,699
|
14,345,428
|
2.24
|
%
|
||||||||
|
482,195,200
|
75.20
|
%
|
|||||||||
Total Common Stocks
|
||||||||||||
(Cost $360,328,687)
|
633,049,738
|
98.73
|
%
|
|||||||||
|
||||||||||||
PARTNERSHIPS – 0.54%
|
||||||||||||
Energy – 0.54%
|
||||||||||||
Plains GP Holdings LP, Class A
|
379,055
|
3,483,516
|
0.54
|
%
|
||||||||
|
||||||||||||
Total Partnerships
|
||||||||||||
(Cost $7,457,592)
|
3,483,516
|
0.54
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS – 0.76%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 0.76%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (c)
|
4,863,321
|
$
|
4,863,321
|
0.76
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $4,863,321)
|
4,863,321
|
0.76
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $372,649,600) – 100.03%
|
641,396,575
|
100.03
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.03)%
|
(168,412
|
)
|
(0.03
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
641,228,163
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
U.S.-traded security of a foreign corporation.
|
(c)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Energy
|
$
|
133,670,838
|
$
|
—
|
$
|
—
|
$
|
133,670,838
|
||||||||
Financials
|
17,183,700
|
—
|
—
|
17,183,700
|
||||||||||||
Utilities
|
482,001,578
|
193,622
|
—
|
482,195,200
|
||||||||||||
Total Common Stocks
|
$
|
632,856,116
|
$
|
193,622
|
$
|
—
|
$
|
633,049,738
|
||||||||
Partnerships
|
||||||||||||||||
Energy
|
$
|
3,483,516
|
$
|
—
|
$
|
—
|
$
|
3,483,516
|
||||||||
Total Partnerships
|
$
|
3,483,516
|
$
|
—
|
$
|
—
|
$
|
3,483,516
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
4,863,321
|
$
|
—
|
$
|
—
|
$
|
4,863,321
|
||||||||
Total Short-Term Investments
|
$
|
4,863,321
|
$
|
—
|
$
|
—
|
$
|
4,863,321
|
||||||||
Total Investments
|
$
|
641,202,953
|
$
|
193,622
|
$
|
—
|
$
|
641,396,575
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $372,649,600)
|
$
|
641,396,575
|
||
Cash
|
375,834
|
|||
Dividends and interest receivable
|
242,468
|
|||
Receivable for fund shares sold
|
114,001
|
|||
Return of capital receivable
|
68,230
|
|||
Prepaid expenses and other assets
|
36,161
|
|||
Total assets
|
642,233,269
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
338,932
|
|||
Payable to advisor
|
209,645
|
|||
Payable to sub-transfer agents
|
161,173
|
|||
Payable to administrator
|
107,712
|
|||
Payable to auditor
|
11,378
|
|||
Accrued distribution fees
|
94,662
|
|||
Accrued service fees
|
45,707
|
|||
Accrued expenses and other payables
|
35,897
|
|||
Total liabilities
|
1,005,106
|
|||
NET ASSETS
|
$
|
641,228,163
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
404,152,347
|
||
Total distributable earnings
|
237,075,816
|
|||
Total net assets
|
$
|
641,228,163
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
559,153,218
|
||
Shares issued and outstanding
|
22,957,819
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
24.36
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
82,074,945
|
||
Shares issued and outstanding
|
3,378,660
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
24.29
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
12,226,890
|
||
Interest income
|
24,850
|
|||
Total investment income
|
12,251,740
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
1,551,797
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
671,732
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
53,585
|
|||
Distribution fees – Investor Class (See Note 5)
|
508,280
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
395,679
|
|||
Service fees – Investor Class (See Note 5)
|
338,854
|
|||
Reports to shareholders
|
34,406
|
|||
Federal and state registration fees
|
23,828
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Trustees’ fees and expenses
|
12,811
|
|||
Audit fees
|
11,375
|
|||
Interest expense (See Note 7)
|
7,184
|
|||
Legal fees
|
4,299
|
|||
Other expenses
|
191,581
|
|||
Total expenses
|
3,818,873
|
|||
NET INVESTMENT INCOME
|
$
|
8,432,867
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
25,308,279
|
||
Net change in unrealized appreciation/depreciation on investments
|
(135,548,373
|
)
|
||
Net loss on investments
|
(110,240,094
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(101,807,227
|
)
|
(1)
|
Net of foreign taxes withheld and issuance fees of $372,054.
|
HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
8,432,867
|
$
|
18,043,168
|
||||
Net realized gain on investments
|
25,308,279
|
63,413,446
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(135,548,373
|
)
|
46,797,092
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(101,807,227
|
)
|
128,253,706
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(42,983,904
|
)
|
(87,242,469
|
)
|
||||
Distributable earnings – Institutional Class
|
(6,343,991
|
)
|
(10,746,642
|
)
|
||||
Total distributions
|
(49,327,895
|
)
|
(97,989,111
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
9,680,042
|
27,141,120
|
||||||
Proceeds from shares subscribed – Institutional Class
|
10,794,545
|
29,423,854
|
||||||
Dividends reinvested – Investor Class
|
40,982,164
|
83,615,102
|
||||||
Dividends reinvested – Institutional Class
|
5,640,190
|
9,491,172
|
||||||
Cost of shares redeemed – Investor Class
|
(123,629,129
|
)
|
(198,693,830
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(22,394,216
|
)
|
(42,887,435
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(78,926,404
|
)
|
(91,910,017
|
)
|
||||
TOTAL DECREASE IN NET ASSETS
|
(230,061,526
|
)
|
(61,645,422
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
871,289,689
|
932,935,111
|
||||||
End of period
|
$
|
641,228,163
|
$
|
871,289,689
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
364,553
|
951,713
|
||||||
Shares sold – Institutional Class
|
401,576
|
1,020,364
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
1,515,277
|
3,050,796
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
209,392
|
346,698
|
||||||
Shares redeemed – Investor Class
|
(4,701,423
|
)
|
(6,995,506
|
)
|
||||
Shares redeemed – Institutional Class
|
(857,916
|
)
|
(1,502,291
|
)
|
||||
Net decrease in shares outstanding
|
(3,068,541
|
)
|
(3,128,226
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
29.64
|
||
Income from investment operations:
|
||||
Net investment income
|
0.29
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(3.86
|
)
|
||
Total from investment operations
|
(3.57
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.27
|
)
|
||
Dividends from net realized gains
|
(1.44
|
)
|
||
Total distributions
|
(1.71
|
)
|
||
Net asset value, end of period
|
$
|
24.36
|
||
TOTAL RETURN
|
-12.56
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
559.15
|
||
Ratio of expenses to average net assets
|
1.03
|
%(3)
|
||
Ratio of net investment income to average net assets
|
2.13
|
%(3)
|
||
Portfolio turnover rate(4)
|
7
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
28.68
|
$
|
30.35
|
$
|
28.57
|
$
|
27.69
|
$
|
31.30
|
|||||||||
0.56
|
(1)
|
0.65
|
0.70
|
0.62
|
0.69
|
|||||||||||||
3.50
|
(1.52
|
)
|
2.20
|
1.58
|
(2.69
|
)
|
||||||||||||
4.06
|
(0.87
|
)
|
2.90
|
2.20
|
(2.00
|
)
|
||||||||||||
(0.62
|
)
|
(0.64
|
)
|
(0.72
|
)
|
(0.69
|
)
|
(0.70
|
)
|
|||||||||
(2.48
|
)
|
(0.16
|
)
|
(0.40
|
)
|
(0.63
|
)
|
(0.91
|
)
|
|||||||||
(3.10
|
)
|
(0.80
|
)
|
(1.12
|
)
|
(1.32
|
)
|
(1.61
|
)
|
|||||||||
$
|
29.64
|
$
|
28.68
|
$
|
30.35
|
$
|
28.57
|
$
|
27.69
|
|||||||||
15.28
|
%
|
-2.86
|
%
|
10.39
|
%
|
8.52
|
%
|
-6.59
|
%
|
|||||||||
$
|
764.10
|
$
|
825.18
|
$
|
1,306.70
|
$
|
1,454.93
|
$
|
1,649.21
|
|||||||||
1.00
|
%
|
1.01
|
%
|
1.01
|
%
|
1.01
|
%
|
0.93
|
%
|
|||||||||
1.98
|
%
|
2.18
|
%
|
2.34
|
%
|
2.25
|
%
|
2.33
|
%
|
|||||||||
12
|
%
|
14
|
%
|
18
|
%
|
38
|
%
|
37
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
29.56
|
||
Income from investment operations:
|
||||
Net investment income
|
0.34
|
(2)
|
||
Net realized and unrealized gains (losses) on investments
|
(3.86
|
)
|
||
Total from investment operations
|
(3.52
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.31
|
)
|
||
Dividends from net realized gains
|
(1.44
|
)
|
||
Total distributions
|
(1.75
|
)
|
||
Net asset value, end of period
|
$
|
24.29
|
||
TOTAL RETURN
|
-12.42
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
82.07
|
||
Ratio of expenses to average net assets
|
0.69
|
%(5)
|
||
Ratio of net investment income to average net assets
|
2.47
|
%(5)
|
||
Portfolio turnover rate(6)
|
7
|
%(3)
|
(1)
|
Institutional Class shares commenced operations on March 1, 2017.
|
(2)
|
Calculated using the average shares outstanding method.
|
(3)
|
Not annualized.
|
(4)
|
Actual return from inception date of March 1, 2017, to the year end of October 31, 2017.
|
(5)
|
Annualized.
|
(6)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Period Ended
|
||||||||||||||||||
Year Ended October 31,
|
October 31,
|
|||||||||||||||||
2019
|
2018
|
2017(1)
|
||||||||||||||||
$
|
28.65
|
$
|
30.32
|
$
|
29.68
|
|
|
|||||||||||
0.64
|
(2)
|
0.71
|
0.62
|
|||||||||||||||
3.50
|
(1.47
|
)
|
0.72
|
|||||||||||||||
4.14
|
(0.76
|
)
|
1.34
|
|||||||||||||||
(0.73
|
)
|
(0.75
|
)
|
(0.70
|
)
|
|||||||||||||
(2.50
|
)
|
(0.16
|
)
|
—
|
||||||||||||||
(3.23
|
)
|
(0.91
|
)
|
(0.70
|
)
|
|||||||||||||
$
|
29.56
|
$
|
28.65
|
$
|
30.32
|
|||||||||||||
15.63
|
%
|
-2.51
|
%
|
4.56
|
%(3)(4)
|
|||||||||||||
$
|
107.18
|
$
|
107.75
|
$
|
84.62
|
|||||||||||||
0.69
|
%
|
0.65
|
%
|
0.64
|
%(5)
|
|||||||||||||
2.25
|
%
|
2.47
|
%
|
1.23
|
%(5)
|
|||||||||||||
12
|
%
|
14
|
%
|
18
|
%(3)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute
substantially all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment
income/loss and realized gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily the
result of the treatment of wash sales for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense. Distributions
from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax purposes and
designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax returns
of the Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax liability
resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and
accretion of discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly
attributable to its portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on
investments are allocated to each class of shares based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid at the end of each calendar quarter. Distributions of net realized capital gains,
if any, are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the original
cost of the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all
liabilities (including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is
closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or similar
instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default rates, and
similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when
observable inputs are unavailable.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end mutual
funds, partnerships, rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as reported
by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last sales price
reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these securities are
actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at the same time the Fund calculates
its NAV because most foreign markets close well before such time. The earlier close of most foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the
interim. In certain circumstances, it may be determined that a foreign security needs to be fair valued because it appears that the value of the security might have been materially affected by events occurring after the
close of the market in which the security is principally traded, but before the time the Fund calculates its NAV, such as by a development that affects an entire market or region (e.g., a weather-related event) or a
potentially global development (e.g., a terrorist attack that may be expected to have an effect on investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at
the ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and
U.S. government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing
service may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition, the
model may incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations. These
securities are generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt investments
with an original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then the values as
of the 61st day prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would be determined,
as described below. Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
524,740,694
|
|||
Gross tax unrealized appreciation
|
$
|
421,155,305
|
|||
Gross tax unrealized depreciation
|
(74,581,422
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
346,573,883
|
|||
Undistributed ordinary income
|
$
|
—
|
|||
Undistributed long-term capital gains
|
41,637,055
|
||||
Total distributable earnings
|
$
|
41,637,055
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
388,210,938
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
7,690,808
|
$
|
18,139,310
|
|||||
Long-term capital gain
|
41,637,087
|
79,849,801
|
|||||||
$
|
49,327,895
|
$
|
97,989,111
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS/EXPENSE EXAMPLE
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 874.40
|
$4.80
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.74
|
$5.17
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 875.80
|
$3.22
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,021.43
|
$3.47
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.03% for Investor Class shares or 0.69% for Institutional Class shares, as applicable, multiplied by the average account value over
the period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors for
consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been provided to
help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
|
(1)
|
The nature and quality of the advisory services provided by the Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(4)
|
The costs and profitability of the Fund to the Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund
and noted that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and
that the nature and extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and
restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s
service providers, as feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios, evaluates
insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports
provided by service providers, and maintains books and records.
|
||
(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and
legal services to the Fund.
|
||
(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The
Advisor participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction
fee. The Advisor compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and
trading oversight personnel, as well as management executives.
|
||
(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and
education.
|
(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of the
Fund to various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated investment objective and
style. The Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As
part of the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the
materials considered at the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds and
concluded that they are reasonable and warranted continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had declined
over the prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the
assets of the Fund increase. For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service
contracts, the Advisor’s significant marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
circumstances. The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of
scale in the future as circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues that the
Advisor has put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines set forth in relevant court
cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund and
its shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary benefits from,
by way of example, its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund. The Trustees determined
that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any additional benefits
realized by the Advisor from its relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical, and other information and services
provided by brokers are merely supplemental to the Advisor’s own efforts in the performance of its duties under the advisory agreement.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
8
|
Statement of Operations
|
9
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
24
|
Proxy Voting Policy and Proxy Voting Records
|
26
|
Availability of Quarterly Portfolio Schedule
|
26
|
Federal Tax Distribution Information
|
26
|
Important Notice Regarding Delivery of Shareholder Documents
|
26
|
Electronic Delivery
|
27
|
Board Approval of Investment Advisory Agreements
|
28
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Tadahiro Fujimura
|
Masakazu Takeda
|
Portfolio Manager,
|
Portfolio Manager,
|
Hennessy Japan Small Cap Fund;
|
Hennessy Japan Fund;
|
Chief Investment Officer
|
Fund Manager
|
SPARX Asset Management Co., Ltd.
|
SPARX Asset Management Co., Ltd.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Japan Fund –
|
||||
Investor Class (HJPNX)
|
-7.98%
|
-4.99%
|
7.77%
|
10.92%
|
Hennessy Japan Fund –
|
||||
Institutional Class (HJPIX)
|
-7.80%
|
-4.64%
|
8.18%
|
11.27%
|
Russell/Nomura
|
||||
Total MarketTM Index
|
-9.13%
|
-2.54%
|
2.95%
|
5.10%
|
Tokyo Price Index (TOPIX)
|
-9.96%
|
-3.11%
|
2.87%
|
4.96%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April
30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Keyence Corp.
|
6.32%
|
Unicharm Corp.
|
5.85%
|
Rohto Pharmaceutical Co., Ltd.
|
5.84%
|
Daikin Industries, Ltd.
|
5.81%
|
Sony Corp.
|
5.77%
|
Terumo Corp.
|
5.69%
|
Kao Corp.
|
5.56%
|
Shimano, Inc.
|
5.50%
|
Recruit Holdings Co., Ltd.
|
5.45%
|
SoftBank Group Co.
|
5.40%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 98.67%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 5.40%
|
||||||||||||
SoftBank Group Co.
|
748,200
|
$
|
32,069,827
|
5.40
|
%
|
|||||||
Consumer Discretionary – 22.27%
|
||||||||||||
Asics Corp.
|
891,700
|
8,455,425
|
1.42
|
%
|
||||||||
Fast Retailing Co., Ltd.
|
55,200
|
26,178,435
|
4.41
|
%
|
||||||||
Nitori Holdings Co., Ltd.
|
178,300
|
27,329,064
|
4.60
|
%
|
||||||||
Ryohin Keikaku Co., Ltd.
|
284,100
|
3,381,217
|
0.57
|
%
|
||||||||
Shimano, Inc.
|
221,700
|
32,668,760
|
5.50
|
%
|
||||||||
Sony Corp.
|
532,000
|
34,236,388
|
5.77
|
%
|
||||||||
|
132,249,289
|
22.27
|
%
|
|||||||||
Consumer Staples – 19.21%
|
||||||||||||
Ariake Japan Co., Ltd.
|
202,200
|
11,660,696
|
1.96
|
%
|
||||||||
Kao Corp.
|
427,900
|
32,998,084
|
5.56
|
%
|
||||||||
Rohto Pharmaceutical Co., Ltd.
|
1,191,100
|
34,655,759
|
5.84
|
%
|
||||||||
Unicharm Corp.
|
943,400
|
34,767,625
|
5.85
|
%
|
||||||||
|
114,082,164
|
19.21
|
%
|
|||||||||
Financials – 2.96%
|
||||||||||||
Anicom Holdings, Inc.
|
475,200
|
17,543,053
|
2.96
|
%
|
||||||||
Health Care – 10.78%
|
||||||||||||
Takeda Pharmaceutical Co., Ltd.
|
839,000
|
30,255,559
|
5.09
|
%
|
||||||||
Terumo Corp.
|
1,017,600
|
33,766,631
|
5.69
|
%
|
||||||||
|
64,022,190
|
10.78
|
%
|
|||||||||
Industrials – 29.44%
|
||||||||||||
Daikin Industries, Ltd.
|
268,900
|
34,508,201
|
5.81
|
%
|
||||||||
Kubota Corp.
|
1,883,000
|
23,384,407
|
3.94
|
%
|
||||||||
Misumi Group, Inc.
|
1,288,600
|
30,608,589
|
5.16
|
%
|
||||||||
Mitsubishi Corp.
|
1,136,700
|
24,107,123
|
4.06
|
%
|
||||||||
Nidec Corp.
|
512,400
|
29,828,899
|
5.02
|
%
|
||||||||
Recruit Holdings Co., Ltd.
|
1,108,600
|
32,339,189
|
5.45
|
%
|
||||||||
|
174,776,408
|
29.44
|
%
|
|||||||||
Information Technology – 6.32%
|
||||||||||||
Keyence Corp.
|
105,100
|
37,521,976
|
6.32
|
%
|
||||||||
Materials – 0.58%
|
||||||||||||
Fuji Seal International, Inc.
|
197,300
|
3,424,921
|
0.58
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Real Estate – 1.71%
|
||||||||||||
Relo Group, Inc.
|
469,100
|
$
|
10,161,822
|
1.71
|
%
|
|||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $486,135,416)
|
585,851,650
|
98.67
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 0.83%
|
||||||||||||
Money Market Funds – 0.83%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (a)
|
4,949,578
|
4,949,578
|
0.83
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $4,949,578)
|
4,949,578
|
0.83
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $491,084,994) – 99.50%
|
590,801,228
|
99.50
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.50%
|
2,951,022
|
0.50
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
593,752,250
|
100.00
|
%
|
(a)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
—
|
$
|
32,069,827
|
$
|
—
|
$
|
32,069,827
|
||||||||
Consumer Discretionary
|
—
|
132,249,289
|
—
|
132,249,289
|
||||||||||||
Consumer Staples
|
—
|
114,082,164
|
—
|
114,082,164
|
||||||||||||
Financials
|
—
|
17,543,053
|
—
|
17,543,053
|
||||||||||||
Health Care
|
—
|
64,022,190
|
—
|
64,022,190
|
||||||||||||
Industrials
|
—
|
174,776,408
|
—
|
174,776,408
|
||||||||||||
Information Technology
|
—
|
37,521,976
|
—
|
37,521,976
|
||||||||||||
Materials
|
—
|
3,424,921
|
—
|
3,424,921
|
||||||||||||
Real Estate
|
—
|
10,161,822
|
—
|
10,161,822
|
||||||||||||
Total Common Stocks
|
$
|
—
|
$
|
585,851,650
|
$
|
—
|
$
|
585,851,650
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
4,949,578
|
$
|
—
|
$
|
—
|
$
|
4,949,578
|
||||||||
Total Short-Term Investments
|
$
|
4,949,578
|
$
|
—
|
$
|
—
|
$
|
4,949,578
|
||||||||
Total Investments
|
$
|
4,949,578
|
$
|
585,851,650
|
$
|
—
|
$
|
590,801,228
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $491,084,994)
|
$
|
590,801,228
|
||
Dividends and interest receivable
|
2,982,515
|
|||
Receivable for fund shares sold
|
2,003,317
|
|||
Receivable for securities sold
|
2,235,796
|
|||
Prepaid expenses and other assets
|
27,371
|
|||
Total assets
|
598,050,227
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
3,669,594
|
|||
Payable to advisor
|
380,948
|
|||
Payable to administrator
|
99,689
|
|||
Payable to auditor
|
10,902
|
|||
Accrued distribution fees
|
9,230
|
|||
Accrued service fees
|
5,482
|
|||
Accrued trustees fees
|
709
|
|||
Accrued expenses and other payables
|
121,423
|
|||
Total liabilities
|
4,297,977
|
|||
NET ASSETS
|
$
|
593,752,250
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
521,005,003
|
||
Total distributable earnings
|
72,747,247
|
|||
Total net assets
|
$
|
593,752,250
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
67,900,849
|
||
Shares issued and outstanding
|
1,987,455
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
34.16
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
525,851,401
|
||
Shares issued and outstanding
|
14,932,137
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
35.22
|
HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
4,427,275
|
||
Interest income
|
96,037
|
|||
Total investment income
|
4,523,312
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
2,688,638
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
91,253
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
293,410
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
342,312
|
|||
Distribution fees – Investor Class (See Note 5)
|
60,556
|
|||
Service fees – Investor Class (See Note 5)
|
40,371
|
|||
Federal and state registration fees
|
39,967
|
|||
Reports to shareholders
|
23,107
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Trustees’ fees and expenses
|
11,722
|
|||
Audit fees
|
10,905
|
|||
Interest expense (See Note 7)
|
3,993
|
|||
Legal fees
|
3,113
|
|||
Other expenses
|
28,372
|
|||
Total expenses
|
3,651,181
|
|||
NET INVESTMENT INCOME
|
$
|
872,131
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized loss on investments
|
$
|
(27,645,838
|
)
|
|
Net change in unrealized appreciation/depreciation on investments
|
(34,481,264
|
)
|
||
Net loss on investments
|
(62,127,102
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(61,254,971
|
)
|
(1)
|
Net of foreign taxes withheld of $491,919.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
872,131
|
$
|
3,262,016
|
||||
Net realized gain (loss) on investments
|
(27,645,838
|
)
|
941,773
|
|||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(34,481,264
|
)
|
64,311,703
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(61,254,971
|
)
|
68,515,492
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(117,482
|
)
|
(35,216
|
)
|
||||
Distributable earnings – Institutional Class
|
(3,035,474
|
)
|
(1,309,459
|
)
|
||||
Total distributions
|
(3,152,956
|
)
|
(1,344,675
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
12,177,276
|
35,974,622
|
||||||
Proceeds from shares subscribed – Institutional Class
|
116,260,913
|
382,329,976
|
||||||
Dividends reinvested – Investor Class
|
113,374
|
34,287
|
||||||
Dividends reinvested – Institutional Class
|
2,957,410
|
1,275,785
|
||||||
Cost of shares redeemed – Investor Class
|
(24,668,042
|
)
|
(60,746,390
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(147,315,933
|
)
|
(230,489,467
|
)
|
||||
Net increase (decrease) in net assets derived
|
||||||||
from capital share transactions
|
(40,475,002
|
)
|
128,378,813
|
|||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(104,882,929
|
)
|
195,549,630
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
698,635,179
|
503,085,549
|
||||||
End of period
|
$
|
593,752,250
|
$
|
698,635,179
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
345,812
|
1,043,125
|
||||||
Shares sold – Institutional Class
|
3,246,679
|
10,907,846
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
2,962
|
1,053
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
75,037
|
38,071
|
||||||
Shares redeemed – Investor Class
|
(708,034
|
)
|
(1,770,416
|
)
|
||||
Shares redeemed – Institutional Class
|
(4,323,602
|
)
|
(6,541,834
|
)
|
||||
Net increase (decrease) in shares outstanding
|
(1,361,146
|
)
|
3,677,845
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
37.17
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
(0.02
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.94
|
)
|
||
Total from investment operations
|
(2.96
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.02
|
)
|
||
Dividends from net realized gains
|
(0.03
|
)
|
||
Total distributions
|
(0.05
|
)
|
||
Net asset value, end of period
|
$
|
34.16
|
||
TOTAL RETURN
|
-7.98
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
67.90
|
||
Ratio of expenses to average net assets
|
1.42
|
%(4)
|
||
Ratio of net investment income (loss) to average net assets
|
(0.09
|
)%(4)
|
||
Portfolio turnover rate(5)
|
8
|
%(3)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Amount is between $(0.005) and $0.005.
|
(3)
|
Not annualized.
|
(4)
|
Annualized.
|
(5)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
33.63
|
$
|
32.75
|
$
|
27.81
|
$
|
24.07
|
$
|
21.77
|
|||||||||
0.05
|
(1)
|
(0.00
|
)(2)
|
(0.03
|
)
|
(0.11
|
)
|
(0.10
|
)
|
|||||||||
3.50
|
0.89
|
4.97
|
3.85
|
2.40
|
||||||||||||||
3.55
|
0.89
|
4.94
|
3.74
|
2.30
|
||||||||||||||
(0.01
|
)
|
(0.01
|
)
|
—
|
—
|
—
|
||||||||||||
—
|
—
|
—
|
—
|
—
|
||||||||||||||
(0.01
|
)
|
(0.01
|
)
|
—
|
—
|
—
|
||||||||||||
$
|
37.17
|
$
|
33.63
|
$
|
32.75
|
$
|
27.81
|
$
|
24.07
|
|||||||||
10.60
|
%
|
2.70
|
%
|
17.76
|
%
|
15.54
|
%
|
10.56
|
%
|
|||||||||
$
|
87.22
|
$
|
103.33
|
$
|
84.44
|
$
|
61.85
|
$
|
61.56
|
|||||||||
1.43
|
%
|
1.43
|
%
|
1.46
|
%
|
1.50
|
%
|
1.53
|
%
|
|||||||||
0.14
|
%
|
(0.02
|
)%
|
(0.15
|
)%
|
(0.38
|
)%
|
(0.44
|
)%
|
|||||||||
9
|
%
|
1
|
%
|
0
|
%
|
5
|
%
|
21
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
38.37
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.06
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(3.02
|
)
|
||
Total from investment operations
|
(2.96
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.16
|
)
|
||
Dividends from net realized gains
|
(0.03
|
)
|
||
Total distributions
|
(0.19
|
)
|
||
Net asset value, end of period
|
$
|
35.22
|
||
TOTAL RETURN
|
-7.80
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
525.85
|
||
Ratio of expenses to average net assets
|
1.04
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
0.31
|
%(3)
|
||
Portfolio turnover rate(4)
|
8
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
34.67
|
$
|
33.64
|
$
|
28.45
|
$
|
24.55
|
$
|
22.15
|
|||||||||
0.21
|
(1)
|
0.15
|
0.03
|
(0.01
|
)
|
(0.02
|
)
|
|||||||||||
3.60
|
0.91
|
5.16
|
3.91
|
2.42
|
||||||||||||||
3.81
|
1.06
|
5.19
|
3.90
|
2.40
|
||||||||||||||
(0.11
|
)
|
(0.03
|
)
|
—
|
—
|
—
|
||||||||||||
—
|
—
|
—
|
—
|
—
|
||||||||||||||
(0.11
|
)
|
(0.03
|
)
|
—
|
—
|
—
|
||||||||||||
$
|
38.37
|
$
|
34.67
|
$
|
33.64
|
$
|
28.45
|
$
|
24.55
|
|||||||||
11.02
|
%
|
3.14
|
%
|
18.24
|
%
|
15.89
|
%
|
10.84
|
%
|
|||||||||
$
|
611.41
|
$
|
399.76
|
$
|
177.42
|
$
|
67.78
|
$
|
54.13
|
|||||||||
1.03
|
%
|
1.01
|
%
|
1.05
|
%
|
1.17
|
%
|
1.27
|
%
|
|||||||||
0.59
|
%
|
0.49
|
%
|
0.30
|
%
|
(0.03
|
)%
|
(0.08
|
)%
|
|||||||||
9
|
%
|
1
|
%
|
0
|
%
|
5
|
%
|
21
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute
substantially all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment
income/loss and realized gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily
the result of the treatment of wash sales for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense.
Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax
purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax
returns of the Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax
liability resulting from unrecognized tax benefits relating to uncertain income tax
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and
accretion of discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are directly
attributable to its portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains/losses on
investments are allocated to each class of shares based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital gains, if
any, are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the
original cost of the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all
liabilities (including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is
closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
i).
|
Foreign Currency – Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales
of investments and income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The Fund does not isolate the portion of the results of
operations resulting from fluctuations in foreign exchange rates on investments from fluctuations resulting from changes in the market prices of securities held. Such fluctuations are included with the net realized and
unrealized gain/loss on investments. Foreign investments present additional risks due to currency fluctuations, economic and political factors, lower liquidity, government regulations, differences in accounting
standards, and other factors.
|
j).
|
REIT Equity Securities – The Fund may invest in the equity securities of real estate investment trusts (“REITs”). Distributions received from REITs may be classified as dividends, capital
gains, or return of capital. Investments in REITs may require the Fund to accrue and distribute income not yet received. To generate sufficient cash to make the requisite distributions, the Fund may be required to sell
securities in its portfolio (including when it is not advantageous to do so) that it otherwise would have continued to hold. At other times, investments in a REIT may result in the
|
HENNESSY FUNDS
|
1-800-966-4354
|
Fund’s receipt of cash in excess of the REIT’s earnings. If the Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal
income tax purposes. Dividends received by the Fund from a REIT generally will not constitute qualified dividend income and will not qualify for the dividends-received deduction.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or
similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default
rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when
observable inputs are unavailable.
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end mutual
funds, partnerships, rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price as
reported by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the last
sales price reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent these
securities are actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at the same time the
Fund calculates its NAV because most foreign markets close well before such time. The earlier close of most foreign markets gives rise to the possibility that significant events, including broad market moves, may have
occurred in the interim. In certain circumstances, it may be determined that a foreign security needs to be fair valued because it appears that the value of the security might have been materially affected by events
occurring after the close of the market in which the security is principally traded, but before the time the Fund calculates its NAV, such as by a development that affects an entire market or region (e.g., a
weather-related event) or a potentially global development (e.g., a terrorist attack that may be expected to have an effect on investor expectations worldwide).
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced at
the ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries, and
U.S. government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The pricing
service may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In addition,
the model may incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer quotations.
These securities are generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt
investments with an original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days, then
the values as of the 61st day prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value would
be determined, as described below. Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
561,371,434
|
|||
Gross tax unrealized appreciation
|
$
|
154,957,601
|
|||
Gross tax unrealized depreciation
|
(20,873,572
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
134,084,029
|
|||
Undistributed ordinary income
|
$
|
2,548,524
|
|||
Undistributed long-term capital gains
|
522,621
|
||||
Total distributable earnings
|
$
|
3,071,145
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
137,155,174
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
2,630,234
|
$
|
1,344,675
|
|||||
Long-term capital gain
|
522,722
|
—
|
|||||||
$
|
3,152,956
|
$
|
1,344,675
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 920.20
|
$6.78
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.80
|
$7.12
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 922.00
|
$4.97
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.69
|
$5.22
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.42% for Investor Class shares or 1.04% for Institutional Class shares, as applicable, multiplied by the average account value over
the period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
Gross Foreign Income
|
Foreign Tax Paid
|
|||
Japan
|
$10,290,290
|
$1,029,031
|
HENNESSYFUNDS.COM
|
PROXY VOTING — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory and sub-advisory agreements and the relevant
factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory and sub-advisory agreements and also referenced the documents that had
been provided to help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor and the Sub-Advisor and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
Summaries of the key terms of the advisory and sub-advisory agreements;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(9)
|
A completed questionnaire from the Sub-Advisor;
|
|
(10)
|
A summary of the Sub-Advisor’s questionnaire and relevant information from the Sub-Advisor’s Form ADV Parts I and II;
|
|
(11)
|
The Sub-Advisor’s Code of Ethics; and
|
|
(12)
|
Financial information of the Sub-Advisor’s parent company.
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(1)
|
The nature and quality of the advisory services provided by the Advisor and the Sub-Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
|
(4)
|
The costs and profitability of the Fund to the Advisor and the Sub-Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor and the Sub-Advisor from serving as an investment advisor to the Fund (other than the advisory and sub-advisory fees).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the Fund
and noted that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the Advisor and
that the nature and extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor oversees the Sub-Advisor for the Fund, and the Sub-Advisor acts as the portfolio manager for the Fund.
|
||
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Sub-Advisor
and the Fund’s other service providers, as feasible, conducts on-site visits to the Sub-Advisor and the Fund’s other service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals,
payments, and fixed expense ratios, evaluates insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts
employee compliance training, reviews reports provided by service providers, and maintains books and records.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(f)
|
The Advisor oversees the selection and continued employment of the Sub-Advisor, reviews the Fund’s investment performance, and monitors the Sub-Advisor’s adherence to the Fund’s investment
objectives, policies, and restrictions.
|
||
(g)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and
legal services to the Fund.
|
||
(h)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(i)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
||
(j)
|
For each annual report of the Fund, the Advisor reviews the written summary prepared by the Sub-Advisor of the Fund’s performance during the most recent 12-month period.
|
||
(k)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing. The
Advisor participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a transaction
fee. The Advisor compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(l)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and
trading oversight personnel, as well as management executives.
|
||
(m)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(n)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and
education.
|
(2)
|
The Trustees considered the services identified below that are provided by the Sub-Advisor:
|
(a)
|
The Sub-Advisor acts as the portfolio manager for the Fund. In this capacity, the Sub-Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and
restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio; and
|
|||
(iii)
|
manages proxy voting for the Fund.
|
(b)
|
The Sub-Advisor ensures that its compliance program includes policies and procedures relevant to the Fund and the Sub-Advisor’s duties as a portfolio manager to the Fund.
|
||
(c)
|
For each annual report of the Fund, the Sub-Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(d)
|
The Sub-Advisor provides a quarterly compliance certification to the Board regarding trading and allocation practices, supervisory matters, the Sub-Advisor’s compliance program (including its
code of ethics), compliance with the Fund’s policies, and general firm updates.
|
(3)
|
The Trustees considered the distinction between the services performed by the Advisor and the Sub-Advisor. The Trustees noted that the management of the Fund, including the oversight of the
Sub-Advisor, involves more comprehensive and substantive duties than the duties of the Sub-Advisor. Specifically, the Trustees considered the lists of services identified above and concluded that the services performed
by the Advisor for the Fund require a higher level of service and oversight than the services performed by the Sub-Advisor. Based on this determination, the Trustees concluded that the differential in advisory fees
between the Advisor and the Sub-Advisor is reasonable.
|
|
(4)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of
the Fund to various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor and the Sub-Advisor manage the Fund in a manner materially consistent with its stated
investment objective and style. The Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory and sub-advisory agreements.
|
|
(5)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar. As
part of the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the
materials considered at the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds
and concluded that they are reasonable and warranted continuation of the advisory and sub-advisory agreements.
|
|
(6)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had remained
relatively flat over the prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to
those expenses as the assets of the Fund increase. For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as
renegotiating service contracts, the Advisor’s significant marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its
management fees in certain circumstances. The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of
scale in the future as circumstances changed.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(7)
|
The Trustees considered the profitability of the Advisor and the Sub-Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources
and revenues that the Advisor has put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor and the Sub-Advisor are reasonable and not excessive when compared to
profitability guidelines set forth in relevant court cases.
|
|
(8)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund
and its shareholders.
|
|
(9)
|
The Trustees considered any benefits to the Advisor and the Sub-Advisor from serving as an advisor to the Fund (other than the advisory and sub-advisory fees). The Trustees noted that the
Advisor and the Sub-Advisor may derive ancillary benefits from, by way of example, their association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers
that execute portfolio trades for the Fund. The Trustees determined that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment
decision-making process. The Trustees concluded that any additional benefits realized by the Advisor and the Sub-Advisor from their relationship with the Fund were reasonable, which was based on, among other things, the
Trustees’ findings that (i) the research, analytical, statistical, and other information and services provided by brokers are merely supplemental to the Advisor’s and the Sub-Advisor’s own efforts in the performance of
their duties under the advisory and sub-advisory agreements and (ii) although the Sub-Advisor could derive benefits from the conversion of Fund shareholders into separate account clients, the Fund also could benefit from
potential institutional shareholders who might choose to invest in the Fund.
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
10
|
Statement of Operations
|
11
|
Statements of Changes in Net Assets
|
13
|
Financial Highlights
|
14
|
Notes to the Financial Statements
|
18
|
Expense Example
|
25
|
Proxy Voting Policy and Proxy Voting Records
|
27
|
Availability of Quarterly Portfolio Schedule
|
27
|
Federal Tax Distribution Information
|
27
|
Important Notice Regarding Delivery of Shareholder Documents
|
27
|
Electronic Delivery
|
28
|
Board Approval of Investment Advisory Agreements
|
29
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Tadahiro Fujimura
|
Masakazu Takeda
|
Portfolio Manager,
|
Portfolio Manager,
|
Hennessy Japan Small Cap Fund;
|
Hennessy Japan Fund;
|
Chief Investment Officer
|
Fund Manager
|
SPARX Asset Management Co., Ltd.
|
SPARX Asset Management Co., Ltd.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Japan Small Cap Fund –
|
||||
Investor Class (HJPSX)
|
-13.34%
|
-7.78%
|
7.80%
|
10.21%
|
Hennessy Japan Small Cap Fund –
|
||||
Institutional Class (HJSIX)(2)
|
-13.15%
|
-7.46%
|
8.17%
|
10.40%
|
Russell/Nomura
|
||||
Small CapTM Index
|
-12.14%
|
-6.67%
|
4.43%
|
6.55%
|
Tokyo Price Index (TOPIX)
|
-9.96%
|
-3.11%
|
2.87%
|
4.96%
|
(1)
|
Periods of less than one year are not annualized.
|
(2)
|
The inception date of Institutional Class shares is June 15, 2015. Performance shown prior to the inception of Institutional Class shares reflects the performance of Investor Class shares and
includes expenses that are not applicable to, and are higher than, those of Institutional Class shares.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April
30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Cosmos Pharmaceutical Corp.
|
2.45%
|
Kobe Bussan Co., Ltd.
|
2.45%
|
Nihon Unisys Ltd.
|
2.37%
|
Tocalo Co., Ltd.
|
2.28%
|
Lifenet Insurance Co.
|
2.25%
|
Benefit One, Inc.
|
2.24%
|
Elecom Co., Ltd.
|
2.24%
|
Nippon Koei Co., Ltd.
|
2.22%
|
Nihon Flush Co., Ltd.
|
2.15%
|
Towa Corp.
|
2.15%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 97.60%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 2.97%
|
||||||||||||
CyberAgent, Inc.
|
30,000
|
$
|
1,259,580
|
1.52
|
%
|
|||||||
Kakaku.com, Inc.
|
59,200
|
1,207,996
|
1.45
|
%
|
||||||||
|
2,467,576
|
2.97
|
%
|
|||||||||
Consumer Discretionary – 10.33%
|
||||||||||||
Kushikatsu Tanaka Holdings Co.
|
33,800
|
424,608
|
0.51
|
%
|
||||||||
Matsuoka Corp.
|
84,600
|
1,453,827
|
1.75
|
%
|
||||||||
Musashi Seimitsu Industry Co., Ltd.
|
115,800
|
937,577
|
1.13
|
%
|
||||||||
Nojima Corp.
|
74,700
|
1,294,776
|
1.56
|
%
|
||||||||
Pacific Industrial Co., Ltd.
|
183,300
|
1,553,302
|
1.87
|
%
|
||||||||
Saizeriya Co., Ltd.
|
83,700
|
1,659,182
|
2.00
|
%
|
||||||||
Seiren Co., Ltd.
|
106,400
|
1,259,774
|
1.51
|
%
|
||||||||
|
8,583,046
|
10.33
|
%
|
|||||||||
Consumer Staples – 7.81%
|
||||||||||||
Cosmos Pharmaceutical Corp.
|
7,600
|
2,034,441
|
2.45
|
%
|
||||||||
Kobe Bussan Co., Ltd.
|
42,200
|
2,038,639
|
2.45
|
%
|
||||||||
Nishimoto Co., Ltd.
|
69,000
|
1,159,264
|
1.39
|
%
|
||||||||
Starzen Co., Ltd.
|
30,900
|
1,261,441
|
1.52
|
%
|
||||||||
|
6,493,785
|
7.81
|
%
|
|||||||||
Energy – 1.57%
|
||||||||||||
Iwatani Corp.
|
38,100
|
1,301,580
|
1.57
|
%
|
||||||||
Financials – 3.12%
|
||||||||||||
AEON Financial Service Co., Ltd.
|
70,000
|
727,948
|
0.87
|
%
|
||||||||
Lifenet Insurance Co. (a)
|
285,300
|
1,867,263
|
2.25
|
%
|
||||||||
|
2,595,211
|
3.12
|
%
|
|||||||||
Health Care – 2.69%
|
||||||||||||
CYBERDYNE, Inc. (a)
|
138,100
|
548,206
|
0.66
|
%
|
||||||||
Ship Healthcare Holdings, Inc.
|
37,300
|
1,686,961
|
2.03
|
%
|
||||||||
|
2,235,167
|
2.69
|
%
|
|||||||||
Industrials – 38.87%
|
||||||||||||
Bell System24 Holdings, Inc.
|
137,000
|
1,621,367
|
1.95
|
%
|
||||||||
Benefit One, Inc.
|
105,800
|
1,857,419
|
2.24
|
%
|
||||||||
Daihen Corp.
|
60,900
|
1,733,936
|
2.09
|
%
|
||||||||
Fugi Corp.
|
83,600
|
1,399,740
|
1.68
|
%
|
||||||||
Hanwa Co., Ltd.
|
96,900
|
1,539,360
|
1.85
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Industrials (Continued)
|
||||||||||||
Hito Communications Holdings, Inc.
|
143,100
|
$
|
1,291,035
|
1.55
|
%
|
|||||||
Juki Corp.
|
125,800
|
689,737
|
0.83
|
%
|
||||||||
Kawada Technologies, Inc.
|
33,900
|
1,582,101
|
1.90
|
%
|
||||||||
Kito Corp.
|
168,300
|
1,704,046
|
2.05
|
%
|
||||||||
METAWATER Co., Ltd.
|
43,000
|
1,710,039
|
2.06
|
%
|
||||||||
MIRAIT Holdings Corp.
|
137,100
|
1,771,028
|
2.13
|
%
|
||||||||
Mitsubishi Logisnext Co., Ltd.
|
135,600
|
1,261,469
|
1.52
|
%
|
||||||||
Morita Holdings Corp.
|
38,900
|
597,776
|
0.72
|
%
|
||||||||
Nihon Flush Co., Ltd.
|
159,600
|
1,789,370
|
2.15
|
%
|
||||||||
Nippon Koei Co., Ltd.
|
64,500
|
1,846,309
|
2.22
|
%
|
||||||||
Okamura Corp.
|
163,600
|
1,182,352
|
1.42
|
%
|
||||||||
Sato Holdings Corp.
|
83,100
|
1,708,851
|
2.06
|
%
|
||||||||
SBS Holdings, Inc.
|
103,800
|
1,755,245
|
2.11
|
%
|
||||||||
Senko Group Holdings Co., Ltd.
|
218,100
|
1,777,483
|
2.14
|
%
|
||||||||
Takeei Corp.
|
214,500
|
1,599,405
|
1.92
|
%
|
||||||||
Tocalo Co., Ltd.
|
192,700
|
1,897,154
|
2.28
|
%
|
||||||||
|
32,315,222
|
38.87
|
%
|
|||||||||
Information Technology – 17.78%
|
||||||||||||
Digital Garage, Inc.
|
49,600
|
1,777,117
|
2.14
|
%
|
||||||||
Elecom Co., Ltd.
|
47,300
|
1,865,333
|
2.24
|
%
|
||||||||
Macnica Fuji Electronics Holdings, Inc.
|
119,800
|
1,630,765
|
1.96
|
%
|
||||||||
Mimaki Engineering Co., Ltd.
|
209,200
|
789,030
|
0.95
|
%
|
||||||||
Nihon Unisys Ltd.
|
68,200
|
1,972,405
|
2.37
|
%
|
||||||||
Nippon Signal Company, Ltd.
|
162,400
|
1,509,775
|
1.82
|
%
|
||||||||
Rorze Corp.
|
12,700
|
522,531
|
0.63
|
%
|
||||||||
Sun Corp.
|
82,000
|
1,194,732
|
1.44
|
%
|
||||||||
Towa Corp.
|
207,200
|
1,789,949
|
2.15
|
%
|
||||||||
Transcosmos, Inc.
|
86,800
|
1,731,975
|
2.08
|
%
|
||||||||
|
14,783,612
|
17.78
|
%
|
|||||||||
Materials – 7.79%
|
||||||||||||
Asia Pile Holdings Co.
|
424,600
|
1,647,421
|
1.98
|
%
|
||||||||
Kanto Denka Kogyo Co., Ltd.
|
55,700
|
442,803
|
0.53
|
%
|
||||||||
Kuriyama Holdings Corp.
|
159,800
|
715,169
|
0.86
|
%
|
||||||||
Sanyo Chemical Industries Ltd.
|
32,600
|
1,284,274
|
1.55
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Materials (Continued)
|
||||||||||||
Stella Chemifa Corp.
|
57,600
|
$
|
1,256,120
|
1.51
|
%
|
|||||||
Tokyo Ohka Kogyo Co., Ltd.
|
26,200
|
1,126,834
|
1.36
|
%
|
||||||||
|
6,472,621
|
7.79
|
%
|
|||||||||
Real Estate – 3.06%
|
||||||||||||
Star Mica Holdings Co., Ltd.
|
115,400
|
1,574,526
|
1.89
|
%
|
||||||||
Tosei Corp.
|
100,300
|
973,399
|
1.17
|
%
|
||||||||
|
2,547,925
|
3.06
|
%
|
|||||||||
Utilities – 1.61%
|
||||||||||||
EF-ON, Inc.
|
292,800
|
1,341,170
|
1.61
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $85,234,828)
|
81,136,915
|
97.60
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 0.99%
|
||||||||||||
Money Market Funds – 0.99%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (b)
|
822,126
|
822,126
|
0.99
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $822,126)
|
822,126
|
0.99
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $86,056,954) – 98.59%
|
81,959,041
|
98.59
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 1.41%
|
1,168,080
|
1.41
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
83,127,121
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
—
|
$
|
2,467,576
|
$
|
—
|
$
|
2,467,576
|
||||||||
Consumer Discretionary
|
—
|
8,583,046
|
—
|
8,583,046
|
||||||||||||
Consumer Staples
|
—
|
6,493,785
|
—
|
6,493,785
|
||||||||||||
Energy
|
—
|
1,301,580
|
—
|
1,301,580
|
||||||||||||
Financials
|
—
|
2,595,211
|
—
|
2,595,211
|
||||||||||||
Health Care
|
—
|
2,235,167
|
—
|
2,235,167
|
||||||||||||
Industrials
|
—
|
32,315,222
|
—
|
32,315,222
|
||||||||||||
Information Technology
|
—
|
14,783,612
|
—
|
14,783,612
|
||||||||||||
Materials
|
—
|
6,472,621
|
—
|
6,472,621
|
||||||||||||
Real Estate
|
—
|
2,547,925
|
—
|
2,547,925
|
||||||||||||
Utilities
|
—
|
1,341,170
|
—
|
1,341,170
|
||||||||||||
Total Common Stocks
|
$
|
—
|
$
|
81,136,915
|
$
|
—
|
$
|
81,136,915
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
822,126
|
$
|
—
|
$
|
—
|
$
|
822,126
|
||||||||
Total Short-Term Investments
|
$
|
822,126
|
$
|
—
|
$
|
—
|
$
|
822,126
|
||||||||
Total Investments
|
$
|
822,126
|
$
|
81,136,915
|
$
|
—
|
$
|
81,959,041
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $86,056,954)
|
$
|
81,959,041
|
||
Dividends and interest receivable
|
886,738
|
|||
Receivable for fund shares sold
|
233,049
|
|||
Receivable for securities sold
|
367,628
|
|||
Prepaid expenses and other assets
|
20,003
|
|||
Total assets
|
83,466,459
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
218,302
|
|||
Payable to advisor
|
52,932
|
|||
Payable to administrator
|
14,157
|
|||
Payable to auditor
|
11,376
|
|||
Accrued distribution fees
|
7,052
|
|||
Accrued service fees
|
3,637
|
|||
Accrued trustees fees
|
5,741
|
|||
Accrued expenses and other payables
|
26,141
|
|||
Total liabilities
|
339,338
|
|||
NET ASSETS
|
$
|
83,127,121
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
91,598,530
|
||
Accumulated deficit
|
(8,471,409
|
)
|
||
Total net assets
|
$
|
83,127,121
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
46,633,407
|
||
Shares issued and outstanding
|
3,533,092
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
13.20
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
36,493,714
|
||
Shares issued and outstanding
|
2,797,027
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
13.05
|
HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
1,091,157
|
||
Interest income
|
22,666
|
|||
Total investment income
|
1,113,823
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
448,150
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
65,319
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
19,607
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
62,729
|
|||
Distribution fees – Investor Class (See Note 5)
|
43,554
|
|||
Service fees – Investor Class (See Note 5)
|
29,036
|
|||
Federal and state registration fees
|
22,486
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,375
|
|||
Reports to shareholders
|
10,100
|
|||
Trustees’ fees and expenses
|
8,832
|
|||
Interest expense (See Note 7)
|
3,076
|
|||
Legal fees
|
730
|
|||
Other expenses
|
8,205
|
|||
Total expenses
|
746,661
|
|||
NET INVESTMENT INCOME
|
$
|
367,162
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
524,902
|
||
Net change in unrealized appreciation/depreciation on investments
|
(17,097,644
|
)
|
||
Net loss on investments
|
(16,572,742
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(16,205,580
|
)
|
(1)
|
Net of foreign taxes withheld of $121,240.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
367,162
|
$
|
628,672
|
||||
Net realized gain (loss) on investments
|
524,902
|
(3,898,603
|
)
|
|||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(17,097,644
|
)
|
9,297,065
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(16,205,580
|
)
|
6,027,134
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(876,351
|
)
|
(3,091,719
|
)
|
||||
Distributable earnings – Institutional Class
|
(1,083,137
|
)
|
(3,196,949
|
)
|
||||
Total distributions
|
(1,959,488
|
)
|
(6,288,668
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
6,533,731
|
16,258,683
|
||||||
Proceeds from shares subscribed – Institutional Class
|
11,172,800
|
30,397,388
|
||||||
Dividends reinvested – Investor Class
|
843,742
|
3,007,874
|
||||||
Dividends reinvested – Institutional Class
|
990,567
|
2,892,147
|
||||||
Cost of shares redeemed – Investor Class
|
(17,839,944
|
)
|
(54,044,581
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(30,495,233
|
)
|
(67,515,691
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(28,794,337
|
)
|
(69,004,180
|
)
|
||||
TOTAL DECREASE IN NET ASSETS
|
(46,959,405
|
)
|
(69,265,714
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
130,086,526
|
199,352,240
|
||||||
End of period
|
$
|
83,127,121
|
$
|
130,086,526
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
448,491
|
1,129,349
|
||||||
Shares sold – Institutional Class
|
830,081
|
2,150,721
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
52,999
|
211,079
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
63,013
|
206,255
|
||||||
Shares redeemed – Investor Class
|
(1,264,731
|
)
|
(3,779,544
|
)
|
||||
Shares redeemed – Institutional Class
|
(2,269,019
|
)
|
(4,821,215
|
)
|
||||
Net decrease in shares outstanding
|
(2,139,166
|
)
|
(4,903,355
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
15.43
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.04
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.06
|
)
|
||
Total from investment operations
|
(2.02
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.21
|
)
|
||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
(0.21
|
)
|
||
Net asset value, end of period
|
$
|
13.20
|
||
TOTAL RETURN
|
-13.34
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
46.63
|
||
Ratio of expenses to average net assets
|
1.53
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
0.55
|
%(3)
|
||
Portfolio turnover rate(4)
|
9
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
14.99
|
$
|
14.92
|
$
|
11.29
|
$
|
10.29
|
$
|
10.51
|
|||||||||
0.03
|
(1)
|
0.05
|
0.08
|
0.03
|
(0.02
|
)
|
||||||||||||
0.88
|
0.35
|
3.77
|
1.31
|
0.71
|
||||||||||||||
0.91
|
0.40
|
3.85
|
1.34
|
0.69
|
||||||||||||||
—
|
(0.05
|
)
|
(0.12
|
)
|
—
|
—
|
||||||||||||
(0.47
|
)
|
(0.28
|
)
|
(0.10
|
)
|
(0.34
|
)
|
(0.91
|
)
|
|||||||||
(0.47
|
)
|
(0.33
|
)
|
(0.22
|
)
|
(0.34
|
)
|
(0.91
|
)
|
|||||||||
$
|
15.43
|
$
|
14.99
|
$
|
14.92
|
$
|
11.29
|
$
|
10.29
|
|||||||||
6.30
|
%
|
2.64
|
%
|
34.82
|
%
|
13.44
|
%
|
7.37
|
%
|
|||||||||
$
|
66.30
|
$
|
100.93
|
$
|
69.86
|
$
|
26.23
|
$
|
22.68
|
|||||||||
1.52
|
%
|
1.46
|
%
|
1.60
|
%
|
1.91
|
%
|
2.12
|
%
|
|||||||||
0.23
|
%
|
0.21
|
%
|
0.26
|
%
|
0.25
|
%
|
(0.38
|
)%
|
|||||||||
21
|
%
|
35
|
%
|
41
|
%
|
22
|
%
|
75
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
15.28
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.06
|
(2)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.02
|
)
|
||
Total from investment operations
|
(1.96
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.27
|
)
|
||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
(0.27
|
)
|
||
Net asset value, end of period
|
$
|
13.05
|
||
TOTAL RETURN
|
-13.15
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
36.49
|
||
Ratio of expenses to average net assets
|
1.12
|
%(4)
|
||
Ratio of net investment income (loss) to average net assets
|
0.77
|
%(4)
|
||
Portfolio turnover rate(5)
|
9
|
%(3)
|
(1)
|
Institutional Class shares commenced operations on June 15, 2015.
|
(2)
|
Calculated using the average shares outstanding method.
|
(3)
|
Not annualized.
|
(4)
|
Annualized.
|
(5)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Period Ended
|
||||||||||||||||||
Year Ended October 31,
|
October 31,
|
|||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015(1)
|
||||||||||||||
$
|
14.83
|
$
|
14.72
|
$
|
11.33
|
$
|
10.30
|
$
|
10.89
|
|||||||||
0.09
|
(2)
|
0.11
|
0.05
|
0.06
|
(0.01
|
)
|
||||||||||||
0.86
|
0.36
|
3.78
|
1.31
|
(0.58
|
)
|
|||||||||||||
0.95
|
0.47
|
3.83
|
1.37
|
(0.59
|
)
|
|||||||||||||
(0.04
|
)
|
(0.08
|
)
|
(0.10
|
)
|
—
|
—
|
|||||||||||
(0.46
|
)
|
(0.28
|
)
|
(0.34
|
)
|
(0.34
|
)
|
—
|
||||||||||
(0.50
|
)
|
(0.36
|
)
|
(0.44
|
)
|
(0.34
|
)
|
—
|
||||||||||
$
|
15.28
|
$
|
14.83
|
$
|
14.72
|
$
|
11.33
|
$
|
10.30
|
|||||||||
6.73
|
%
|
3.12
|
%
|
35.17
|
%
|
13.73
|
%
|
-5.42
|
%(3)
|
|||||||||
$
|
63.78
|
$
|
98.42
|
$
|
28.71
|
$
|
3.42
|
$
|
2.65
|
|||||||||
1.12
|
%
|
1.04
|
%
|
1.19
|
%
|
1.63
|
%
|
1.86
|
%(4)
|
|||||||||
0.61
|
%
|
0.77
|
%
|
0.80
|
%
|
0.63
|
%
|
(1.04
|
)%(4)
|
|||||||||
21
|
%
|
35
|
%
|
41
|
%
|
22
|
%
|
75
|
%(3)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to distribute
substantially all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net investment
income/loss and realized gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences are primarily
the result of the treatment of wash sales for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax expense.
Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization accounting for tax
purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax
returns of the Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax
liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium and
accretion of discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are
directly attributable to its portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized
gains/losses on investments are allocated to each class of shares based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital gains, if
any, are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the
original cost of the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those
estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all
liabilities (including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange is
closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
i).
|
Foreign Currency – Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales
of investments and income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The Fund does not isolate the portion of the results of
operations resulting from fluctuations in foreign exchange rates on investments from fluctuations resulting from changes in the market prices of securities held. Such fluctuations are included with the net realized and
unrealized gain/loss on investments. Foreign investments present additional risks due to currency fluctuations, economic and political factors, lower liquidity, government regulations, differences in accounting
standards, and other factors.
|
j).
|
REIT Equity Securities – The Fund may invest in the equity securities of real estate investment trusts (“REITs”). Distributions received from REITs may be classified as dividends, capital
gains, or return of capital. Investments in REITs may require the Fund to accrue and distribute income not yet received. To generate sufficient cash to make the requisite distributions, the Fund may be required to sell
securities in its portfolio (including when it is not advantageous to do so) that it otherwise would have continued to hold. At other times, investments in a REIT may result in the Fund’s receipt of cash in excess of
the REIT’s earnings. If the Fund distributes these amounts, these distributions could constitute a return of capital to Fund
|
HENNESSY FUNDS
|
1-800-966-4354
|
shareholders for U.S. federal income tax purposes. Dividends received by the Fund from a REIT generally will not constitute qualified dividend income and will not qualify for the
dividends-received deduction.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or
similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default
rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when
observable inputs are unavailable.
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end
mutual funds, partnerships, rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales price
as reported by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ from the
last sales price reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the extent
these securities are actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at the same
time the Fund calculates its NAV because most foreign markets close well before such time. The earlier close of most foreign markets gives rise to the possibility that significant events, including broad market moves,
may have occurred in the interim. In certain circumstances, it may be determined that a foreign security needs to be fair valued because it appears that the value of the security might have been materially affected by
events occurring after the close of the market in which the security is principally traded, but before the time the Fund calculates its NAV, such as by a development that affects an entire market or region (e.g., a
weather-related event) or a potentially global development (e.g., a terrorist attack that may be expected to have an effect on investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are priced
at the ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries,
and U.S. government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The
pricing service may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In
addition, the model may incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer
quotations. These securities are generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt
investments with an original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days,
then the values as of the 61st day prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair value
would be determined, as described below. Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
117,570,374
|
|||
Gross tax unrealized appreciation
|
$
|
22,229,518
|
|||
Gross tax unrealized depreciation
|
(11,332,904
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
11,896,614
|
|||
Undistributed ordinary income
|
$
|
1,959,489
|
|||
Undistributed long-term capital gains
|
—
|
||||
Total distributable earnings
|
$
|
1,959,489
|
|||
Other accumulated gain/(loss)
|
$
|
(4,162,444
|
)
|
||
Total accumulated gain/(loss)
|
$
|
9,693,659
|
$4,162,444
|
Unlimited Short-Term
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
1,959,488
|
$
|
275,405
|
|||||
Long-term capital gain
|
—
|
6,013,263
|
|||||||
$
|
1,959,488
|
$
|
6,288,668
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS/EXPENSE EXAMPLE
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 866.60
|
$7.10
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.26
|
$7.67
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 868.50
|
$5.20
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.29
|
$5.62
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.53% for Investor Class shares or 1.12% for Institutional Class shares, as applicable, multiplied by the average account value
over the period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
|
Gross Foreign Income
|
Foreign Tax Paid
|
|||
Japan
|
$2,851,789
|
$285,661
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
ELECTRONIC DELIVERY/BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory and sub-advisory agreements and the
relevant factors for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory and sub-advisory agreements and also referenced the documents that
had been provided to help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor and the Sub-Advisor and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
Summaries of the key terms of the advisory and sub-advisory agreements;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(9)
|
A completed questionnaire from the Sub-Advisor;
|
|
(10)
|
A summary of the Sub-Advisor’s questionnaire and relevant information from the Sub-Advisor’s Form ADV Parts I and II;
|
|
(11)
|
The Sub-Advisor’s Code of Ethics; and
|
|
(12)
|
Financial information of the Sub-Advisor’s parent company.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
The nature and quality of the advisory services provided by the Advisor and the Sub-Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
|
(4)
|
The costs and profitability of the Fund to the Advisor and the Sub-Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor and the Sub-Advisor from serving as an investment advisor to the Fund (other than the advisory and sub-advisory fees).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the
Fund and noted that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the
Advisor and that the nature and extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor oversees the Sub-Advisor for the Fund, and the Sub-Advisor acts as the portfolio manager for the Fund.
|
||
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the
Sub-Advisor and the Fund’s other service providers, as feasible, conducts on-site visits to the Sub-Advisor and the Fund’s other service providers, monitors incidents of abusive trading practices, reviews Fund expense
accruals, payments, and fixed expense ratios, evaluates insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses,
conducts employee compliance training, reviews reports provided by service providers, and maintains books and records.
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(f)
|
The Advisor oversees the selection and continued employment of the Sub-Advisor, reviews the Fund’s investment performance, and monitors the Sub-Advisor’s adherence to the Fund’s investment
objectives, policies, and restrictions.
|
||
(g)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology,
and legal services to the Fund.
|
||
(h)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(i)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
||
(j)
|
For each annual report of the Fund, the Advisor reviews the written summary prepared by the Sub-Advisor of the Fund’s performance during the most recent 12-month period.
|
||
(k)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing.
The Advisor participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a
transaction fee. The Advisor compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(l)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and
trading oversight personnel, as well as management executives.
|
||
(m)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(n)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training and
education.
|
(2)
|
The Trustees considered the services identified below that are provided by the Sub-Advisor:
|
(a)
|
The Sub-Advisor acts as the portfolio manager for the Fund. In this capacity, the Sub-Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies, and
restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio; and
|
|||
(iii)
|
manages proxy voting for the Fund.
|
(b)
|
The Sub-Advisor ensures that its compliance program includes policies and procedures relevant to the Fund and the Sub-Advisor’s duties as a portfolio manager to the Fund.
|
||
(c)
|
For each annual report of the Fund, the Sub-Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(d)
|
The Sub-Advisor provides a quarterly compliance certification to the Board regarding trading and allocation practices, supervisory matters, the Sub-Advisor’s compliance program (including its
code of ethics), compliance with the Fund’s policies, and general firm updates.
|
(3)
|
The Trustees considered the distinction between the services performed by the Advisor and the Sub-Advisor. The Trustees noted that the management of the Fund, including the oversight of the
Sub-Advisor, involves more comprehensive and substantive duties than the duties of the Sub-Advisor. Specifically, the Trustees considered the lists of services identified above and concluded that the services performed
by the Advisor for the Fund require a higher level of service and oversight than the services performed by the Sub-Advisor. Based on this determination, the Trustees concluded that the differential in advisory fees
between the Advisor and the Sub-Advisor is reasonable.
|
|
(4)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance of
the Fund to various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor and the Sub-Advisor manage the Fund in a manner materially consistent with its stated
investment objective and style. The Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory and sub-advisory agreements.
|
|
(5)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from Morningstar.
As part of the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for purposes of the
materials considered at the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other comparable funds
and concluded that they are reasonable and warranted continuation of the advisory and sub-advisory agreements.
|
|
(6)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had
declined over the prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those
expenses as the assets of the Fund increase. For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as
renegotiating service contracts, the Advisor’s significant marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its
management fees in certain circumstances. The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of
scale in the future as circumstances changed.
|
|
(7)
|
The Trustees considered the profitability of the Advisor and the Sub-Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the
resources and revenues that the Advisor has put into
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor and the Sub-Advisor are reasonable and not excessive when compared to profitability guidelines
set forth in relevant court cases.
|
||
(8)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the Fund
and its shareholders.
|
|
(9)
|
The Trustees considered any benefits to the Advisor and the Sub-Advisor from serving as an advisor to the Fund (other than the advisory and sub-advisory fees). The Trustees noted that the
Advisor and the Sub-Advisor may derive ancillary benefits from, by way of example, their association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers
that execute portfolio trades for the Fund. The Trustees determined that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment
decision-making process. The Trustees concluded that any additional benefits realized by the Advisor and the Sub-Advisor from their relationship with the Fund were reasonable, which was based on, among other things,
the Trustees’ findings that (i) the research, analytical, statistical, and other information and services provided by brokers are merely supplemental to the Advisor’s and the Sub-Advisor’s own efforts in the
performance of their duties under the advisory and sub-advisory agreements and (ii) although the Sub-Advisor could derive benefits from the conversion of Fund shareholders into separate account clients, the Fund also
could benefit from potential institutional shareholders who might choose to invest in the Fund.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
8
|
Statement of Operations
|
9
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
23
|
Proxy Voting Policy and Proxy Voting Records
|
25
|
Availability of Quarterly Portfolio Schedule
|
25
|
Federal Tax Distribution Information
|
25
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
Hennessy Large Cap Financial Fund –
|
||||
Investor Class (HLFNX)
|
-9.77%
|
-10.08%
|
5.15%
|
6.42%
|
Hennessy Large Cap Financial Fund –
|
||||
Institutional Class (HILFX)(2)
|
-9.66%
|
-9.78%
|
5.54%
|
6.62%
|
Russell 1000® Financial
|
||||
Services Index
|
-15.76%
|
-11.28%
|
7.01%
|
8.97%
|
Russell 1000® Index
|
-3.56%
|
0.09%
|
8.74%
|
11.57%
|
(1)
|
Periods of less than one year are not annualized.
|
(2)
|
The inception date of Institutional Class shares is June 15, 2015. Performance shown prior to the inception of Institutional Class shares reflects the performance of Investor Class shares
and includes expenses that are not applicable to, and are higher than, those of Institutional Class shares.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April
30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
PayPal Holdings, Inc.
|
5.33%
|
Citigroup, Inc.
|
5.08%
|
Moody’s Corp.
|
4.98%
|
Square, Inc., Class A
|
4.98%
|
Bank of America Corp.
|
4.97%
|
The Blackstone Group, Inc.
|
4.93%
|
Mastercard, Inc., Class A
|
4.91%
|
Apple, Inc.
|
4.87%
|
Visa, Inc., Class A
|
4.79%
|
Fiserv, Inc.
|
4.73%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 96.75%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials – 62.43%
|
||||||||||||
American Express Co.
|
6,000
|
$
|
547,500
|
1.40
|
%
|
|||||||
Bank of America Corp.
|
81,000
|
1,948,050
|
4.97
|
%
|
||||||||
Berkshire Hathaway, Inc., Class B (a)
|
9,500
|
1,779,920
|
4.54
|
%
|
||||||||
Capital One Financial Corp.
|
28,000
|
1,813,280
|
4.62
|
%
|
||||||||
Citigroup, Inc.
|
41,000
|
1,990,960
|
5.08
|
%
|
||||||||
Citizens Financial Group, Inc.
|
67,000
|
1,500,130
|
3.83
|
%
|
||||||||
Comerica, Inc.
|
32,000
|
1,115,520
|
2.84
|
%
|
||||||||
Fifth Third Bancorp
|
60,000
|
1,121,400
|
2.86
|
%
|
||||||||
JPMorgan Chase & Co.
|
19,000
|
1,819,440
|
4.64
|
%
|
||||||||
Moody’s Corp.
|
8,000
|
1,951,200
|
4.98
|
%
|
||||||||
The Blackstone Group, Inc.
|
37,000
|
1,932,880
|
4.93
|
%
|
||||||||
The Charles Schwab Corp.
|
42,000
|
1,584,240
|
4.04
|
%
|
||||||||
The Goldman Sachs Group, Inc.
|
10,000
|
1,834,200
|
4.68
|
%
|
||||||||
The PNC Financial Services Group, Inc.
|
16,000
|
1,706,720
|
4.35
|
%
|
||||||||
Wells Fargo & Co.
|
63,000
|
1,830,150
|
4.67
|
%
|
||||||||
|
24,475,590
|
62.43
|
%
|
|||||||||
Information Technology – 34.32%
|
||||||||||||
Apple, Inc.
|
6,500
|
1,909,700
|
4.87
|
%
|
||||||||
Fidelity National Information Services, Inc.
|
14,000
|
1,846,460
|
4.71
|
%
|
||||||||
Fiserv, Inc. (a)
|
18,000
|
1,855,080
|
4.73
|
%
|
||||||||
Mastercard, Inc., Class A
|
7,000
|
1,924,790
|
4.91
|
%
|
||||||||
PayPal Holdings, Inc. (a)
|
17,000
|
2,091,000
|
5.33
|
%
|
||||||||
Square, Inc., Class A (a)
|
30,000
|
1,954,200
|
4.98
|
%
|
||||||||
Visa, Inc., Class A
|
10,500
|
1,876,560
|
4.79
|
%
|
||||||||
|
13,457,790
|
34.32
|
%
|
|||||||||
Total Common Stocks
|
||||||||||||
(Cost $31,323,453)
|
37,933,380
|
96.75
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 3.85%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 3.85%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (b)
|
1,508,965
|
$
|
1,508,965
|
3.85
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $1,508,965)
|
1,508,965
|
3.85
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $32,832,418) – 100.60%
|
39,442,345
|
100.60
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.60)%
|
(235,486
|
)
|
(0.60
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
39,206,859
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
|
Common Stocks
|
|||
|
U.S. Bancorp
|
|||
Beginning Cost – November 1, 2019
|
$
|
489,030
|
||
Purchase Cost
|
$
|
—
|
||
Sales Cost
|
$
|
(489,030
|
)
|
|
Ending Cost – March 30, 2020
|
$
|
—
|
||
Dividend Income
|
$
|
2,100
|
||
Net Change in Unrealized Appreciation/Depreciation
|
$
|
(24,150
|
)
|
|
Realized Gain/Loss
|
$
|
31,875
|
||
Shares
|
—
|
|||
Market Value – March 30, 2020
|
$
|
—
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Financials
|
$
|
24,475,590
|
$
|
—
|
$
|
—
|
$
|
24,475,590
|
||||||||
Information Technology
|
13,457,790
|
—
|
—
|
13,457,790
|
||||||||||||
Total Common Stocks
|
$
|
37,933,380
|
$
|
—
|
$
|
—
|
$
|
37,933,380
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
1,508,965
|
$
|
—
|
$
|
—
|
$
|
1,508,965
|
||||||||
Total Short-Term Investments
|
$
|
1,508,965
|
$
|
—
|
$
|
—
|
$
|
1,508,965
|
||||||||
Total Investments
|
$
|
39,442,345
|
$
|
—
|
$
|
—
|
$
|
39,442,345
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $32,832,418)
|
$
|
39,442,345
|
||
Dividends and interest receivable
|
53,778
|
|||
Receivable for fund shares sold
|
149,253
|
|||
Prepaid expenses and other assets
|
20,392
|
|||
Total assets
|
39,665,768
|
|||
LIABILITIES:
|
||||
Payable for securities purchased
|
377,296
|
|||
Payable for fund shares redeemed
|
12,250
|
|||
Payable to advisor
|
27,768
|
|||
Payable to administrator
|
9,038
|
|||
Payable to auditor
|
11,373
|
|||
Accrued distribution fees
|
3,376
|
|||
Accrued service fees
|
1,665
|
|||
Accrued trustees fees
|
6,427
|
|||
Accrued expenses and other payables
|
9,716
|
|||
Total liabilities
|
458,909
|
|||
NET ASSETS
|
$
|
39,206,859
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
36,675,020
|
||
Total distributable earnings
|
2,531,839
|
|||
Total net assets
|
$
|
39,206,859
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
21,869,493
|
||
Shares issued and outstanding
|
1,071,110
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
20.42
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
17,337,366
|
||
Shares issued and outstanding
|
845,989
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
20.49
|
HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income from unaffiliated securities
|
$
|
348,785
|
||
Dividend income from affiliated securities
|
2,100
|
|||
Interest income
|
6,983
|
|||
Total investment income
|
357,868
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
202,502
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
22,467
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
11,859
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
28,083
|
|||
Federal and state registration fees
|
19,843
|
|||
Distribution fees – Investor Class (See Note 5)
|
17,426
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Service fees – Investor Class (See Note 5)
|
11,617
|
|||
Audit fees
|
11,375
|
|||
Trustees’ fees and expenses
|
8,377
|
|||
Reports to shareholders
|
4,285
|
|||
Interest expense (See Note 7)
|
410
|
|||
Legal fees
|
184
|
|||
Other expenses
|
4,105
|
|||
Total expenses
|
355,995
|
|||
NET INVESTMENT INCOME
|
$
|
1,873
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain (loss) on investments:
|
||||
Unaffiliated investments
|
$
|
(1,167,325
|
)
|
|
Affiliated investments
|
31,875
|
|||
Net change in unrealized appreciation/deprecation on investments:
|
||||
Unaffiliated investments
|
(2,552,865
|
)
|
||
Affiliated investments
|
(24,150
|
)
|
||
Net loss on investments
|
(3,712,465
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(3,710,592
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income (loss)
|
$
|
1,873
|
$
|
(54,782
|
)
|
|||
Net realized loss on investments
|
(1,135,450
|
)
|
(2,153,768
|
)
|
||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(2,577,015
|
)
|
3,586,065
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(3,710,592
|
)
|
1,377,515
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
—
|
(982,872
|
)
|
|||||
Distributable earnings – Institutional Class
|
—
|
(250,041
|
)
|
|||||
Total distributions
|
—
|
(1,232,913
|
)
|
|||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
3,331,723
|
2,668,470
|
||||||
Proceeds from shares subscribed – Institutional Class
|
5,367,903
|
19,568,396
|
||||||
Dividends reinvested – Investor Class
|
—
|
961,534
|
||||||
Dividends reinvested – Institutional Class
|
—
|
249,016
|
||||||
Cost of shares redeemed – Investor Class
|
(3,213,421
|
)
|
(21,047,821
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(8,167,479
|
)
|
(6,788,374
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(2,681,274
|
)
|
(4,388,779
|
)
|
||||
TOTAL DECREASE IN NET ASSETS
|
(6,391,866
|
)
|
(4,244,177
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
45,598,725
|
49,842,902
|
||||||
End of period
|
$
|
39,206,859
|
$
|
45,598,725
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
173,995
|
122,976
|
||||||
Shares sold – Institutional Class
|
289,653
|
863,528
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
—
|
48,710
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
—
|
12,634
|
||||||
Shares redeemed – Investor Class
|
(146,859
|
)
|
(1,040,638
|
)
|
||||
Shares redeemed – Institutional Class
|
(412,403
|
)
|
(321,223
|
)
|
||||
Net decrease in shares outstanding
|
(95,614
|
)
|
(314,013
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
22.63
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
(0.02
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.19
|
)
|
||
Total from investment operations
|
(2.21
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
—
|
|||
Net asset value, end of period
|
$
|
20.42
|
||
TOTAL RETURN
|
-9.77
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
21.87
|
||
Ratio of expenses to average net assets
|
1.75
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
(0.15
|
)%(3)
|
||
Portfolio turnover rate(4)
|
54
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
21.43
|
$
|
22.02
|
$
|
16.23
|
$
|
18.36
|
$
|
20.87
|
|||||||||
(0.05
|
)(1)
|
(0.07
|
)
|
(0.08
|
)
|
0.07
|
0.01
|
|||||||||||
1.84
|
0.48
|
5.97
|
(0.49
|
)
|
(0.40
|
)
|
||||||||||||
1.79
|
0.41
|
5.89
|
(0.42
|
)
|
(0.39
|
)
|
||||||||||||
—
|
—
|
(0.10
|
)
|
(0.02
|
)
|
—
|
||||||||||||
(0.59
|
)
|
(1.00
|
)
|
—
|
(1.69
|
)
|
(2.12
|
)
|
||||||||||
(0.59
|
)
|
(1.00
|
)
|
(0.10
|
)
|
(1.71
|
)
|
(2.12
|
)
|
|||||||||
$
|
22.63
|
$
|
21.43
|
$
|
22.02
|
$
|
16.23
|
$
|
18.36
|
|||||||||
8.75
|
%
|
1.82
|
%
|
36.41
|
%
|
-2.57
|
%
|
-2.57
|
%
|
|||||||||
$
|
23.63
|
$
|
40.99
|
$
|
26.33
|
$
|
26.67
|
$
|
100.73
|
|||||||||
1.82
|
%
|
1.69
|
%
|
1.81
|
%
|
1.66
|
%
|
1.57
|
%
|
|||||||||
(0.23
|
)%
|
(0.44
|
)%
|
(0.41
|
)%
|
0.16
|
%
|
0.03
|
%
|
|||||||||
83
|
%
|
64
|
%
|
76
|
%
|
141
|
%
|
74
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
22.68
|
||
Income from investment operations:
|
||||
Net investment income
|
0.02
|
(2)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.21
|
)
|
||
Total from investment operations
|
(2.19
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
—
|
|||
Net asset value, end of period
|
$
|
20.49
|
||
TOTAL RETURN
|
-9.66
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
17.34
|
||
Ratio of expenses to average net assets
|
1.41
|
%(4)
|
||
Ratio of net investment income (loss) to average net assets
|
0.18
|
%(4)
|
||
Portfolio turnover rate(5)
|
54
|
%(3)
|
(1)
|
Institutional Class shares commenced operations on June 15, 2015.
|
(2)
|
Calculated using the average shares outstanding method.
|
(3)
|
Not annualized.
|
(4)
|
Annualized.
|
(5)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Period Ended
|
||||||||||||||||||
Year Ended October 31,
|
October 31,
|
|||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015(1)
|
||||||||||||||
$
|
21.39
|
$
|
21.91
|
$
|
16.26
|
$
|
18.39
|
$
|
19.72
|
|||||||||
0.01
|
(2)
|
0.03
|
0.18
|
0.02
|
0.01
|
|||||||||||||
1.87
|
0.45
|
5.78
|
(0.36
|
)
|
(1.34
|
)
|
||||||||||||
1.88
|
0.48
|
5.96
|
(0.34
|
)
|
(1.33
|
)
|
||||||||||||
—
|
—
|
(0.31
|
)
|
(0.09
|
)
|
—
|
||||||||||||
(0.59
|
)
|
(1.00
|
)
|
—
|
(1.70
|
)
|
—
|
|||||||||||
(0.59
|
)
|
(1.00
|
)
|
(0.31
|
)
|
(1.79
|
)
|
—
|
||||||||||
$
|
22.68
|
$
|
21.39
|
$
|
21.91
|
$
|
16.26
|
$
|
18.39
|
|||||||||
9.16
|
%
|
2.16
|
%
|
36.92
|
%
|
-2.14
|
%
|
-6.74
|
%(3)
|
|||||||||
$
|
21.97
|
$
|
8.85
|
$
|
5.83
|
$
|
0.35
|
$
|
0.29
|
|||||||||
1.43
|
%
|
1.34
|
%
|
1.50
|
%
|
1.24
|
%
|
1.19
|
%(4)
|
|||||||||
0.05
|
%
|
(0.07
|
)%
|
(0.17
|
)%
|
0.52
|
%
|
0.25
|
%(4)
|
|||||||||
83
|
%
|
64
|
%
|
76
|
%
|
141
|
%
|
74
|
%(3)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to
distribute substantially all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net
investment income/loss and realized gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences
are primarily the result of the treatment of wash sales for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax
expense. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization
accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax
returns of the Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no tax
liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium
and accretion of discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are
directly attributable to its portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized
gains/losses on investments are allocated to each class of shares based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital gains,
if any, are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the
original cost of the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those
estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all
liabilities (including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange
is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or
similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves, default
rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when
observable inputs are unavailable.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end
mutual funds, partnerships, rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales
price as reported by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ
from the last sales price reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To the
extent these securities are actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued at
the same time the Fund calculates its NAV because most foreign markets close well before such time. The earlier close of most foreign markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim. In certain circumstances, it may be determined that a foreign security needs to be fair valued because it appears that the value of the security might have been
materially affected by events occurring after the close of the market in which the security is principally traded, but before the time the Fund calculates its NAV, such as by a development that affects an entire
market or region (e.g., a weather-related event) or a potentially global development (e.g., a terrorist attack that may be expected to have an effect on investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are
priced at the ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S. Treasuries,
and U.S. government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based techniques. The
pricing service may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. In
addition, the model may incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued primarily using dealer
quotations. These securities are generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt
investments with an original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60 days,
then the values as of the 61st day prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s fair
value would be determined, as described below. Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific
securities.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
36,407,512
|
|||
Gross tax unrealized appreciation
|
$
|
9,841,735
|
|||
Gross tax unrealized depreciation
|
(1,047,941
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
8,793,794
|
|||
Undistributed ordinary income
|
$
|
—
|
|||
Undistributed long-term capital gains
|
—
|
||||
Total distributable earnings
|
$
|
—
|
|||
Other accumulated gain/(loss)
|
$
|
(2,551,363
|
)
|
||
Total accumulated gain/(loss)
|
$
|
6,242,431
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
—
|
$
|
—
|
|||||
Long-term capital gain
|
—
|
1,232,913
|
|||||||
$
|
—
|
$
|
1,232,913
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS/EXPENSE EXAMPLE
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 902.30
|
$8.28
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,016.16
|
$8.77
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 903.40
|
$6.67
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.85
|
$7.07
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.75% for Investor Class shares or 1.41% for Institutional Class shares, as applicable, multiplied by the average account value
over the period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors for
consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been provided
to help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
|
(1)
|
The nature and quality of the advisory services provided by the Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(4)
|
The costs and profitability of the Fund to the Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the
Fund and noted that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the
Advisor and that the nature and extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies,
and restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s
service providers, as feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios, evaluates
insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training, reviews reports
provided by service providers, and maintains books and records.
|
||
(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology,
and legal services to the Fund.
|
||
(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and Pershing.
The Advisor participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without paying a
transaction fee. The Advisor compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative, and
trading oversight personnel, as well as management executives.
|
||
(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training
and education.
|
(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment performance
of the Fund to various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated investment
objective and style. The Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from
Morningstar. As part of the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for
purposes of the materials considered at the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of other
comparable funds and concluded that they are reasonable and warranted continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. In addition, the Trustees noted that many of the
expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to those expenses as the assets of the Fund increase. For example, mutual fund platform
fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions such as renegotiating service contracts, the Advisor’s significant marketing efforts to
promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or lower its management fees in certain circumstances. The Trustees noted that it did not
appear that the Advisor was
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
realizing economies of scale at current asset levels and concluded that it would continue to monitor economies of scale in the future as circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues
that the Advisor has put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines set forth in
relevant court cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the
Fund and its shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary benefits
from, by way of example, its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund. The Trustees
determined that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any additional
benefits realized by the Advisor from its relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical, and other information
and services provided by brokers are merely supplemental to the Advisor’s own efforts in the performance of its duties under the advisory agreement.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
8
|
Statement of Operations
|
9
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
23
|
Proxy Voting Policy and Proxy Voting Records
|
25
|
Availability of Quarterly Portfolio Schedule
|
25
|
Federal Tax Distribution Information
|
25
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Small Cap Financial Fund –
|
||||
Investor Class (HSFNX)
|
-27.19%
|
-26.55%
|
0.31%
|
2.68%
|
Hennessy Small Cap Financial Fund –
|
||||
Institutional Class (HISFX)
|
-27.06%
|
-26.38%
|
0.68%
|
2.99%
|
Russell 2000® Financial
|
||||
Services Index
|
-26.36%
|
-24.18%
|
1.96%
|
6.64%
|
Russell 2000® Index
|
-15.47%
|
-16.39%
|
2.88%
|
7.69%
|
(1)
|
Periods of less than one year are not annualized.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
PennyMac Financial Services, Inc.
|
5.25%
|
First Midwest Bancorp, Inc.
|
5.15%
|
Meridian Bancorp, Inc.
|
5.13%
|
Hingham Institution for Savings
|
4.84%
|
First BanCorp.
|
4.71%
|
Opus Bank
|
4.71%
|
Wintrust Financial Corp.
|
4.64%
|
Webster Financial Corp.
|
4.47%
|
Synovus Financial Corp.
|
4.16%
|
Lakeland Bancorp, Inc.
|
4.07%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 99.39%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials – 96.62%
|
||||||||||||
Associated Banc-Corp.
|
145,000
|
$
|
2,050,300
|
3.24
|
%
|
|||||||
Atlantic Union Bankshares Corp.
|
65,000
|
1,551,550
|
2.46
|
%
|
||||||||
Banc of California, Inc.
|
185,000
|
1,927,700
|
3.05
|
%
|
||||||||
Berkshire Hills Bancorp, Inc.
|
105,000
|
1,789,200
|
2.83
|
%
|
||||||||
Brookline Bancorp, Inc.
|
90,000
|
918,900
|
1.45
|
%
|
||||||||
Cadence BanCorp
|
255,000
|
1,688,100
|
2.67
|
%
|
||||||||
CIT Group, Inc.
|
50,000
|
949,000
|
1.50
|
%
|
||||||||
Columbia Financial, Inc. (a)
|
55,000
|
778,525
|
1.23
|
%
|
||||||||
ConnectOne Bancorp, Inc.
|
160,000
|
2,390,400
|
3.78
|
%
|
||||||||
First BanCorp. (b)
|
510,000
|
2,973,300
|
4.71
|
%
|
||||||||
First Midwest Bancorp, Inc.
|
220,000
|
3,251,600
|
5.15
|
%
|
||||||||
Green Dot Corp., Class A (a)
|
20,000
|
610,000
|
0.97
|
%
|
||||||||
HarborOne Bancorp, Inc. (a)
|
125,000
|
1,002,500
|
1.59
|
%
|
||||||||
Hingham Institution for Savings
|
20,000
|
3,060,400
|
4.84
|
%
|
||||||||
HomeTrust Bancshares, Inc.
|
120,000
|
1,844,400
|
2.92
|
%
|
||||||||
Independent Bank Corp.
|
22,500
|
1,640,025
|
2.60
|
%
|
||||||||
Kearny Financial Corp. of Maryland
|
80,000
|
744,000
|
1.18
|
%
|
||||||||
Lakeland Bancorp, Inc.
|
230,000
|
2,573,700
|
4.07
|
%
|
||||||||
Meridian Bancorp, Inc.
|
275,000
|
3,239,500
|
5.13
|
%
|
||||||||
Nicolet Bankshares, Inc. (a)
|
35,000
|
1,925,700
|
3.05
|
%
|
||||||||
OceanFirst Financial Corp.
|
45,000
|
758,250
|
1.20
|
%
|
||||||||
Opus Bank
|
155,000
|
2,979,100
|
4.71
|
%
|
||||||||
PennyMac Financial Services, Inc.
|
110,000
|
3,318,700
|
5.25
|
%
|
||||||||
People’s United Financial, Inc.
|
150,000
|
1,903,500
|
3.01
|
%
|
||||||||
Sterling Bancorp
|
135,000
|
1,664,550
|
2.63
|
%
|
||||||||
Synovus Financial Corp.
|
125,000
|
2,626,250
|
4.16
|
%
|
||||||||
Texas Capital Bancshares, Inc. (a)
|
72,500
|
2,014,050
|
3.19
|
%
|
||||||||
Umpqua Holdings Corp.
|
165,000
|
2,066,625
|
3.27
|
%
|
||||||||
United Community Banks, Inc.
|
50,000
|
1,057,250
|
1.67
|
%
|
||||||||
Webster Financial Corp.
|
100,000
|
2,825,000
|
4.47
|
%
|
||||||||
Wintrust Financial Corp.
|
70,000
|
2,933,000
|
4.64
|
%
|
||||||||
|
61,055,075
|
96.62
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Information Technology – 2.77%
|
||||||||||||
Alliance Data Systems Corp.
|
35,000
|
$
|
1,752,450
|
2.77
|
%
|
|||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $68,763,156)
|
62,807,525
|
99.39
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 0.73%
|
||||||||||||
Money Market Funds – 0.73%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (c)
|
460,107
|
460,107
|
0.73
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $460,107)
|
460,107
|
0.73
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $69,223,263) – 100.12%
|
63,267,632
|
100.12
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.12)%
|
(73,966
|
)
|
(0.12
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
63,193,666
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
U.S.-traded security of a foreign corporation.
|
(c)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Financials
|
$
|
61,055,075
|
$
|
—
|
$
|
—
|
$
|
61,055,075
|
||||||||
Information Technology
|
1,752,450
|
—
|
—
|
1,752,450
|
||||||||||||
Total Common Stocks
|
$
|
62,807,525
|
$
|
—
|
$
|
—
|
$
|
62,807,525
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
460,107
|
$
|
—
|
$
|
—
|
$
|
460,107
|
||||||||
Total Short-Term Investments
|
$
|
460,107
|
$
|
—
|
$
|
—
|
$
|
460,107
|
||||||||
Total Investments
|
$
|
63,267,632
|
$
|
—
|
$
|
—
|
$
|
63,267,632
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $69,223,263)
|
$
|
63,267,632
|
||
Dividends and interest receivable
|
42,445
|
|||
Receivable for fund shares sold
|
17,958
|
|||
Prepaid expenses and other assets
|
18,662
|
|||
Total assets
|
63,346,697
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
46,785
|
|||
Payable to advisor
|
42,560
|
|||
Payable to administrator
|
11,192
|
|||
Payable to auditor
|
11,459
|
|||
Accrued distribution fees
|
7,260
|
|||
Accrued service fees
|
4,080
|
|||
Accrued trustees fees
|
5,916
|
|||
Accrued expenses and other payables
|
23,779
|
|||
Total liabilities
|
153,031
|
|||
NET ASSETS
|
$
|
63,193,666
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
75,941,941
|
||
Accumulated deficit
|
(12,748,275
|
)
|
||
Total net assets
|
$
|
63,193,666
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
54,583,397
|
||
Shares issued and outstanding
|
3,590,628
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
15.20
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
8,610,269
|
||
Shares issued and outstanding
|
955,224
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
9.01
|
HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
961,129
|
||
Interest income
|
27,603
|
|||
Total investment income
|
988,732
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
411,827
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
74,268
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
6,762
|
|||
Distribution fees – Investor Class (See Note 5)
|
56,099
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
52,227
|
|||
Service fees – Investor Class (See Note 5)
|
37,399
|
|||
Federal and state registration fees
|
24,826
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,463
|
|||
Trustees’ fees and expenses
|
8,742
|
|||
Reports to shareholders
|
8,647
|
|||
Legal fees
|
640
|
|||
Other expenses
|
8,382
|
|||
Total expenses
|
714,744
|
|||
NET INVESTMENT INCOME
|
$
|
273,988
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized loss on investments
|
$
|
(5,998,474
|
)
|
|
Net change in unrealized appreciation/depreciation on investments
|
(19,807,124
|
)
|
||
Net loss on investments
|
(25,805,598
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(25,531,610
|
)
|
(1)
|
Net of foreign taxes withheld of $5,250.
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
273,988
|
$
|
711,118
|
||||
Net realized gain (loss) on investments
|
(5,998,474
|
)
|
4,257,379
|
|||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(19,807,124
|
)
|
849,952
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(25,531,610
|
)
|
5,818,449
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(3,014,018
|
)
|
(7,622,114
|
)
|
||||
Distributable earnings – Institutional Class
|
(963,721
|
)
|
(2,386,465
|
)
|
||||
Total distributions
|
(3,977,739
|
)
|
(10,008,579
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
755,467
|
7,715,297
|
||||||
Proceeds from shares subscribed – Institutional Class
|
1,310,729
|
5,904,217
|
||||||
Dividends reinvested – Investor Class
|
2,952,871
|
7,476,720
|
||||||
Dividends reinvested – Institutional Class
|
935,074
|
2,340,222
|
||||||
Cost of shares redeemed – Investor Class
|
(14,032,670
|
)
|
(45,169,956
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(9,318,453
|
)
|
(21,638,108
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(17,396,982
|
)
|
(43,371,608
|
)
|
||||
TOTAL DECREASE IN NET ASSETS
|
(46,906,331
|
)
|
(47,561,738
|
)
|
||||
NET ASSETS:
|
||||||||
Beginning of period
|
110,099,997
|
157,661,735
|
||||||
End of period
|
$
|
63,193,666
|
$
|
110,099,997
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
46,241
|
400,923
|
||||||
Shares sold – Institutional Class
|
110,240
|
477,781
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
136,924
|
373,487
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
72,426
|
195,642
|
||||||
Shares redeemed – Investor Class
|
(729,057
|
)
|
(2,193,955
|
)
|
||||
Shares redeemed – Institutional Class
|
(832,075
|
)
|
(1,754,857
|
)
|
||||
Net decrease in shares outstanding
|
(1,195,301
|
)
|
(2,500,979
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
21.60
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.05
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(5.70
|
)
|
||
Total from investment operations
|
(5.65
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.09
|
)
|
||
Dividends from net realized gains
|
(0.66
|
)
|
||
Total distributions
|
(0.75
|
)
|
||
Net asset value, end of period
|
$
|
15.20
|
||
TOTAL RETURN
|
-27.19
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
54.58
|
||
Ratio of expenses to average net assets
|
1.63
|
%(4)
|
||
Ratio of net investment income (loss) to average net assets
|
0.53
|
%(4)
|
||
Portfolio turnover rate(5)
|
42
|
%(3)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Amount is between $(0.005) and $0.005.
|
(3)
|
Not annualized.
|
(4)
|
Annualized.
|
(5)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
21.96
|
$
|
26.02
|
$
|
23.48
|
$
|
23.81
|
$
|
24.13
|
|||||||||
0.10
|
(1)
|
0.03
|
(0.04
|
)
|
0.10
|
0.03
|
(1)
|
|||||||||||
0.93
|
(2.12
|
)
|
5.83
|
1.20
|
2.99
|
|||||||||||||
1.03
|
(2.09
|
)
|
5.79
|
1.30
|
3.02
|
|||||||||||||
(0.07
|
)
|
0.00
|
(2)
|
(0.06
|
)
|
(0.03
|
)
|
—
|
||||||||||
(1.32
|
)
|
(1.97
|
)
|
(3.19
|
)
|
(1.60
|
)
|
(3.34
|
)
|
|||||||||
(1.39
|
)
|
(1.97
|
)
|
(3.25
|
)
|
(1.63
|
)
|
(3.34
|
)
|
|||||||||
$
|
21.60
|
$
|
21.96
|
$
|
26.02
|
$
|
23.48
|
$
|
23.81
|
|||||||||
5.27
|
%
|
-8.79
|
%
|
25.03
|
%
|
5.80
|
%
|
14.51
|
%
|
|||||||||
$
|
89.36
|
$
|
122.00
|
$
|
174.01
|
$
|
132.09
|
$
|
218.50
|
|||||||||
1.58
|
%
|
1.54
|
%
|
1.52
|
%
|
1.54
|
%
|
1.50
|
%
|
|||||||||
0.47
|
%
|
0.11
|
%
|
(0.06
|
)%
|
0.38
|
%
|
0.17
|
%
|
|||||||||
46
|
%
|
28
|
%
|
46
|
%
|
46
|
%
|
49
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
12.92
|
||
Income from investment operations:
|
||||
Net investment income
|
0.05
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(3.38
|
)
|
||
Total from investment operations
|
(3.33
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.19
|
)
|
||
Dividends from net realized gains
|
(0.39
|
)
|
||
Total distributions
|
(0.58
|
)
|
||
Net asset value, end of period
|
$
|
9.01
|
||
TOTAL RETURN
|
-27.06
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
8.61
|
||
Ratio of expenses to average net assets
|
1.25
|
%(3)
|
||
Ratio of net investment income to average net assets
|
0.93
|
%(3)
|
||
Portfolio turnover rate(4)
|
42
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
13.28
|
$
|
15.69
|
$
|
14.23
|
$
|
14.39
|
$
|
14.53
|
|||||||||
0.10
|
(1)
|
0.07
|
0.02
|
0.09
|
0.06
|
(1)
|
||||||||||||
0.54
|
(1.27
|
)
|
3.56
|
0.75
|
1.81
|
|||||||||||||
0.64
|
(1.20
|
)
|
3.58
|
0.84
|
1.87
|
|||||||||||||
(0.18
|
)
|
(0.02
|
)
|
(0.17
|
)
|
(0.04
|
)
|
—
|
||||||||||
(0.82
|
)
|
(1.19
|
)
|
(1.95
|
)
|
(0.96
|
)
|
(2.01
|
)
|
|||||||||
(1.00
|
)
|
(1.21
|
)
|
(2.12
|
)
|
(1.00
|
)
|
(2.01
|
)
|
|||||||||
$
|
12.92
|
$
|
13.28
|
$
|
15.69
|
$
|
14.23
|
$
|
14.39
|
|||||||||
5.57
|
%
|
-8.42
|
%
|
25.56
|
%
|
6.22
|
%
|
14.91
|
%
|
|||||||||
$
|
20.74
|
$
|
35.66
|
$
|
37.92
|
$
|
21.27
|
$
|
25.94
|
|||||||||
1.23
|
%
|
1.15
|
%
|
1.15
|
%
|
1.17
|
%
|
1.17
|
%
|
|||||||||
0.84
|
%
|
0.51
|
%
|
0.30
|
%
|
0.72
|
%
|
0.48
|
%
|
|||||||||
46
|
%
|
28
|
%
|
46
|
%
|
46
|
%
|
49
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to
distribute substantially all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net
investment income/loss and realized gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary differences
are primarily the result of the treatment of wash sales for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as an income tax
expense. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize equalization
accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The tax
returns of the Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets and no
tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of premium
and accretion of discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those expenses that are
directly attributable to its portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized
gains/losses on investments are allocated to each class of shares based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital
gains, if any, are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing the
original cost of the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those
estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus all
liabilities (including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock Exchange
is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical or
similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves,
default rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information)
when observable inputs are unavailable.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end
mutual funds, partnerships, rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the last sales
price as reported by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price, which may differ
from the last sales price reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid and ask prices. To
the extent these securities are actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges generally are not valued
at the same time the Fund calculates its NAV because most foreign markets close well before such time. The earlier close of most foreign markets gives rise to the possibility that significant events, including
broad market moves, may have occurred in the interim. In certain circumstances, it may be determined that a foreign security needs to be fair valued because it appears that the value of the security might have been
materially affected by events occurring after the close of the market in which the security is principally traded, but before the time the Fund calculates its NAV, such as by a development that affects an entire
market or region (e.g., a weather-related event) or a potentially global development (e.g., a terrorist attack that may be expected to have an effect on investor expectations worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are
priced at the ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S.
Treasuries, and U.S. government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based
techniques. The pricing service may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating
to the issuer. In addition, the model may incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued
primarily using dealer quotations. These securities are generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt
investments with an original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60
days, then the values as of the 61st day prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the security’s
fair value would be determined, as described below. Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for
specific securities.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
94,969,593
|
|||
Gross tax unrealized appreciation
|
$
|
17,543,168
|
|||
Gross tax unrealized depreciation
|
(4,227,881
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
13,315,287
|
|||
Undistributed ordinary income
|
$
|
166,556
|
|||
Undistributed long-term capital gains
|
3,279,231
|
||||
Total distributable earnings
|
$
|
3,445,787
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
16,761,074
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
698,496
|
$
|
848,924
|
|||||
Long-term capital gain
|
3,279,243
|
9,159,655
|
|||||||
$
|
3,977,739
|
$
|
10,008,579
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS/EXPENSE EXAMPLE
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 728.10
|
$7.00
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,016.76
|
$8.17
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 729.40
|
$5.37
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.65
|
$6.27
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.63% for Investor Class shares or 1.25% for Institutional Class shares, as applicable, multiplied by the average account
value over the period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors for
consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been
provided to help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
|
(1)
|
The nature and quality of the advisory services provided by the Advisor;
|
|
(2)
|
A comparison of the fees and expenses of the Fund to other similar funds;
|
|
(3)
|
Whether economies of scale are recognized by the Fund;
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(4)
|
The costs and profitability of the Fund to the Advisor;
|
|
(5)
|
The performance of the Fund; and
|
|
(6)
|
Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
|
(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to the
Fund and noted that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the
Advisor and that the nature and extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
|
(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
|
(i)
|
manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives, policies,
and restrictions;
|
|||
(ii)
|
seeks best execution for the Fund’s portfolio;
|
|||
(iii)
|
manages the use of soft dollars for the Fund; and
|
|||
(iv)
|
manages proxy voting for the Fund.
|
(b)
|
The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
|
||
(c)
|
The Advisor monitors the liquidity of each Fund.
|
||
(d)
|
The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
|
||
(e)
|
The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the
Fund’s service providers, as feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios,
evaluates insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training,
reviews reports provided by service providers, and maintains books and records.
|
||
(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information
technology, and legal services to the Fund.
|
||
(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
|
||
(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
|
||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and
Pershing. The Advisor participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without
paying a transaction fee. The Advisor compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
|
||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative,
and trading oversight personnel, as well as management executives.
|
||
(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board training
and education.
|
(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment
performance of the Fund to various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated
investment objective and style. The Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from
Morningstar. As part of the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories for
purposes of the materials considered at the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios of
other comparable funds and concluded that they are reasonable and warranted continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had
declined over the prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of scale relating to
those expenses as the assets of the Fund increase. For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain expenses through actions
such as renegotiating service contracts, the Advisor’s significant marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s agreement to waive fees or
lower its management fees in certain
|
HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
circumstances. The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to monitor
economies of scale in the future as circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and revenues
that the Advisor has put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines set forth in
relevant court cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to the
Fund and its shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary benefits
from, by way of example, its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund. The Trustees
determined that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded that any
additional benefits realized by the Advisor from its relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical, and other
information and services provided by brokers are merely supplemental to the Advisor’s own efforts in the performance of its duties under the advisory agreement.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Letter to Shareholders
|
2
|
Performance Overview
|
4
|
Financial Statements
|
|
Schedule of Investments
|
5
|
Statement of Assets and Liabilities
|
9
|
Statement of Operations
|
10
|
Statements of Changes in Net Assets
|
11
|
Financial Highlights
|
12
|
Notes to the Financial Statements
|
16
|
Expense Example
|
23
|
Proxy Voting Policy and Proxy Voting Records
|
25
|
Availability of Quarterly Portfolio Schedule
|
25
|
Federal Tax Distribution Information
|
25
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Technology Fund –
|
||||
Investor Class (HTECX)
|
-5.16%
|
-4.50%
|
8.16%
|
7.84%
|
Hennessy Technology Fund –
|
||||
Institutional Class (HTCIX)
|
-5.07%
|
-4.23%
|
8.48%
|
8.13%
|
NASDAQ Composite Index
|
7.76%
|
10.99%
|
13.74%
|
15.05%
|
S&P 500® Index
|
-3.16%
|
0.86%
|
9.12%
|
11.69%
|
Expense ratios:
|
Gross 3.85%, Net 1.24%(2) (Investor Class);
|
Gross 3.48%, Net 0.99%(2) (Institutional Class)
|
(1)
|
Periods of less than one year are not annualized.
|
(2)
|
The Fund’s investment advisor has contractually agreed to limit expenses until February 28, 2021.
|
HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2020 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Paylocity Holding Corp.
|
1.98%
|
ServiceNow, Inc.
|
1.96%
|
Expedia Group, Inc.
|
1.95%
|
Qurate Retail Group, Inc.
|
1.85%
|
Dropbox, Inc.
|
1.82%
|
Amazon.com, Inc.
|
1.78%
|
DXC Technology Co.
|
1.78%
|
Sabre Corp.
|
1.75%
|
F5 Networks, Inc.
|
1.74%
|
SolarEdge Technologies, Inc.
|
1.73%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 96.39%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 3.33%
|
||||||||||||
Match Group, Inc. (a)
|
1,052
|
$
|
80,962
|
1.61
|
%
|
|||||||
SciPlay Corp. (a)
|
8,151
|
85,993
|
1.72
|
%
|
||||||||
|
166,955
|
3.33
|
%
|
|||||||||
Consumer Discretionary – 8.43%
|
||||||||||||
Amazon.com, Inc. (a)
|
36
|
89,064
|
1.78
|
%
|
||||||||
Booking Holdings, Inc. (a)
|
49
|
72,548
|
1.45
|
%
|
||||||||
Despegar.com Corp. (a)(b)
|
10,208
|
70,435
|
1.40
|
%
|
||||||||
Expedia Group, Inc.
|
1,378
|
97,810
|
1.95
|
%
|
||||||||
Qurate Retail Group, Inc. (a)
|
11,499
|
92,625
|
1.85
|
%
|
||||||||
|
422,482
|
8.43
|
%
|
|||||||||
Information Technology – 84.63%
|
||||||||||||
Accenture PLC, Class A (b)
|
443
|
82,039
|
1.64
|
%
|
||||||||
Adobe Systems, Inc. (a)
|
237
|
83,813
|
1.67
|
%
|
||||||||
Apple, Inc.
|
291
|
85,496
|
1.71
|
%
|
||||||||
Applied Materials, Inc.
|
1,577
|
78,345
|
1.56
|
%
|
||||||||
Atlassian Corp. PLC (a)(b)
|
535
|
83,187
|
1.66
|
%
|
||||||||
Automatic Data Processing, Inc.
|
526
|
77,159
|
1.54
|
%
|
||||||||
Avnet, Inc.
|
2,575
|
77,301
|
1.54
|
%
|
||||||||
Booz Allen Hamilton Holding Corp., Class A
|
977
|
71,751
|
1.43
|
%
|
||||||||
Cardtronics PLC (a)(b)
|
3,420
|
78,318
|
1.56
|
%
|
||||||||
CDW Corp.
|
713
|
79,000
|
1.58
|
%
|
||||||||
Citrix Systems, Inc.
|
501
|
72,650
|
1.45
|
%
|
||||||||
Dropbox, Inc. (a)
|
4,347
|
91,374
|
1.82
|
%
|
||||||||
DXC Technology Co.
|
4,918
|
89,163
|
1.78
|
%
|
||||||||
eGain Corp. (a)
|
10,267
|
85,216
|
1.70
|
%
|
||||||||
Euronet Worldwide, Inc. (a)
|
828
|
75,977
|
1.52
|
%
|
||||||||
EVERTEC, Inc. (b)
|
3,108
|
78,757
|
1.57
|
%
|
||||||||
F5 Networks, Inc. (a)
|
625
|
87,037
|
1.74
|
%
|
||||||||
Fair Isaac Corp. (a)
|
239
|
84,353
|
1.68
|
%
|
||||||||
Fortinet, Inc. (a)
|
684
|
73,694
|
1.47
|
%
|
||||||||
Hewlett Packard Enterprise Co.
|
7,136
|
71,788
|
1.43
|
%
|
||||||||
Intel Corp.
|
1,230
|
73,775
|
1.47
|
%
|
||||||||
International Business Machines Corp.
|
613
|
76,968
|
1.54
|
%
|
||||||||
Intuit, Inc.
|
297
|
80,134
|
1.60
|
%
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Information Technology (Continued)
|
||||||||||||
Jabil, Inc.
|
2,843
|
$
|
80,855
|
1.61
|
%
|
|||||||
Kimball Electronics, Inc. (a)
|
6,076
|
82,148
|
1.64
|
%
|
||||||||
KLA-Tencor Corp.
|
486
|
79,748
|
1.59
|
%
|
||||||||
Lam Research Corp.
|
288
|
73,521
|
1.47
|
%
|
||||||||
Mastercard, Inc., Class A
|
282
|
77,542
|
1.55
|
%
|
||||||||
Maxim Integrated Products, Inc.
|
1,364
|
74,993
|
1.50
|
%
|
||||||||
Methode Electronics, Inc.
|
2,747
|
82,465
|
1.65
|
%
|
||||||||
Microsoft Corp.
|
440
|
78,852
|
1.57
|
%
|
||||||||
NCR Corp. (a)
|
3,542
|
72,682
|
1.45
|
%
|
||||||||
NetApp, Inc.
|
1,790
|
78,348
|
1.56
|
%
|
||||||||
Oracle Corp.
|
1,409
|
74,635
|
1.49
|
%
|
||||||||
Palo Alto Networks, Inc. (a)
|
414
|
81,355
|
1.62
|
%
|
||||||||
Paychex, Inc.
|
1,084
|
74,276
|
1.48
|
%
|
||||||||
Paylocity Holding Corp. (a)
|
867
|
99,297
|
1.98
|
%
|
||||||||
QIWI PLC – ADR (b)
|
6,258
|
76,473
|
1.53
|
%
|
||||||||
Qualcomm, Inc.
|
1,029
|
80,951
|
1.61
|
%
|
||||||||
Sabre Corp.
|
12,071
|
87,756
|
1.75
|
%
|
||||||||
Sanmina Corp. (a)
|
2,738
|
75,925
|
1.51
|
%
|
||||||||
Seagate Technology PLC (b)
|
1,461
|
72,977
|
1.46
|
%
|
||||||||
ServiceNow, Inc. (a)
|
280
|
98,431
|
1.96
|
%
|
||||||||
ShotSpotter, Inc. (a)
|
2,496
|
85,788
|
1.71
|
%
|
||||||||
SolarEdge Technologies, Inc. (a)
|
777
|
86,705
|
1.73
|
%
|
||||||||
Synnex Corp.
|
938
|
82,131
|
1.64
|
%
|
||||||||
Take-Two Interactive Software, Inc. (a)
|
614
|
74,325
|
1.48
|
%
|
||||||||
Texas Instruments, Inc.
|
668
|
77,535
|
1.55
|
%
|
||||||||
Ubiquiti Networks, Inc.
|
468
|
75,830
|
1.51
|
%
|
||||||||
Visa, Inc., Class A
|
421
|
75,241
|
1.50
|
%
|
||||||||
Vishay Intertechnology, Inc.
|
5,013
|
83,166
|
1.66
|
%
|
||||||||
VMware, Inc., Class A (a)
|
580
|
76,282
|
1.52
|
%
|
||||||||
Zebra Technologies Corp. (a)
|
368
|
84,515
|
1.69
|
%
|
||||||||
|
4,242,043
|
84.63
|
%
|
|||||||||
Total Common Stocks
|
||||||||||||
(Cost $4,433,227)
|
4,831,480
|
96.39
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS – 3.61%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 3.61%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.25% (c)
|
180,935
|
$
|
180,935
|
3.61
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $180,935)
|
180,935
|
3.61
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $4,614,162) – 100.00%
|
5,012,415
|
100.00
|
%
|
|||||||||
Liabilities in Excess of Other Assets – 0.00%
|
(121
|
)
|
0.00
|
%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
5,012,294
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
U.S.-traded security of a foreign corporation.
|
(c)
|
The rate listed is the fund’s seven-day yield as of April 30, 2020.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
166,955
|
$
|
—
|
$
|
—
|
$
|
166,955
|
||||||||
Consumer Discretionary
|
422,482
|
—
|
—
|
422,482
|
||||||||||||
Information Technology
|
4,242,043
|
—
|
—
|
4,242,043
|
||||||||||||
Total Common Stocks
|
$
|
4,831,480
|
$
|
—
|
$
|
—
|
$
|
4,831,480
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
180,935
|
$
|
—
|
$
|
—
|
$
|
180,935
|
||||||||
Total Short-Term Investments
|
$
|
180,935
|
$
|
—
|
$
|
—
|
$
|
180,935
|
||||||||
Total Investments
|
$
|
5,012,415
|
$
|
—
|
$
|
—
|
$
|
5,012,415
|
HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2020 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $4,614,162)
|
$
|
5,012,415
|
||
Dividends and interest receivable
|
1,270
|
|||
Receivable for fund shares sold
|
322
|
|||
Prepaid expenses and other assets
|
16,776
|
|||
Due from advisor
|
7,509
|
|||
Total assets
|
5,038,292
|
|||
LIABILITIES:
|
||||
Payable to administrator
|
3,116
|
|||
Payable to auditor
|
11,459
|
|||
Accrued distribution fees
|
993
|
|||
Accrued service fees
|
282
|
|||
Accrued trustees fees
|
6,843
|
|||
Accrued expenses and other payables
|
3,305
|
|||
Total liabilities
|
25,998
|
|||
NET ASSETS
|
$
|
5,012,294
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
4,556,060
|
||
Total distributable earnings
|
456,234
|
|||
Total net assets
|
$
|
5,012,294
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
3,755,669
|
||
Shares issued and outstanding
|
215,195
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
17.45
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
1,256,625
|
||
Shares issued and outstanding
|
70,114
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
17.92
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2020 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income
|
$
|
26,937
|
||
Interest income
|
986
|
|||
Total investment income
|
27,923
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
19,326
|
|||
Federal and state registration fees
|
17,636
|
|||
Compliance expense (See Note 5)
|
13,462
|
|||
Audit fees
|
11,463
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
8,255
|
|||
Trustees’ fees and expenses
|
8,197
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
3,452
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
358
|
|||
Reports to shareholders
|
3,095
|
|||
Distribution fees – Investor Class (See Note 5)
|
2,925
|
|||
Service fees – Investor Class (See Note 5)
|
1,950
|
|||
Other expenses
|
2,097
|
|||
Total expenses before reimbursement by advisor
|
92,216
|
|||
Expense reimbursement by advisor – Investor Class (See Note 5)
|
(46,725
|
)
|
||
Expense reimbursement by advisor – Institutional Class (See Note 5)
|
(15,022
|
)
|
||
Net expenses
|
30,469
|
|||
NET INVESTMENT LOSS
|
$
|
(2,546
|
)
|
|
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
88,996
|
||
Net change in unrealized appreciation/depreciation on investments
|
(378,872
|
)
|
||
Net loss on investments
|
(289,876
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(292,422
|
)
|
HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2020
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2019
|
|||||||
OPERATIONS:
|
||||||||
Net investment loss
|
$
|
(2,546
|
)
|
$
|
(5,958
|
)
|
||
Net realized gain on investments
|
88,996
|
156,775
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(378,872
|
)
|
729,890
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(292,422
|
)
|
880,707
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(108,418
|
)
|
(408,753
|
)
|
||||
Distributable earnings – Institutional Class
|
(37,554
|
)
|
(138,693
|
)
|
||||
Total distributions
|
(145,972
|
)
|
(547,446
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
297,318
|
371,583
|
||||||
Proceeds from shares subscribed – Institutional Class
|
42,505
|
149,605
|
||||||
Dividends reinvested – Investor Class
|
106,748
|
401,355
|
||||||
Dividends reinvested – Institutional Class
|
37,105
|
137,038
|
||||||
Cost of shares redeemed – Investor Class
|
(203,641
|
)
|
(435,464
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(60,553
|
)
|
(124,774
|
)
|
||||
Net increase in net assets derived
|
||||||||
from capital share transactions
|
219,482
|
499,343
|
||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(218,912
|
)
|
832,604
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
5,231,206
|
4,398,602
|
||||||
End of period
|
$
|
5,012,294
|
$
|
5,231,206
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
16,229
|
21,608
|
||||||
Shares sold – Institutional Class
|
2,149
|
8,241
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
5,574
|
26,633
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
1,887
|
8,882
|
||||||
Shares redeemed – Investor Class
|
(12,499
|
)
|
(25,732
|
)
|
||||
Shares redeemed – Institutional Class
|
(2,939
|
)
|
(7,113
|
)
|
||||
Net increase in shares outstanding
|
10,401
|
32,519
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
18.90
|
||
Income from investment operations:
|
||||
Net investment loss
|
(0.01
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(0.92
|
)
|
||
Total from investment operations
|
(0.93
|
)
|
||
Less distributions:
|
||||
Dividends from net realized gains
|
(0.52
|
)
|
||
Total distributions
|
(0.52
|
)
|
||
Net asset value, end of period
|
$
|
17.45
|
||
TOTAL RETURN
|
-5.16
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
3.76
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
3.63
|
%(3)
|
||
After expense reimbursement
|
1.23
|
%(3)
|
||
Ratio of net investment loss to average net assets:
|
||||
Before expense reimbursement
|
(2.56
|
)%(3)
|
||
After expense reimbursement
|
(0.16
|
)%(3)
|
||
Portfolio turnover rate(5)
|
84
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
The Fund’s current expense limitation agreement, which became effective on February 28, 2017, was in effect for eight months of the year ended October 31, 2017. The Fund previously had
an expense limitation agreement in effect from October 26, 2012, to February 28, 2015.
|
(5)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
18.04
|
$
|
18.46
|
$
|
15.82
|
$
|
15.36
|
$
|
14.86
|
|||||||||
(0.03
|
)(1)
|
(0.05
|
)
|
(0.23
|
)
|
(0.68
|
)
|
(0.38
|
)
|
|||||||||
3.15
|
1.26
|
2.87
|
1.14
|
0.88
|
||||||||||||||
3.12
|
1.21
|
2.64
|
0.46
|
0.50
|
||||||||||||||
(2.26
|
)
|
(1.63
|
)
|
—
|
—
|
—
|
||||||||||||
(2.26
|
)
|
(1.63
|
)
|
—
|
—
|
—
|
||||||||||||
$
|
18.90
|
$
|
18.04
|
$
|
18.46
|
$
|
15.82
|
$
|
15.36
|
|||||||||
20.47
|
%
|
7.25
|
%
|
16.69
|
%
|
2.99
|
%
|
3.36
|
%
|
|||||||||
$
|
3.89
|
$
|
3.31
|
$
|
3.20
|
$
|
2.91
|
$
|
4.04
|
|||||||||
3.84
|
%
|
3.70
|
%
|
4.16
|
%
|
3.61
|
%
|
3.13
|
%
|
|||||||||
1.23
|
%
|
1.23
|
%
|
2.15
|
%(4)
|
3.61
|
%
|
2.75
|
%
|
|||||||||
(2.80
|
)%
|
(2.83
|
)%
|
(3.16
|
)%
|
(2.92
|
)%
|
(2.30
|
)%
|
|||||||||
(0.19
|
)%
|
(0.36
|
)%
|
(1.15
|
)%(4)
|
(2.92
|
)%
|
(1.92
|
)%
|
|||||||||
185
|
%
|
225
|
%
|
267
|
%
|
80
|
%
|
163
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2020
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
19.40
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.01
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(0.95
|
)
|
||
Total from investment operations
|
(0.94
|
)
|
||
Less distributions:
|
||||
Dividends from net realized gains
|
(0.54
|
)
|
||
Total distributions
|
(0.54
|
)
|
||
Net asset value, end of period
|
$
|
17.92
|
||
TOTAL RETURN
|
-5.07
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
1.26
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
3.25
|
%(3)
|
||
After expense reimbursement
|
0.98
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets:
|
||||
Before expense reimbursement
|
(2.18
|
)%(3)
|
||
After expense reimbursement
|
0.09
|
%(3)
|
||
Portfolio turnover rate(5)
|
84
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
The Fund’s current expense limitation agreement, which became effective on February 28, 2017, was in effect for eight months of the year ended October 31, 2017. The Fund previously had
an expense limitation agreement in effect from October 26, 2012, to February 28, 2015.
|
(5)
|
Calculated on the basis of the Fund as a whole.
|
HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||
$
|
18.47
|
$
|
18.85
|
$
|
16.11
|
$
|
15.58
|
$
|
15.02
|
|||||||||
0.01
|
(1)
|
0.01
|
(0.12
|
)
|
(0.43
|
)
|
(0.25
|
)
|
||||||||||
3.23
|
1.28
|
2.86
|
0.96
|
0.81
|
||||||||||||||
3.24
|
1.29
|
2.74
|
0.53
|
0.56
|
||||||||||||||
(2.31
|
)
|
(1.67
|
)
|
—
|
—
|
—
|
||||||||||||
(2.31
|
)
|
(1.67
|
)
|
—
|
—
|
—
|
||||||||||||
$
|
19.40
|
$
|
18.47
|
$
|
18.85
|
$
|
16.11
|
$
|
15.58
|
|||||||||
20.77
|
%
|
7.54
|
%
|
17.01
|
%
|
3.40
|
%
|
3.73
|
%
|
|||||||||
$
|
1.34
|
$
|
1.09
|
$
|
1.22
|
$
|
0.90
|
$
|
0.95
|
|||||||||
3.47
|
%
|
3.27
|
%
|
3.74
|
%
|
3.28
|
%
|
2.76
|
%
|
|||||||||
0.98
|
%
|
0.98
|
%
|
1.77
|
%(4)
|
3.28
|
%
|
2.44
|
%
|
|||||||||
(2.43
|
)%
|
(2.41
|
)%
|
(2.74
|
)%
|
(2.59
|
)%
|
(1.92
|
)%
|
|||||||||
0.06
|
%
|
(0.12
|
)%
|
(0.77
|
)%(4)
|
(2.59
|
)%
|
(1.60
|
)%
|
|||||||||
185
|
%
|
225
|
%
|
267
|
%
|
80
|
%
|
163
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2020 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
|
b).
|
Federal Income Taxes – No provision for federal income taxes or excise taxes has been made because the Fund has elected to be taxed as a regulated investment company and intends to
distribute substantially all of its taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Net
investment income/loss and realized gains/losses for federal income tax purposes may differ from those reported in the financial statements because of temporary book and tax basis differences. Temporary
differences are primarily the result of the treatment of wash sales for tax reporting purposes. The Fund recognizes interest and penalties related to income tax benefits, if any, in the Statement of Operations as
an income tax expense. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income to shareholders for tax purposes. The Fund may utilize
equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as part of the dividends paid deduction for income
tax purposes.
|
c).
|
Accounting for Uncertainty in Income Taxes – The Fund has accounting policies regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The
tax returns of the Fund for the prior three fiscal years are open for examination. The Fund has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Fund’s net assets
and no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. The Fund’s major tax jurisdictions are U.S. federal and
Delaware.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
d).
|
Income and Expenses – Dividend income is recognized on the ex-dividend date or as soon as information is available to the Fund. Interest income, which includes the amortization of
premium and accretion of discount, is recognized on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. The Fund is charged for those
expenses that are directly attributable to its portfolio, such as advisory, administration, and certain shareholder service fees. Income, expenses (other than expenses attributable to a specific class), and
realized and unrealized gains/losses on investments are allocated to each class of shares based on such class’s net assets.
|
e).
|
Distributions to Shareholders – Dividends from net investment income for the Fund, if any, are declared and paid annually, usually in December. Distributions of net realized capital
gains, if any, are declared and paid annually, usually in December.
|
f).
|
Security Transactions – Investment and shareholder transactions are recorded on the trade date. The Fund determines the realized gain/loss from an investment transaction by comparing
the original cost of the security lot sold with the net sale proceeds. Discounts and premiums on securities purchased are accreted or amortized, respectively, over the life of each such security.
|
g).
|
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported change in net assets during the reporting period. Actual results could differ from those
estimates.
|
h).
|
Share Valuation – The net asset value (“NAV”) per share of the Fund is calculated by dividing (i) the total value of the securities held by the Fund, plus cash and other assets, minus
all liabilities (including estimated accrued expenses) by (ii) the total number of shares outstanding for the Fund, rounded to the nearest $0.01. The Fund’s shares will not be priced on days the New York Stock
Exchange is closed for trading. The offering and redemption price per share for the Fund is equal to the Fund’s NAV per share.
|
Level 1 –
|
Unadjusted, quoted prices in active markets for identical instruments that the Fund has the ability to access at the date of measurement.
|
|
Level 2 –
|
Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar instruments, quoted prices in markets that are not active for identical
or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets, such as interest rates, prepayment speeds, credit risk curves,
default rates, and similar data).
|
|
Level 3 –
|
Significant unobservable inputs (including the Fund’s own assumptions about what market participants would use to price the asset or liability based on the best available information)
when observable inputs are unavailable.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds,
closed-end mutual funds, partnerships, rights, and real estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available will generally be valued at the
last sales price as reported by the primary exchange on which the securities are listed. Securities listed on The NASDAQ Stock Market (“NASDAQ”) will generally be valued at the NASDAQ Official Closing Price,
which may differ from the last sales price reported. Securities traded on a securities exchange for which a last-quoted sales price is not readily available will generally be valued at the mean between the bid
and ask prices. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified in Level 1 of the fair value hierarchy. Securities traded on foreign exchanges
generally are not valued at the same time the Fund calculates its NAV because most foreign markets close well before such time. The earlier close of most foreign markets gives rise to the possibility that
significant events, including broad market moves, may have occurred in the interim. In certain circumstances, it may be determined that a foreign security needs to be fair valued because it appears that the value
of the security might have been materially affected by events occurring after the close of the market in which the security is principally traded, but before the time the Fund calculates its NAV, such as by a
development that affects an entire market or region (e.g., a weather-related event) or a potentially global development (e.g., a terrorist attack that may be expected to have an effect on investor expectations
worldwide).
|
|
Registered Investment Companies – Investments in open-end registered investment companies, commonly referred to as mutual funds, generally are
priced at the ending NAV provided by the applicable mutual fund’s service agent and will be classified in Level 1 of the fair value hierarchy.
|
|
Debt Securities – Debt securities, including corporate bonds, asset-backed securities, mortgage-backed securities, municipal bonds, U.S.
Treasuries, and U.S. government agency issues, are generally valued at market on the basis of valuations furnished by an independent pricing service that utilizes both dealer-supplied valuations and formula-based
techniques. The pricing service may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data
relating to the issuer. In addition, the model may incorporate observable market data, such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are
valued primarily using dealer quotations. These securities are generally classified in Level 2 of the fair value hierarchy.
|
|
Short-Term Securities – Short-term equity investments, including money market funds, are valued in the manner specified above. Short-term debt
investments with an original term to maturity of 60 days or less are valued at amortized cost, which approximates fair market value. If the original term to maturity of a short-term debt investment exceeded 60
days, then the values as of the 61st day prior to maturity are amortized. Amortized cost is not used if its use would be inappropriate due to credit or other impairments of the issuer, in which case the
security’s fair value would be determined, as described below. Short-term securities are generally classified in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity
levels for specific securities.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year
|
|||
2020
|
2021
|
2022
|
2023
|
Total
|
||
Investor Class
|
$44,032
|
$83,351
|
$92,255
|
$46,725
|
$266,363
|
|
Institutional Class
|
$15,692
|
$26,820
|
$29,447
|
$15,022
|
$ 86,981
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
4,492,391
|
|||
Gross tax unrealized appreciation
|
$
|
881,203
|
|||
Gross tax unrealized depreciation
|
(132,544
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
748,659
|
|||
Undistributed ordinary income
|
$
|
61,674
|
|||
Undistributed long-term capital gains
|
84,295
|
||||
Total distributable earnings
|
$
|
145,969
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
894,628
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2020
|
October 31, 2019
|
||||||||
Ordinary income(1)
|
$
|
61,675
|
$
|
381,139
|
|||||
Long-term capital gain
|
84,297
|
166,307
|
|||||||
$
|
145,972
|
$
|
547,446
|
(1) Ordinary income includes short-term capital gain.
|
HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS/EXPENSE EXAMPLE
|
HENNESSY FUNDS
|
1-800-966-4354
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2019
|
April 30, 2020
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 948.40
|
$5.96
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.75
|
$6.17
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 949.30
|
$4.75
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.99
|
$4.92
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.23% for Investor Class shares or 0.98% for Institutional Class shares, as applicable, multiplied by the average account
value over the period, multiplied by 182/366 days (to reflect the half-year period).
|
HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE — ELECTRONIC DELIVERY
|
HENNESSY FUNDS
|
1-800-966-4354
|
(1)
|
A memorandum from outside legal counsel that described the fiduciary duties of the Board with respect to approving the continuation of the advisory agreement and the relevant factors
for consideration;
|
|
(2)
|
A memorandum from the Advisor that listed the factors relevant to the Board’s approval of the continuation of the advisory agreement and also referenced the documents that had been
provided to help the Board assess each such factor;
|
|
(3)
|
An inventory of the services provided by the Advisor;
|
|
(4)
|
A written discussion of economies of scale;
|
|
(5)
|
A summary of the key terms of the advisory agreement;
|
|
(6)
|
A recent Fund fact sheet, which included performance information over various periods;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q.
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(1)
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The nature and quality of the advisory services provided by the Advisor;
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(2)
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A comparison of the fees and expenses of the Fund to other similar funds;
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(3)
|
Whether economies of scale are recognized by the Fund;
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HENNESSYFUNDS.COM
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BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
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(4)
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The costs and profitability of the Fund to the Advisor;
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(5)
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The performance of the Fund; and
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(6)
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Any benefits to the Advisor from serving as an investment advisor to the Fund (other than the advisory fee).
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(1)
|
The Trustees considered the services identified below that are provided by the Advisor. Based on this review, the Trustees concluded that the Advisor provides high-quality services to
the Fund and noted that their overall confidence in the Advisor was high. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by
the Advisor and that the nature and extent of the services provided by the Advisor were appropriate to assure that the Fund’s operations are conducted in compliance with applicable laws, rules, and regulations.
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(a)
|
The Advisor acts as the portfolio manager for the Fund. In this capacity, the Advisor does the following:
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(i)
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manages the composition of the Fund’s portfolio, including the purchase, retention, and disposition of portfolio securities in accordance with the Fund’s investment objectives,
policies, and restrictions;
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(ii)
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seeks best execution for the Fund’s portfolio;
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(iii)
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manages the use of soft dollars for the Fund; and
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(iv)
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manages proxy voting for the Fund.
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(b)
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The Advisor performs a daily reconciliation of portfolio positions and cash for the Fund.
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(c)
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The Advisor monitors the liquidity of each Fund.
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(d)
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The Advisor monitors the Fund’s compliance with its investment objectives and restrictions.
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(e)
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The Advisor monitors compliance with federal securities laws, maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the
Fund’s service providers, as feasible, conducts on-site visits to the Fund’s service providers, monitors incidents of abusive trading practices, reviews Fund expense accruals, payments, and fixed expense ratios,
evaluates insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, manages regulatory examination compliance and responses, conducts employee compliance training,
reviews reports provided by service providers, and maintains books and records.
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(f)
|
The Advisor oversees service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information
technology, and legal services to the Fund.
|
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(g)
|
The Advisor maintains in-house marketing and distribution departments on behalf of the Fund.
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(h)
|
The Advisor is actively involved with preparing regulatory filings for the Fund, including writing and annually updating the Fund’s prospectus and related documents.
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HENNESSY FUNDS
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1-800-966-4354
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(i)
|
For each annual report of the Fund, the Advisor prepares a written summary of the Fund’s performance during the most recent 12-month period.
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||
(j)
|
The Advisor oversees distribution of the Fund through third-party broker/dealers and independent financial institutions such as Charles Schwab, Inc., Fidelity, TD Ameritrade, and
Pershing. The Advisor participates in “no transaction fee” (“NTF”) programs with these companies on behalf of the Fund, which allow customers to purchase the Fund through third-party distribution channels without
paying a transaction fee. The Advisor compensates, in part, a number of these third-party providers of NTF programs out of its own revenues.
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||
(k)
|
The Advisor pays the incentive compensation of the Fund’s compliance officers and employs other staff, such as legal, marketing, national accounts, distribution, sales, administrative,
and trading oversight personnel, as well as management executives.
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(l)
|
The Advisor provides a quarterly compliance certification to the Board.
|
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(m)
|
The Advisor prepares or reviews all Board materials, frequently presents to the Board and leads Board discussions, prepares or reviews all meeting minutes, and arranges for Board
training and education.
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(2)
|
The Trustees compared the performance of the Fund to benchmark indices over various periods and also noted that the Trustees review and discuss reports comparing the investment
performance of the Fund to various indices at each quarterly Board meeting. Based on such information, the Trustees determined that the Advisor manages the Fund in a manner materially consistent with its stated
investment objective and style. The Trustees concluded that the performance of the Fund over various periods warranted continuation of the advisory agreement.
|
|
(3)
|
The Trustees reviewed the advisory fees and overall expense ratios of the Fund compared to other funds similar in asset size and investment objective to the Fund using data from
Morningstar. As part of the discussion with management, the Trustees ensured that they understood and were comfortable with the criteria used to determine the mutual funds included in the Morningstar categories
for purposes of the materials considered at the meeting. The Trustees determined that the advisory fee and overall expense ratio of the Fund falls within the range of the advisory fees and overall expense ratios
of other comparable funds and concluded that they are reasonable and warranted continuation of the advisory agreement.
|
|
(4)
|
The Trustees also considered whether the Advisor was realizing economies of scale that it should share with the Fund’s shareholders. The Trustees noted that the assets of the Fund had
remained relatively flat over the prior year. In addition, the Trustees noted that many of the expenses incurred to manage the Fund are asset-based fees, so the Advisor does not realize material economies of
scale relating to those expenses as the assets of the Fund increase. For example, mutual fund platform fees increase as the Fund’s assets grow. The Trustees also considered the Advisor’s efforts to contain
expenses through actions such as renegotiating service contracts, the Advisor’s significant marketing efforts to promote the Funds, the Advisor’s investments in personnel to manage the Funds, and the Advisor’s
agreement to waive fees or lower its management fees
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HENNESSYFUNDS.COM
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BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
in certain circumstances. The Trustees noted that it did not appear that the Advisor was realizing economies of scale at current asset levels and concluded that it would continue to
monitor economies of scale in the future as circumstances changed.
|
||
(5)
|
The Trustees considered the profitability of the Advisor, including the impact of mutual fund platform fees on the Advisor’s profitability, and also considered the resources and
revenues that the Advisor has put into managing and distributing the Fund. The Trustees then concluded that the profits of the Advisor are reasonable and not excessive when compared to profitability guidelines
set forth in relevant court cases.
|
|
(6)
|
The Trustees considered the high level of professionalism and knowledge of the Advisor’s employees, along with a very low level of turnover, and concluded that this was beneficial to
the Fund and its shareholders.
|
|
(7)
|
The Trustees considered any benefits to the Advisor from serving as an advisor to the Fund (other than the advisory fee). The Trustees noted that the Advisor may derive ancillary
benefits from, by way of example, its association with the Fund in the form of proprietary and third-party research products and services received from broker-dealers that execute portfolio trades for the Fund.
The Trustees determined that any such products and services have been used for legitimate purposes relating to the Fund by providing assistance in the investment decision-making process. The Trustees concluded
that any additional benefits realized by the Advisor from its relationship with the Fund were reasonable, which was based on, among other things, the Trustees’ finding that the research, analytical, statistical,
and other information and services provided by brokers are merely supplemental to the Advisor’s own efforts in the performance of its duties under the advisory agreement.
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HENNESSY FUNDS
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1-800-966-4354
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(a)
|
The Registrant’s President and Treasurer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of
this report, as required by Rule 30a‑3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are
effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service providers.
|
(b)
|
There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely
to materially affect, the Registrant's internal control over financial reporting.
|
(a)
|
(1) Code of ethics, or amendments thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing of an
exhibit. Not applicable.
|
By: /s/Neil J. Hennessy
Neil J. Hennessy, President
|
Date: July 9, 2020
|
By: /s/Teresa M. Nilsen
Teresa M. Nilsen, Treasurer
|
Date: July 9, 2020
|
1.
|
I have reviewed this report on Form N-CSR of Hennessy Funds Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if
the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the
filing date of this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and
report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: July 9, 2020
|
/s/Neil J. Hennessy
Neil J. Hennessy
President
|
1.
|
I have reviewed this report on Form N-CSR of Hennessy Funds Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if
the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the
filing date of this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and
report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: July 9, 2020
|
/s/Teresa M. Nilsen
Teresa M. Nilsen
Treasurer
|
/s/Neil J. Hennessy
Neil J. Hennessy
President
Hennessy Funds Trust
|
/s/Teresa M. Nilsen
Teresa M. Nilsen
Treasurer
Hennessy Funds Trust
|
Date: July 9, 2020
|
Date: July 9, 2020
|
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